Guidance for Estimating Reductions & Cost

A key consideration in your submission will be the expected cost per ton of carbon dioxide equivalent (CO₂e) that your project reduces or sequesters. Below we provide guidance for estimating tons reduced and cost per ton. Please feel free to submit back-of-the-envelope estimates, and ranges if there are substantial uncertainties. Provide what you can; most importantly, we're interested in hearing your idea.

Estimating emissions reductions and carbon sequestration

Please provide back-of-the-envelope estimates of the total expected emissions reduced or carbon sequestered from your proposed project along with the reductions/sequestration you expect each year through the project lifetime. Please also provide a high-level description of the methods and major assumptions you used in your estimates, including a discussion of the baseline.

If you are not already familiar with estimating emission reductions from your project you might consult existing offset methodologies. You would not need to do all of the detailed calculations in those methodologies, but could apply the overall approach to your project.

For reductions of non-CO₂ GHG emissions, please use IPCC AR5 100-year Global Warming Potentials (GWPs)..

Estimating $/ton CO₂e

Cost per ton is a measure of the funds needed to enable the proposed project to be implemented and to operate. This measure gives UC an understanding of the funding needed by UC to generate the expected emissions reductions.

Please include your cost per ton estimate (which can be a range) and a discussion of the major costs over the project lifetime (upfront and operational), taking into account any revenues other than the sale of offsets.

If you are not already familiar with how to calculate cost per ton, we’ve provided a template to help with the calculations.

You can download the template here.

Template Instructions:

The template is set up to estimate, at a high-level, the cost of offsets per ton of CO₂e emissions avoided or sequestered. The idea is to capture the funds needed to create the offsets from project implementation to its final year of operations. The template automatically calculates net cost per ton each year of the project life and the levelized cost per ton CO₂e for the project as a whole.

At the top of the template are “Summary Calculations,” which are based on inputs provided below under “Detailed Line Items.” You can enter your estimates in either section.

For project implementation costs (design, construction, initial supplies, etc.) please sum all of these expenses and provide them under year “0.” In some cases a project may have other sources of funds such as grants - these funds should be included as revenues to the degree that they are part of the offset project.

Many projects will not have revenues. Examples of projects with revenues are those that involve producing a product that is sold, like electricity or biogas. Other grants can also be considered as revenues as could the sale of replaced equipment.

The net cost of implementing and operating the offset project may be only the incremental increase in cost above the baseline scenario. For example, the costs of implementing a high efficiency boiler might only be the difference in costs between the high efficiency boiler and a standard boiler that would otherwise have been needed to replace an old boiler. These costs might be lessened over time by cost savings from the more efficient system. If avoided costs affect the funds needed to implement and operate the project, you can enter avoided costs in the Avoided Costs section.

If your project idea has multiple phases or is a pilot for a larger project, as possible, please estimate the cost per ton for each phase. You can do this in a single spreadsheet that includes both/all phases, or in separate spreadsheets.

The project life will differ per project. We have included twenty columns for input, for twenty years of the project life. Feel free to use only some of those columns if the project life is shorter than twenty years, or to add columns if it is longer.

The default discount rate is 6.5%, UC's capital planning rate.

Feel free to add rows or sections as needed to fit your project, as well as to use the space at the bottom as a worksheet.

We will continue to add information to this guidance as we receive questions, so feel free to check back here as you prepare your submission.