UNEP: Offsetting And Achieving Climate Neutrality

Thu, 01/04/10

As a climate neutral organization from 1 January 2008, the United Nations Environment Programme (UNEP) was one of the first UN organizations to commit to compensating for its emissions of greenhouse gases (GHG). When it came to compiling its GHG inventory and then buying the necessary carbon offsets, UNEP deliberately aimed to set a benchmark of the highest standards, and to establish a process that would be also applicable to other agencies – thereby ensuring a common approach and best practice throughout the UN system.

The first GHG inventory for UNEP was prepared in 2008, covering 2007's activities. This was itself a very time consuming process, and was complicated by the need for data from other agencies which share premises with UNEP. There was no agreed UN methodology for how to go about it, and many things to learn. Just setting up the internal administrative systems required considerable effort, particularly since they had to cover all the different UNEP divisions and duty stations, whose modes of operation differ a lot from one another. Close collaboration had to be established not only between UNEP divisions, to identify procedures that would work throughout the organization, but also between UNEP and the United Nations Office at Nairobi (UNON), which provides UNEP with such things as IT support, accounting and travel services. 

When all was said and done, however, the 2008 GHG inventory established that UNEP needed to buy offsets that year to compensate for emissions of 11,508 tonnes of carbon dioxide equivalent. Careful analysis of the existing offsets market was then required, to identify suitable, reliable high-quality providers. Proper procedures also had to be put in place. Procurement in UN organizations is highly regulated, and offset procurement is not a common task; indeed, in Nairobi (where UNEP has its headquarters) it had never been done before. Ensuring that the procedure followed UN rules meant resolving even such basic questions as whether offsets should be classified as ‘service’ or ‘goods’ – or the fact that there was no code in the system for offsets. 

By early 2009, UNEP was in a position to invite proposals from offset providers. Six tenders were received, each including a technical and a financial proposal, in separate, sealed envelopes. 

In May 2009 the technical proposals were evaluated by a committee consisting of five UNEP officials. The ground rules stipulated that the offsets they offered should be Certified Emission Reductions (CERs) from registered Clean Development Mechanism (CDM) projects, and preferably from:

  • projects in Least Developed Countries
  • CDM projects within one (or several) of UNEP's preferred sectors, namely renewable energy, end-user energy   efficiency or biomass/biogas
  • certified ‘Gold Standard’ CDM projects, ensuring that they contributed to poverty alleviation and environmental improvement in addition to mitigating climate change. Tenders would not be eligible if they offered CERs from projects that involved hydrofluorocarbon (HFC) disposal or burning other gases with no additional benefits apart from reducing GHG emissions. 


UNEP also decided not to buy offsets from projects which it had itself generated or supported – a voluntary exclusion, to avoid potential conflicts of interest. Nor would it buy CERS on secondary markets – they had to come directly from the original source that generated them. 

Of the six tenders, five were identified as technically compliant, so UNEP's procurement team opened their respective financial proposals. On this evaluation, the tender from EcoSecurities Ltd was recommended as the most advantageous. It offered the necessary 11,508 CERs from CDM projects in India (windpower) and Nicaragua (energy/biomass) for a total cost of USD 225,796.

On 13 August the Local Contracting Committee decided to award the contract to EcoSecurities Ltd. 

This methodology and procedure, as developed by UNEP, provide an example for other intergovernmental organizations to follow – with an overview of the basic steps that need to be taken, and criteria for ensuring the highest possible standards, as well as a list of areas where additional work is required as the organization moves into the implementation stage.

 

Costs and benefits

 

The UNEP Climate Neutral Fund, specially created to manage the financing of offset procurement, collects contributions from each UNEP division in proportion to the emissions it has caused. The total cost of offsets covering UNEP’s 2008 emissions was USD 225,796, as already stated.

In its pioneering work in this area, as one of the first UN organizations to go climate neutral, UNEP has led by example and set out a methodology that others can learn from. Its offsets programme compensates for its GHG emissions through investment in renewable energy in developing countries, ensuring that it is walking the talk on the 'polluter pays' principle. 

"Climate change is the challenge of our time," says UNEP's Climate Neutral Officer Lova Andre. "We want to make sure that we minimize our impact on the climate. That is why we try to reduce our emissions, and offset to compensate for the emissions that we could not avoid." 

Categories: Finance, Offsets, Procurement