First off, I apologize for the rather long-winded comments, but after having reviewed the proposed changes to the EA Credit: Green Power and Carbon Offset provisions, I believe there are several areas that require serious attention and illustrate USGBC’s lack of understanding of Renewable Energy Certificates (RECs) and carbon offsets. Left unchanged, these changes could result in LEED certification being more expensive to achieve and may discourage participation from international users.

I. Exclusion of Carbon Offsets as a Means of Offsetting Scope 2 Emissions

While I understand that some companies prefer to purchase green power, in the form of RECs, to address their Scope 2 emissions, I do not understand why USGBC has excluded carbon offsets as a means of addressing Scope 2 emissions. Given that it is irrelevant from the point of view of mitigating climate change where greenhouse gas emissions are reduced/avoided/sequestered, it does not make sense to limit the application of carbon offsets to just Scope 1 emissions. This is recognized throughout the voluntary carbon market – as evidenced by thousands of companies that offset their scope 2 emissions with carbon offsets - and even in the context of LEED, as demonstrated by numerous cases where USGBC has permitted, through the alternative compliance path, companies to use certain carbon offsets against Scope 2 emissions to earn Green Power points.

Furthermore, I feel it is peculiar to require international projects that wish to address their Scope 2 emissions to use RECs, which are inherently a U.S.-based instrument. RECs are not well known outside the United States and are not a global tradable environmental instrument. For these reasons, I feel that left as is, this provision would make it unnecessarily difficult for international projects to attain Green Power credits.

Acknowledging USGBC’s desire to promote grid-connected renewable energy within its Green Power and Carbon provisions, I would urge USGBC to allow the application of carbon offsets against Scope 2 emissions, however limit the type of offsets used to those generated by grid-connected renewable energy. This is in line with the intent of Green Power credits, as such offsets would encourage the development and use of grid-connected, renewable energy technologies on a net zero pollution basis. They also have the added benefit of ensuring an incremental and fully additional increase in renewable energy capacity and greenhouse gas emissions reductions. Lastly, such a provision would allow U.S. projects that prefer to use offsets over RECs to do so – while supporting grid-connected renewable energy – and provide international projects an option for using an instrument that is more global in nature.

II. Redundancy of Gold Standard and Green-e Climate

USGBC has modified their rules to only allow carbon offsets that are certified to the Gold Standard or are Green-e Climate approved. The Center for Resource Solutions’ Green-e Climate program already endorses the Gold Standard so mentioning the two side-by-side seems redundant and confusing.

I propose USGBC either:

• Identify a positive list of acceptable offset standards on their own, using the standards endorsed by the International Carbon Reduction and Offset Alliance (ICROA) as a guide; or
• Make reference only to Green-e Climate.

III. Requirement that All U.S. Projects Must Use U.S.-based Offsets

USGBC is proposing to limit U.S. projects to U.S.-based carbon offsets. Again, this provision is inconsistent with the fact that from the point of view of mitigating climate change, it is irrelevant where greenhouse gas emissions are reduced/avoided/sequestered. The carbon offset market is designed to put a price on greenhouse gas emissions and provide an economic incentive to reduce emissions, beginning with the lowest-cost opportunities. By limiting U.S. projects to U.S.-based offsets and therefore a smaller pool of lower cost emission reductions, the USGBC is in effect increasing the cost for projects to attain LEED certification.

Furthermore, carbon finance is an invaluable source of financing for sustainable development in low and middle-income countries – whether it is for financing life-saving fuel efficient cookstoves or financing much needed reforestation. USGBC’s proposal to limit U.S. projects to U.S.-based carbon offsets would run counter to the originally stated purpose of carbon finance, which is to assist industrialized countries in fulfilling their emission reduction obligations as cost-effectively as possible in exchange for the transfer of investment to developing countries for the purpose of reducing GHG emissions and promoting sustainable development.

As such, I propose that USGBC allow the use of carbon offsets from projects anywhere in the world in an effort to reduce the cost of LEED certification, increase LEED participation and promote sustainable development worldwide.

IV. Requirement that All International Projects Must Use CDM-approved Offsets

Again, USGBC is proposing to limit the use of carbon offsets – this time in the context of international projects – in a way that seems arbitrary and inconsistent with the basic principles of climate science. While, on its surface, I understand why USGBC may think it is appropriate to limit international projects to CDM-approved offsets, in practice this provision makes little sense and will only hinder the carbon offset market and LEED participation.

CDM-approved offsets (otherwise known as CERs) are meant to be used, at least in the first instance, by regulated entities under the Kyoto Protocol. These entities are generally in industrialized countries, excluding the US due to their decision not to ratify the Kyoto Protocol. It does not, however, stand to reason that just because CERs are not generally used by US firms, they are used internationally, across all other countries. Many international LEED projects can be found in Asian countries, for instance, that are not signatories of the Kyoto Protocol and therefore are not normal consumers of CERs. Limiting all international projects to only CDM-approved offsets would therefore be like ‘trying to put a square peg in a round hole’.

Furthermore, CERs trade at a premium to offsets of equal quality in the voluntary carbon market – due to the compliance-driven nature of CER demand - and therefore limiting offset use to CERs among international projects would dramatically increase the cost of LEED certification and decrease LEED participation.

Finally, by limiting international projects to CDM-approved offsets, USGBC would generally forgo the opportunity to support small-scale, community and innovative emission reduction projects that characterize the voluntary carbon market and the standards that support it. The Gold Standard, for example, which is known for its emphasis on co-benefits and used almost exclusively outside the US, would not be eligible for use by any LEED projects under these proposed provisions.

For the reasons mentioned above, I urge USGBC to allow the use of carbon offsets certified to any one of the standards agreed upon under Comment II (see above).