The Climate Trust 2005 Annual Report

Printed on recycled paper with soy-based inksWhat does The Climate Trust do? The Climate Trust invests funding from power plants, businesses, and individuals into high quality project-based emissions reductions that offset greenhouse gas (GHG) emissions. Project-based emissions reductions play an important role in fighting global warming, because they allow society to address climate change at the lowest overall cost, which leaves more money for everything else we want, such as food, shelter, health care, security, and recreation. Also known as offsets, they are an effective means of acting against global warming now, while we develop advanced technology to power a lower-carbon economy in the future.The Climate Trust’s MissionThe mission of The Climate Trust is to promote climate change solutions by providing high quality greenhouse gas offset projects and advancing sound offset policy. What is a Greenhouse Gas offset? A project-base emission reduction or GHG offset, is a project implemented specifically to reduce the level of GHGs in the atmosphere. GHG offsets are so named because they counteract or offset the purchaser’s GHG emissions. The end effect is as if the cancelled emissions had never occurred.PROBLEMS:Utility Emissions Industrial Emissions Building Emissions Vehicle Emissions Clearcutting ForestsSOLUTIONS:Renewable Energy Cogeneration Energy Efficiency Carpooling ReforestationLetter from the Chair2005 was a ‘tipping point’ for awareness of the impacts of global warming pollution and perhaps the climate system as well. Hurricane Katrina made global warming a household term. Consequently, people’s willingness to act and reduce greenhouse gas emissions is increasing rapidly. Project-based emissions reductions, and The Climate Trust, are receiving well-deserved attention. As citizens, businesses, and governments move to reduce their impact on climate change, The Climate Trust continues to deliver GHG offsets and provide sound GHG offset policy advice.2005 was a year of growth for The Climate Trust:• A growing recognition of the important role that project-based emissions reductions can play in mitigating global warming pollution has led policy makers in the Northeast, California, and Congress to solicit input from The Climate Trust, which is the most experienced U.S. organization in acquiring GHG offsets. • Growing interest in GHG offsets from concerned individuals and businesses has increased participation in our Partnership Program. • Our diverse portfolio of high quality GHG offset projects continues to grow. • In January, The Climate Trust released a request for proposals designed to spend at least $4.3 million to capture GHG offsets. • In September, The Climate Trust signed a new GHG offset contract with Shurepower, LLC to reduce emissions at truck stops by installing the first truck stop electrification technology in Oregon and Washington. • In December, the largest industrial efficiency project in Oregon began commercial operation at the Blue Heron Paper Company.In addition to our pioneering work in delivering high quality GHG offsets, we on the Board are most proud of the efficiency with which we provide our environmentally beneficial services. Over 92% of all the money we have spent has gone to our GHG offset-related programs. We look forward to continuing our outstanding environmental and financial performance in the years to come.The Climate Trust expects to carry this momentum into 2006. We anticipate doubling the size of our GHG offset port-folio by adding up to ten new projects. To date, our GHG offset projects will reduce GHG emissions by 1.6 million tons, and with these new projects we will decrease GHG emissions by nearly 3 million tons. You can also expect to see The Climate Trust remaining active in policy discussions at all levels. Please keep track of The Climate Trust’s progress in 2006 by subscribing to our new electronic newsletters at www.climatetrust.org/about_us_press.php.Sincerely,Alan ZelenkaBoard Chair2 0 0 5 A n n u a l R e p o r t 12005 aCCompLishmentsReducing Diesel Emissions through Truck Stop Electrification The Climate Trust awarded a GHG offset purchase agreement to Shurepower, LLC to support the launch of a truck stop elec-trification network at truck stops in Oregon and Washington. Each night thousands of truckers idle their diesel engines during government mandated rest periods to power heating, air conditioning, and appliances for their sleeper cabs. Shurepower’s technology provides electrical power, allowing truckers to shut down and plug in to cleaner power from the electric grid. The project will not only help prevent global warming but also clean the air, reduce unnecessary fuel consumption, and save truckers money. Solicitations for $4.7 Million in New ProjectsSeeking to expand our portfolio of projects, The Climate Trust released two solicitations worth approximately $4.7 million. The Climate Trust seeks high quality, additional, future, quantifiable GHG offset projects. Solicitations will be completed in 2006. • International SolicitationThe Climate Trust released a Request for Proposals worth $4.3 million. Funding for this solicitation was provided by Portland General Electric to meet compliance with the Oregon Carbon Dioxide Standard.• Montana SolicitationThe Climate Trust released a Request for Proposals worth $360,000 with a preference for projects based in Montana. Basin Creek Power Services provided the funds as a means to offset a portion of the global warming emissions from a new power plant they are building in Montana. 2 2 0 0 5 A n n u a l R e p o r tThird graders from Clatskanie Elementary school help break ground for the new Port Westward Power Plant.The Trust Joined California Climate Action Registry Dedicated to the cause of reducing greenhouse gases and advancing global warming policy, The Climate Trust joined the California Climate Action Registry (CCAR). On an annual basis, The Climate Trust will calculate our greenhouse gas footprint and report it to CCAR. The Climate Trust Goes Carbon NeutralIn addition to measuring and reporting our GHG footprint, The Climate Trust has taken the process a step further and will offset our annual GHG footprint to become carbon neutral. In 2005, The Climate Trust purchased 58 tons of GHG offsets from our portfolio.We’re Growing To help keep up with all our growth, The Climate Trust has hired new top-notch employees. Welcome to:Bjorn Fischer Business Development ManagerThad Miller Research AssociateMatthew Tidwell Project Coordinator (new in 2006) Elise Town Office Manager New OfficeWe outgrew our old office space and moved to one of the oldest buildings in downtown Portland. Please stop by next time you are in the neighborhood. The Climate Trust’s downtown Portland office, 65 SW Yamhill St., Suite 400, Portland, OR 97204Bjorn Fischer2 0 0 5 A n n u a l R e p o r t 3How Project-Based Emmissions Reductions Fit into PolicyAs greenhouse gas (GHG) emissions—and their impacts— continue to grow throughout the world, it is becoming clear that we need “all hands on deck” to reduce emissions. With limited leadership from the federal government, state and local governments are tackling global warming by implementing new policies and GHG offsets will hold a prominent role in state initiatives.Any market-based GHG regulatory system (e.g. cap-and-trade), contains four generally understood mechanisms for compliance: • internal reductions• purchase of allowances in an auction• trading of allowances• purchase of GHG offsets As policy-makers develop market-based GHG regulatory systems, GHG offsets are one cost-effective tool for achieving GHG reduction targets. GHG offsets offer an established policy option that offer real and cost-effective reductions from “un-capped” sectors.While GHG offsets are not a panacea, they can play a valuable role as a complimentary compliance mechanism to bridge the gap to the next generation of cleaner power generation. The Energy Information Agency and others project that the amount of GHGs, particularly from new coal-fired generation, may increase dramatically over the next ten to twenty years. To address this challenge we have several tools at our disposal: renewable energy, energy efficiency, low-carbon generation, and cogeneration. Unfortunately, these technologies alone cannot reduce projected demand enough to forestall the development of fossil-based energy generation. By implementing GHG offsets now, we can bridge the gap to a future low-carbon economy.poLiCy4 2 0 0 5 A n n u a l R e p o r tThe Climate Trust’s Contribution to Policy Development 2005 saw a flurry of activity in climate change policy at the state and local levels. In order to ensure that the substantial benefits of GHG offsets are included as an element of climate policy, The Climate Trust actively participated in the Northeast’s Regional Greenhouse Gas Initiative (RGGI), Oregon Governor’s Advisory Group on Global Warming, and the West Coast Governors’ Global Warming Initiative.In 2005, The Climate Trust continued its role in RGGI by reiterating the importance and viability of GHG offset projects. We also engaged with California energy sector leaders regarding Governor Schwarzenegger’s GHG reduction targets announced in June 2005. To assist in the West Coast Governor’s Initiative on Climate Change, The Climate Trust focused its contributions on Oregon’s efforts to formulate GHG reduction goals through our seat on the Governor’s Advisory Group on Global Warming and the Carbon Allocation Task Force. The Climate Trust sent four representatives to the two-week XI Conference of Parties (COP) of the United Nations Framework Convention on Climate Change in Montreal in December, 2005. We were invited to present on two separate panels regarding U.S.-based reduction activity in the regulatory and voluntary arenas, one sponsored by the International Emissions Trading Association (IETA) and the Carbon Fund at the World Bank and the other sponsored by the U.S. Climate Action Network. All of this activity should make for a busy 2006. For instance, in May 2006, The Climate Trust will submit its final comments on the RGGI model rule, which will lead to the first regional GHG regulatory system in the U.S. The Climate Trust also expects to become more involved in climate change policy on the national stage as 2006 is sure to see renewed activity on the federal level. The Climate Trust stands ready to share our unique experience with policy-makers and other stakeholders to help develop high quality GHG offset programs and policy. 2 0 0 5 A n n u a l R e p o r t 5projeCtsTruck Stop Electrification (New)Shurepower LLC will install truck stop electrification equipment at seven truck stops in Oregon and Washington. Truckers will be able to shut down their diesel engines and plug in to grid electricity to power their sleeper cabs. The GHG offsets are generated by the use of electricity, which is a lower carbon energy source than diesel engines.Reforestation in the Deschutes River BasinThe Deschutes Resource Conser-vancy (DRC) is recruiting private landowners to reforest rivers and streams in an effort to generate GHG offsets and repair the overall health of this riparian area that has been impacted by logging and livestock grazing. GHG offsets are generated by the carbon sequestered in the planted trees. Two large sites have been reha-bilitated under the program and the Climate Trust is tracking their progress through periodic moni-toring and verification site visits.Portland Building Energy Efficiency ProgramThe Portland Office of Sustainable Development (POSD) is managing a program that seeks to install energy efficiency measures—such as EnergyStar© windows, floor and ceiling insulation, and sophisti-cated thermostat contracts—in multifamily housing (apartments) and new commercial buildings. The GHG offsets are generated through reduced use of electricity. The project continues to perform exceptionally well and has regis-tered more than 250,000 tons of offsets to date.Preservation of Native Northwest ForestThis project uses GHG funding to support the work of the Lummi Indian tribe to acquire previously logged forest land and manage it to permanent old growth.Ecuadorian Rainforest RestorationThis project has reforested more than 680 acres of highly degraded rainforest in northwest Ecuador. The project is located in one of the more biologically diverse ar-eas on Earth. The planting phase of the project has been completed. Now the project implementation team, Conservation International and Jatun Sacha Foundation, will continue to maintain and manage the site.Lumber Mill CogenerationThe project will install a back-pressure steam turbine at one of the facilities of Collins Pine, a lumber products manufacturing company. Electricity from the tur-bine will displace grid electricity and thus generate GHG offsets.2 0 0 5 A n n u a l R e p o r t 7 6 2 0 0 5 A n n u a l R e p o r tCool Climate Concrete©This project encourages the use of blended cement by concrete manufacturers and ready-mix companies. This project replaces Portland cement, the binding agent in concrete, with equally effective industrial byproducts. Cement manufacturing causes very high emissions from energy use and chemical reactions. The GHG offsets are generated by the lower energy intensity of making the blended cement, as well as, the avoided process emissions. This program continues to gener-ate offsets from a growing num-ber of concrete companies who are increasing the use of blended cement as a result of their participation in the program.Internet Based Carpool MatchingThis project developed and operates an interactive web site to help commuters conveniently and easily arrange carpools. Each participant in the carpooling program saves fuel, which generates the GHG offsets.Traffic Signals OptimizationThis project improves the timing of traffic signals allowing cars to reduce time spent idling at and accelerating from stop lights. The expedited travel times will decrease overall fuel use resulting in reduced emissions of carbon dioxide from gasoline and diesel fuel. A total of seven corridors in the Portland metro area have been optimized under the program thus far. The Climate Trust is now measuring the performance of these corridors through their monitoring and verification program.Oregon Wind Farm (Complete)This project helped fund the construction of an Oregon wind farm and helped the Bonneville Environmental Foundation consummate their first major purchase of the environmental benefits of wind power. Efficiency Upgrade at Paper Manufacturing FacilityBlue Heron Paper Manufacturing Company, an Oregon-based company, completed the instal-lation of retrofits and upgrades to their paper manufacturing equipment in order to increase the plants overall operating effi-ciency. Among other upgrades, the project significantly increased Blue Heron’s ability to use recycled paper in their production process which will lead to a dramatic decrease in energy use. The GHG offsets are generated through reduced use of electricity. This project is one of the larger indus-trial energy efficiency projects ever implemented in the state. 2 0 0 5 A n n u a l R e p o r t 7 6 2 0 0 5 A n n u a l R e p o r tThe Climate Trust’s high-quality projects are available to everyone: • power generators• large corporations• small businesses• individuals Whether a small, one-time direct purchases or a large-scale co-investment in GHG emissions reduction projects, we can find a way to work with you to meet the challenge. In 2005, we welcomed Portland Energy Conservation, Inc. (PECI) as a partner to a growing list of repeat customers who annually offset all or part of their carbon footprint with us. Repeat customers, Nike and Progressive Investment Management, once again offset their emissions with The Climate Trust. Such relationships are a testament to those companies’ commitment to reducing their contribution to global warming and our ability to provide quality services and offsets. We also began working with two large U.S. utilities outside of the Oregon Program in 2005, helping them develop cost- effective programs on climate change. Basin Creek Power of Montana provided funding to offset emissions from a new power plant. On behalf of Basin Creek Power, The Climate Trust issued a solicitation for Montana-based offset projects worth $360,000.We are particularly proud of our ongoing success in 2005 in bridging the concerns and needs of the public and private sector on this issue. With a diverse offset portfolio we are able to offer clients a variety of options in purchasing high quality offsets. In 2006, we plan to build on our past success and continue to offer quality offsets to various clients while enhancing the quality and diversity of our portfolio with new offset projects. Our first step will be to engage in our first international partnership in 2006.you Can heLp stop GLobaL WarminG noWOver 92% of all money The Climate Trust has spent directly supports GHG offset-related programs.Contact The Climate Trust at 503.238.1915 (Tel) 503.238.1953 (Fax) info@climatetrust.org www.climatetrust.orgOptions to offset emissions with The Climate Trust• Large Scale—We customize GHG offset purchases from high-quality projects for large emitters who may face future regulations of their emissions. Partners can take ownership of the GHG offsets or keep them in trust with us to meet current and future reduction goals. See Large Emitter Partnerships at www.climatetrust.org/programs_emitter.php. • Medium Scale—We offer high-quality GHG offsets to small firms from our existing portfolio of projects. Because we retire the GHG offsets on buyers’ behalf, the purchase is tax-deductible. See our “Donate-to-Offset Program” at www.climatetrust.org/programs_donate.php. • Small Scale—You can quickly learn about your own impact on global warming and directly address it, again with a tax deductible donation. Go to our personalized website www.CarbonCounter.org for a two-minute insight into your carbon footprint. Also look for an exciting new launch of our CarbonCounter.org in June 2006 “ As an energy efficiency company working closely with electric and gas utilities, we believe The Climate Trust has the most credible and innovative programs for reducing emissions in ways that we can use to help our clients and the environment.” Phil Welker Executive Director Portland Energy Conservation, Inc.(PECI), which offset business related emissions in 2005 with The Climate Trust. Oregon“ We at Basin Creek Power see real potential for small energy companies and other project developers in this young carbon market and The Climate Trust is the most credible organization out there for small and large firms alike.” James L. Williams President, Basin Creek Power Services MontanaNew in 2006:“ 3C is proud to be the first European carbon offset provider to cooperate with The Climate Trust. Bridging the climate policy gap between the U.S. and Europe is essential and such a cooperation is an important first step in this direction. In my view, The Climate Trust employs the highest quality criteria for emission reductions currently available in the U.S.”Dr. Sascha Lafeld Managing Director 3c Frankfurt, Germany2 0 0 5 A n n u a l R e p o r t 9 fundersOregon Power Plant ProgramAvista Calpine City of Klamath Falls Northwest Natural PacifiCorp Power Marketing Portland General Electric Large Emitter Offset Acquisition Program Portland General Electric Donate-to-Offset Program Jennifer AllenMichael Ashford & Wendy BlogerAtter WynneAxis Performance Advisors Elyssa BackThe Bill Healy Foundation City of Portland Office of Sustainable Development Ecotrust Great Pacific Iron WorksCathy HigginsHot Lips Pizza Individual Tree Selection Management Ferris KawarKaren Leigh & Keith OldhamThe Lemelson Foundation Metafore Natural Capital Center Nike Kristin OhlsonDorthy PatonPortland Energy Conservation Inc. Progressive Investment Management Quantec ShoreBank CorpShoreBank PacificSustainable Harvest, Inc.The Climate TrustThe Climate Trust Advisory Council Three Pin ProductionsWorld Cup CoffeeFoundations The Energy Foundation Meyer Memorial Trust M.J. Murdock Charitable Trust Surdna FoundationLeadership Circle Members of this elite group evidence a strong desire to counter the impacts of global warming and make an annual donation of $500+ from individuals or $1000+ from corporations. Individual Members:Elyssa BackEli and Madeleine Lamb Peter Samson Mike Burnett and Mary E. HenryHenry Mark Klein & Mary WagnerCorporate Members:Natural Capital Center Nike Portland Energy Conservation Inc.Progressive Investment Management Quantec ShoreBank Pacific2 0 0 5 A n n u a l R e p o r t 1 1 1 0 2 0 0 5 A n n u a l R e p o r tAdvisory Council Gail Achterman Director of the Institute for Natural Resources for Oregon State University Dale Bryk Senior Attorney, Natural Resources Defense Council Tom Casten President of International Cogeneration Alliance Chairman and CEO of Private Power Christine Ervin Former President & CEO, U.S. Green Building Council Ross Gelbspan Retired Boston Globe reporter and the author of “The Heat is On” Jan Hamrin Executive Director of the Center for Resource Solutions Joel Makower Executive Producer of the Green Business Network Andrei Marcu Executive Director, International Emissions Trading Association Hal Nelson Lecturer in Political Science, Portland State UniversityTia Nelson Executive Secretary, Board of Commissioners of Public LandsKen Newcombe Head of Strategic Development, Climate Change CapitalJonathan Pershing Program Director, Climate and Energy, World Resources Institute Glenn Prickett Executive Director of the Center for Environmental Leadership in Business, and Senior Vice President of Conservation International David Sandalow Environment Scholar, The Brookings Institution Diane Wittenberg President of the California Climate Action Registry Board of DirectorsVotingAlan Zelenka Board ChairMartha Dibblee Vice ChairSusan Anderson SecretaryBettina von Hagen TreasurerDiana BodtkerRick ColganBob Therkelsen Non-VotingTim CarlbergPeter HansenMichael J. HaywardWayne LeiRoby RobertsStaffMike Burnett Executive DirectorMichael Ashford Deputy DirectorSean Clark Offset Portfolio ManagerBjörn Fischer Business Development ManagerErica C. Graetz Program and Operations ManagerThad Miller Research AssociateMatthew Tidwell Project CoordinatorElise Town Office Manager 2 0 0 5 A n n u a l R e p o r t 1 1 1 0 2 0 0 5 A n n u a l R e p o r tfinanCiaL statementDecember 31, 2005 & 2004 Audited Statements of Financial PositionAssets Cash $914,786 $869,603 Accounts receivable $87,746 $104,311 Grants receivable $87,500 $153,500 Other current assets $69,333 $31,741 Investments $8,325,329 $6,677,101 Office equipment, net depreciation $19,908 15,081TOTAL ASSETS $9,504,602 $7,851,337Liabilities and Net AssetsLiabilities Accounts payable and accrued expenses $30,416 $17,856 Offset contracts payable $2,098,840 $2,785,326 Unearned offset contract revenue $7,139,750 $4,819,778TOTAL LIABILITIES $9,269,006 $7,622,960Net Assets Unrestricted $96,110 $63,188 Temporarily restricted $139,486 $165,189 Total net assets $235,596 $228,377TOTAL LIABILITIES AND NET ASSETS $9,504,602 $7,851,337 2005 2004Total CommitmentOffset Contract AmountObligated ContractsBalance Left to ObligateOffset Tracking Report (US $)Offset Mgt. Funds SpentOffset Mgt. Funds UnspentTotal For Offset Mgt. Funds12 2 0 0 5 A n n u a l R e p o r tOffset Funding SourceKlamath Cogeneration ProjectHermiston Power ProjectCoyote Springs 2NW NaturalKlamath Expansion ProjectHermiston Power True-UpPort WestwardMassachusettsPartnersTOTAL958,1583,375,0082,114,47818,853210,029347,3134,300,815450,000202,58511,977,239565,9771,628,8971,609,5584,8574,857260,485350,0000202,5854,627,216392,1811,746,111504,92013,996205,17286,8283,950,815450,00007,350,023239,539843,752528,6194,71352,50886,8281,075,204100,00042,5522,973,715110,931325,120255,281777725,2935,553033,357755,689128,608518,632273,3384,63652,43161,5351,069,651100,0009,1952,218,0261,197,6974,218,7602,643,09723,566262,537434,1415,376,019550,000245,13714,950,954Offset Purchase Agreements Offset ManagementUnearned Contract RevenueAll offset contract revenues are restricted for selection and contracting, acquiring, and managing offset contracts. Offset contract revenues are recognized as revenue in the period the offset contracts are obligated and management and oversight services are performed. Offset contract funds received but not yet obligated are recorded as unearned offset contract revenue. Unearned offset contract revenue is summarized as follows:Audited Statements of Activities 2005 2004Balance at beginning of year $4,819,778 $3,998,712Funds received $3,008,781 —Offset contract cancellations and revisions — $2,079,917Funds obligated and revenue earned ($688,809) ($1,258,851)Unearned offset contract revenue $7,139,750 $4,819,7782 0 0 5 A n n u a l R e p o r t 13 Changes in net assets Revenues Offset contract revenue $688,809 $1,258,851 Other contract revenue $65,505 $176,726 Interest/Investment income $208,550 $93,914 Contributions and grants $78,397 $222,849 Other income $12,502 TOTAL REVENUE $1,053,763 $1,752,340Expenses Program $888,744 $1,551,295 Management and general $141,671 $95,385 Fund Raising $16,129 $37,102TOTAL EXPENSES $1,046,544 $1,683,782Change in net assets $7,219 $68,558Net assets—beginning of year $228,377 $159,819Net assets—end of year $235,596 $228,377 2005 20042005 EXPENSES 2005 REVENUESProgramsManagement & GeneralFundraisingOffset Contract RevenueOther Contract RevenueInvestmentsContributonsOther Grants65 SW Yamhill St., Suite 400 Portland, OR 97204Printed on recycled paper with soy-based inks