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Climeworks // BACK This recommendation was last updated in November 2022. It may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We do not have plans to update this recommendation in the foreseeable future as we have paused our work assessing direct carbon removal and offset projects. Questions and comments are welcome. Giving Green believes that donating to our top recommendations is likely to be the most impactful giving strategy for supporting climate action. However, we recognize that contributing to policy advocacy (as most of these nonprofits do) may not be tenable for all donors, especially businesses. Taking this into consideration, we recommend Climeworks specifically for businesses given its more direct alignment with corporate net-zero ambitions. We believe Climeworks to be a high-impact option, but we are unsure of the extent to which its cost-effectiveness approaches that of our top recommendations. Overview of Climeworks Climeworks is a Switzerland-based Direct Air Capture (DAC) company founded by engineers Christoph Gebald and Jan Wurzbacher in 2009. At Orca, Climeworks’ DAC facility in Iceland, the CO 2 is removed from the air and stored underground in partnership with the Icelandic mineralization company, Carbfix. Climeworks has a policy against working with fossil fuel production companies as clients or investors. Such companies are common partners for DAC companies, as certain types of fossil fuel extraction can be made more efficient and productive by injecting CO 2 underground in a process called enhanced oil r,ecovery (EOR). Given that the climate impact of these projects depends on many factors, Climeworks’ focus on other types of projects is compelling. [1] Climeworks’ growing customer base consists of over 160 companies, [2] including multinationals such as Microsoft, BCG, UBS or Swiss Re, as well as more than 16,000 individual Climate Pioneers. [ 3] The company uses technology it created to collect CO 2 from the surrounding air. This happens through a two-step process of drawing air into a “collector” using large fans and filtering it to capture CO 2 . After the CO 2 is collected with the filters, the company heats the collector container, releasing the CO 2 and enabling capture. The company has implemented multiple projects accumulating to hundreds of thousands hours of operation across different countries, and is currently expanding. In 2017, Climeworks opened a DAC facility in Hinwil, Switzerland, to capture CO 2 and provide it to commercial partners such as a Swiss greenhouse and a Coca-Cola bottler. In 2022, Climeworks closed its commercial operations in order to focus on permanent removals through its international direct air capture and storage (DAC + S) projects. [ 4] Its current permanent carbon removal facility, Orca, in Iceland, will soon be complemented by a new facility, Mammoth, with nearly 10x the capacity of Orca. [ 5] In September 2022, Climeworks announced the successful implementation of its 3rd party verified methodology, co-created with Carbfix, for certification with risk and assurance international leader DNV, enabling the production of the world’s first Certified CDR via DAC+S. [ 6] Carbon removal services Climeworks sells carbon removal as a service on the voluntary carbon market through its Orca facility, based in Iceland [7] . Climeworks has partnered with Carbfix , the Icelandic mineralization company, to deposit the CO 2 deep underground into geological formations where the CO 2 reacts with the minerals around it and forms solid materials. This is considered to be one of the safest and most durable ways to store CO 2, as it is extremely unlikely to leak back into the atmosphere. When a carbon removal service is purchased from Climeworks, the company either puts that money into the operational costs associated with running its DAC project or into the financing of new projects. The Climeworks team claims that the carbon removal services that it sells go directly to removing additional tons of CO 2 from the atmosphere, as all the money it receives goes into operational and modular expansion costs (more on this below). Theory of Change Funds generated by the sale of carbon removal services feed the immediate operational costs that keep the DAC plants operating, as well as signal market potential to investors. The following theory of change diagram outlines this process: Mechanism Purchasing carbon services from Climeworks funds carbon removal, directing money towards its DAC+S projects. Casuality We assess the following elements to determine causality of a DAC project: Successful removal of carbon from the atmosphere; Successful sequestration; Minimal leakage of CO2; Minimal carbon intensity of energy required; Byproducts of sequestration. Successful carbon removal Climeworks’ Orca project received third party verification through DNV [ 8] in June 2021, meeting the standards outlined in ISO 14064-2 and its own DAC methodology. The Orca project is the first DAC permanent carbon removal project to be validated, adding another layer of trust and signal of advancement to the technology and its implementation. Successful sequestration In Iceland, Climeworks has partnered with Carbfix to deposit CO 2 underground in areas where the CO 2 will react with the underlying rock and form solid material (carbonates). The mineralization process used by Carbfix has been rigorously monitored and tested, demonstrating success at commercial scale. [ 9] Minimal leakage of CO2 Because Climeworks’ sequestered carbon is mineralized, we view the likelihood of leakage of CO 2 with Climeworks as very low. Minimal carbon intensity of energy required DAC is an energy intensive process. Climeworks has built its system on top of a geothermal power plant which provides renewable energy, meaning that the carbon footprint of its operations is relatively low—confirmed by an LCA to be at 10% or below. Emissions associated with the construction of the plant, its operations, and its end of life are accounted for, as Climeworks sells "net removals". [ 10] We are sufficiently convinced that the CO 2 it removes far outstrips its carbon footprint. Additionality Climeworks’ projects require a significant upfront capital investment and ongoing operational costs. The funds from carbon removal services are its greatest source of revenue; they cover the operating costs of capturing and storing CO 2 at existing facilities as well as the financing necessary to develop new projects. [ 11] Project-level additionality Because the entire Climeworks DAC project relies on demand for carbon removal, we believe Climeworks has a clear case for project-level additionality. Although investors cover much of its current capital costs, these exist because of expectations of future revenue streams. Climeworks has also confirmed that most of its current revenue comes from carbon removal service sales. [ 12 ] Marginal additionality Climeworks’ operational costs are extremely high due to the novel nature of its technology. Carbon removal services go towards these operational costs and, according to the company, directly enable more CO 2 to be captured and injected underground by “keeping the lights on.” Therefore, a steady stream of income keeps the project functioning. Beyond the immediate CO 2 removed at the Iceland facility, purchasing carbon removal services provides ancillary benefits to Climeworks and its climate impact: Carbon removal services signal to investors that there is a market for DAC technology , which means that private investors are likely to push money into developing better DAC technology and expanding the company’s projects. We believe this will have downstream effects on the amount of CO 2 that can be removed in the long run. Climeworks has built its technology to be modular, meaning that it can add small additional units that increase its capacity for DAC. Climeworks newest facility, Mammoth, [ 13] is equity financed. [ 14] Therefore, we believe that every offset purchase contributes to additional carbon removal in the future. As such, we are confident that Climeworks’ carbon removal services are highly additional. Profits Climeworks is a for-profit company, meaning income from carbon removal services may eventually go to profits instead of removing CO 2 . We are not yet worried about this issue given that it requires a significant upfront capital investment to build its facilities. This investment is unlikely to happen without a profit motive for investors, meaning that a for-profit structure is likely one of the only ways this technology and these projects could exist. While we are currently satisfied with the information we have received from Climeworks, we hope that in the future that financial information will be publicly available so that carbon removal purchasers can be sure that their funds are used for CO 2 removal. Permanence We view Climeworks’ DAC process as highly permanent. As discussed above, the CO 2 forms a solid material when sequestered. It has tracked this process carefully; we are confident that the DAC process works as outlined. Converting the CO 2 into a solid material avoids the potential problem of the CO 2 leaking back into the atmosphere. Co-benefits We are unaware of any co-benefits from Climeworks’ carbon removal services. Cost-effectiveness When considering the price per ton of CO 2 removed directly, Climeworks does not appear to be one of the most cost-effective options currently on the market. It currently costs around $1200 for a retail purchaser to remove a ton of CO 2 with Climeworks; corporate prices are confidential and depend on parameters such as volume and length of commitment. [ 15] However, we believe that this “simple” cost-effectiveness evaluation is misleading, and the true value of purchasing a removal service from Climeworks comes through supporting the market for and development of carbon removal technology. In the appendix, we detail our efforts to model these benefits. Modeling the future of Climeworks’ removals requires difficult assumptions, with key ones being how carbon removal service purchases affect the growth rate, how price decreases trigger increases in demand, and how one values the future. Projecting 30 years out to the future, we come to a rough estimate that purchasing carbon removal services now actually contributes to 44 times the current carbon removal, or a cost of $25 per ton. This number is sensitive to many assumptions (detailed in the appendix). Our model should not be taken literally as a prediction of Climeworks’ growth or costs, and we have not compared our model to Climeworks’ projections of its growth. However, we do believe the general premise of the model: by purchasing carbon removal services from Climeworks now, one is making an important contribution to the development of DAC technology, which will drive down costs and therefore increase carbon removal in the future. Climeworks projects that prices can drop to $250-350/t in the next decade once removal technologies reach multi-megaton capacity and deployment. [ 16] Conclusions We recommend purchasing carbon removal services from Climeworks for the following reasons: We have high certainty that Climeworks is permanently removing CO 2 from the atmosphere; We believe that each dollar invested in its work will additionally remove carbon; We are convinced that investments in its work right now are being used to remove carbon as opposed to simply maximizing profit; We see long-term potential in its DAC technology; Carbon removal services purchased now contribute to potentially drastic long-term cost reductions for Climeworks. The main drawback of Climeworks is that it is currently very expensive ($1200/ton) to remove carbon relative to other options. The hope that supporting Climeworks will hopefully reduce the cost of its frontier carbon-removal technology justifies this concern, as we aim to illustrate in our long-term projections. You can purchase carbon removal services from Climeworks on its website . We thank Dr. Jan Wurzbacher, co-founder of Climeworks; Clémence Favre, B2B Marketing Manager at Climeworks; and several other experts for a series of conversations that informed this document. Endnotes [1] “Above all, pricing carbon, eliminating subsidies for fossil fuels, investing in electric vehicles and enacting other policies to reduce oil demand will be critical both to realize the potential emissions reductions from CO2-EOR and to ensure the world transitions off of oil and other polluting fuels as quickly as possible.” Mulligan and Lashof, 2019. [2] Climeworks email correspondence. 2022-11-28 [3] Climeworks Newsroom. https://newsroom.climeworks.com/ [4] “Today, Climeworks completes the commercial operation phase of its first technology generation in Hinwil, Switzerland, as the company focuses on scaling its permanent carbon dioxide removal (CDR) service via direct air capture and storage (DAC+S) internationally.” https://climeworks.com/news/climeworks-completes-commercial-operations-in-hinwil [5] “With a nominal CO₂ capture capacity of 36,000 tons per year when fully operational, Mammoth represents a demonstrable step in Climeworks' ambitious scale-up plan: multi-megaton capacity by 2030, on track to deliver gigaton capacity by 2050.” https://climeworks.com/news/climeworks-announces-groundbreaking-on-mammoth [6] “Climeworks and Carbfix developed the world's first full-chain certification methodology dedicated to carbon dioxide removal via direct air capture and underground mineralization storage. This methodology has been validated by the independent quality and assurance leader DNV.” https://climeworks.com/news/certification-methodology-for-permanent-carbon-removal [7] Climeworks prefers to use the term services over credits as the latter often relates to the purchase of avoided emissions offsets. [8] “Climeworks’ new large-scale direct air capture plant “ Orca ” has successfully achieved independent third-party validation from DNV, the global leader in quality and risk assurance.” https://climeworks.com/certification-and-mrv-in-the-carbon-removal-industry [9] “To date, over 70,000 tons of CO2 have been successfully stored at the Carbfix injection site in Hellisheiði, Iceland. To ensure that mineralisation is taking place and that the CO2 is being safely stored, established monitoring techniques are employed.” https://www.carbfix.com/proven [10] “A recently published independent life cycle assessment (LCA) now provides new insights on the technology’s net environmental benefit. The assessment was carried out by RWTH Aachen University - using data from Climeworks. It shows that for typical operation conditions the environmental benefits of direct air capture far outweigh the impact caused by building and operating the technology.” https://climeworks.com/news/life-cycle-assessment-direct-air-capture [11] “Our carbon removal services are our primary source of revenue.” Climeworks email correspondence, 2022-11-09. [12] “Our carbon removal services are our primary source of revenue.” Climeworks email correspondence, 2022-11-09. [13] “Climeworks breaks ground in Iceland to build its newest and largest direct air capture and storage facility, called Mammoth.” https://climeworks.com/news/climeworks-announces-groundbreaking-on-mammoth [14] “Climeworks breaks ground in Iceland to build its newest and largest direct air capture and storage facility, called Mammoth.” Climeworks, 2022 ; “Mammoth is equity financed.”, Climeworks email correspondence, 2022-11-09. [15] “Our carbon removal pricing conditions for corporate customers are confidential and a function of various parameters, like volume and length of commitment.” Climeworks email correspondence, 2022-11-09. [16] “ The cost of Direct Air Capture, or DAC, technology is expected to drop as low as $250-$300/mtCO2e by the end of this decade for a range of a multi-megaton capacity, Barbara Truyers, manager for strategic partnerships at Climeworks, told S&P Global Commodity Insights.” https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/energy-transition/042222-cost-of-capturing-co2-from-air-to-drop-to-250-300mtco2e-end-decade-climeworks Appendix: Modeling Long-term Costs Note: This model was developed in 2021 using a cost estimate of $1100/ton for Climeworks’ removal services. The current price for retail donors as listed on its website is $1200/ton. Purchasing a ton of removal from Climeworks, or from any early-stage technology offering permanent removal, is quite expensive on face. We believe that much of the value of this purchase lies in its ability to catalyze further improvements in the technology, making future removal cheaper and driving adoption; the value of a purchase now is thus not only in the ton of carbon removed today, but in the tons removed in the future because of the firm’s increased ability to scale, bring down prices, and attract further buyers. To illustrate this effect, we created a simple cost-effectiveness model . We do not believe this is an accurate projection of Climeworks’ future removal capacity, revenue, or any other parameter mentioned here. Our goal is not to predict Climeworks’ growth over time. It is to show the relative difference in potential growth caused by offset purchases, and to illustrate the mechanism by which the purchase of a carbon credit has an impact beyond the ton of carbon immediately removed. We have low confidence in the model and have published it here ; we encourage others to question, critique, and build on our assumptions. Our model has four main components: Baseline + Growth: Climeworks will become more efficient and grow its operations year over year by a moderate amount, even if it attracted no new sources of revenue; this means that for a fixed yearly “baseline removal budget”, more carbon is removed, and prices decrease. We assume that purchasing offsets increases the growth rate, an assumption which we detail in the following section. Demand: We assume that as prices decrease in one year, more consumers will purchase carbon removal the next year, and refer to this “demand generated above baseline” as an additional stream of revenue and removals. Credits: We model credits as a fixed amount of money spent per year at whatever price was set in the prior year. Credits also increase the growth rate applied to the growth amount. Total removal & costs: Based on #1 -3, we calculate the total removal. We then calculate the cost per credit using the “baseline removal budget”, the additional demand, and the credits. We evaluate three scenarios: No offsets: A scenario in which credits is 0, and carbon removal is the sum of growth and demand . Offset in year 1: A set dollar amount of offsets is purchased in Year 1, meaning that growth rate is higher in Year 1 as well. In Year 2 and beyond, growth rate returns to baseline, and no additional credits are purchased. Offset every year: A set dollar amount of offsets is purchased in every year, meaning growth rate is elevated every year. Scenario 1: No offsets Scenario 2: Offset in Year 1 Scenario 3: Offset every year Baseline + Growth: We concentrate our modeling efforts on how purchasing carbon credits from Climeworks lead to advancements in DAC technology and the ability to scale, and how this “learning” will contribute to falling costs in the future. We are inspired by, but not strictly following, the idea of a technology learning rate ; that is, that one can empirically observe the rate at which the unit cost of a technology falls as its cumulative output doubles. The learning rate does not attempt to describe the mechanism by which this happens. We choose to model costs falling over time, rather than over cumulative output. For our purposes, we can imagine that every year, the cost of direct air capture falls due to the firm learning how to maximize efficiency in the process of operating the removal service; offsets increase the firm’s capacity to remove carbon, thereby increasing the amount of learning that happens in a given year. Climeworks claims to be capable of removing 4000 tons of CO2 per year at their newest Iceland facility and they sell credits at about $1100 USD per ton of carbon removed. We use this as the baseline ‘year 0’. While corporate bulk buyers can purchase credits for less , and Climeworks’ true operating cost is closer to $500-600/tCO2 , we use the assumption of $1100/tCO2 because this is closer to the price available to a retail consumer, and therefore determines the cost-effectiveness of the retail consumer’s contribution. The model addresses how costs change over time as the DAC process becomes more efficient. Applying the modeling concepts laid out in The Carbon Dioxide Removal Primer to the idea of growth over time, we assume that growth is directly a function of the amount of CO2 removed in the previous year. Therefore, purchasing offsets increases growth, and makes all future DAC more efficient. The primer gives the range of reasonable learning rates to be between 5% and 30%, which we apply to our growth rate. We use a linear model to quantify the relationship between CO2 removed and growth: GR=0+1X where GR is the growth rate expressed as a proportion, 0 is the minimum amount of learning that occurs even in the absence of offsets, X represents offset dollars (in millions), and 1 is the change in the learning rate for $1M in offsets. The growth rate is set to 30% if the value estimated from the linear model is more than 0.30. When implementing this model, we fixed 0=0.05 to correspond to the minimum 5% learning threshold, and 1=0.01, a very rough estimate based on the order of magnitude of Climeworks’ current funding. Figure 1 shows how the estimated learning rate changes as a function of varying X . We also assume that the price of removal cannot fall below $30/ton; this is the “residual cost” used in a recent analysis of Climeworks . Applying this model on an annual basis, we project the amount of carbon removed each year. Demand: We assume a simple linear relationship between demand in a given year (expressed as dollars spent on Climeworks’ carbon removal service; in reality, one can imagine this being a combination of carbon credits and commodity carbon dioxide purchases) and price in the prior year. We assume two parameters, m and b , and introduce a relationship between the two such that the line will always intersect the point representing the initial assumed price and 0 additional demand: in our assumptions, $1100/ton. Credits: We attempt to assess the cost-effectiveness of the money spent in the “credits” category. We assume a fixed dollar amount of credits is purchased in any year that credits are applied (i.e. dollar amount does not go up and down with price). As price goes down, tons of CO2 removed via credits goes up. Scenario analysis: We evaluate under three scenarios: (1) no offsets enter the system, and minimal growth occurs, (2) $5M in offsets sold in year 1 only, and (3) $5M in offsets are generated each year. Each of these scenarios are projected out 30 years and compared at years 10, 20, and 30. The primary endpoint ( Table 1 ) is to estimate the cost for each additional ton of CO2 removed, including both the direct effect of the current offset as well as increased growth and therefore additional removal in the future. We compare scenarios 2 and 3 against scenario 1: that is, we total the carbon removed and the money spent (in both the “demand” and “credits” projections) in each scenario, and divide the money spent on offsets in scenario 2 over scenario 1 by the additional carbon removed, and repeat for scenario 3. We calculate these numbers with no discounting and with a 3% yearly discount rate. The price per ton of CO2 when the future growth enabled is taken into account is much lower than the $1100/ton price for present day removal. In the most generous scenario (offset once, no discounting, 30 years), offsetting right now removes CO2 at a price of $25/ton. Regardless of the scenario, Climeworks is increasing their removal capacity each year in our models due to the minimum 5% growth rate. As a secondary endpoint, we show in Table 2 how the price of a carbon offset decreases due to scale. We note that our projections, despite being estimates based on general concepts and not informed by any real physical or market characteristics of Climeworks’ work, are within a reasonable range of prior techno-economic analyses of DAC: Climeworks stated in 2019 that they have a roadmap to $200/ton “over the next five years” and that they intend to reach 1 million tons of removal annually by 2030. Our model likely makes conservative estimates about Climeworks’ growth. It is likely that Climeworks will grow substantially faster than 5-10% over the next few years; we do not explore this as we use a constant growth rate for 30 years. In addition, we use retail prices, where Climeworks’ statement is likely about true cost. A recent learning-by-doing model of Climeworks published by Klaus Lackner and Habib Azarabadi of Arizona State University’s Center for Negative Carbon Emissions estimates that $200MM of purchases are needed to bring down the cost of DAC to $100/ton. This is far lower than our model suggests, with a cumulative demand of over $1B before costs reach $100/ton, though their sensitivity analysis also explores amounts into the billions. We do not assert our estimates to be precise and certainly refer interested readers to the growing body of literature on the economics of DAC, some of which we reference in our overview of DAC . We have low confidence in the exact outputs of the model. Our main goal here is to show the mechanism by which, under reasonable assumptions, carbon credits that support an early-stage removal technology can be shown to enable further removal in the future, and are thus more cost-effective than they may appear on face. Select Resources Note: This list was last updated in October 2021. For light updates we made in 2022, we include in-line citations. “Background Information about Geologic Sequestration.” EPA, Environmental Protection Agency, 6 Sept. 2016, www.epa.gov/uic/background-information-about-geologic-sequestration . “The Concept of Geologic Carbon Sequestration.” USGS , Mar. 2011, pubs.usgs.gov/fs/2010/3122/pdf/FS2010-3122.pdf. Brennan, S.T., Burruss, R.C., Merrill, M.D., Freeman, P.A., and Ruppert, L.F., 2010, A probabilistic assessment methodology for the evaluation of geologic carbon dioxide storage: U.S. Geological Survey Open-File Report 2010–1127 Sundquist, Eric, Burruss, Robert, Faulkner, Stephen, Gleason, Robert, Harden, Jennifer, Kharaka, Yousif, Tieszen, Larry, and Waldrop, Mark, 2008, Carbon sequestration to mitigate climate change: U.S. Geological Survey Fact Sheet 2008– 3097 “What’s the Difference between Geologic and Biologic Carbon Sequestration?” What's the Difference between Geologic and Biologic Carbon Sequestration?, 2020, www.usgs.gov/faqs/what-s-difference-between-geologic-and-biologic-carbon-sequestration?qt-news_science_products=0#qt-news_science_products. Douglas W. Duncan and Eric A. Morrissey. “The Concept of Geologic Carbon Sequestration, Fact Sheet 2010-3122.” USGS Publications Warehouse, 2010, pubs.usgs.gov/fs/2010/3122/. “CCS Explained.” UKCCSRC, 13 Dec. 2019, ukccsrc.ac.uk/ccs-explained/. Roberts, David. “Pulling CO2 out of the Air and Using It Could Be a Trillion-Dollar Business.” Vox, Vox, 4 Sept. 2019, www.vox.com/energy-and-environment/2019/9/4/20829431/climate-change-carbon-capture-utilization-sequestration-ccu-ccs. “Geologic Sequestration in Deep Saline Aquifers.” Geologic Sequestration in Deep Saline Aquifers | EARTH 104: Earth and the Environment (Development), 2020, www.e-education.psu.edu/earth104/node/1094. “Sequestration Map MIT.” Google Maps JavaScript, sequestration.mit.edu/tools/projects/ccs_map.html. Elliott, Rebecca. “Carbon Capture Wins Fans Among Oil Giants.” The Wall Street Journal, Dow Jones & Company, 12 Feb. 2020, www.wsj.com/articles/carbon-capture-is-winning-fans-among-oil-giants-11581516481#:~:text=Chevron%20has%20invested%20in%20companies,natural%20gas%20or%20making%20cement. Kintisch, Eli. “Can Sucking CO2 Out of the Atmosphere Really Work?” MIT Technology Review, MIT Technology Review, 2 Apr. 2020, www.technologyreview.com/2014/10/07/171023/can-sucking-co2-out-of-the-atmosphere-really-work/ . Peters, Adele. “We Have the Tech to Suck CO2 from the Air–but Can It Suck Enough to Make a Difference?” Fast Company, Fast Company, 17 June 2019, www.fastcompany.com/90356326/we-have-the-tech-to-suck-co2-from-the-air-but-can-it-suck-enough-to-make-a-difference. McQueen, N., Kolosz, B., and McCormick, C. “Analysis and Quantification of Negative Emissions” CDR Primer (2021), edited by J Wilcox, B Kolosz, J Freeman Lackner, K. S., & Azarabadi, H. (2021). Buying down the Cost of Direct Air Capture. Industrial & Engineering Chemistry Research, 60(22), 8196–8208. https://doi.org/10.1021/acs.iecr.0c04839 .

MASH Makes // BACK This recommendation was last updated in November 2022. It may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We do not have plans to update this recommendation in the foreseeable future as we have paused our work assessing direct carbon removal and offset projects. Questions and comments are welcome. Giving Green believes that donating to our top recommendations is likely to be the most impactful giving strategy for supporting climate action. However, we recognize that contributing to policy advocacy (as most of these recommendations do) may not be tenable for all donors, especially businesses. Taking this into consideration, we recommend Mash Makes specifically for businesses given its more direct alignment with corporate net-zero ambitions. We believe Mash Makes to be a high-impact option, but we are unsure of the extent to which its cost-effectiveness approaches that of our top recommendations Summary Overview of Mash Makes Mechanism Causality Project Additionality Marginal Additionality Permanence Co-Benefits Cost-Effectiveness Conclusion How to contribute to Mash Makes Summary Giving Green recommends the Mash Makes Maharashtra Model as one of the top carbon removal opportunities for businesses. Mash Makes is an Indo-Danish carbon-negative energy company. It aims to convert waste streams (primarily residue biomass) into energy products (biofuel, hydrogen, and electricity), of which biochar is a byproduct. Mash Makes partners with farmers, NGOs, and organizations w orking in agriculture in India to convert crop residue that would have otherwise been burnt into biochar, with the possibility of expanding to other locations. Applying biochar to soil securely stores carbon that plants have removed from the atmosphere with medium-term permanence, preventing carbon emissions and air pollution. We have identified the Mash Makes Maharashtra Model as a high-quality, medium-term-permanence carbon removal option. Overview of Mash Makes Mash Makes is an Indo-Danish carbon-negative energy company. It began as a project at the Technological University of Denmark, converting waste streams (primarily waste agricultural residues and woody biomass) into energy products (biofuel, hydrogen, and electricity) and biochar, a natural by-product. The promising results of this work led to the funding of a company to commercialize the technology. Mash Make s now partners with farmers, NGOs, and organizations working in agriculture in India to convert crop residue that would have otherwise been burnt into biochar, with the possibility of expanding to other locations. [1] Applying biochar to soil securely stores the carbon that plants have removed from the atmosphere with medium-term permanence, preventing carbon emissions and air pollution. Mash Makes does this through the use of Special Purpose Vehicle (SPV) units, the fundamental unit of which is Mash Make’s pyrolysis machine. This machine features a unique heat principle that enables efficient feedstock heating by only using residual pyro-gas produced as a byproduct of the process. Feedstock is fed into a pyrolysis unit and heated at temperatures of 550°C in the absence of oxygen to produce biochar, which stores carbon in a more stable form more than the original biomass. Each SPV will consist of at least four such pyrolysis units containing Mash Makes technology tailored t o the local supply chain energy needs and feedstock availability. [2] Mash Makes intends to utilize a modular franchise model by rolling out a series of SPVs; efforts are currently focused in India, though other areas in South Asia and sub-Saharan Africa are under consideration. [3] Mash Makes biochar is certified by the European Biochar Certificate. Figure 1. Modular pyrolysis machine designed by Mash Makes Figure 2. Representation of upcoming commercial Mash Makes facility for launch in 2023 Mechanism Removed emissions. Giving Green views the biochar production process as emissions removal. As crops grow, they draw carbon out of the atmosphere and store it in their biomass. Mash Makes intercepts the residue of this biomass material post-harvest, converting it into biochar before it can re-emit the stored carbon back into the atmosphere. This cycle is a carbon-negative process, resulting in less carbon in the atmosphere overall. We acknowledge that the line between removed and avoided carbon emissions can be a gray area. Some evaluations do not consider crop growth part of the biochar product cycle unless organizations grow it themselves, or they view biochar as an imperfect form of carbon removal due to its impermanence. Considering these views, we assess the biochar produced by Mash Makes to be a medium-permanence emissions removal project. Causality High causality. Biochar uses post-harvest agricultural biomass residues (feedstock). These would have often been left to decompose, but can also be burnt or put to alternative uses. The dry weight of biochar is easily measured before and after burning to determine fixed carbon content. [4] A high fixed carbon content translates to efficient feedstock use for carbon storage, showing a large proportion of feedstock is converted into stable carbon rather than ash or volatile compounds. Mash Makes biochar has a fixed carbon content of 84.9%. We believe that almost all of the carbon stored in the feedstock used by Mash Makes would be released into the atmosphere within a short amount of time if it weren’t converted to biochar. If the feedstock is left in the field, 20% of the carbon from plant biomass is stored over a 5-10 year period. [5] More likely, it would be burned, converting the carbon into CO 2 right away as the soil only retains 3% of carbon during crop burning. Karnataka state, the location of Mash Makes’ first commercial facility, has one of the highest rates of crop residue burning in India. [6] In other cases, organizations could purchase feedstock before it is burnt, putting it towards alternative uses such as biofuel, paper-based or packing materials, or animal feed. [7] However, these products will all re-release their carbon as they are used or discarded and so are carbon-neutral processes at best. Project Additionality Medium project additionality. Project-level additionality seeks to answer the following question: would Mash Makes exist and sell biochar in the absence of offsets? We rate the additionality of Mash Makes as medium. Mash Makes wants to keep the prices of its biochar as low as possible, depending upon the funds produced from the sale of carbon removal certificates, to keep operations feasible. Mash Makes currently sells its biochar at below-market prices (<$0.1/kg) to NGO afforestation or reforestation projects, with the sale price set to recover transport costs only. Producing 323kg of Mash Makes biochar will remove one ton of CO 2 equivalent, meaning that biochar sales / transport costs are equivalent to roughly 20% of the price of a credit. It is our impression that this cost recovery does not substantially reduce the additionality of offsets. Further, it provides biochar to farmers for free to participate in field trials. Mash Makes uses a modular franchise model to expand the number of SPVs, with investors funding individual SPVs that use the Mash Makes technology. To ensure the model attracts investor interest, bio-oil (a byproduct of the pyrolysis process) is sold at market rate as a carbon-neutral fuel source to shipping and transportation operators, with profits returning to investors. [8] We are comfortable with this aspect of Mash Makes operations, as (i) Mash Makes told us the model still depends on carbon credits to be feasible, (ii) Mash Makes does not directly profit from this, (iii) this increases the rate at which Mash Makes can expand, leading to the removal of more carbon, and (iv) the bio-oil replaces carbon-intensive fossil fuel use, assisting with industry decarbonization. [9] If project products generate profit, this can decrease our confidence in whether projects need carbon credits to operate, calling additionality into question. However, Mash Makes told us that carbon credits are a vital part of its operations and that it aims to keep its biochar prices as low as possible while selling bio-oil to expand. Marginal Additionality High marginal additionality. Marginal additionality ensures that each credit purchase goes towards removing additional greenhouse gas emissions, rather than generating profit. We also rate the marginal additionality of Mash Makes as high. As Mash Makes is a for-profit company, there could be concerns about carbon credit revenue generating profit rather than sequestering additional carbon. However, Mash Makes aims to be a business for impact, using a profitable business model to attract investors and remove carbon at a pace it believes would not be possible as a non-profit. [10] As the revenue from carbon credits goes towards operational costs and assisting with expansion, leading to additional carbon sequestration, we feel confident in the additionality claims of Mash Makes. [11] The modular design of Mash Makes’s SPVs allows for the quick and efficient setup of facilities near biomass residues that commercial operators would typically be unable to reach, also reducing costs associated with the transport of the feedstock. This also creates higher confidence in additionality, as rural feedstock is less likely to be accessible for other climate-related purposes. Permanence Medium permanence. The biochar produced through pyrolysis is more stable than the original feedstock. However, biochar permanence can be highly variable depending upon the feedstock type and pyrolysis temperature, which influence biochar characteristics, and the post-production conditions, which impact how quickly biochar will degrade. Mash Makes biochar has an oxygen-to-organic carbon ratio of 0.056, a hydrogen-to-organic carbon ratio of 0.4, and pyrolysis production temperatures of 550°C. Mash Makes biochar feedstock is currently primarily agricultural residues such as nutshells, but it may expand to other feedstocks in the future. [12] Due to these characteristics, we estimate the theoretical quality of Mash Makes biochar to be extremely high, with a >1000-year half-life under laboratory conditions. [13] MASH Makes recommends that its biochar is first mixed with compost, manure or an organic fertilizer before it is applied to the soil. This ensures that the biochar forms a stable sink and no biochar is lost to wind erosion. Research has shown that laboratory estimates are relatively accurate in temperate climates, but there is less confidence in the accuracy of laboratory estimates in tropical or subtropical areas. [14] At the moment, Mash Makes primarily operates in India, which has a tropical semi-arid climate. Differences are likely to be greatest between laboratory estimates and field results where low-quality biochar contains high amounts of unstable carbon, as it is unstable carbon that will be primarily affected by post-production conditions. For example, one study found that only biochar produced at pyrolysis temperatures >550°C could persist for >100 years in high soil temperatures of 40°C - 60°C. [15] Due to this, we think it is unlikely that the >1000-year half-life of Mash Makes biochar will change in field conditions. However, we acknowledge the uncertainty around this estimate and the need for further research. As a result, we categorize the permanence of Mash Makes biochar to be in the 100-1000+ year half-life range. We hope to receive further information from Mash Makes field trials within a year to clarify this further. Co-Benefits Mash Makes offers two co-benefit streams: those from the avoided burning of crop waste and those from increased food security based on improved soil quality due to biochar addition. Mash Makes aims to use feedstock that would have otherwise been burnt. Converting this biomass into biochar instead prevents air pollutants from being released. These air pollutants enhance climate warming and are harmful to human health, alongside having subsequent impacts on tourism and the socioeconomic status of farmers. [16] It also contributes to climate warming by releasing black and brown carbon, which absorbs incoming solar radiation as heat and warms the air, changing rain and cloud patterns. [17] We have high certainty that the prevention of feedstock burning positively impacts human health through decreased air pollution, which likely has other flow-on environmental and socioeconomic benefits. [18] The co-benefits from improved soil quality are more difficult to quantify. Field research has shown that in some conditions, biochar can help to remediate soils, improving soil water holding capacity and nutrient availability, decreasing plant susceptibility to disease, and increasing crop yields. Increases in crop yield could benefit the food security of those living in regions with depleting soil quality and a rapidly increasing population. However, the co-benefits depend on several environmental and biochar characteristics. MASH Makes recommends that its biochar is first mixed with compost, manure or an organic fertilizer before it is applied to the soil to benefit soil health and crop productivity by charging the biochar with nutrients. [19] However, we will have higher certainty of this claim once Mash Makes field trials are complete. Overall, the geographic location of Mash Makes seems suitable for using biochar to improve soil quality and crop yields, as field trials with biochar have shown positive increases related to improved crop productivity in regions with weathered soils. [20] However, we are unsure whether optimizing Mash Makes biochar for carbon sequestration will prevent this effect. We will rely on the results from its field trials to be certain about the benefit of its biochar for soil quality. Mash Makes is currently partnering with local universities to undertake field trials on the impact of its biochar on soil quality, which will help us to increase our certainty in this area. Cost-Effectiveness Mash Makes carbon credits will be available for pre-purchase on its website for $160/ton of CO 2 by the end of 2022, with delivery in Q2 2023. Buyers can also get in touch with Mash Makes directly; credit prices are variable based on volume of purchases. We believe that this price reflects the actual cost of producing biochar. It is in the lower range of the price spectrum of other biochar projects we evaluated, which sold credits at prices between $98 and $524/ ton of CO 2 removed (average $265, median $200). Mash Makes’s price per ton is also significantly lower than other removal projects, such as Charm bio-oil , which sells carbon credits for $600/ton of CO 2 ; we note that these more expensive pathways generally have higher permanence. Mash Makes is more expensive than t he avoided emissions credits we recommend (which can be as low as $17/ton of CO 2 ). Much of the cost of the Maharashtra Model comes from the purchase of feedstock and operating costs (such as wages and electricity), as well as the initial production and deployment of the SPVs. The market determines feedstock prices, making them hard to predict, while operating costs will likely rise with inflation. Credit prices are currently not anticipated to drop further, though ways to make the technology more cost-effective are being investigated. Mash Makes is expanding from one SPV in 2022 to 50 SPVs over the next five years, meaning there is substantial room for more funding. Key uncertainties/open questions We have medium uncertainty around the permanence of biochar in field conditions. Mash Makes is currently undertaking field trials that will help us address this concern. As Mash Makes is unlikely to experience further price drops due to technological breakthroughs, we are uncertain whether it will remain cost-effective compared to our other recommendations. Supporting developing technologies, such as direct air capture, or purchasing already cheap offset credits, such as those sold by Tradewater, may prove to be a more cost-effective way of reducing or removing emissions in the long run. We are unsure as to whether carbon credits will continue to be additional in the future as Mash Makes scales up to commercial-level operations and uses investment to explore other revenue streams. This could reduce the likelihood that a removal project would not have happened without an offset purchase, but Mash Makes has informed us that carbon credits are an essential part of their model for all future ventures. We plan to re-evaluate additionality as the company expands. As Mash Makes is a for-profit company we have limited access to publicly available financial information, making it difficult to confidently assess project additionality. However, for the reasons stated above, we are not concerned by this due to our impression that offset purchases are still a core component of their funding. Conclusion Overall we have identified the Mash Makes Maharashtra Model as a high-quality, medium-permanence carbon removal project. The scalable, modular technology (the SPV model) will be tailored to the local context, allowing for more cost-effective carbon removal. The company addresses typical concerns around biochar project additionality by currently providing biochar to farmers for free to conduct field trials. Supporting Mash Makes will assist in producing more SPVs to scale up biochar production. Its team has been transparent with data and financial information; we look forward to seeing the results from its current field trials to address our uncertainty around biochar permanence and crop yield co-benefits. How to contribute to Mash Makes These credits are available for purchase through Patch here , or by contacting Mash Makes directly through its website . We thank Srikanth Vishwanath, Test and Development Engineer at Mash Makes, for the conversations that informed this document. Endnotes [1] See ‘Maharashtra Model’. Mash Makes. n.d. [2] Correspondence with Mash Makes, 2022-11-15. [3] S ee ‘Who are we?’. Mash Makes. N.d ; Correspondence with Mash Makes, 2022-11-15. [4] “...the crucible is heated over the Bunsen burner until all the carbon is burned. The residue is weighed, and the difference in weight from the previous weighing is the fixed carbon.” Speight, 2015 . [5] See abstract. Gaunt & Rondon, 2006. [6] “The top ten states that showed maximum amount of crop residues burning in our estimations are Uttar Pradesh (34.38 MT), Punjab (19.45 MT), Maharashtra (11.81 MT), Madhya Pradesh (11.77 MT), Haryana (10.51 MT), Karnataka (8.45 MT), Bihar (8.30 MT), Rajasthan (7.67 MT) and West Bengal (6.44 MT)”. Sahu et al., 2021. [7] See section 5.2. National Policy for Management of Crop Residues. 2014. [8] “An SPV is a financial instrument rather than a physical machine, made up of four container units. The money is not raised for these through Mash Makes, but instead through investors that fund individual SVPs.” Mash Makes call notes, 2022-11-15. [9] Correspondence with Mash Makes, 2022-11-15. [10] Correspondence with Mash Makes, 2022-11-15. [11] “Our projects still depend on finance based on the sale of carbon removal certificates for it to be feasible.” Mash Makes email correspondence, 2022-09-20. [12] “The state of Maharashtra itself burns about seven million tonnes of crop residue yearly – which is 80% of its total annual crop residue generated. Of this, sugarcane leaves, along with cotton, soy and wheat residue make up the bulk of the burnt stubble.” Mash Makes. n.d. [13] See “Permanence” section of Biochar Sector Overview. Giving Green, 2022. [14] “However, at elevated temperatures (40 or 60 °C), which may be experienced in tropical environments at certain times and especially in surface soil, only the biochars produced at a higher pyrolysis temperature (e.g. 550 °C) may persist for more than 100 years.” Fang et al., 2014 ; See “Conclusions” section. Kuzyakov, 2014. [15] “However, at elevated temperatures (40 or 60 °C), which may be experienced in tropical environments at certain times and especially in surface soil, only the biochars produced at a higher pyrolysis temperature (e.g. 550 °C) may persist for more than 100 years.” Fang et al., 2014. [16] “These particulate matters pose a higher health risk, monetary losses, and socioeconomic losses.” Singh et al., 2022. [17] “One contributor to global climate change is the release of fine black and also brown carbon (primary and secondary) that contributes to the change in light absorption.” Bhuvaneshwari et al. 2019. [18] “The impact of stubble-burning is not limited to human health, soil, and ambient air quality. Stubble-burning has a range of effects on economic growth and causes other social problems such as adverse effects on tourism, agricultural productivity, farmer’s socioeconomic condition, and climate effects”. Singh et al. 2022 . [19] Correspondence with Mash Makes, 2022-11-15. [20] “The greatest (positive) effects with regard to soil analyses were seen in acidic (14%) and neutral pH soils (13%), and in soils with a coarse (10%) or medium texture (13%). This suggests that two of the main mechanisms for yield increase may be a liming effect and an improved water holding capacity of the soil, along with improved crop nutrient availability.” Jeffery et al., 2011.

Spark Climate Solutions // BACK Overview The Giving Green Fund plans to award a restricted grant to Spark Climate Solutions (Spark) for its enteric methane mitigation program, which aims to reduce methane emissions from ruminants like cattle and sheep. Spark is a US-based organization with US and international workstreams. It accelerates emerging climate mitigation strategies, with a current focus on short-lived climate pollutants like methane. Spark’s work falls within our philanthropic strategy of reducing food sector emissions. While we believe reducing meat consumption can have a bigger impact on cutting food sector emissions than focusing only on enteric methane, we still think efforts to reduce enteric methane are worthwhile. They offer a backup in case global meat demand does not decrease significantly, and the opportunity to reduce emissions from any remaining meat demand. Please see Giving Green’s deep dive report on food sector emissions for more information, including risks and potential co-benefits, recommended sub-strategies, theory of change, funding need, and key uncertainties. Last updated: October 2024 What is Spark Climate Solutions? Spark was founded in 2021 to speed up progress in emerging, high-impact climate mitigation strategies. It focuses on reducing the risks of near-term warming by cutting emissions of short-lived climate pollutants . Its core programs are enteric methane mitigation and methane removal research. It is also developing programs to reduce agricultural nitrous oxide emissions and understand methane emissions from permafrost thaw and tropical wetlands . Spark fulfills a unique role as a field builder in these neglected sectors by mobilizing resources and coordinating efforts to drive innovation forward. Its activities include coordinating policy advocacy efforts, mobilizing industry actors, supporting the path to market for new innovations, and regranting to fill research gaps. What are we funding at Spark, and how could it help reduce greenhouse gas emissions? The planned grant is restricted to Spark’s enteric methane mitigation program, which provides strategic support and leadership across the field to accelerate technical, market, and policy solutions. Specifically, Spark plans to use our grant to develop its Global Enteric Methane Industry Association (GEMIA), which will coordinate work among stakeholders, including solution providers, livestock producers, retailers, and funding bodies. By aligning industry bodies to a shared strategy, we believe Spark could streamline work that would accelerate R&D, advance policy, and strengthen the path to market for enteric methane solutions. Why do we think Spark will use this funding well? We think political advocacy, coordination, and coalition building could be powerful levers to amplify governmental and industry support for enteric methane mitigation. We think Spark is well-positioned to fill gaps in the field because of its strong connections to the sector, technical expertise, and strategic approach. We have been impressed by Spark’s leadership in the nascent field of enteric methane mitigation. For example, it advocated for the introduction of the US’s bipartisan EMIT LESS Act for enteric methane mitigation. It also helped to establish, and now actively supports, the program strategy of the Global Methane Hub’s $200 million Enteric Fermentation Accelerator as coordinator of its science oversight committee. In addition, Spark organizes the only annual conference dedicated to enteric methane emissions. GEMIA is still in its early stages but has thus far been well received, with non-binding commitments from 20 influential sector leads to participate in the coalition. Spark is fundraising to expand its enteric methane team to accommodate new workstreams, including GEMIA and a US livestock methane policy coalition. For more on the difference between the grantees of the Giving Green Fund and our Top Nonprofits, please see this blog post on the Giving Green Fund. This is a non-partisan analysis (study or research) and is provided for educational purposes.

CarbonPlan // BACK Overview The Giving Green Fund plans to award a restricted grant to CarbonPlan , a US-based nonprofit that analyzes the design and efficacy of climate projects and programs, primarily those related to carbon offsets, carbon removal, and climate risks. This is one of a series of ecosystem grants supporting foundational work to unlock innovative policy approaches for durable carbon dioxide removal (CDR) demand. CarbonPlan falls within our philanthropic strategy of carbon dioxide removal . Please see Giving Green’s deep dive report on CDR for more information, including risks and potential co-benefits, recommended sub-strategies, theory of change, funding need, and key uncertainties. Last updated: October 2024 What is CarbonPlan? Founded in 2020, CarbonPlan is a US-based nonprofit that analyzes the design and efficacy of public and private projects and programs in the context of carbon offsets, CDR, and climate risks. CarbonPlan conducts research, develops policy, and builds software to help improve climate programs across the private and public sectors. What are we funding at CarbonPlan and how could it help scale demand for CDR? This grant funds CarbonPlan’s exploration of questions and contexts outside of conventional demand policies (i.e. credit-based carbon markets), which we think will motivate new and creative research design and applications. We think this could expand understanding of how, where, and to what extent CDR can be embedded across industries and applications, unlocking new opportunities to scale CDR demand to meet climate targets. Specifically, CarbonPlan will conduct research on agricultural lime, a soil additive, and its comparative CDR potential. Conventional thinking suggests that carbon credits could be used as financial subsidies for farmers to amend their practices to include additives that sequester carbon. However, the use of agricultural lime is currently incentivized through pay-for-practice policies (policies that subsidize implementation rather than performance) in the US; according to CarbonPlan, it is difficult to integrate agricultural lime into existing carbon markets because of the challenge of determining additionality. CarbonPlan is modeling CDR outcomes of agricultural lime and silicates, which are more well-established and understood in the context of carbon markets, to compare conditions under which one might outperform the other in terms of net climate benefits. In contexts where their findings show that agricultural lime has greater climate benefit, their evidence could be used to support the expansion of pay-for-practice policies for agricultural lime, thus (a) increasing demand for and deployment of this CDR practice and (b) providing a proof point for policies that do not rely on credit-based financing. CarbonPlan plans to publish results in an academic paper as well as a public-facing explainer. Why do we think CarbonPlan will use this funding well? CarbonPlan’s team has deep technical expertise and a track record of producing high-quality and influential tools , research , and commentary , as evidenced by its collaborations with Frontier and strong partnerships with CDR companies, scientists, and other ecosystem actors. Because of this, we think that it is well-positioned to conduct strategic and rigorous research to support meaningful shifts in policy and market approaches. Giving Green believes that additional climate donations are likely to be most impactful when directed to our top nonprofits. For a number of reasons , we may choose to recommend grants to other organizations for work that we believe is at least as impactful as grants to our top recommendations. We are highlighting this grant to offer transparency to donors to the Giving Green Fund as well as to provide a resource for donors who are particularly interested in this impact strategy. This is a nonpartisan analysis (study or research) and is provided for educational purposes.

Waste Biogas Capture // BACK This report was last updated in November 2020. It may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We may revise this report in the future, depending on our research capacity and research priorities. Questions and comments are welcome. Summary Waste sites (such as landfills and agricultural waste storage) produce biogas from the decomposition of organic materials, including the powerful greenhouse gas methane. With the right infrastructure and systems, companies and municipalities can capture this methane and either destroy it or convert it into energy. Biogas capture projects cause a clear reduction in greenhouse gas (GHG) emission, but it is unclear whether waste biogas carbon offsets actually cause the projects to be implemented. While we have not yet found any biogas-related carbon offsets to recommend, we do believe that there are likely circumstances where these offsets do cause real emissions reductions. Better biogas offsets are in places where methane capture is not mandated by regulation (either current or future), and in sites where the electricity generated by biogas is not enough to make the project profitable. Overall, we believe that there are likely good biogas offsets that are additional, but thus far we have been unable to find any that meet our criteria. As not all offsets are offered online, it is possible that these high-quality offsets are being directly sold to corporate buyers or are only transacted through brokers. Giving Green will continue searching for biogas projects we can recommend with confidence. Waste biogas capture as a carbon offset Landfills and agricultural waste sites produce biogas from the decomposition of organic materials. Biogas is composed of primarily methane and carbon dioxide (CO2), along with a small amount of other organic compounds. Both methane and CO2 are greenhouse gases that trap heat in the atmosphere. Methane is 28-36 times better at trapping heat in the atmosphere than CO2 over a 100 year period, making it a particularly potent GHG [1]. Of all methane produced in the United States, landfills are the third-largest source with approximately 14% of overall emissions [2]. Reducing methane emissions is a key priority in combating climate change. Waste sites emit methane through an anaerobic process. Large amounts of organic material (e.g. food, wood) are deposited into landfills, and agricultural waste sites contain production byproducts (such as plant husks or animal excrement). Bacteria decompose these materials and produce a mixture of gases, which is then emitted into our atmosphere and contributes to global warming. Biogas normally escapes from waste sites into the atmosphere soon after it is produced. However, if the right infrastructure and systems are put in place at waste sites, companies and municipalities can capture the methane and either destroy it or convert it into energy. Gas extraction wells and piping systems can be set up at waste sites and used to move biogas from the production site to treatment locations. At the treatment locations, biogas is either flared (burned to convert methane into a less harmful gas) [3] or converted into energy like electricity or car fuel. To encourage biogas flaring or capture, the US Government regulates large emitters of GHG through the Clean Air Act and through reporting requirements to the Environmental Protection Agency (EPA). Regulations require landfill emissions to be measured and publicly documented. Large emitters are required to either capture and destroy or convert their landfill gas into a reusable resource [4]. However, biogas emissions from agricultural operations and smaller landfills are more lightly regulated, if at all. Carbon offsets fund the construction and upkeep of biogas capture and treatment infrastructure. In the absence of regulation or profitable circumstances, biogas capture and treatment is unlikely to occur. Causality Overall, if projects are executed correctly, then waste biogas capture is highly likely to cause reductions in atmospheric greenhouse gas emissions. Project-level additionality In the absence of regulation or profitable circumstances, biogas capture and treatment is unlikely to happen. As such, carbon offsets can be catalytic for these projects in cases in which they are additional. The cost of biogas projects depends on the size, location, and configuration of the site. There are significant capital outlays at the start of a project, as the physical infrastructure is designed and created. After the initial expenditure, there are routine costs to upkeep equipment and oversee operations. For projects that are not profitable and exempt from government regulation (e.g. too small), carbon offsets can provide a financial incentive to capture and use the biogas. The EPA estimates that a privately owned and operated project with a 3 megawatt turbine and no previously installed capture system costs approximately $8.5 million to install and will lose approximately $3.5 million over a 15-year lifetime [5]. While the above cost does not factor in tax credits or exemptions or the ability to use the electricity produced for on-site operations, the cost of biogas capture and treatment systems are often prohibitive for companies and municipalities [6]. Marginal additionality The marginal additionality of waste biogas carbon offset projects varies based on where the project is in the project lifecycle. Before construction, while trying to achieve sufficient financing for the project to go ahead, carbon offsets are likely to be marginally additional (as long as the target goal is eventually reached). After construction, however, the marginal additionality of waste biogas capture projects is relatively low as the binding financial outlay is for the construction of the initial system. In some cases carbon offsets might continue to fund operational expenses, which would satisfy marginal additionality; we have not yet found any projects in this space that make a compelling claim to use carbon offsets in that way. Permanence Some waste biogas projects destroy emissions; these have high permanence. Once the emissions are captured and destroyed, they are not at risk of leaking back into the atmosphere. We do not think that the capture of these emissions is likely to increase emissions elsewhere. For projects that use captured emissions to produce energy, we see the permanence as lower. These projects often use the gases to create energy through a process that eventually emits them, meaning that they are not permanently removed from the atmosphere. In these projects, the benefit is more “clean” energy created by gases that would otherwise have just leaked into the atmosphere without any additional benefit. Co-benefits With projects that use waste biogas to create electricity or other energy, the co-benefits are more energy produced for the surrounding regions. We view this co-benefit as fairly weak as most of the surrounding where these projects are happening have other sources of energy. Assessment of waste biogas capture projects Carbon offsets for biogas are most “impactful” when they meet the best-in-class standards for carbon offsets - additional, not overestimated, permanent, not claimed by another entity, and not associated with significant social or environmental harms - along with meeting the following conditions [7]: Project is not required by regulation to implement biogas capture and treatment Project is not profitable from the sale of renewable resources from biogas treatment Project is capital constrained and will not happen without carbon offsets Carbon offsets go directly to purchasing biogas project infrastructure or maintenance, as opposed to non-essential inputs When reviewing projects for this report, we found that it was difficult to get enough information to determine whether projects met the above conditions. Simply being certified by one of the major certifying agencies did not give us confidence that the project was indeed additional. We expect that some biogas projects will meet these conditions, and some will not. This appears to be confirmed by what others have concluded [8][9]. For example, the GHG Management Institute and Stockholm Environment Institute say that the usefulness of landfill gas projects and associated carbon offsets depends on the project. They state: “Varies by location. Projects are likely additional in most parts of the developing world. In developed countries, including the United States, some projects are pursued to avoid triggering regulatory requirements, and projects that generate energy can be economical without carbon revenue.” The report also describes how there is uncertainty in baseline levels of methane output with these projects, which further adds to the difficulty of quantifying their impact [10][11]. We therefore focused the remainder of our research on waste biogas projects in developing countries and projects involving small landfills in the US. Developing countries: Unfortunately, we found few offsets in developing countries available for sale online. The UN offers two such projects, capturing biogas from agricultural waste in India and Thailand. However, after further consideration, we didn’t feel comfortable recommending either. The Ratchaburi Farms Biogas Project in Thailand is a biogas capture system that generates energy for use on a large pig farm. The first issue with additionality is that the system may be profitable, and as a large company it’s plausible that the farm could and would have made the investment without the carbon credits. But more worrisome is that the project is quite old. It started operating in 2008, and in its original application for offset certification, it requested credits for 10 years. The project was a partnership with the Government of Denmark, who committed to buying some of the credits as part of their commitment under the Kyoto accord. So as far as we can tell, the current offsets for sale were generated before 2018 but were not part of the purchase agreement with Denmark. Given this, it is quite hard to believe that expectation of voluntary offsets purchases 10 years in the future actually contribute to additionality. The Mabagas Power Plant in India is somewhat more promising. It generates energy by procuring animal waste from nearby farmers and feeding this waste into its digesters. Without this plant, this waste would degrade and release biogas into the air. There are no regulations requiring the construction of the plant. However, a couple of worries have prevented us from recommending these offsets. First, the project seems plausibly profitable. Although the IRR documents submitted as part of the offset certification procedure claim that selling carbon credits is necessary to achieve viability, these numbers are hard to verify. Next, there is a question of who precisely is on the receiving end of these offsets. Mabagas was launched as a joint venture between two companies that mainly deal in (petroleum-based) oil and gas: the state-owned Indian Oil Company, and the German company Marquard & Bahls. As revenue from offsets will ultimately flow to these companies or their subsidiaries, it is unlikely that this capital will fuel more green projects. Overall, we cannot recommend these offsets given the information available at this time. US-based projects: Although large emitters are required to install methane capture systems, small landfills are not covered by these regulations, and carbon credits may certainly spur them to build capture systems. However, regulations are constantly changing [12], and plants may install landfill gas capture systems in anticipation of coming under regulatory authority (due to expansion or changing regulations). We explored US landfill gas offset options and, at least given the data available, felt unable to confidently recommend any of them. For instance, this landfill in Massachusetts seems to be a project that was very much spurred by carbon credits, with credits originally issued for ten years. However, the offsets available for purchase now are for the second issuance of offsets, while the actual infrastructure seems to only have been modestly updated. It is unclear what additionality these new offsets are providing. The Hilltop Landfill in Virginia was a small landfill that installed methane capture financed with carbon credits. But the landfill closed in 2013, and it seems like the investment has already been refunded from previous carbon credit sales [13]. So further sales are likely not additional. Other options we explored are larger landfills that seem likely to fall under methane capture regulations as they grow or as new regulations are put into place. Overall, we believe that there are likely good biogas offsets that are additional, but currently, we have been unable to find any that meet our criteria. As not all offsets are offered online, it is possible that these high-quality offsets are being directly sold to corporate buyers or are only transacted through brokers. Giving Green will continue searching for biogas projects we can recommend with confidence. [1] https://www.sepa.org.uk/media/28988/guidance-on-landfill-gas-flaring.pdf [2] https://www.epa.gov/lmop/frequent-questions-about-landfill-gas [3] https://www.epa.gov/lmop/basic-information-about-landfill-gas [4] https://www.epa.gov/lmop/basic-information-about-landfill-gas#methane [5] https://www.eesi.org/papers/view/fact-sheet-landfill-methane [6] Direct-use projects (i.e. where the energy created is used to power upkeep of the landfill) cost less and have a slightly higher ROI, but are less common because they require their facilities to be nearby. [7] http://www.offsetguide.org/wp-content/uploads/2019/11/11.15.19.pdf [8] http://www.offsetguide.org/wp-content/uploads/2019/11/11.15.19.pdf [9] https://www.drawdown.org/solutions/buildings-and-cities/landfill-methane [10] http://www.offsetguide.org/wp-content/uploads/2019/11/11.15.19.pdf [11] https://www.drawdown.org/solutions/buildings-and-cities/landfill-methane [12] http://biomassmagazine.com/articles/16424/epa-proposes-federal-plan-under-2016-landfill-gas-regulations [13] https://www.ecosystemmarketplace.com/articles/offsetting-local-inside-landfill-gas-project/ References https://www.epa.gov/lmop/basic-information-about-landfill-gas https://www.epa.gov/sites/production/files/2017-04/documents/lmop_2017_special_session_cowan.pd https://www.r-e-a.net/work/biowaste-recycling/ https://wasteadvantagemag.com/business-case-carbon-offsets-waste-diversion-waste-digestion-composting/ https://sustainability.wm.com/downloads/WM_CDP_Climate_Change_Response.pdf https://earthworks.org/issues/flaring_and_venting/ https://en.wikipedia.org/wiki/Landfill_gas_utilization https://www.eesi.org/papers/view/fact-sheet-landfill-methane https://www.terrapass.com/project/flathead-county-landfill-gas-to-energy http://www.offsetguide.org/wp-content/uploads/2019/11/11.15.19.pdf http://www.offsetguide.org/wp-content/uploads/2019/11/11.15.19.pdf https://www.sepa.org.uk/media/28988/guidance-on-landfill-gas-flaring.pdf http://www.aqmd.gov/docs/default-source/permitting/toxics-emission-factors-from-combustion-process-.pdf?sfvrsn=0 https://www.eesi.org/papers/view/fact-sheet-landfill-methane https://www.co2offsetresearch.org/consumer/Methane.html https://americancarbonregistry.org/carbon-accounting/standards-methodologies/landfill-gas-destruction-and-beneficial-use-projects https://americancarbonregistry.org/carbon-accounting/standards-methodologies/landfill-gas-destruction-and-beneficial-use-projects/landfill-gas-destruction-and-beneficial-use-methodology-v1-0-march-2017.pdf

ESG Funds & Climate Impact // BACK This report was last updated in November 2021. It may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We may revise this report in the future, depending on our research capacity and research priorities. Questions and comments are welcome. Download the full report: 2021-11 ESG Funds & Climate Impact .pdf Download PDF Note: This article is intended for research and information purposes only in order to review the potential positive climate impacts of available investment opportunities, not their financial performance, and therefore should not be construed as investment, financial, or other advice, or construed as a recommendation to buy, sell, or otherwise transact in any investment. We do not endorse any specific product that is referenced in this article. This article is not a replacement for personal financial advice and it is strongly recommended that you review your own personal financial situation and seek professional investment and/or financial advice before engaging in any investing. Reading this article does not create a professional relationship and we are not in the business of providing investment or financial advice. The information provided in this article is as accurate as possible, however errors may occasionally occur and we are not responsible for any errors. We expressly disclaim any liability or loss incurred by any person who acts on the information, ideas, or strategies discussed in this report. Executive Summary Is it possible to save for retirement, a home purchase, or college tuition while also pushing corporations to act on climate change? We think it might be. In this overview, we explore the ways Environmental, Social, and Governance (ESG) investing in mutual funds and exchange-traded funds might move the needle on corporate climate action and reduce GHG emissions. Because ESG includes “environment” as one of its pillars, it is often the starting point for retail investors hoping to use their money to have an impact on climate change. But we find that ESG funds are often not designed to have an impact on any environmental, social or governance outcomes at all. The rise of these sustainable investment funds has been driven by three types of investor motivation: values alignment, financial performance and (less frequently) impact. Additionally, we find ESG scores for specific companies to be an unreliable shorthand for climate performance. This is because ESG scores for companies rely on voluntary disclosures, often contradict each other, and aggregate climate metrics with many other metrics. This allows companies to obscure their climate record with better performance on other metrics. We find ESG, in general, to be an unreliable shorthand for climate-forward investments. There are some ESG funds that do claim to have an impact on the climate. Although investment managers use an array of terms to describe how their climate-focused funds deviate from conventional funds, we suggest it boils down to two main approaches: portfolio composition, or “what the fund holds”; and shareholder activism, or “what the fund does.” Climate funds vary in the type of information they use to build their portfolio (e.g., ESG scores, sector or industry, specific practices) and the way they use that information (e.g., screening or weighting certain companies in their portfolio). The most common strategy portfolio composition strategy used by climate funds is fossil fuel divestment. Climate funds also vary in the degree of shareholder activism they engage in. These funds can pressure companies to change behavior by introducing shareholder resolutions, voting on proxy ballots, and other informal strategies. Many climate funds combine some type of portfolio composition approach with shareholder action. But how likely is it for these two main strategies to lead to climate impacts? For that, we explore the theories of change and available empirical evidence, summarized in Table 1 below. We find that the evidence on the impact of fossil fuel divestment is mixed. Based on our current research, we see the most potential for near-term impact on climate from funds that concentrate on shareholder engagement, either on its own or in coordination with divestment strategies. As such, we recommend climate-focused retail investors pay attention to a fund’s track record of shareholder engagement, rather than just its portfolio composition strategy. We close by describing three main categories of funds that are using shareholder activism to push for climate action. We did not consider the financial viability of these funds, beyond a basic observation of the fund fees, and the examples we provide do not constitute investment advice. Smaller, newer funds which appear to have transparent, sophisticated climate investment strategies and a stated intention to leverage shareholder engagement to induce climate action but are too new to have any track record of success (e.g., Engine No. 1’s ETF, Carbon Collective, and others). These funds also claim to offer fees that are comparable to conventional funds. Older, medium-sized funds with proven track records of pushing companies to reduce GHG emissions through shareholder engagement (e.g., Green Century Funds, Trillium Asset Managers, Zevin Asset Management, and others). These types of funds often charge fees that are somewhat higher than fees charged by non-sustainable actively managed funds. Larger, often generic funds which have greater influence over proxy votes due to the size of their holdings and tend to outperform their peers in their support for climate resolution (e.g., Hartford Funds or Columbia Threadneedle). We also note that the two largest asset managers in the United States, Blackrock, and Vanguard, had some of the lowest rates of support for climate resolutions in 2020. Investing for the climate is challenging. Individual retail investor choices are necessarily an indirect path to impact but investing in funds that use their influence as shareholders to drive climate action appears to be a promising strategy. Good signs include funds actively engaging their portfolio companies on climate issues, funds introducing and voting in favor of climate-forward resolutions, and funds that have sophisticated, climate-specific, transparent criteria for inclusion. Download the full report above for more about ESG, the academic literature on its impact (or not), and our conclusions on climate impact.

Beyond Zero Emissions: Recommendation // BACK Last updated in 2024. Giving Green recommends Beyond Zero Emissions (BZE) as one of Australia's most effective organisations combating climate change. Their evidence-based theory of change is driving comprehensive and actionable research worthy of support. Australia has many comparative advantages in decarbonising emissions from heavy industry. Thus, investments in this area can lead to reduced global emissions and a stronger Australian economy. However, the path to implementing needed changes is often fraught with political potholes and policy detours. Beyond Zero Emissions develops plans that the government can adapt to advance new clean industries, decarbonise domestic and export emissions, and leverage promising economic opportunities. Beyond Zero Emissions’ policy expertise can contribute to substantive policy changes and industry actions to significantly reduce carbon emissions in Australia and globally. Beyond Zero Emissions’ ambitious plan for accelerating the development of green industry in Australia would impact Australia’s climate output and reduce hard-to-decarbonise industrial emissions worldwide. Beyond Zero Emissions reported a funding gap of $1.4 million AUD for the 2024 period and would use additional funds to further expand its policy impacts. For more information, please see our deep dive research report and a summary below. What is Beyond Zero Emissions? Launched in 2006, Beyond Zero Emissions is an Australia-based nonprofit and think-tank focused on industry engagement, policy research, and advocacy that seeks to transition Australia to a zero-emissions economy. How can Beyond Zero Emissions help combat climate change? Beyond Zero Emissions aims to combat climate change by engaging with industry, producing policy research, and engaging in public policy advocacy. It focuses on decarbonising Australian heavy industry and heavy industry exports, which comprise a substantial and neglected portion of Australian emissions. What does Beyond Zero Emissions do? Beyond Zero Emissions engages with industry and experts to identify large-scale methods of decarbonising sectors of the Australian economy. This research contributes to specific policy proposals with the government at state and federal levels (prioritising exported emissions, the largest portion of Australia’s emissions profile). What evidence is there of Beyond Zero Emissions’ effectiveness? BZE has made significant progress in passing climate policy and accelerating critical climate-relevant projects. Experts we interviewed cited BZE’s work on Renewable Energy Industrial Precincts (REIPs) and the National Supergrid as integral to the creation of recent REIPs and renewable energy zones. Experts further cited Beyond Zero Emissions’ Million Jobs Plan as having a significant impact on climate policy at both federal and state levels. More recently, BZE’s policy proposals have fast-tracked $3 billion of government investment in transition projects, with the federal Rewiring the Nation program likely being influenced by BZE’s National Supergrid report. Similarly, a number of legislative and funding recommendations from BZE’s REIP program have been adopted in the National Net Zero Authority, the National Reconstruction Fund, and the Powering the Regions fund. BZE’s future work seems highly promising. Their ongoing work in research and engagement to inform policy details of the Australian Renewable Industry Package, a potential $100 billion investment, pushes for an ambitious clean industry export strategy which, if implemented, could power some of Australia’s most impactful and economically beneficial work on climate. BZE is also recognised as a significant contributor to the climate movement at large. In 2020, BZE was awarded Best International Climate Change and Environment Think Tank by the UK’s Prospect Magazine and received the Environmental Philanthropy Award from Philanthropy Australia. What would Beyond Zero Emissions do with your donation? Donating to Beyond Zero Emissions will advance their successful work advocating for the deployment of Renewable Energy Industrial Precincts and support policy impacts relating to clean Australian exports, cleantech supply chains, and industrial decarbonisation. Funding would also be used on projects to counter disinformation about clean technologies. Why is Giving Green excited about Beyond Zero Emissions? Beyond Zero Emissions supports green industry development in Australia in an economically sustainable way and focuses on high-scale solutions. We think that there is strong evidence to support its theory of change, that Beyond Zero Emissions has positioned itself as a leader in the Australian climate space, and that it is implementing highly impactful work. These factors drive our funding recommendation. Donate to Beyond Zero Emissions to advance the decarbonisation of industrial emissions in Australia and worldwide. Giving Green is part of IDInsight Inc., a charitable, tax-exempt organization. This is a non-partisan analysis (study or research) and is provided for educational purposes. // BACK

Purchasing from Compliance Carbon Markets // BACK This report was lightly updated in May 2023 to better align with our overall research methodology, but core findings and facts were not changed. The previous version of this report was published in October 2021. This report may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We may revise this report in the future, depending on our research capacity and research priorities. Questions and comments are welcome. Summary Cap-and-trade compliance markets have been around for thirty years and represent a market-based approach to limiting greenhouse gas (GHG) emissions from industries under their regulation (e.g. power generation, transportation). Recently, brokers have emerged that can buy and retire pollution allowances on these markets on behalf of customers looking to “offset” their GHG emissions. Giving Green evaluated these brokers, the markets they participate in, and the underlying industries regulated, and determined that we were not ready to recommend buying and retiring allowances from compliance markets at this time. It was difficult to determine the degree of credit the specific cap-and-trade programs deserve for emissions reductions given potential design weaknesses in these markets related to offsets and leakage. And while some brokers were taking more innovative approaches to engaging in these markets on behalf of customers, their model was too new to determine real world efficacy. Purchasing Offsets from Compliance Carbon Markets How it works Two main categories of carbon offset markets exist – voluntary and compliance markets. Voluntary markets allow for businesses and individuals with voluntary intentions to meet a carbon neutral or net zero claim to purchase carbon offsets from project developers. The compliance market is for offsets associated with regional or international pacts such as the Kyoto accords and national or regional cap-and-trade systems. In the United States, examples include the California Air Resources Board’s (CARB) cap-and-trade system and the Regional Greenhouse Gas Initiative (RGGI). In these kinds of market-based cap-and-trade systems, polluters must purchase an allowance for each ton of CO2 they emit annually. Offset projects assessed by Giving Green are necessarily part of the voluntary market. However, compliance market brokers have recently emerged to make it possible for those normally limited to buying offsets in voluntary carbon markets to participate in compliance markets. Individuals or businesses can pay a broker to purchase and retire allowances traded on compliance markets to “offset” their greenhouse gas (GHG) emissions. A climate benefit is created by reducing the number of allowances available for polluters to buy (and increasing the price of remaining allowances) and effectively reducing GHG emissions. This section will cover the benefits and risks of intervening in compliance markets in this way. While there may be some immediate climate benefits by restricting allowances to emit GHGs in a sector under a cap-and-trade system, there are features of compliance markets – particularly the fact that compliance markets are not truly capped – that can dilute the impact of these initiatives. Compliance market brokers The brokers that have emerged with the ability to participate in compliance markets mostly function the same way. Individuals or businesses can pay these brokers to purchase and retire allowances from compliance markets equal to the volume of GHG emissions they wish to offset. We briefly reviewed the work of four such brokers as examples of those operating in this space: The Adirondack Council retires allowances equal to 1 ton of GHG emissions from the RGGI market for every $25 carbon reduction certificate they sell on their website. Carbon Lighthouse, an NGO, offers a similar service and has retired 90,000 tons of GHGs through the RGGI and California cap-and-trade program. Air to Earth purchases and retires allowances from the RGGI market and then applies a portion of the sales revenue to finance an inhouse direct air capture (DAC) project and to support advocacy organizations working on carbon removal. C limate Vault purchases allowances on RGGI and California’s cap-and-trade market, then “vaults” these allowances, or temporarily retires them, with the intention of eventually selling the allowances back into the relevant compliance market. Climate Vault uses the proceeds from selling allowances back into the market at a later date to buy carbon removal credits from companies that have been vetted by their expert team. Mechanism Purchasing and retiring emissions allowances on compliance markets reduces GHG emissions entering the atmosphere, rather than removing existing GHGs, and therefore is considered emissions avoidance. Some brokers, like Climate Vault and Air to Earth, incorporate additional mechanisms of supporting carbon dioxide removal. Air to Earth claims to use the proceeds to support carbon removal advocacy efforts and fund an in-house direct air capture initiative. Climate Vault intends on selling purchased allowances back into compliance markets and using the proceeds to purchase carbon removal credits from vetted companies. Air to Earth’s progress on advancing carbon removal using their proceeds is difficult to verify. Climate Vault has not yet had an opportunity to use proceeds from the sale of allowances to buy carbon removal credits on a one-to-one basis (the organization is planning to undertake this in 2022). These approaches are too new and unvetted for us to assess their efficacy, and we therefore cannot yet consider them to be carbon removal mechanisms. Causality Causality is difficult to determine, as the actual GHG reductions caused by these brokers depends on the actions of the bodies that govern these carbon markets and of the individual polluters regulated under them. Compliance markets are not truly capped. Carbon markets can theoretically release more allowances into the market if prices get too high, or they can withhold or eliminate allowances they consider to be surplus after a period of time . These actions can significantly disrupt the impact claims made by compliance market brokers. For example, if a broker purchases and retires a large quantity of allowances on behalf of their clients, restricting available allowances and increasing prices, markets may simply release more allowances. Some compliance markets, as in Europe’s case , have begun to withhold or eliminate allowances they consider to be surplus. The active participation of brokers buying and retiring credits may result in markets withholding or eliminating surplus allowances more slowly, meaning the cap on emissions from polluters is higher than it would have been without brokers’ purchases. Both of these responses to broker purchases and retirements by compliance markets could significantly dilute the impact claimed by brokers. However, North American markets, like California’s cap-and-trade program and the RGGI, are more insulated from these changes because decisions around the allowance cap are made years in advance, and price triggers that would result in releasing more allowances are higher than current prices. RGGI’s price trigger to release more allowances is $13 per allowance (increasing by 7% per year ) which is approximately 40% higher than RGGI’s current price at $9.30 . It is worth noting that prices have increased substantially over the past several auctions, making it possible for the price trigger to be reached. California’s cap-and-trade program’s cap is set to decline by an average of 4% per year until 2030 and by approximately 3% of the 2020 cap per year under RGGI . For this reason, the brokers we reviewed engaged exclusively in North American compliance markets. The track record of the compliance markets themselves is difficult to ascertain. In California, where the cap-and-trade program covers 85% of the state’s emissions, statewide GHG emissions declined 5.3% between 2013, when the program was formed, and 2017. Under RGGI, power plant emissions reductions in participating states are down 47% , exceeding reductions of power plants in the rest of the United States by 90%. However, it is difficult to establish causality between emissions reductions and specific programs and policies. In the same time these cap-and-trade programs have existed, energy efficiency technologies have improved, renewable energy costs have come down, and other climate policies have come into effect. Critics point out that California’s program has made too many concessions to the oil and gas industry, does not hold individual polluters responsible, and potentially weakens other climate regulations. Polluters have the ability to use carbon offsets towards meeting a small portion of their compliance obligation, which risks diluting the impact of cap-and-trade programs given the challenges seen with forestry offsets in particular. Polluters may also choose to move their polluting activities to non-regulated states to bring their internal costs down, meaning that despite regional decreases in emissions, overall emissions remain the same. For example, under RGGI, electricity imported from outside the participating states has significantly increased in the last 10 years . This is a form of leakage, where carbon pollution just shifts from one jurisdiction to another. Research is being done to understand the impact of overlapping climate policies and other unintended consequences of cap-and-trade systems. Establishing a causal link between cap-and-trade programs and actual emissions reductions – especially in an environment of overlapping climate policies, industry loopholes, and lower costs for green technology – can be difficult. As a result, we rate purchasing from compliance carbon markets as low on our causality metric. Project-level additionality Because there is not a specific project being supported through these brokers, this metric does not apply. Marginal additionality Setting aside broader causality concerns, these purchases do have a high degree of marginal additionality – depending on whether there are surplus allowances in the market. For every ton an individual or business purchases from a broker, one ton is purchased and retired from a compliance market like RGGI. Marginal additionality is made even harder to ascertain when it comes to claims made about additional climate benefits beyond allowance retirement: for example, Air to Earth’s claim to support an in-house direct air capture project or Climate Vault’s claim to support carbon removal enterprises with the proceeds from the sale of carbon allowances back into compliance markets. These efforts are too new and untested for us to assess the marginal additionality of these approaches. Overall, we assess the marginal additionality of these brokers as medium given the persistence of surplus allowances in these markets and the potential for brokers to sell allowances from prior year auctions. Permanence Brokers that purchase and can prove that they have permanently retired allowances (Adirondack Council, Air to Earth, and Carbon Lighthouse) rate highly from a permanence standpoint. This claim is difficult to make for Climate Vault, however, since the company plans to sell allowances back into the market, and thus far has not funded any carbon removal projects that we can assess for permanence. Further, given the high cost and limited supply of permanent carbon removal, it is yet to be determined whether Climate Vault can secure permanent carbon removal credits on a one-to-one basis using proceeds from the sale of allowances. Cost The cost to purchase and retire compliance market allowances varies by broker. Adirondack Council offers to permanently retire one ton of emissions allowances from RGGI at a cost of $25/ton. Air to Earth offers multiple subscription packages. Their “Starter Plan” claims to allow buyers to “remove” 4 tons of CO2 every year for $5/month or $60/year - approximately $15/ton of CO2. Air to Earth’s use of the term “remove” in this context refers to the retirement of allowances from a compliance market. Carbon Lighthouse will retire 1 ton of CO2 from RGGI for $12/ton. Climate Vault allows individuals to offset 1 ton of CO2 for $14.78/ton With costs ranging from $12 to $25/ton, these offsets are comparable with many renewable energy and forestry offsets. The underlying cost of the allowances vary depending on the compliance market used and the vintage of the credit. All of the providers studied purchase and retire allowances from the RGGI market. In its latest auction as of this writing (September 2021), the price of RGGI’s allowances was $9.30/ton , and it was as low as $2.53/ton as recently as June 2017. The price of California’s cap-and-trade program’s allowances in its latest auction (August 2021) was $23.69/ton, up from $10/ton from its first auction (November 2012). In order to keep their actual costs lower than their selling price, brokers can exclusively participate in the RGGI compliance market with a lower allowance cost, diversify across multiple compliance markets, or retire allowances that were purchased from previous auctions at lower prices. What brokers are doing with the premium they are charging can range from supporting local environmental projects to advocacy efforts and in-house projects to fundraising and administrative costs. There is little transparency, however, on the breakdown of how remaining funds are used after allowances are purchased. Finally, many of the brokers operating in this space are 501(c)3 entities, meaning proceeds will not be going towards their profits while making purchases potentially tax-deductible. Co-benefits The additional benefits of buying from these brokers can be assessed on a broker level and a market level. At a broker level, Adirondack Council, Air to Earth, and Carbon Lighthouse claim to use part of the funds to support climate advocacy efforts or in-house environmental projects. Given the lack of publicly available details on these efforts, we believe the greater co-benefits exist with the revenue received from the cap-and-trade markets themselves. Cap-and-trade markets like RGGI and the California cap-and-trade program were designed to use the proceeds from allowance sales to address jurisdictional climate goals and benefit small businesses and communities. Proceeds from allowance sales go towards financing clean energy projects, direct assistance to bring down the cost of energy for low-income communities, improving air quality, and other environmental priorities for participating states. RGGI estimates its 2019 auctions lowered electricity bills for 260,000 households and 1,400 small businesses and supported projects that will avoid the release of approximately 2.5 million tons of CO2. However, the cap-and-trade programs have come under fire for allowing polluters to meet part of their compliance obligation by buying offsets, and in some cases maintaining or even increasing polluting activities in proximity to low-income communities and communities of color. Given the benefits from investments made with proceeds from allowance sales, the opacity of broker activities with these funds, and the challenge offsetting presents, we assess co-benefits as medium. Giving Green’s Assessment While we are intrigued by the model that brokers have used to intervene in compliance carbon markets, we are not ready to pursue recommendations of any of these brokers at this time. This is primarily because it is not clear that the specific cap-and-trade programs involved have been designed in a way to avoid our causality concerns, and the groups that are taking more innovative approaches in this space are too new to have proven their model.

High-Impact Climate Giving in Australia // BACK Australian philanthropists can maximise impact and reduce global emissions by up to 7% by backing initiatives focused on decarbonising heavy industry exports. Download our white paper: High-Impact Climate Giving in Australia .pdf Download PDF • 2.09MB This report was last updated in June 2024. A summary of our findings is as follows: We think the most promising philanthropic strategy to address climate change from within Australia is decarbonising Australia’s industry exports. This strategy maps well with all five of our impact indicators: systems change, global impact, comparative advantage, political context, and neglectedness. We also analysed reducing coal and natural gas exports, but we found this strategy to be less neglected and less politically viable. Australia is uniquely well-placed to decarbonise industrial emissions globally. Due to Australia’s unique comparative advantages—abundant solar and wind resources, abundant raw materials, and a strong export market—it may be able to decarbonise a significant portion of heavy industry at a lower cost than almost any other country would be. This approach would affect Australia’s domestic heavy industry, and also a significant portion of global heavy industry emissions through Australia’s exports. Some economists estimate that Australia could decarbonise an estimated 7% of global emissions. This approach is high scale, partially due to the high carbon footprint of Australian exports. The contribution of Australian exports to global emissions is several times larger than all of Australia’s domestic emissions combined. Carbon-relevant exports include fossil fuels and raw materials for heavy industry such as iron and aluminium. As an example, this approach could see Australian iron ore turned into iron here using green hydrogen, rather than exported overseas and processed using high-emissions technologies. This approach is ready for philanthropic support. Recent years have seen a rise in nonprofits working on decarbonising Australia’s heavy industry exports by advocating for greater deployment of renewables, upgrading and expanding the grid, and financing industrial development and innovation. We identified three promising focus areas within this strategy. We believe the most effective approaches to decarbonising heavy industry and heavy industry exports are to electrify on a large scale, enhance transmission networks, and implement policies that encourage the development and financing of industrial technology. These actions can also assist in creating alternative industries and exports for those regions currently reliant on heavy industry. We acknowledge a few key uncertainties in this strategy. Key uncertainties include the likelihood of technological progress in other areas lessening Australia’s comparative advantage in green industry, the efficacy of government incentives, and the willingness of other countries to import cost-competitive industrial goods from Australia. Overall, we think it is important to direct more philanthropic funding toward creating and expanding green heavy industries in Australia. This view is informed by the significant opportunity size, a perceived high level of tractability, challenges of decarbonisation in this sector in other countries, comparative advantage in the Australian context, and the comparatively low level of funding these sectors have received so far. Following this investigation, we identified actionable routes for philanthropists to direct funding to this strategy. While outside the scope of this report, we conducted a search for the most effective nonprofits decarbonising heavy industry. The nonprofits we found form our list of top climate nonprofits in Australia . // BACK

Energy for Growth Hub // BACK Overview The Giving Green Fund plans to award an unrestricted grant to the Energy for Growth Hub to support its work in various areas, including contract transparency for clean energy markets; Energy Security Compacts, an initiative that would enable the US to swiftly respond to its allied partners’ energy concerns; and nuclear financing in emerging markets. Energy for Growth primarily falls within our philanthropic strategy of supporting an energy transition in low- and middle-income countries (LMICs) and, to some extent, our philanthropic strategy of supporting nuclear power as a way to diversify energy portfolios . Please see Giving Green’s deep dive reports, linked above, for more information, including risks and potential co-benefits, recommended sub-strategies, theory of change, funding need, and key uncertainties. Last updated: October 2024. What is Energy for Growth Hub? Energy for Growth Hub is a think tank headquartered in Washington, DC, with a global network of researchers and advocates. Its research, policy advocacy, and thought leadership focuses on promoting energy abundance and climate resilience. Its work focuses on four main areas: (1) creating progress indicators that link economic growth with ending energy poverty; (2) exploring opportunities for new low-carbon technologies in emerging markets, especially in Asia and Africa; (3) promoting open, competitive clean energy markets and effective development finance; and (4) examining the connections between climate, energy, and development policies. Energy for Growth was founded in 2018. What are we funding at Energy for Growth, and how could it help reduce greenhouse gas emissions? Contract transparency: In many LMICs, utilities often make deals with private developers for new power capacity, without revealing the contract terms to the public. This lack of transparency slows clean energy projects, keeps prices artificially high, raises investment risks, and hinders the shift from fossil fuels to cleaner energy by preventing fair assessment of energy options. Energy for Growth and its partners are pushing for transparency, both through top-down support from leaders and bottom-up efforts from civil society and policymakers. We think increased transparency could accelerate reductions in greenhouse gas emissions by (1) helping countries avoid carbon lock-in and (2) expediting a clean energy transition compared to the counterfactual. With more funding, Energy for Growth would speed up its advocacy efforts, strengthen its work with the Asian and African Development Banks, expand its global data collection, and work with partners in Asia and Africa to agree on legal ways to ensure contract transparency. Energy Security Compacts: Energy for Growth has worked alongside a partner organization to propose Energy Security Compacts, a delivery mechanism for multi-year bilateral investments that enhance energy security among US allies. Compact development would include identifying and sequencing priority investments and reforms in selected countries and committing the US to providing key services, followed by years of implementation and monitoring. We believe there could be bipartisan political momentum for the US to support allied countries that rely on US competitors for energy. According to Energy for Growth, the markets where Compacts would be implemented would most likely address their energy security challenges by building out renewables. If true, we think this targeted work could help renewables scale more quickly and lead to faster reductions in emissions. Nuclear financing in emerging markets: Energy for Growth has worked with a partner organization to map advanced nuclear markets and nuclear cooperation agreements as communication tools when engaging with policymakers. Their argument is that future demand will be in emerging markets and there is a strong need to develop financing options that will help build overseas demand for advanced nuclear reactors. Focusing on international markets could lower emissions if it supports new nuclear power projects that replace or prevent the need for new fossil fuel plants. Energy for Growth would use additional funds to update its global maps and engage with the US International Development Finance Corporation (DFC), an agency created to catalyze US investment in overseas infrastructure projects. It plans to watchdog DFC’s progress in financing nuclear projects and propose specific changes to DFC’s reauthorization. Why do we think Energy for Growth Hub will use this funding well? Energy for Growth Hub’s past success includes being the first to propose a consolidated development finance agency, which we think helped inform the establishment of the DFC, and working with its partners to help overturn the DFC's ban on financing nuclear technologies. Energy for Growth was also involved in supporting Ghana’s public register of power purchase agreements. We think Energy for Growth will use this funding well because it has demonstrated that it is skilled at building bold but practical policy proposals. Given its global mindset, it also seems likely to us that increased funding could help Energy for Growth replicate its efforts and success elsewhere in the world. Furthermore, we think Energy for Growth has been strategic in pushing relatively niche policies, which makes us believe funding to Energy for Growth would be additional. For more on the difference between the grantees of the Giving Green Fund and our Top Nonprofits, please see this blog post on the Giving Green Fund. This is a non-partisan analysis (study or research) and is provided for educational purposes.

Clean Air Task Force: Recommendation // BACK Clean Air Task Force: Recommendation Last updated in November 2024. Clean Air Task Force (CATF) is one of the top climate nonprofits selected by Giving Green in 2024. We previously recommended CATF in 2023 , 2022 , 2021 , and 2020 . CATF has a history of successfully advocating for a wide array of climate provisions in the US and is expanding its influence internationally. In particular, CATF has begun to scale its work on technology innovation to include global implementation and commercialization, focusing on technologies that are either nascent or lack broad support from civil society. By raising awareness and advocating for favorable policies in these neglected areas, we think CATF can accelerate decarbonization in sectors that might otherwise struggle to secure funding. When we reassessed CATF in 2024, we closely analyzed three program areas aligned with our sectors of focus: superhot rock geothermal energy, zero-carbon fuels, and transportation decarbonization. We are impressed by the teams’ technical analysis, stakeholder engagement, and policy advocacy. While we have not assessed CATF’s other program areas (advanced nuclear energy, carbon capture, energy access, fusion energy, infrastructure deployment, land systems, power plants, and methane pollution prevention) in detail, we remain confident in its overall work and recommend unrestricted funding for the organization at large. CATF would invest additional funds to support the multi-year strategies of its existing programs and continued international expansion. Support would also enable the organization to expand its policy capacity in key jurisdictions. For more information, see our deep dive on CATF , a summary below, and our broader reports on geothermal energy and decarbonizing aviation and maritime shipping . What is CATF? CATF’s work elevates critical emerging climate technologies that need robust investment and supportive policies to scale effectively. How could CATF help address climate change? CATF’s work elevates critical, emerging climate technologies that need robust investment and supportive policies to scale effectively. What does CATF do? CATF’s work to support technological innovation can be generalized into three categories: identifying technical and market barriers through modeling and systems analysis, engaging with stakeholders to align strategies to address these barriers, and advocating for policies supporting technological development and market growth. What are some of CATF’s historical accomplishments? CATF helped secure key climate provisions in the bipartisan US Energy Act of 2020 and provided technical assistance and input on important authorization and funding measures in the Infrastructure Investment and Jobs Act (IIJA). It also successfully advocated for Inflation Reduction Act (IRA) provisions relating to cutting methane pollution, advancing neglected low-emissions technologies, and making tax incentives and grants stackable. CATF was instrumental in catalyzing the Global Methane Pledge, introduced by US President Joe Biden and EU President Ursula von der Leyen in September 2021, and signed by more than 100 countries at COP26. Under this pledge, countries collectively agree to reduce methane emissions by 30% by 2030. What’s new in 2024? CATF has been deeply engaged in advancing key policy priorities in the US and EU that align with our philanthropic strategies, including a federal clean fuel standard and R&D funding for advanced geothermal technologies. Moving forward, CATF is continuing its expansive policymaker engagement and education on these crucial policy levers. CATF is conducting first-of-a-kind modeling of the full U.S. transportation sector to assess the impact on fuel demand and emissions under a range of potential policy developments. In terms of its work on geothermal, CATF continues to provide thought leadership on superhot rock geothermal and has broadened its policy work to include supporting demonstrations of existing next-generation geothermal technologies. CATF’s efforts underpin its goals to enable positive policy progress on key technologies in priority geographies. What would CATF do with your donation? CATF plans to expand its geographical scope and policy focus to meet the global decarbonization challenge. We think it is well-positioned to capitalize on the current political climate, influence policy debate within the US and EU, and promote pragmatic climate pathways in Africa and the Middle East. Why is Giving Green excited about CATF? Giving Green is particularly excited about CATF’s work in sectors that align with our 2024 assessment of scale, feasibility, and funding need, including superhot rock geothermal energy, zero-carbon fuels, and decarbonizing maritime shipping and aviation. Explore ways to give to Clean Air Task Force and more. Clean Air Task Force is a 501(c)(3) tax-exempt organization in the United States. We are only offering an opinion on CATF, and not on CATF Action. This is a non-partisan analysis (study or research) and is provided for educational purposes.

Water Purification Technology // BACK This report was last updated in November 2020. It may no longer be accurate, both with respect to the evidence it presents and our assessment of the evidence. We may revise this report in the future, depending on our research capacity and research priorities. Questions and comments are welcome. Summary Offsets based on water purification technology rely on the assumption that the technology replaces the practice of boiling for purification. In general, all parties would agree that households receiving the filters are not currently boiling water nor do they plan to. However, most water purification offsets are granted on the theory of “suppressed demand,” which is based on the concept that households have a right to clean water, and if they were wealthy enough, they would have boiled the water in the absence of the new technology. Although endorsed by the UN’s Clean Development Mechanism (CDM), we don’t find this logic tying water purification to decreased emissions convincing, and therefore we do not recommend any offsets tied to water purification. Offsets based on water purification are unlikely to lead to avoided emissions, and therefore we do not recommend purchasing them. Water purification as a carbon offset Water purification offsets rely on the fact that purifying water with purification devices like chlorine tablets requires less carbon than boiling water would. The key assumption is that providing alternatives to boiling will cause households currently boiling water to switch to less carbon-intensive water purification methods. No project first verifies that households are actually boiling water, to begin with. Causality There is little evidence that providing a water filtration alternative to boiling water to households has a causal impact on greenhouse gas emissions. In order to certify emissions from water purification, project implementers do not have to show that households would have been boiling water in absence of the new technology. In fact, boiling water for purification is extremely rare throughout the world, as it is very expensive to do so. Instead, offset certifiers justify water purification offsets through the concept of “suppressed demand,” which has been endorsed by the UN’s Clean Development Mechanism (CDM) as a valid way to structure offsets. The logic behind this concept is as follows: poor people have a right to certain basic necessities, such as clean water. But in some cases, they are not accessing these necessities due to poverty. If they were not poor, they might use carbon-intensive approaches to achieve these necessities. By providing a carbon-neutral technology to provide these same necessities, we are providing human rights in a way that previously would only have been possible through emitting carbon. In other words, in the absence of the water purification technology and had they been wealthy enough to achieve their basic rights, households would have burned fuel to boil water. This logic is problematic for a number of reasons. First, it clearly does not require any emissions to be avoided by providing the technology. This is highly problematic for an offset. Second, there is no evidence that households would indeed boil water if they had the resources to do so. There are no examples we have seen of countries in which boiling water has become a common purification practice as the country has developed. Instead, other systems (such as UV purification) are much more common. The logic behind water purification offsets (specifically the “suppressed demand” assumption) has been challenged frequently over the years. For instance, this SSIR article called out the absurdity of the situation, and spurred some extremely interesting and heated discussion in the comments, including by the former CEO of Gold Standard. Additionally, experts agree that funding water purifiers is unlikely to decrease emissions. As described this assessment of expert opinions, the concept of suppressed demand is “considered ‘fiction’ in terms of baseline measurement” and “contradicts the goal of carbon credits that aims to reduce emissions”. Project-level additionality Water purification projects tend to give away purification technology, and therefore rely on donor funding to operate. If projects are funded primarily by offsets, they would likely satisfy project-level additionality. For projects that sell purification technology, additionality would be less clear. Marginal additionality and Permanence Since purification technology is low-cost and modular, it is likely that in a well-run project, additional offset sales would lead to additional purification technology being distributed. Therefore, they could satisfy marginal additionality. Co-benefits Water purification offsets may have the co-benefit of providing households with a means to purify their water, thus improving health. This co-benefit is most likely to occur when households are not currently boiling their water, and so is unlikely to exist if the offsets work properly. If households do boil their water, however (which we believe to be an untenable overall assumption), then these offsets may have the co-benefit of limiting exposure to indoor air pollution depending on the fuel source used by households to boil their water. Assessment of water purification projects Overall, it is clear that purchasing offsets for water purification do not avoid emissions whatsoever, and therefore we do not recommend purchasing them. References Summers, S. K., Rainey, R., Kaur, M., & Graham, J. P. (2015). CO2 and H2O: Understanding Different Stakeholder Perspectives on the Use of Carbon Credits to Finance Household Water Treatment Projects. PloS one, 10(4), e0122894. https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0122894 Starr, K. (2011). Thirty million dollars, a little bit of carbon, and a lot of hot air. Stanford Social Innovation Review Blog. https://ssir.org/articles/entry/thirty_million_dollars_a_little_bit_of_carbon_and_a_lot_of_hot_air