The GHG Protocol for Project Accounting

Project Protocol - Introduction

The GHG Protocol for Project Accounting is a set of rules and guidelines that helps measure and report the reduction of greenhouse gas (GHG) emissions or the increase in removals and storage of these gases. These reductions come from projects designed to combat climate change.

Imagine different projects around the world trying to reduce the amount of harmful gases that contribute to climate change. The Project Protocol is like a universal rulebook that these projects follow to measure and report how much they are helping the environment.

Here are the key points:

  1. Development Process: The Project Protocol was created through a four-year collaboration involving many different people with expertise in climate change projects. Over twenty project developers from ten countries tested an early version of the protocol, and more than a hundred experts provided feedback.
  1. Objectives of the Project Protocol: The main goals of the Project Protocol are to:
    • Provide a trustworthy and clear way to measure and report GHG reductions from these climate change projects.
    • Improve the reliability of accounting for these projects by using common concepts and principles.
    • Create a common ground for coordination among various climate change initiatives and programs.
  1. Guidance and Principles: The Project Protocol outlines specific requirements for measuring and reporting GHG reductions. It also provides guidance and principles to help projects meet these requirements. While the rules are detailed, there is room for flexibility. This flexibility is necessary because different projects face choices that involve balancing environmental impact, program participation, development costs, and administrative challenges.
  1. Decision Making: The Project Protocol doesn’t favor any specific programs or policies. Instead, it allows users to make decisions about accounting based on their specific circumstances. This is because different climate change programs may have different goals and priorities, and the protocol respects these differences.

Who Can Use the Project Protocol?

The Project Protocol is like a rulebook, and it’s mainly written for people who develop projects that aim to reduce greenhouse gas (GHG) emissions. However, it’s also useful for those who manage or design programs and systems that include such projects, as well as for independent verifiers who check if these projects are doing what they claim.

  1. Who Should Use the Project Protocol?
    • Project Developers: Those creating projects to reduce GHG emissions.
    • Administrators or Designers: People managing or planning initiatives and programs involving GHG projects.
    • Third-Party Verifiers: Independent checkers ensuring that projects follow the rules.
  1. Who Shouldn’t Use It for What?
    • Corporate or Entity-wide GHG Reductions: If you want to measure emissions reductions for an entire company, a different set of rules (Corporate Accounting Standard) should be used.
  1. Why Do GHG Projects Exist?
    • GHG projects can be undertaken for various reasons, like earning recognized credits for meeting emission targets, gaining recognition under voluntary programs, or offsetting emissions to meet company goals. The Project Protocol is meant to work for all these purposes.
  1. Important Points to Note:
    • No Guarantees: Using the Project Protocol doesn’t guarantee a specific result or acceptance by GHG programs that haven’t officially adopted its rules.
    • Consultation is Encouraged: Users are strongly encouraged to talk to relevant programs or other interested parties for important decisions related to policies.
    • Be Transparent: If there’s no external guidance, users should aim to be as clear as possible when explaining their decisions and meeting the requirements of the Project Protocol.

Issues Not Addressed by the Project Protocol

  1. Sustainable Development:
    • What it means: Sustainable development involves making sure that projects not only reduce greenhouse gases (GHG) but also contribute positively to local development goals.
    • Why it’s not in the Project Protocol: The Project Protocol focuses specifically on counting and reporting GHG reductions. Since sustainable development is a broader concept, it’s not directly related to the accounting of GHG reductions, so the protocol doesn’t address it.
  1. Stakeholder Consultation:
    • What it means: In some projects, it’s important to listen to and address the concerns of the communities affected by the project.
    • Why it’s not in the Project Protocol: While talking to the people involved is crucial for project success, it’s not directly related to counting GHG reductions. Therefore, the Project Protocol doesn’t give guidance on stakeholder consultation.
  1. Ownership of GHG Reductions:
    • What it means: Sometimes, the reduction of GHGs might happen in places not directly controlled by the project developer. Ownership of these reductions can be legally important.
    • Why it’s not in the Project Protocol: The protocol doesn’t delve into ownership issues. If project developers need guidance on this, they are directed to Chapter 3 of the Corporate Accounting Standard.
  1. Uncertainty:
    • What it means: GHG accounting involves dealing with uncertainty about various factors, such as estimating emissions and measuring project impacts.
    • Why it’s not in the Project Protocol: While Chapter 10 of GHG Project Protocol gives some brief guidance on dealing with uncertainty, the protocol doesn’t explicitly require specific actions for addressing uncertainty.
  1. Confidentiality:
    • What it means: Quantifying GHG reductions may involve sharing sensitive information. Some details might be considered confidential by the project developer or their partners.
    • Why it’s not in the Project Protocol: The protocol doesn’t address confidentiality issues. This is left for the project developers to consider when deciding how much information to share.
  1. Verification:
    • What it means: Sometimes, project developers might want a third party to verify that their GHG reduction measurements are accurate. This ensures transparency and credibility.
    • Why it’s not in the Project Protocol: While Chapter 11 of GHG Project Protocol sets minimum requirements for reporting GHG reductions transparently, the protocol doesn’t provide guidance on how to get third-party verification. This decision is left to the users of the protocol.

Project Protocol Treatment of Additionality

  • What it means: Additionality is an essential idea when measuring the greenhouse gas (GHG) reductions of a project. It basically says that the reductions claimed by a project should be additional or extra to what would have naturally occurred without that specific project.
  • Why it’s important: If a project claims to reduce emissions but those reductions would have happened anyway, then the project isn’t actually making a unique positive impact. The concept of additionality ensures that projects are recognized and rewarded only for the emissions reductions they genuinely contribute.

  • Understanding Additionality in the Project Protocol:

    • Project Protocol’s Stance: While it’s widely agreed that additionality is crucial, its exact definition and application can vary.
    • Requirement in the Protocol: The Project Protocol doesn’t explicitly demand a demonstration of additionality. Instead, it discusses the concept in Chapter 2 and explores its policy dimensions in Chapter 3 of GHG Project Protocol.
    • Incorporation into Baseline Emission Estimation: Additionality is implicitly part of the procedures used to estimate baseline emissions . Here, its interpretation and strictness depend on the discretion of the users (those applying the protocol).

Linkages with the Corporate Accounting Standard

  1. Corporate Accounting Standard:
    • What it is: It’s like a rulebook for companies and organizations to create a Greenhouse Gas (GHG) emissions inventory, which is a record of all the GHGs a company produces, considering its entire organization.
    • Why it’s important: This standard helps companies understand and document how much greenhouse gas they are emitting as a whole, giving them a clear picture of their environmental impact.
  1. Link to the Project Protocol:
    • Different Purposes: While the Corporate Accounting Standard and the Project Protocol are designed for different purposes (one for overall company emissions, the other for specific projects), they share some common accounting principles.
    • Common Principles: Both standards use principles like relevance, completeness, consistency, transparency, and accuracy. These principles are like guidelines to make sure that the accounting of emissions and reductions is trustworthy and credible.
    • How They’re Connected: Even though they serve different purposes, they use the same foundational principles, which ensures that the accounting of both a company’s overall emissions and specific project-based emissions reductions is reliable.
  1. Combining the Standards:
    • Dual Use by Companies: A company can use both standards together, depending on what it’s trying to achieve. For example:
      • If a company wants to know its overall GHG emissions across the entire organization, it would use the Corporate Accounting Standard.
      • If the same company is working on a specific project to reduce GHGs, it would use the Project Protocol to measure and report the emissions reductions from that particular project.
    • GHG Balance Sheet: The Corporate Accounting Standard includes a special document called a GHG balance sheet. This sheet helps companies see how the emissions reductions achieved by a specific project fit into the overall goal of reducing the company’s total GHG emissions.

Additional Tools

WRI and WBCSD are developing four sets of tools to help project developers use the Project Protocol. These tools will be available on the GHG Protocol website at www.ghgprotocol.org.

  1. GHG Project Typology:
    • What it is: The GHG Project Typology is like a guide that helps project developers understand and classify different types of projects that aim to reduce greenhouse gas (GHG) emissions.
    • Why it’s useful: It gives basic advice for each type of project, like how to identify baseline conditions (the starting point for measuring reductions), consider secondary effects, monitor progress, and handle specific issues related to the project’s technology.
  1. Sector-Specific Guidance:
    • What it is: While the Project Protocol applies broadly to all GHG projects, there’s a plan to add more detailed guidance for specific sectors over time. Sectors could be things like projects that affect electricity sources or those involved in biological carbon sequestration (capturing carbon from the air).
    • Why it’s needed: Different projects have different considerations, so having specialized guidance for each sector helps project developers understand and follow the right procedures.
  1. GHG Calculation Tools:
    • What they are: These are tools provided by the GHG Protocol to help calculate GHG emissions from different sources. They were initially developed for the Corporate Accounting Standard but can be adapted for GHG projects.
    • Examples of tools:
      • Stationary combustion tool (for projects involving fuel switching).
      • Mobile combustion tool.
      • Tools for estimating uncertainty in measurements.
      • Tools specific to certain sectors like aluminum, steel, cement, and more.
  1. Relationship with Other Initiatives:
    • What it is: This section talks about how the Project Protocol connects with other international initiatives focused on reducing GHG emissions through projects.
    • Examples of initiatives:
      • Kyoto Protocol’s Clean Development Mechanism (CDM): Methods and procedures in the Project Protocol can be used for CDM projects.
      • International Organization for Standardization (ISO) provides ISO 14064: The guidance in the Project Protocol can help apply ISO requirements.

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