The Climate Trust 2008 Annual Report

co-benefitsThe Climate Trust 2008 Annual Report opportunityOffsets create economic opportunityThe Climate Trust’s offset funding helped Klamath County, Oregon, achieve its economic development goals by providing the incentive needed for Biotactics to move and expand its operations to geothermally heated warehouses in the county.“The Climate Trust has helped establish Oregon as a leader in offsets and sustainability.” —Ted Kulongoski, Governor of OregonThe Climate Trust | 2008 Annual ReportThe Year of Voluntary Offset ProgramsIn addition to providing quality offset programs, we continue to work to ensure offset quality through our policy initiatives, most notably the Offset Quality Ini-tiative. This coalition of leading national nonprofit or-ganizations got a strong start with the publication of a white paper, Ensuring Offset Quality: Integrating High Quality Greenhouse Gas Offsets Into North American Cap-and-Trade Policy, which outlined key offset quality criteria and offset design recommendations. Looking forward, The Climate Trust plans to continue to excel in providing high quality offsets for our compliance customers in Oregon and Washington, and to expand our role by providing services to regulators elsewhere. In addition, we will continue to implement the NW Natural Smart Energy program and the Colorado Carbon Fund and to help other clients design and operate voluntary market programs. Finally, we also plan to continue to inform policy makers about important market lessons to ensure the development of climate legislation that protects both the economy and the environment. We are proud of all of our accomplishments in 2008 and we look forward to new challenges and opportunities ahead. Sincerely,Mike BurnettExecutive Director Bob TherkelsenBoard ChairAfter a decade as the nation’s leader in the compliance offset market and top-rated North American retail offset provider, The Climate Trust took another step in provid-ing innovative leadership in the offset market in 2008. We expanded our services to include client-based offset pro-grams. Much of our growth focused on helping other or-ganizations design and operate voluntary offset programs.Growing numbers of businesses and governmental agen-cies were striving to reduce their climate impacts in the absence of regional or federal climate legislation. Many wanted to offer offsets to their customers, but they lacked the tools and expertise to do so. The Climate Trust is one of the most experienced offset providers in the world and pioneered many of the ap-proaches now used in this billion dollar industry. Our in-depth understanding of market conditions, our experi-ence developing and managing offset projects, and our consistently high ratings by organizations such as Clean Air-Cool Planet drew these clients to The Climate Trust. Our first client-based voluntary market program was our collaboration with NW Natural on their Smart Energy program, which allows customers to offset their carbon footprint from natural gas by making a donation on their bill. We invest the funds in biogas projects in the Pacific Northwest. We helped NW Natural conceive, design, and gain regulatory commission approval for this program, and now manage the funds and acquire the offsets. In late 2008, we acquired the first project for Smart Energy, a manure-to-energy project with two participating dairy farms in Mount Vernon, Washington.Also in 2008, we developed our second client-based vol-untary offset program. We created the Colorado Carbon Fund, in partnership with the Colorado Governor’s Energy Office, after winning a competitive bidding pro-cess. CCF allows individuals and businesses to invest in greenhouse gas reduction projects located in the state. Our roles include designing and managing the fund and locating, evaluating, and acquiring the projects. habitatsOffsets conserve habitatsThe Climate Trust’s Ecuadorian Rainforest Reforestation project has restored about 700 acres in the Bilsa Biological Reserve, which is considered one of the 25 most biodiverse places in the world.“Many of The Climate Trust’s projects promote biodiversity by restoring and preserving degraded habitats.” —Fred Krupp, President of the Environmental Defense FundThe Climate Trust | 2008 Annual ReportOur MissionVoluntary program consulting supportThe New York/New Jersey Port Authority awarded The Climate Trust a consulting contract in which we serve on a technical advisory panel for its carbon-neutral ef-forts. We review and rank potential offset projects to meet the emission reduction needs of the port, as well as the needs of a possible retail program for port users. Acquire first offset project for NW Natural Smart EnergyAt year’s end, The Climate Trust acquired the first proj-ect for NW Natural’s Smart Energy, a program that al-lows customers to offset their natural gas use through offsets from biogas projects in the Pacific Northwest. The Climate Trust, which also helped design the pro-gram, contracted to buy methane emission reductions from a Farm Power biodigester project in Mount Ver-non, Washington. Manure from two small dairy farms is being piped to a covered tank, which will capture and combust the methane. Place second in ranking of U.S. offset providersThe Climate Trust placed second in a Carbon Con-cierge’s 2008 ranking of the top U.S. retail offset pro-viders in North America. Carbon Concierge evaluated and rated top North American offset providers based on industry standards and developed a customizable tool to allow for informed carbon offset purchasing decisions. The critieria included business and project transparency, offset quality, industry leadership, third-party evaluation, education, and social benefit. Close retail offset programsThe Climate Trust closed down its retail offset programs in December 2008 to focus on client-based voluntary offset programs. Among the first of their kind, the CarbonCounter.org and Donate-to-Offset programs en-couraged individuals and organizations to calculate and offset their carbon footprints. We were able to end the successful programs to concentrate on developing high quality offset projects and sound climate policy, con-fident that a variety of appropriate carbon calculators and offset programs are now available to consumers. Since our founding in 1997, The Climate Trust’s mission has been to promote climate change solutions by provid-ing high-quality greenhouse gas (GHG) offset projects and advancing sound offset policy. The Climate Trust fulfills this mission by providing the following services: › Compliance offsets — Selects, contracts, and manages offset projects for the compliance market › Voluntary climate services — Designs, implements, and manages voluntary offset programs customized for our clients › Climate policy — Provides education and expert ad-vice to policymakers on incorporation of offsets into climate legislation and regulation › Consulting — Scopes out the opportunities, risks, and costs of offset programs and services for clients consid-ering entrance in the voluntary market2008 Highlights Convene the Offset Quality Initiative The Offset Quality Initiative (OQI), a coalition of six leading national nonprofit organizations led by The Climate Trust, provides leadership on offset policy and best practices. In 2008 the group began working in earnest, thanks to a one-year $235,000 grant awarded by the Energy Foundation. OQI released its first paper, Ensuring Offset Quality: Integrating High Quality Greenhouse Gas Offsets Into Cap-and-Trade Policy, at a briefing held before a meeting of Western Climate Initiative stakeholders in July. The group also launched a new web site at www.offsetqualityinitiative.org. Launch the Colorado Carbon FundIn May 2008 the Colorado Governor’s Energy Office selected The Climate Trust to design and implement the Colorado Carbon Fund, a program that provides the op-portunity for individuals and businesses to reduce their footprint and offset the rest through high quality GHG offset projects in the state. The Colorado Carbon Fund is the first voluntary retail offset program designed by and for a state. The program was designed to reduce greenhouse gas emissions and to support new energy efficiency and renewable energy projects in Colorado. energyOffsets promote energy independenceThe Climate Trust’s Farm Power biogas project creates enough renewable energy from cow manure to power about 550 homes.“NW Natural turned to The Climate Trust to help us develop clean, renewable energy from waste through the Smart Energy program.” —Gregg Kantor, President and CEO of NW NaturalenergyOur Portfolio of Offset ProjectsBy the end of 2008, The Climate Trust had place $8.8 million in a diverse portfolio of projects that are expected to offset 2.4 million metric tons of carbon dioxide—the equivalent of taking 478,088 cars off the road for a year. PROJECT CATEGORY PROJECT NAME CONTRACT SIGNING DATEPROJECT TERM (YEARS)CO2 OFFSETSOVER PROJECT TERM (METRIC TONS)ENERGY EFFICIENCYChanging technology or systems to use less energy while maintaining the same or increasing the level of output.Duluth Steam Plant UpgradeBlue Heron Industrial Efficiency UpgradePortland Building Efficiency ProgramTOTAL 2006200420021510 5210,328 191,232 327,776729,336SEQUESTRATIONRemoval of CO2, either through biological processes (e.g., plants & trees) or through geological processes such as CO2 storage in underground reservoirs.Deschutes Riparian RestorationEcuadorian Rainforest Restoration Preservation of a Native NW ForestTOTAL 20022002200152 9999233,333 58,890 263,159555,382COGENERATIONHigh-efficiency method of producing electricity from wasted steam after use in an industrial process.Oregon State University CogenerationNewark Group Cogeneration TOTAL 2007200620 15338,790 114,259453,049TRANSPORTATION EFFICIENCYChanging technology or systems to reduce CO2 emissions while maintaining the same or higher mobility. May also include reducing the need for transportation services.Truck Stop Electrification Traffic Signal Optimization Internet-Based Carpool MatchingTOTAL 20052002200116101090,000178,6741,021269,695MATERIAL SUBSTITUTIONReplacing a carbon-intensive material with one that is less carbon-intensive in industrial applications.Cool Climate ConcreteTOTAL 2004 6 212,500212,500RENEWABLE ENERGYElectricity created by renewable energy sources such as sun, wind, biomass, and other sources.Innovative Wind Financing TOTAL 2002 2 23,89223,892FUEL REPLACEMENTDisplacing the use of a higher carbon intensity fuel with a lower carbon intensity fuel.Biotactics Geothermal Heating Montana Fuels for SchoolsTOTAL 20072007101525,50059,10084,600BIODIGESTERCapturing and combusting methane emissions from cow manure.Farm PowerTOTAL 2009 10 60,000 60,000TOTAL CO2 OFFSETS (METRIC TONS) 2,388,454The Climate Trust | 2008 Annual ReportwaterOffsets benefit water qualityThe Climate Trust’s Deschutes Riparian Reforestation project acts as a living filter that protects the water quality of the Deschutes River.“We collaborate with The Climate Trust because they share our commitment to environmental integrity.” —Gary Gero, President of the Climate Action Reserve Financial SummaryThe Climate Trust has a perfect record of clean audits conducted by a professional auditing firm every year, including for calendar year 2008. STATEMENT OF FINANCIAL POSITION 2008 2007Total Assets 1,837,223 4,479,304Liabilities 1,548,272 4,033,256Net Assets 958,492 522,444TOTAL LIABILITIES AND NET ASSETS $1,247,443 $968,492Offset Funds Tracking – December 31, 2008 (US $)New Oregon energy facilities can elect to comply with the Oregon Carbon Dioxide Standard by providing offset funds on a fee-per-ton basis to The Cli-mate Trust. These funds are used to solicit and acquire offsets and manage offset contracts. Offset management includes monitoring, evaluating, admin-istering, and enforcing offset contracts over the project lifetime. A breakdown of Oregon Program funds placed into offset contracts and expended on offset management is reported in the table below. Offset Funding Source Total CommitmentOffset Contract AmountObligated CcontractsBalance Left to ObligateTotal for Offset Mgt FundsKlamath Cogeneration 1,197,6978 958,158 766,557 191,601 239,539Hermiston Power 4,218,760 3,375,008 1,578,725 1,796,283 843,752Coyote Springs 2 2,643,098 2,114,478 1,446,123 668,355 528,619NW Natural Mist 23,567 18,853 4,685 14,168 4,713Klamath Expansion Project 262,537 210,029 5,532 204,497 52,508Hermiston Power True-Up 434,142 347,313 260,485 86,828 86,828Port Westward 5,400,565 4,320,452 3,502,919 817,533 1,080,113Klamath Cogen True-Up 500,462 400,462 0 400,462 100,000NW Natural Molalla 33,641 26,913 0 26,913 6,728Klamath Cogen Shortfall 3,090,759 2,649,222 0 2,649,222 441,537Massachusetts 551,162 450,000 450,000 0 101,162Montana 475,785 360,000 360,000 0 115,785NW Natural Smart Energy 235,377 198,085 0 198,085 37,292Invenergy 284,496 234,430 0 234,430 50,066Colorado Carbon Fund 179,891 179,891 0 179,891 0Partners 568,093 464,699 434,699 30,000 103,397TOTAL $20,100,032 $16,307,993 $8,809,725 $7,498,268 $3,792,039OFFSET PURChASE AGREEMENTS OFFSETMANAGEMENTOther income 2%Offset contract revenue 26%Other contract revenue 10%Investment income, net of expenses 32%Contributionsand grants 32%2008 RevenuesFundraising 2%2008 ExpensesProgramservices 73%Management and general 25%waterThe Climate Trust | 2008 Annual ReporttechnologyOffsets advance low-carbon technologyOur Cool Climate Concrete program provides incentives for concrete manufacturers to use an innovative, lower-carbon cement. “Our partnership with The Climate Trust on the Colorado Carbon Fund is advancing our New Energy Economy, creating jobs, and leading Colorado toward a cleaner and more secure energy future for our children.” —Bill Ritter,Governor of Colorado Oregon Power Plant ProgramAvista CorporationCalpineCity of Klamath FallsIberdrola RenewablesNW NaturalPortland General ElectricLarge Emitter Offset Acquisition ProgramColorado Carbon FundAmerican National PowerBasic Creek PowerInvenergyConectiv Energy Supply, Inc.Seattle City LightDominion Resources Services, Inc.Entergy CorporationNW Natural Smart Energy ProgramNRG Energy, Inc.Public Service Enterprise GroupSacramento Municipal Utility DistrictSeattle City LightOffset Donations (>$500)Businesses:7Group, LLCAir & Waste Management AssociationAnkrom Moisan ArchitectsBlue Box Group, LLCvBoora Architects, Inc.British Embassy WashingtonBroadcast Interactive MediaCalifornia League Services Corporation-CUAOCeliloCollege of the AtlanticCompton Foundation, Inc.Global PartnershipsHawthorne Auto ClinicHDR, Inc.Herrera Environmental Consultants, Inc.I.H.S. Global Inc.Insight Partners MarketShift StrategiesMetropolitan Group, LLCNorthwest Environmental ConferenceOboz Footwear LLCPortfolio 21 Investments, Inc.Portland Energy ConservationPortland General ElectricResidential Energy Services NetworkRoss & Associates Environmental Consulting, Ltd.Schwabe Williamson & Wyatt, P.C.Second Nature, Inc.ShoreBank CorporationSRG Partnership Inc.Stoll, Stoll, Berne, Loking & Schlachter PCStrategic Energy GroupThe Association of State Wetland Managers, Inc.The Tesseract SchoolTransamerica Insurance & Investment GroupUnited Fund AdvisorsIndividuals:Sherrie AustinCaroline BaileyMr. and Mrs. Frederick BeckettClaude BlackburnMr. and Mrs. Ken ChampneyShaun ChurchChristine ErvinJames FernowDr. Andrew GuntherPeter HeymannJoel GeeskeMichael JohnsonDr. Walter KwanRichard LandersJean LeDemAlan LinningBruce MaguireKelly MichelChristopher Morgan, MDSteve MotenkoPeter MurchieWilliam Reed & Ellen Lee Teare ReedRoby RobertsMary SeabrightWilliam UryGrant and Foundation SupportM.J. Murdock Charitable TrustMcKenzie River Gathering FoundationFriends of ConservationLaird Norton Family FoundationThe Energy FoundationLeadership CircleThe following are individuals who contributed $500 or more, and organizations that contributed $1,000 or more to support The Climate Trust.Individuals:Sheryl AlstrinA. Joseph HuertaPayam ImaniJohn and Arlene McLarenTalia Milgrom-ElcottJaclyn SkrivsethOrganizations:Materium Fund of Schwab Charitable FundNorthwest Core CollectionThreshold FoundationTrue Now, LLCNational Board of DirectorsBob Therkelsen, Board Chair and Energy Consultant, Therkelson Energy and Environmental Consulting Alan Zelenka, Board Vice Chair and Energy Services Leader, Kennedy/Jenks ConsultingSusan Anderson, Board Secretary and Director, Portland Bureau of Planning and SustainabilityBettina von Hagen, Board Treasurer and CEO. Ecotrust Forest Management IncCarter Bales, Co-founder and Managing Partner Emeritus, The Wicks GroupWinston Hickox, Partner, California StrategiesTruman Semans, Principal, GreenOrderOregon Board of DirectorsLaura Beane, Board Chair and Market Structure Manager, Iberdrola RenewablesSean Penrith, Board Vice Chair and Executive Director, Earth AdvantageAlan Zelenka, Board Secretary and Energy Services Leader, Kennedy/Jenks ConsultingBettina von Hagen, Board Treasurer and CEO, Ecotrust Forest Management Inc.Jake Polvi, Member, Oregon Energy Facility Siting Council; Owner, Sustainable Engineering LLC Bob Therkelsen, Professor, Southern Oregon University Zach Willey, Economist, Environmental Defense Fund Non-Voting Certificate Holder AppointeesArya Behbehani-Divers, Manager, Environmental Services, Portland General Electric Tim Carlberg, Construction Manager, Avista Corp. Rick Colgan, Plant Manager, Hermiston Power Project, Calpine Bill Edmonds, Director of Environmental Policy and Sustainability, NW Natural StaffMike Burnett, Executive DirectorSean Clark, Director of Offset ProgramsMaggie Albertson, Office ManagerLucy Brehm, Senior Manager, Business Development Shanna Brownstein, Policy AssociateErica Keeley, Senior Offset Portfolio Manager Aurora Martin, Offset Portfolio AssociateBecky Ostrom, Administrative AssistantAmy Phillips, Marketing & Communications ManagerMonica Thilges, Offset Project CoordinatorPeter Weisberg, Offset Project AnalystSheldon Zakreski, Senior Program ManagertechnologyFunders and ClientsThe Climate Trust | 2008 Annual Reportco-benefitsPrinted on FSC certified paperOffsets provide co-benefits Carbon offsets are a cost-effective, market-based solution to reducing the greenhouse gases that cause global warming. Offsets also provide a host of additional environmental and economic benefits, from protecting biodiversity to creating jobs.The Climate Trust | 65 SW Yamhill Street, Suite 400, Portland, OR 97204 | 503.238.1915 | www.climatetrust.org