Month: November 2021

Why COP26’s endorsement of carbon credit markets is a positive move

One world sign

COP26 negotiations surfaced both praise for and criticism of the role carbon markets can play in achieving the Paris Agreement climate objectives. Some environmental advocates at the recent meeting, including Greenpeace, made clear their strong disapproval of carbon credits and warned that these markets could undermine global climate goals. Such positions can result in either/or assumptions—either carbon markets or carbon reductions. However, such framing presents a false dichotomy and risks abandoning a powerful emissions mitigation tool at a time when we must be maximizing all options in the ‘climate change toolbox.’ The evidence shows that carbon markets have the potential to significantly accelerate and reduce the costs of global emissions reductions. That understanding led negotiators in Glasgow to finalize rules to enable international trading of carbon credits. Despite the challenges facing carbon credit markets, we believe that, properly implemented, they are a critical component of any credible climate strategy that’s committed to achieving global net zero emissions. This blog outlines the value that carbon credits and markets have for reaching that goal.

Carbon Credits Will Be Necessary to Achieve Net Zero Emissions

Avoiding the worst impacts of climate change will require that, after maximizing emissions reductions, all residual emissions must be balanced with carbon removals annually by 2050. The SBTi Net-Zero Standard has made clear that corporates setting net zero targets must also commit to neutralizing residual emissions with carbon removals. In short, reducing emissions alone won’t get us to the ultimate goal. Naturally, ensuring adequate neutralization of remaining emissions will require scientifically rigorous methodologies for quantifying and verifying removals, which will build off of existing carbon credit frameworks.

Carbon Credits Must Complement a Strategy to Reduce Absolute Emissions

Just as emissions reductions alone won’t achieve the net zero goal, neither will carbon credits. Environmental NGOs, including Greenpeace, governments, and other members of civil society are right to be skeptical of organizations using carbon credits to avoid aggressively reducing their internal emissions. A credible and adequate net zero strategy must prioritize operational and value chain emissions reductions before pursuing external emissions reductions. Purchasing carbon credits to address unabated emissions is not on its own a climate strategy, for countries or corporates. Investments in external emissions reductions projects must always be part of a larger strategy that prioritizes internal emissions reduction.

Carbon Credits Align Corporate Strategies with Global Climate Needs

Conversations ahead of and during COP26 emphasized that achieving global net zero requires scaling up financing to support nature-based emissions reductions and developing carbon removal technologies. The release of SBTi’s Net-Zero Standard in the lead-up to COP26 clarified the pivotal role that private companies should play in providing this finance by investing in “beyond value chain emissions reductions,” including in the form of carbon credits. It makes clear that corporate climate leadership means seeking opportunities to invest in mitigation beyond an organization’s own carbon footprint. The standard states: 

Decarbonizing a company’s value chain in line with science and reaching net-zero emissions by 2050 is increasingly becoming the minimum societal expectation on companies. Businesses can play a critical role in accelerating the net-zero transition and in addressing the ecological crisis by investing in mitigation actions beyond their value chains.

These investments absolutely cannot replace or delay setting and pursuing deep emissions cuts, but they do ensure that corporate strategies support the global objective of net zero.

Credible, Transparent Accounting Is Critical to Carbon Markets’ Success

The Article 6 negotiations at COP26 laid the groundwork for robust accounting associated with international carbon trading. Any country that exports an emission reduction must “correspondingly adjust” its own emissions inventory to ensure no double-counting of emissions reductions. A “Supervisory Body” has been designated the responsible party for approving carbon credit methodologies, and it must create a high standard for which projects will be allowed in the market. These details are critical to addressing the criticism that carbon markets do not deliver the stated emission reductions due to inadequate accounting regimes. 

The voluntary carbon market is also on track to continue its trend of consistent improvements in credit quality and accounting. Scientific advances around greenhouse gas quantification allow project developers to consistently improve the monitoring, reporting, and verification of credits. Stakeholder demands for more transparency in the use of carbon credits to achieve climate targets also encourages companies to publicize the details of their carbon investments. Transparent climate strategies send long-term demand signals for high-quality credits, which builds market certainty and allows project developers to make the necessary investments to bring high-quality credits to market.

Both/And Solutions Offer Near-Term and Long-Term Benefits

COP26 negotiations made clear that carbon credits will play a role in achieving our global climate objectives. While carbon removals are needed to meet net zero, the robust quantification methodologies offered by carbon credit standards are essential to ensuring that emissions are adequately neutralized around the globe. Well-designed carbon markets can leverage near-term governmental and private sector climate targets to support long-term emissions reductions in hard-to-abate sectors, particularly over the coming decades. These investments must be within a comprehensive strategy that is underpinned by robust accounting and complemented by public reporting on progress toward internal reductions.

GreenBiz VERGE – Ask an Expert: Advancing Fleet Electrification with 3Degrees

3Degrees’ Dave Meyer (Director of Transportation Markets) and Ryan Pawling (Director of Business Partnerships, Energy and Mobility) provide practical guidance on fleet electrification, including information on how to access the Low Carbon Fuel Standard and other market-based incentive programs at GreenBiz Group’s VERGE 21 conference.

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What you need to know about the first net-zero standard

In late October, after more than a year of anticipation, the Science Based Targets Initiative (SBTi) released the world’s first net-zero standard (the SBTi Net-Zero Standard). This is exciting news for many organizations who have been awaiting additional guidance as they consider their own climate action plans, and we applaud SBTi for this publication. In this blog, we’ll provide a brief summary of the SBTi Net-Zero Standard’s key components, discuss the significance of its publication, and highlight a few areas where there is remaining work ahead in the broader net-zero space. 

Key Components of the SBTi Net-Zero Standard

The SBTi Net-Zero Standard offers stakeholder-driven consensus on key pillars of a net-zero goal, which are outlined in the table below.

Component SBTi Net-Zero Standard Details 
Definition of net-zero Reducing Scope 1, 2, and 3 emissions to zero or to a residual level that is consistent with reaching net-zero emissions at the global or sector level in eligible 1.5°C-aligned pathways, then neutralizing any residual emissions in the net-zero target year and any greenhouse gas (GHG) emissions released into the atmosphere thereafter.
Required targets Organizations must set and meet the following targets as part of an SBTi-validated net-zero goal: 

  • Near-term targets, which must be achieved within five to ten years and encompass 95% of an organization’s Scope 1 and 2 emissions. At least 67% of Scope 3 emissions must be included, as well, if an organization’s Scope 3 emissions are greater than 40% of total emissions. Depending on the timeframe and level of ambition selected, emissions must be reduced by 2.5 to 4.2% per year. 
  • Long-term targets, which must be achieved by 2050 or earlier and encompass 95% of an organization’s Scopes 1, 2, and 3 emissions. Most organizations will need to reduce 90% of their total base year emissions.

It’s important to note that SBTi’s Net-Zero Standard does not permit the use of carbon credits (also known as offsets) in any form to meet either near-term or long-term targets. See below for further information about the recommended uses of carbon credits. 

Required neutralization After an organization meets its long-term target, to be considered “net-zero” it must neutralize remaining carbon emissions (also called “residual emissions”) with permanent carbon removals, including in the form of carbon credits.
Recommended actions beyond value chain mitigation  SBTi recommends that organizations: 

  • Invest in emissions reductions and removals outside of an organization’s direct and indirect footprint (which SBTi terms “beyond value chain mitigation”). SBTi will be developing further guidance throughout 2022 but advises priority focus on securing and enhancing carbon sinks in the near term. 
  • Disclose neutralization milestones such as near-term investments in removals technologies that show commitments towards neutralizing unabated emissions once long-term targets are achieved. 


Significance of the SBTi Net-Zero Standard

Publication of the SBTi Net-Zero Standard is a significant step forward in the comprehensive effort to limit global temperature rise to 1.5oC for three reasons. 

First, the standard provides a much-needed unifying definition of the term “net-zero” for the private sector. As a global collaboration between CDP, the United Nations Global Compact, the World Resources Institute, and the World Wide Fund for Nature, the SBTi has strong authority in the climate space to put forward a definition that will directly impact how organizations approach their climate and sustainability strategies. By providing a definition that offers needed goalposts for the journey to net-zero, SBTi begins to alleviate the painful “open to interpretation” definition that presided over the private sector. 

Second, the standard clearly outlines the level of ambition needed from organizations to align with global net-zero. Developing plans to meet a 2050 goal is unprecedented for many organizations, and ensuring those plans enable emission reductions in line with limiting global temperature rise to 1.5oC will require thoughtful leadership and tactical action. While SBTi does not provide a playbook for how organizations can achieve these emission reductions, the SBTi Net-Zero Standard is clear on the magnitude of emission reductions that are required through near-term and long-term targets. SBTi seems to purposefully delegate the creative and strategic implementation planning required to achieve these targets to the sectors and organizations themselves. 

Finally, the SBTi Net-Zero Standard sends the clear message that the first priority for any organization looking to meet a net-zero goal is absolute emissions reduction. SBTi provides concrete guidance that most organizations will need to reduce their emissions by 90% to meet a long-term target as part of reaching net-zero. While SBTi does encourage organizations to show climate leadership by pursuing investments in emissions mitigation and climate innovation beyond their value chain, the new standard does not provide detailed guidance on technology choices, volumes, and implementation timelines. Publishing the first version of the standard while stakeholders are still assessing the role of beyond value chain interventions is further indication from SBTi that absolute emissions reductions cannot wait.

Remaining Work Ahead

While the SBTi Net-Zero Standard aligns organizations in a single direction for net-zero by mid-century, guidance for the private sector is not entirely complete as several important open questions remain. Specifically, organizations are seeking further guidance today on the appropriate role of climate investments to complement their absolute reduction targets and protocols for rapidly growing organizations to align with net-zero.

Investments in emissions reductions and removals outside of an organization’s value chain represent an impactful tool to achieve real and measurable greenhouse gas reductions. SBTi encourages organizations seeking to increase climate ambition to pursue these investments, and an SBTi co-founder has included it as a key way companies can ensure their net-zero targets are credible. However, the current standard does not offer detailed guidance on how these activities should be incorporated into a larger strategy that complements near- and long-term reduction targets.

“Decarbonizing a company’s value chain in line with science and reaching net-zero emissions by 2050 is increasingly becoming the minimum societal expectation on companies. Businesses can play a critical role in accelerating the net-zero transition and in addressing the ecological crisis by investing in mitigation actions beyond their value chains.” – SBTi Net-Zero Standard

As more organizations seek opportunities for near-term climate action, stakeholder-driven initiatives and standards can play a critical role in guiding the private sector on how best to align additional investments with net-zero goals. In the near-term, existing carbon credit protocols offer a comprehensive blueprint for how to quantify and verify greenhouse gas reductions. Additional initiatives, like the Taskforce on Scaling the Voluntary Carbon Market, are underway to ensure this market is set up to deliver continued impact over the next decades. For carbon removals, guidance on how to integrate these projects into net-zero aligned strategies–including how to vet emerging technologies and protocols, and appropriate volumes and timelines for implementing these additional investments–will go a long way in driving corporate action. 

Another key area for development within the net-zero space is accessibility for climate-conscious, high-growth organizations. Many growing organizations are eager to root their growth in climate-committed foundations, but cannot practically implement a net-zero framework that requires absolute emission reductions prior to executing their growth plans. Growing organizations require a unique approach to target-setting that recognizes the important role they play in developing the innovative approaches and technologies needed to achieve net-zero, without allowing unfettered growth in emissions. Such a framework could, among other things, recognize when an organization’s growth results in decreased market share for higher-emitting competitors. In the absence of such a framework, rapidly growing organizations are unable to receive the appropriate  level of recognition for climate action compared to steady state organizations that reduce their emissions from a clearly established baseline. 

While standard-setting organizations continue working to drive industry-wide consensus on net-zero-aligned carbon credit investments and pathways for rapidly growing organizations to meet net-zero, 3Degrees will continue to work closely with our clients to develop impactful climate solutions that fit each organization’s unique circumstances and needs.

No matter where an organization may be on its climate journey, there are critical steps that every organization can take to address its climate impact: quantify their emissions, set reduction targets, implement emission reduction projects, and pursue opportunities to maximize their climate impact beyond their value chain.

If you have questions about the SBTi Net-Zero Standard, or are interested in support to accelerate your energy and climate strategy, feel free to reach out to us. We’re happy to help.

From Carbon Footprinting to Net-Zero Emissions: Gaining Momentum for Meaningful GHG Reduction (video)

In this joint webinar with CDP, Elizabeth Geller, Director, Energy and Climate Practice at 3Degrees interviews Audrey Waldrop, Sustainability Manager at Blue Bottle Coffee to explore Blue Bottle Coffee’s approach to quantifying its emissions and its evolving emissions reductions strategy. This one-hour webinar recording provides practical guidance for how organizations can get started, make quick progress, and develop a roadmap for deep, long-term GHG reduction.

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EV charging infrastructure credits are speeding up the transition to clean transportation

EV charging

Widespread adoption of zero-emissions vehicles (ZEVs) could assist many regions in achieving robust greenhouse gas mitigation goals. Government mandates, market-based incentive programs, and innovative technologies have been building momentum, and the transportation sector seems to have reached a tipping point. To meet its ambitious targets, the United States needs a solid suite of electric vehicle (EV) charging and refueling infrastructure. So far, California is the leading state in the deployment of EVs, and has set aggressive climate goals. By 2025, the state hopes to have adequate infrastructure to support 1.5 million ZEVs, and provide 250,000 battery EV chargers.


Clean transportation is developing nationwide, but is particularly present in California due to both the proliferation of EV charging infrastructure and the availability of EV purchase incentives. There is wide agreement that the availability of clean energy infrastructure is required to enable wide-scale EV adoption. To further catalyze the rapid expansion of EV charging stations in California, a ZEV infrastructure crediting provision was added to the state’s Low Carbon Fuel Standard (LCFS) in 2018. 

While most credits generated under the LCFS are related to fuel dispensed, the infrastructure provisions enable entities to generate credits for available fueling capacity instead of actual fueling activity. The infrastructure provision covers both Hydrogen Refueling Infrastructure (HRI) and Direct Current (DC) Fast Charging Infrastructure (FCI), also known as Level 3 chargers. 

Levels 1 and 2 charging use a universal connector that can be plugged into any EV, and the majority of consumer EV owners do their charging at home using Level 2 chargers, which are relatively slow and inexpensive. Most often, DC fast chargers — which charge an EV battery in about half an hour — can be found at commercial centers, or along major travel corridors. 

Fast charging provides the fastest available fill-up, but not every EV model is equipped for it. DC fast charging uses three different connector systems: CHAdeMO, CCS Combo, and Tesla Supercharger. When installing an EV infrastructure, it is important for station owners to consider the type of charger they offer. In some cases, the amount of possible FCI credits may be limited if only one charger type is available at a site. Understanding what variables to consider in an installation project will help your organization maximize its cost savings.


The infrastructure crediting provisions come from an attempt to solve a chicken-or-egg problem. While consumers want assurance that they will have access to charging stations in a variety of locations, infrastructure owners want to know demand will exist to drive utilization. The LCFS Charging Infrastructure crediting provisions ensure infrastructure owners are able to recoup their investments by providing a revenue stream for fueling stations based on the capacity made available, rather than the actual fuel dispensed. infrastructure crediting process

Incentivizing the expansion of charging infrastructure is critical during this early stage of ZEV adoption. As fueling activity increases, the number of credits generated under the infrastructure provision decreases, until eventually all of the credit activity is derived from actual fueling. Each site has a fueling capacity limit — the maximum is 1,200 kg/day for HRI stations, and between 2,500 kw for FCI stations, where each charger at the FCI station must have a nameplate capacity of between 50 kW and 350 kw. 

The HRI station’s fueling capacity is generated by studying factors such as time between fills, hourly distribution, and mass flow fueling rate. Crediting for HRI stations is based on 100% of the station capacity while FCI credit generation depends on charger capacity and covers 10-20% utilization. Infrastructure credits can be generated for five years at FCI stations and fifteen years at HRI stations.


There are limits to the number of facilities that can be approved by California Air Resources Board (CARB). As of November, 2021, there were 62 HRI stations and 1,314 FCI stations at a total of 259 sites across California. Applications for new stations can be accepted as long as the estimated potential HRI and FCI credits from all approved stations does not exceed 2.5% of LCFS deficits in the prior quarter. 

In addition to the global program requirements, individual stations must be publicly accessible 24 hours a day. An eligible station cannot have any gates or codes to access, and should not require any special training to be used, and the site must accept major credit and debit cards at the point of sale terminal. 

The application and documentation process can be complex and onerous. Fuel station owners must report fuel transactions on a quarterly basis to CARB, they must include cost and revenue data in their quarterly reports, and there are additional annual reporting requirements. With so many specific rules, infrastructure crediting can be difficult to navigate. Working with an advisor like 3Degrees can help alleviate the administrative burden of program participation while ensuring the highest possible return. For more information, please contact us here.