Carbon credits offer opportunity for biodiesel producers

By Jim Murphy | October 16, 2007
Over the past two years, Carbon Green LLC and Environmental Credit Corp. (ECC) have been working to develop protocols that would enable biodiesel producers to qualify for carbon credits. Currently, the protocols are being developed for submission to the Chicago Climate Exchange (CCX), the only legally binding, rules-based exchange for greenhouse gas (GHG) emissions trading in the United States. This could be an invaluable opportunity for biodiesel producers, not only as an income generator, but also to reinforce that biofuels are alternatives to "business as usual."

Although the biofuel production protocols are still in development, we have been successful in bringing carbon credits to a biofuel producer for switching its fuel source. Corn Plus, one of Minnesota's largest ethanol producers, is our first client to join CCX. The refinery uses a fluidized bed biomass reactor that produces steam to fuel its operations. The technology reduced the plant's natural gas usage by more than 50 percent and decreased the plant's GHG emissions to a point well below the level required by its CCX membership commitment, qualifying Corn Plus for carbon credits. Although biodiesel refineries have different carbon profiles than ethanol plants, similar methods for reducing GHG emissions are an option.

Carbon Credits Defined
Carbon credits are actively traded in Europe and the United States and result from monetizing the economic value of defined environmental benefits, most commonly a reduction in GHG emissions. Emission reductions are defined by a rigorous set of scientific rules to ensure that a reduction actually occurs. To make carbon credits tradable, CCX has created a unit of measure known as the Carbon Financial Instrument (CFI). One CFI represents 100 metric tons of carbon dioxide emissions reduction, or its equivalent in other GHGs. All GHGs are given a carbon dioxide equivalent rating using carbon dioxide as the standard.

The CCX uses a cap-and-trade system whereby its members commit to reduce their GHG emissions. Membership is voluntary, but exchange members are legally bound to meet their commitment. If the member company cannot meet its reduction commitment, it must purchase carbon credits, most often from offset projects. As the CCX Web site states, CCX issues offset credits to "owners or aggregators of eligible projects on the basis of sequestration, destruction or displacement of GHG emissions."

How Aggregators Can Help
As offset aggregators, Carbon Green and ECC not only develop new ways for our clients to earn carbon credits, but also manage offset projects by providing services to implement and measure emission reductions. We are developing protocols substantiating that biofuel producers should be awarded credits for their activities that displace GHG emissions. While there are still challenges facing the protocols' approval due to a rapidly changing political environment, we believe that the science is sound and validates our efforts. With current projects including agricultural and landfill methane destruction, soil and forest carbon sequestration and renewable energy production, ECC is one of the leading aggregators in the United States. They have an established reputation as a reliable and successful offset aggregator to CCX.

Carbon Green joined with ECC to assess and develop offset protocols specifically for biofuels. By focusing on biodiesel, ethanol and biomass, Carbon Green has developed strong relationships with leaders in these industries, as well as with biotechnology experts. These relationships will facilitate our goal of increasing efficiency and profitability for our biofuel clients.

We think the future is bright for biofuels in the United States and look forward to helping producers add value through the emerging carbon markets.

Jim Murphy is president of Carbon Green LLC. Reach him at or (312) 432-6570. For more information, visit
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