5 Things to Consider When Posting a Bid for Offset Projects

June 9, 2017

In 2006, a group of higher education leaders concerned about their schools’ environmental impact convened at Arizona State University to map out what would become the American College & University Presidents’ Climate Commitment (ACUPCC). Hundreds of schools committed to carbon neutrality with their target dates varying from the near future (2012) to the very distant (2099). A large portion of those target dates are now quickly approaching. Within the next 20 years, over a quarter of active signatories will be carbon neutral. These signatories are now recognizing, it just isn’t possible to achieve carbon neutrality without some use of carbon offsets and Renewable Energy Certificates (RECs).

Many signatories on the early end of the curve have prioritized “normalizing” the idea of carbon offsets and RECs throughout their campuses, with their administration, and the general public.

For public institutions the purchase of carbon offsets is like purchasing anything else, it must go through the procurement process. I recently completed an Invitation for Bid (IFB) published by the University of Illinois Urbana-Champaign requesting 113,000 carbon offsets.

Here’s what I learned: just as the idea of carbon offsets needs to be normalized on and around campus, so does the procurement process for purchasing those very same offsets.

Below are five ideas a school needs to take into consideration before posting an IFB, RFP, or RFQ. For purposes of simplicity I will refer to an IFB, RFP, or RFQ as an IFB.

 

1. Carbon offsets (and RECs) are not a typical procurement good.

Carbon offsets’ intangibility is a difficult concept for some to wrap their head around. For a school, although an offset must go through the procurement process, the nature of the product is just not the same as procuring, say, new chairs or bathroom equipment. Many times carbon offsets are project-based, meaning it is not just a transfer of money to the seller and offsets to the buyer, but include the school’s participation, support, and knowledge.

This is important to account for when releasing an IFB, are you looking solely for carbon offsets? Do you need it be project-based and involve the student body?

 

2. Type matters, not just price.

When a school posts an IFB, it typically requests a specific number of offsets i.e. “The University intends to purchase XXXXX metric tons of verified carbon offsets in accordance with the specifications listed below.”

Within those, specifications include confirming the project was validated and verified by an outside party, that the reduction was real and additional, and that the offsets haven’t been previously retired.

What’s missing in the specification, however, is the type of project. Are they open to accepting a methane collection and combustion project? A destruction of industrial pollutants project? Or a land use, forestry or conservation project?

These are important decisions and shouldn’t be taken lightly.

To some schools, it may not matter. Maybe they just need the offsets and want them as fast as possible. If that’s the case, that needs to be specified, but in the large majority of cases, it should matter.

 

3. Location is not just important, it’s the most important thing.

If you’ve ever spoken to someone about carbon offsets, you may have heard, “it’s like giving your problem to someone else.”

One way to combat that idea is to create carbon offset projects close to home, ones that you and your students can see, touch, and feel. However, finding and creating a project so close to home is not easy. It’s hard to find an anaerobic digester, landfill, or renewable energy source right next to your campus or house.

For the most part, there’s only one category of project readily made hyper-local and that is forestry – conservation, urban forestry, etc.

This means not only does location matter, but it should be defined in the explanation section of the IFB. Local forestry projects take planning, include different stakeholders, and many times (as described in Number 1) require the “school’s participation and support.”

 

4. Timing can be an issue.

A carbon credit cannot be generated until the carbon sequestration event has actually occurred. So in the case of forestry, it could take years.

There’s a catch-22 that arises – If an institution desires a hyper-local project and virtually all hyper-local projects have to be conservation or urban forestry, does the institution have to wait decades as the trees grow to generate the credits?

This is why it’s important to outline a timeline for a project.

 

5. Pricing does not have to be one-for-one.

Typically, IFB’s require single-source offsets. This, however, exposes the University to risk – project supplier trust, verification trust, weather related incidents.

With this perception of single-sourced – one type, location, and time – can you receive hyper-local impact immediately? In almost all cases you have to pick one, either local or immediate. Urban Offsets’ solution to this is what we call an “offset bundle.”

Multiple-sources is a way of mitigating this risk, creating an effect price per offset, and providing additional value to the University. Click here to find out more how Urban Offsets is doing it.

Pricing in co-benefits with an offset bundle is not always straight-forward but is essential to produce high-impact offsets. Incorporating these ideas into your IFBs will not only make it easier for the bidders but also help your school receive the highest-quality offsets for the lowest price.