This blog was published on 30th November 2023.
Carbon finance is generating much excitement in the distributed solar industry though the opportunity remains tantalisingly out of reach for most companies. In response to this interest, GOGLA has been hosting a six-part webinar series for our members, with a) the aim of increasing our collective understanding of this potential revenue stream and b) exploring the requirements for the off-grid solar (OGS) sector to create and sell high-integrity offsets.
During the first session, expert panellists shared an introduction to carbon markets and the cost, challenges, and opportunities they present for off-grid companies. In the second session of the series, we dived into the world of methodologies and gave insights into the certification process. We heard from one of the leading agencies as well as two successful examples in the field. Here is a recap of the top insights:
1. There are a variety of methodologies available and appropriate for off-grid solar companies to define and measure carbon offsets.
The most relevant methodologies are those developed for the CDM, such as AMS-I.A., AMS-I.F. and AMS-I.L. Most of the attendees are aware of some, or all, of the most common methodologies used by the off-grid sector to date. Additionally, methodologies in support of emissions reductions in agriculture through off-grid solutions are also being used and developed.
2. As well as demonstrating CO2 avoidance, the Gold Standard also requires emissions reductions to positively impact two other SDGs but automatically assumes that there is additionality in the case of off-grid solar adoption.
Hugh Salway from the Gold Standard advised that all projects approved for carbon credits by the standards agency are required to serve SDG 13 and two other SDGs as a minimum, ensuring that they strive for additional impact. Stakeholder inclusivity, safeguarding and demonstration of real outcomes are also required to ensure credibility next to additionality. However, for projects in Small Island Development States (SIDS) or Least Developed Countries (LDCs), or projects on a micro-scale, such as off-grid solar, additionality is automatically assumed.
3. Namene has successfully monetised carbon finance to help them distribute solar lanterns to hard-to-reach communities and people living under the poverty line.
Namene, an off-grid solar company operating in four countries in Southern Africa, has managed to distribute one million pico-solar lights with the support of carbon finance. The company obtained carbon credits using the ASM-III A.R that predicts a fixed Emissions Reduction (ER) Value of 92kg per light per year. This has helped them to provide lighting for millions of people living under the poverty line and, cumulatively, enabled households to save millions of dollars on fossil fuel costs. However, obtaining carbon credits involved substantial up-front costs and required dedicated efforts and innovation in business models, sales, and monitoring processes.
4. Research from A2EI in Nigeria shows that the potential for carbon finance to displace fossil fuel generators is huge and they are exploring how to update current diesel displacement methodologies.
In countries such as Nigeria with a highly unreliable grid, diesel gensets fill the streets. A2EI provides solar generators as a clean alternative for the fossil fuel powered generators. A study conducted in collaboration with the Nile University that monitored over 300 fossil fuel gensets showed that replacement with a solar alternative can save up to 3600kg of CO2 per year. This is significantly more than the emissions reduction estimated in current methodologies. A2EI are working with standards bodies to update the methodology around diesel displacement via off-grid solar.
5. GOGLA has also been in discussions with standards agencies to encourage them to incorporate black carbon into CO2e calculations, so that the full emissions avoidance of switching from kerosene lanterns to off-grid solar can be accounted for.
GOGLA advised that they are also working to expand the adoption of the methodology used by in the GOGLA Standardised Impact Metrics for Off-Grid Solar Energy for the displacement of kerosene. The GOGLA methodology has been developed with leading researchers from USC Berkely and the Schatz Energy Research Center and incorporates black carbon which has a particularly high warming potential and CO2 equivalency. While several funds and funders accept this methodology, it has not yet been adopted by carbon credit agencies.
What’s Next? The third webinar in the Carbon Finance Series will take place on 14 December at 14 pm CET. Keep an eye out for the GOGLA Member Briefing to register.
We would like to thank our partners and speakers – Catherine Allinson, Director, Future Earth, Hugh Salway Senior Director, Market Development and Partnerships, Gold Standard, Bernardo Lazo Head of Climate, Namene, Thomas Gottschalk, Managing Director, Access to Energy Institute and Susie Wheeldon, Head of Communications and Insights, GOGLA – for their insightful contributions towards the second webinar in the series.
The Carbon Finance webinar series is being funded by GET.invest, a European programme that mobilises investment in renewable energy, supported by the European Union, Germany, Sweden, the Netherlands, and Austria.