It is the carbon credit market that provides the stimulus and resources to reduce methane emissions. Nations are now turning to market mechanisms as an effective way to cut emissions, through offering businesses choice and economic incentives.

Most industrialised nations have agreed to cap their emissions of greenhouse gases, under the Kyoto Protocol, and other regulatory regimes providing for companies to restrict their own emissions or offset them through carbon credits.

Coal mine and landfill gas projects, in particular, offer significant carbon credit generating opportunities. A typical 6MW_el project may produce over 200,000 carbon credits each year. However, realising the credits requires skillful project analysis and the receipt of credit approvals, in addition to securing the best possible price for the credits (Carbon Credit pricing). Prices range from less than EUR 5/credit to over EUR 20/credit, depending on the market, the character of the seller and delivery risks. At these prices many otherwise unprofitable methane-to-energy projects become commercially attractive.

Carbon credits are measured in equivalent tons of carbon dioxide. Several different credit types exist depending on the source and regulations under which the emission reduction is achieved.

Under the Kyoto Protocol, there are two mechanisms to help nations comply with their emission reduction commitments by sponsoring projects to reduce emissions. Countries and their companies may use the Clean Development Mechanism (CDM) and Joint Implementation (JI) to meet their emissions cap targets depending on the location of the projects.

• CDM allows industrialised nations with a commitment to greenhouse gas reduction, such as Germany, the U.K or Japan to invest in emission reducing projects in developing countries, such as China, Ecuador, and India. CDM credits are called certified emission reductions (CERs)
• JI allows industrialised countries with national emission limits to reduce greenhouse gas emissions by investing in emission reduction projects in other identified industrialised nations. In return, the investor nation receives credits known as Emission Reduction Units (ERUs).

While CDM and JI are the most important credits for Green Gas and its partners, there are also several other types of credits under different regulatory regimes that may stimulate investment in methane energy projects, and there is a thriving market in "voluntary emission reductions" (VERs) through which companies and individuals can voluntarily offset emissions.

Green Gas and Carbon credits

Green Gas helps its partners through the stringent qualification and registration process for carbon credits, namely:

• Evaluation of whether a project is likely to qualify for carbon credits. This involves a review of a project's emissions, and an analysis of whether the emission reductions are genuine, meaning that emission reductions would not otherwise occur in a normal operating situation
• Contact with the relevant approval bodies who set the criteria for awarding carbon credits. This includes the host country (which may have its own additional criteria regarding project qualification and social/environmental sustainability benefits); the government of the carbon credit purchaser and the United Nations body set up to review methodologies and manage a registry. Both landfill gas and coal mine gas projects have approved methodologies.

Projects require several approvals:

• The host and buyer governments
• Relevant bodies under the United Nations Framework Convention on Climate Change (UNFCCC)
• Validation from an organisation approved by the UN

Once registered, a project must adhere to strict monitoring and verification practices for carbon credits to be issued. Green Gas selects approved verification organisations to provide third party verification of emission reductions. Once these organisations are satisfied that the project has followed the monitoring methodology, they ask the United Nations to issue emission credits.

Carbon Credit Pricing

Green Gas works with its project partners to help them secure the best possible price for their carbon credits.

From our base in London, the centre of the carbon credit market, we track prices and trends and know the key market players. Our expertise in credit creation and asset management, along with our diverse portfolio of projects and financial skills, means that we are in a strong position to negotiate the best prices.