The CarbonNeutral Protocol January 2020 The global standard for carbon neutral programmes The CarbonNeutral Protocol | January 2020 Natural Capital Partners works with and supports the following internationally recognised bodies: BUSINESS RENEWABLES CENTER A ROCK Y MOUNT AIN INS TITUTE INITIA TIVE PROJECT DRAWDOWN Cover photo Meru and Nanyuki Community Reforestation, Kenya: Carbon finance helps empower farmers to build sustainable livelihoods through community reforestation activity 2 Table of Contents Glossary of Terms .................................................... 4 Appendices ............................................................ 54 Preface .................................................................... 16 1. Guidance: Define .......................................... 55 1.1. Corporate value chain (Scope 3) Introduction ............................................................ 20 accounting and reporting .................................. 55 Purpose ............................................................................ 21 1.2. Selecting boundaries for “cradle-to-customer” Principles ......................................................................... 21 CarbonNeutral® products ................................. 57 Structure of The CarbonNeutral Protocol ............... 22 1.3. Using environmental product declarations Development of The CarbonNeutral Protocol ....... 22 (EPDs) for CarbonNeutral® products .............. 58 Relationship to other standards, 1.4. Treatment of assets rented or leased to protocols and broader context. ................................. 22 customers of CarbonNeutral® entities ........... 61 About Natural Capital Partners .................................. 23 Acknowledgements ....................................................... 23 2. Guidance: Measure ....................................... 61 Use, legal disclaimer and copyright .......................... 23 2.1. Treatment of renewable electricity Awards .............................................................................. 23 in Scope 2 emissions .......................................... 61 2.2. Market-based Scope 2 reporting declaration CarbonNeutral® Certification ............................... 24 to support CarbonNeutral® certification ........ 62 The Five Steps to Achieving 2.3. Energy Attribute Certificate (EAC) application CarbonNeutral® Certification ...................................... 25 protocol for third-party assessment partners .. 62 Step 1: Define ................................................................. 26 2.4. How to report GHG emissions from Step 2: Measure ............................................................. 32 green gas certificates .......................................... 62 Step 3: Target ................................................................. 35 2.5. Calculating the climate impact of aviation ......... 65 Step 4: Reduce ............................................................... 37 2.6. Determining aviation emissions Step 5: Communicate ................................................... 40 from flight distances ........................................... 67 2.7. Treatment of recycled waste – Technical Annexes ................................................. 42 substitution within GHG assessments ........... 68 A. Certification specific requirements ...................... 43 2.8. Water consumption and B. Use of the CarbonNeutral Certification Logo .... 44 waste water treatment ....................................... 68 C. Approved Environmental 2.9. Quality assurance and verification .................. 68 Instrument Standards .............................................. 45 2.10. How to report GHG emissions D. Recognised Non-carbon from carbon neutral services within Accounting Standards.... ......................................... 47 a corporate GHG inventory .............................. 70 E. GHG Emissions Assessments ................................. 48 F. CarbonNeutral Certification Form ......................... 50 3. Guidance: Target ........................................... 71 3.1. Setting internal reduction targets ................... 71 3.2. Climate (or carbon, or net) positive ................ 71 4. Guidance: Reduce ......................................... 72 4.1. Emission reduction project types excluded under The CarbonNeutral Protocol ................ 72 4.2. Evaluating internal GHG reduction projects ..... 73 4.3. Insetting ................................................................. 75 3 carbonneutral.com Acre Amazonian Rainforest Conservation Portfolio, Brazil: The three projects work with communities and local groups to help protect ecosystem services while providing alternative models of economic development which avoid destruction of the forest Glossary of Terms Glossary The CarbonNeutral Protocol | January 2020 Glossary of Terms The term ‘carbon neutral’ and many of the concepts associated with it have been in common usage for over 20 years. However, they may still mean different things to different audiences. This Glossary sets out the definitions of key terms and concepts as they apply toT he CarbonNeutral Protocol to support the award of the CarbonNeutral certifications and the use of the associated CarbonNeutral certification logo. Over time, we seek to reference definitions that are brought into common usage by respected independent third-party standards and by recognised scientific, academic and civil society organisations and coalitions. A Additional (also additionality): A criterion applied Assessment: The process of quantifying the GHG to GHG emission reduction projects, stipulating emissions for a given subject, using robust and that project-based GHG reductions should only transparent methods that can be replicated. be quantified if the project activity “would not have happened anyway”. I.e. the project activity Available (referring to data): Applied to primary (or the same technologies or practices it employs) data, “available” means readily collectable, would not have been implemented and, that with at reasonable cost. Applied to secondary data, the project, emissions will be lower than without “available” means readily found in reputable, the project (Ref: The GHG Protocol for Project published sources such as those issued by Accounting). An Emission Reduction Project is said government departments, academic institutions, to be additional when it can be demonstrated that specialist research bodies and the secretariats in the absence of the availability of Carbon Finance of leading GHG standards and protocols. the project activity would not have occurred (the “baseline” scenario); and, such a baseline scenario Aviation Impact Factor (AIF): A term used in would have resulted in higher greenhouse gas The CarbonNeutral Protocol for the multiplier (GHG) emissions. Each eligible carbon accounting applied to the GHG emissions from aviation standard under The CarbonNeutral Protocol in order to take account of the wider impacts provides tools for how additionality at a project of aviation on climate. This includes but is level is tested and demonstrated. For further not limited to short or long-term impacts; discussion of this topic, see Annex C. from GHGs alone and others with global warming influence (for example, soot particles AIC: Aircraft (or aviation) induced clouds which have and aviation induced clouds); and, direct and a potential climate warming affect. SeeAppendix indirect impacts (for example, the interaction 2.5 for further discussion of this topic. of NOx with methane gases and ozone at high altitudes). See Appendix 2.5 for further discussion of this topic. 5 The CarbonNeutral Protocol | January 2020 Glossary of Terms B Baseline (also Baseline scenario): Baseline procedures: Methods used to estimate A hypothetical description of what would have baseline emissions. The GHG Project Protocol most likely occurred in the absence of any presents two optional procedures: the project-specific intervention to mitigate the impact of GHG procedure and the performance standard procedure. emissions. The baseline for a project activity is (Ref: The GHG Protocol for Project Accounting). the projected GHG emissions that are calculated to occur in the absence of the intervention. Boundary: The physical or spatial extent of the Baselines are established to determine subject – the entity, product or activity – i.e. the Additionality, and to calculate emission sites (including mobile sites such as vehicles) reductions associated with emission reduction involved. By way of example, the boundary might projects. For further discussion of this topic, encompass the office and vehicles of an entity, see Annex C. or the sites used for the manufacture, storage and transportation of a product. See Step 1: Define for further information of this topic with respect to CarbonNeutral® certifications. C Carbon: Shorthand term for all greenhouse Carbon markets: Carbon markets are used for gases recognised under the United Nations voluntary or compliance purposes. Voluntary Framework Convention on Climate Change. carbon markets refer to the collective transactions of carbon credits used by non-state entities to Carbon credit: A transactable, intangible achieve voluntary climate goals. Compliance carbon environmental instrument representing a markets refer to the governmental or sectoral unit of carbon dioxide-equivalent (CO2e) – schemes to reduce greenhouse gas emissions typically one metric tonne – created either by which enable