Residential Energy Efficiency Carbon Credits

Summary

From 2008 through 2015 I was fortunate enough to work on two projects focused on using saved CO2 emissions generated by weatherization programs as a source of additional funds for those programs.  To be as cost effective as possible when weatherizing low income homes, a system was created to measure, track, and sell the CO2 emissions that are saved when a home is weatherized.  There are several sources of funds for these programs, including the United States Department of Energy and utility companies.  By quantifying the CO2 emissions, certifying them as verified carbon offsets, and then selling those offsets, the weatherization programs can provide additional services to their clients without having to receive additional tax dollars.

To have the highest integrity possible, a methodology was created on the Verified Carbon Market that allows for the sale of carbon offsets from weatherization activities.  This market is an elite carbon market where strict requirements must be met to ensure that the carbon offsets predicted are true and accurate.

History

Methodology Creation and First Sale

In January 2008, MaineHousing began the process of creating a method to measure and sell carbon offsets on the Verified Carbon Market.  As the Lead Developer at JAI Software, I was the primary developer in charge of MaineHousing’s Weatherization Software. Therefore, I became involved in this project as a Subject Matter Expert around energy savings and determining the mathematical formulas needed to measure energy savings.

The initial goal of this project was realized on December 7, 2010 when the methodology titled ‘Weatherization of Single Family and Multi-Family Buildings’, also known by the Verified Carbon Standard number VM0008, was approved by the Verified Carbon Standard (VCS).  In early 2011, Chevrolet announced that it would purchase the carbon offsets offered by MaineHousing. The deal provided for Chevrolet to invest up to $40 million over the following three to five years.1

Part of the project was to create software that could be used to track and aggregate the CO2 emissions created by the weatherization programs.  I became the Lead Developer of the Energy Data Repository software that was created to help aggregate and report on the amount of CO2 emissions saved through weatherization.  I continued to work with MaineHousing through the first round of Verification of the CO2 credits, which resulted in the sale of those verified credits to Chevrolet.

NASCSP – Moving to a Nationwide Market

In 2012, Jo-Ann Choate was named the Carbon Trading Program Director for the National Association for State Community Service Programs (NASCSP).  Under Jo-Ann’s direction, NASCSP signed up 17 states to participate in the NASCSP Carbon Trading Initiative.2 NASCSP worked with First Environment for carbon verification and JAI Software for software development and consulting services.  As the Lead Developer of the Energy Data Repository, I already had significant experience with the process.  Under NASCSP, I lead an effort to expand the Energy Data Repository software to allow for multiple states to provide data to a nationwide repository.  The Carbon Data Repository (CDR) was the result of that effort.  The CDR allows multiple organizations to contribute to a central repository of energy data for aggregating that data to quantify the amount of CO2 emissions to be sold.  The CDR tracks where every ton of CO2 originated and how it was aggregated for sale.  In December 2015, a Project Document for the NASCSP project was tentatively approved. This Project Document allows for the sale of carbon offsets for any state in the United States and any US territory.

How Does It Work?

The description of the Weatherization Assistance Program from the US Department of Energy states:

The U.S. Department of Energy (DOE) Weatherization Assistance Program provides grants to states, territories, and some Indian tribes to improve the energy efficiency of the homes of low-income families. These governments, in turn, contract with local governments and nonprofit agencies to provide weatherization services to those in need using the latest technologies for home energy upgrades. Since the program began in 1976, DOE has helped improve the lives of than 7 million families by reducing their energy bills. 3

Weatherization Programs from utilities and other programs throughout the country provide the same service, weatherizing homes so that the home uses less energy.

By reducing the amount of fuel needed by these homes, the Weatherization Programs are also reducing the amount of CO2 produced.  Since these programs can track how much fuel is saved per home, there is an opportunity to quantify the amount of CO2 being saved and sell them on the Voluntary Carbon Market.

Once the Carbon Offset has been verified by a third-party auditor, the Carbon Offset can be placed on the Voluntary Carbon Market for sale to other companies.  It is this verification process that makes the Carbon Offsets created by the Weatherization Program so valuable and sought after.  Any company investing in Carbon Offsets created via this programs can be assured that the offsets they are purchasing are real and monitored appropriately.  There is an additional benefit that makes these offsets more valuable as well.  The fact that the funds are going to be reused to weatherize more homes gives these credits a humanitarian benefit as well.

The funds provided by the Carbon Offsets get returned to the Weatherization Programs to be reinvested into weatherizing additional homes.  The sale of the Carbon Offsets does not stop after the first year.  The annual savings of carbon offsets can be verified each year for up to 20 years.

Collecting and Maintaining Data

General Data Requirements

A very important part of this processing is the collecting and maintenance of the data required to continue selling the carbon long-term.  There are certain pieces of data that must be collected for a sale to occur.  At a minimum, this data includes:

  • Address of the building being weatherized.
  • The complete pre-retrofit energy audit with the date that the energy audit was performed.
  • List of measures that were installed as part of the project.
  • Verification that the building was occupied at the time of the energy audit.
  • Proof that the homeowner has agreed to allow the sale of the carbon offset.
  • Heating Degree Day and Cooling Degree Day data for the region where the building is located.
  • The primary fuel type of the building.
  • The amount of fuel used annually prior to weatherization as measured by a DOE approved energy audit.
  • The estimated amount of fuel used annually after weatherization as measured by a DOE approved energy audit.
  • The percentage savings attained by the project.
  • The size of the building measured in ft2 or m2.
  • The date that the Final Inspection was performed on the building.

Any buildings that are included in a carbon offset sale must maintain this information for as long as the building is included in carbon offset sales.  Therefore, if the building is included for the full 20 years, then this data will need to be maintained for that entire 20 years.

Additionality

The Verified Carbon Standard requires proof that the only way these energy savings would have occurred is with the direct involvement in the Weatherization Assistance Program.  To meet this guideline, there is a concept called ‘additionality’.  This is basically a way to prove that the only way a certain level of energy savings would be achieved is because of the weatherization program.

To meet this guideline, the program needs to provide data for homes that were NOT weatherized.  By performing an analysis, a value can be determined that states (with 90% accuracy), the upper-bounds of what a building could save WITHOUT weatherization activities.  So, for example, it may be determined that all non-weatherized homes have energy savings of 6%.  This means that, to be included in the program, any building must have a savings amount higher than 6%.  If a building got less than 6% savings from being weatherized, then there’s no way to prove that the savings came from the weatherization project.  The homeowner may have just saved energy on their own.

Efficiency of Scale

A big detractor from the ability to sell carbon offsets on the Voluntary Carbon Standard is the validation and verification process that carbon offset sellers must go through to do the sale.

The first step in the process is to create a ‘Project Document’ that must be validated by a third-party validation company.  The project document explains exactly how the program will work, including things like:

  • Who is in control of the preserved data and how is it being preserved.
  • The process used to collect the data. For example, which entity goes out and performs the audit?
  • The process for aggregating all the data together into a carbon offset sale.
  • The calculations that will be used to estimate the carbon savings.

Once the Project Document has been certified by the validator, then the next step in the process is to get a batch of carbon offsets verified for sale.  This means that a third-party verification company reviews the data that comes in, verifies that it meets the data requirements specified in the project document, and verifies that the number of carbon offsets created are accurately measured.

This is a long process and requires an investment of money at each step.  The Project Document validation requires a sizable amount of money, but is only required one time for the life of the project.  The verification process is an activity that must occur each time a sale is made.  Due to the expense of the validation and verification processes, it is more cost effective if you have many buildings to be included in one project.

I enjoyed working on these projects and it would be exciting if other organizations would get involved in similar projects. These projects have the potential to provide a huge influx of money into the weatherization program.  And, since the process would be the same (or very similar) for non-low-income buildings, there’s potential for this project to serve as a framework for other demographics to supplement energy investments in residential buildings as well.

References

  1. Quimby, Beth. “Chevrolet deal drives Maine Low-Income Weatherization.” Portland Press Herald. 22 February 2011. Web. 18 February 2017. http://www.pressherald.com/2011/02/22/chevrolet-deal-drives-maine-low-income-weatherization_2011-02-22/
  2. Gerdes, Justin. “Using Carbon Credits To Pay For Energy Retrofits.” Forbes. 25 September 2012. Web. 20 February 2017. http://www.forbes.com/sites/justingerdes/2012/09/25/using-carbon-credits-to-pay-for-energy-retrofits/#1460ffae32ed
  3. “Weatherization Assistance Program.” gov. Department of Energy, n.d. Web. 20 February 2017