Portfolio Guidelines

Offset Portfolio Principles

In order to achieve and maintain high quality standards for all of its offset projects, the Carbon Reduction Fund will rely on independent verification, and registration in an offset registry. All domestic offset projects/programs must be verified according to ISO 14064 standards, and quantified according to internationally recognized methodologies, such as those approved by the UNFCCC. Presently, any foreign-based projects will have achieved Gold Standard CER or VER status to be considered. However, the Carbon Reduction Fund will assess and consider new protocols being established in the voluntary carbon market, such as the Voluntary Carbon Standard, should they meet our high standards of quality.

Offsets purchased by the CRF will be retired on behalf of the purchasing parties and are not intended to be traded or to re-enter circulation.

Additionally, offsets must meet the following quality checklist:

  • - Offsets will be additional to a business-as-usual scenario. In other words, there must be some assurance the project would not occur without the funding provided by carbon credits.
  • - Offsets will be quantified according to a credible methodology
  • - Offsets will be verified by a third party in accordance with ISO 14064
  • - Where possible, offsets will be registered in a credible offset registry to ensure exclusivity and avoid double-counting
  • - Offsets will have no or minimal leakage effects. The term leakage refers to emissions- reductions from a project directly or indirectly leading to increased emissions somewhere else. For example, the possibility of a reforestation project leading to increased logging somewhere else.
  • - Offsets will be permanent. The project must be able to guarantee GHG mitigation over the stated time period. In the case of afforestation projects, projects must be situated on lands that have permanent conservation easement or equivalent status.
  • - Offset projects or programs should have additional environmental and/or social co-benefits, such as the reduction of pollutants, endangered habitat preservation, or contributions to local communities.

Offset Portfolio Makeup

The Fund will strive to achieve a balanced portfolio to maximize the impact of our project/program investments and minimize portfolio asset risk. As the fund grows, we expect to build a balanced portfolio with offsets originating from each of the four following categories:

  1. Renewable energy. This category will include projects that generate GHG emission reductions through the use of renewable energy technologies, including solar, wind, small hydro, biomass and geo-thermal energy.
  2. Energy/fuel efficiency or Fuel switching. This category includes projects and programs that generate GHG emission reductions by reducing the use of energy or fuel and/or switching to a cleaner fuel source.
  3. Afforestation. Of all possible Land Use, Land Use Change and Forestry (LULUCF) project types, we will only consider afforestation projects, where non-forested land is reclaimed and reforested and only in cases where permanent conservation easements or similar provisions are in place.
  4. Innovation. It is the position of the Fund that the voluntary markets must play an important role in developing and testing new project and program ideas and we fully expect to help generate new and exciting ideas and methodologies. All projects that fall in our innovation category will be subject to the same high standards as all of our portfolio holdings.

The majority of our portfolio will be composed of projects in the first two categories, with afforestation and innovation projects accounting for smaller percentages. Once our portfolio is fully established, we will publish our portfolio weightings on the Carbon Reduction Fund website.

Offset Project Location Criteria

Our desired portfolio ratio regarding offset project/program location is that at least 75% of our credits come from Canadian-based programs or projects. Our rationale for this position is fourfold:

  1. On a per capita basis, Canada is one of the largest emitters of GHG emissions in the world.
  2. Despite this large potential for emission reductions, Canada is currently under-represented in the global market of carbon offset projects. The Fund believes that it is important to stimulate the development of new GHG reduction projects and programs in Canada.
  3. Domestically sited GHG reduction projects and programs help ensure that we keep the need to reduce our emissions top-of-mind, rather than simply outsourcing the clean-up to someone else. Domestic projects help raise awareness on our shared carbon footprint and thus trigger additional reductions through behavioural change.
  4. Unlike projects in remote parts of the world, we believe that domestic projects are easier to supervise, both for the Fund and our external stakeholders.