Frequently Asked Questions
Why did the California Registry start the Reserve?
How does the Reserve provide assurance to the public?
What is a GHG reduction project?
What are Carbon Reduction Tons (CRTs)?
What is a “vintage”?
Where can projects be located?
Who can register a project?
What kinds of projects does the Reserve accept?
What does “retired” mean?
What is “additionality”?
What does an independent third-party verifier do?
Why is independent third-party verification important?
How is the Reserve helpful to the environment?
How is the Reserve helpful to consumers, traders, investors, and exchanges?
What does it mean to be “carbon neutral”?
What is a “cap and trade” system?
How is the Reserve different than a cap and trade system?
Is the Reserve an exchange? Can I trade emissions on the Reserve?
Q: What is the Climate Action Reserve (the Reserve)?
A: The Reserve is a program of the California Climate Action Registry (California Registry) that registers and tracks voluntary projects that reduce emissions of greenhouse gases (GHGs) through a publicly accessible database.
Q: Why did the California Registry start the Reserve?
A: It was started to provide assurance to the public that registered GHG emission reductions associated with certain types of projects actually have occurred, have not been double counted or double sold, and are additional to business as usual, meaning that they would not have happened without the incentive provided by a GHG offsets market.
Q: How does the Reserve provide assurance to the public?
A: The Reserve provides a brand of high quality for any emission reduction activities registered in its database.
First, the Reserve develops very rigorous standards (known as protocols) for quantifying emission reductions using an open and public process to insure that calculations of emission reductions are accurate, conservative, and have environmental integrity. Project developers use these standards to report emission reductions from their qualifying activities. Accredited independent third-parties must then verify that projects have complied with the standards and to quantify the GHG emission reductions.
Once a project is verified, the developer’s account on the system is credited with the number of tons reduced from the project for a given calendar year. One ton of reduction generates one Carbon Reduction Ton (CRT, pronounced “carrot.”). Each CRT has a unique serial number which assures buyers that it cannot be double sold. Each serial number has imbedded information that identifies the project type, location, developer and year, so that the buyer knows what he/she is buying. All CRTs are tracked as they are traded and retired.
Detailed information about all protocols and verified projects is available to the public at www.climateregistry.org.
Q: What is a GHG reduction project?
A:A greenhouse gas reduction project is a specific activity that reduces emissions of GHGs or increases sequestration of GHGs in accordance with international principles. The reductions should be real, permanent, verifiable and additional. For instance, a project could include capturing and destroying methane that would otherwise be emitted to the atmosphere, or returning open lands to their native forested state.
Q: What are Carbon Reduction Tons (CRTs)?
A: A Carbon Reduction Ton or CRT (pronounced “carrot”) represents one ton of CO2-equivalent emission reduction or sequestration.
Q: What is a “vintage”?
A: Each CRT has a vintage. This is the calendar year in which the reduction actually took place. The vintage is included in the serial number.
Q: Where can projects be located?
A: Most projects can be located anywhere in the United States. However, forestry projects must be located in California under current rules.
Q: Who Can Register a Project?
A: A project can be registered by anyone who has legal title to the reductions. Typically this would be a property owner or a project developer.
Q: What kinds of projects does the Reserve accept?
A: Today, projects developed using the California Registry project protocols for livestock waste management (biodigesters), landfill methane capture and combustion, forest conservation (avoided deforestation), afforestation/reforestation, and forest conservation management can be registered in the Reserve. As project protocols in additional sectors are developed, they too will be eligible.
Q: What does “retired” mean?
A: Many people and businesses want to offset their GHG emissions for specific activities (for instance, vacation or business travel) or in total (to make claims about being carbon neutral). To do so, CRTs can be purchased and applied against some emissions. In so doing, the CRTs are ‘retired’ so that they cannot be used to offset any other emissions. The Reserve retires these CRTs by permanently placing them in a locked retirement account, thereby precluding their further trade to any other party.
Q: What is “additionality”?
A: Additionality is a concept from international GHG project accounting principles that requires that a project activity would not have occurred in the absence of a market for GHG emission reductions. The Reserve ensures that projects are additional by setting a performance standard that project activities reduce GHGs significantly more than standard practice in an industry and are not driven by regulatory or other requirements. Such performance-based project protocols are a well-recognized and accepted approach adopted by the International Standards Organization, the WRI/WBCSD International GHG Protocol, and others.
Q: What does an independent third-party verifier do?
A: A verifier functions much like a financial auditor when it conducts an annual audit of a company’s financial statements. That is, they independently review records, data, equipment, and activities to ensure compliance with a set of standards which, in this case, are the California Registry project protocols. At the end of the process, the verifiers are the ones who determine the number of GHG emission reductions attributable to the project. To ensure that they are truly independent from the projects that they verify, verifiers are checked for conflicts of interest and may not work with project developers with whom there is a conflict of interest. Verifiers are accredited and trained by California Registry with oversight by the State of California. A list of accredited verifiers is posted on our website (www.climateregistry.org/SERVICEPROVIDERS).
Q: Why is independent third-party verification important?
A: Not only is independent third-party verification considered to be best practice in international greenhouse gas accounting and consistent with the International Standards Organization and the WRI/WBCSD GHG Project Protocol, but it provides assurance to the public that the emission reductions associated with a project are real and not simply the unsubstantiated claim of a project developer.
Q: How is the Reserve helpful to the environment?
A: The Reserve ensures that the GHG emission reductions associated with projects are real, permanent, additional, and independently verified and that they have not been double counted or double sold. When a buyer of reductions registered in the Reserve use any tons to offset their own emissions, there is a true benefit to the environment. The Reserve ensures that there is environmental integrity when its reductions, or offsets, are used in a regulatory program.
The California Registry, through the Reserve, encourages people to directly reduce their own emissions as much as possible, by reducing consumption, using energy efficiently and other measures, and to only use emission reductions to offset their unavoidable emissions.
Q: How is the Reserve helpful to consumers, traders, investors, and exchanges?
A: Purchasers of CRTs can have confidence in the projects in which they are investing. A great deal of information about Reserve-registered tons is publicly available including the protocols and calculation methodologies, project descriptions, the developers, the verifiers and the process of verification. We strive to have a very open and transparent system as we believe that it is critical for credibility.
Q: What does It mean to be “carbon neutral”?
A: Carbon neutral means that an individual, organization, or company has inventoried the GHG emissions associated with their activities, reduced those emissions to the maximum extent feasible, and offset their remaining unavoidable emissions by purchasing and retiring verified GHG emission reductions such as the Reserve’s CRTs.
Q: What is a “cap and trade” system?
A: A cap and trade system is a market-based regulatory system in which a government entity caps the total emissions from a group of sources (typically of some type of air pollutant). Each source is given or allowed to purchase a number of allowances with the total number of allowances issued being equal to the cap. The number of allowances issued declines each year. The sources are then permitted to trade among themselves. Those that have made deeper reductions can sell their allowances to other sources that have made fewer reductions. In some cap and trade systems, the sources are also allowed to purchase reductions that are made by projects in unregulated sources outside of the system.
Q: How is the Reserve different than a cap and trade system?
A: The Reserve registers and tracks verified GHG emission reductions (CRTs) that have occurred voluntarily. Purchasers of these CRTs are not entitled to use them to meet a regulatory obligation, such as in a cap and trade program in California or anywhere else today, but instead apply them against their own emissions to reduce the climate change impact of their operations or activities, and support claims of being carbon neutral. It has yet to be determined whether CRTs may be used within a regulatory cap and trade program in California or anywhere else.
Q: Is the Reserve an exchange? Can I trade emissions on the Reserve?
A: An exchange, like the New York Stock Exchange, is a private, for-profit business where goods, stocks, commodities, or other assets are bought, sold or traded. The Reserve is not an exchange. It is a public, non-profit organization working on behalf of the environment that registers projects and tracks their associated emission reductions. It is not a place where anything is bought, sold, or traded. The actual sale or purchase of CRTs takes place directly between a buyer and seller outside of the Reserve. After a sale takes place, the parties inform the Reserve and the CRTs are moved from one account to another. In the market for any commodity, exchanges or brokers may offer their services to buyers and sellers to bring them together to transact sales. This is likely to happen in the market for CRTs as well, but it is not a service that the Reserve itself will offer.