March 20, 2023

How TIME CO2 Selects and Verifies Quality Projects

TIME CO2 Portfolios

Here are some highlights of what we'll get into:

  • Navigating carbon markets and the broader climate space can be very complicated; we have an extensive due diligence process so our customers can purchase our portfolios with confidence.
  • Our seven-step process combines extensive data sourcing from suppliers with internal and external expert analysis. This includes consulting with leading scientists, as well as incorporating external project ratings.
  • We also build in risk mitigation and monitoring strategies to give customers full peace of mind.

The complexity of navigating the climate space

When companies are looking to offset their carbon impact or contribute to climate initiatives, identifying and supporting high quality projects can be easier said than done. We have learned firsthand that high quality carbon credits are scarce or already committed to large institutional buyers who secured exclusive rights to credits generated by projects they financed. As a result, it takes industry expertise to know where to look, and to earn the trust of project developers or brokers who are wary of selling their carbon credits to buyers who may use their credits for greenwashing or resale without meaningful climate impact.

But finding the credits is just the first step. There is no guarantee that an issued carbon credit has actually achieved the reported climate impact. Thus, to ensure the projects have actually produced the reported carbon reduction or removal impact, the onus is on buyers to conduct expert reviews of lengthy project design documents, monitoring and verification reports, and conduct reviews of any available external evaluations. This process is onerous and subject to reviewer bias.

These challenges are equally, if not more, prominent with non-carbon credit generating projects. Given that carbon offset registries only capture a subset of climate project types, many projects can have high climate impact even if they aren't issuing carbon credits. However, without standardized methodologies, companies looking to support these initiatives need to double down on scrutinizing project models and monitoring techniques if they want the projects to demonstrate verifiable climate impact.

TIME CO2's robust due diligence process

To bring our portfolios to our customers with confidence, we must understand each project inside and out.

To solve this issue, TIME CO2 has developed a seven-step due diligence process to source high quality projects and to ensure that every project follows through with its expected impacts. As a first step, project developers or suppliers are asked to submit a detailed application form, consisting of 50 questions that address every dimension of carbon project design and execution. In addition, our team engages in multiple rounds of Q&A with applicants to fill information gaps or address potential inconsistencies. We firmly believe that, in order to bring our portfolios to our customers with confidence, we must understand each project inside and out. Our attention to detail has been noticed and valued by partners similarly dedicated to quality; on several occasions, suppliers have expressed their appreciation for our thorough and holistic approach when evaluating projects, as well as our willingness to deliberate the nuances of the implementation model and underlying science.

TIME CO2's seven-step due diligence process.

To standardize our technical review process, we’ve systematically mapped the questionnaire against ten criteria. At least two TIME CO2 experts review, score, and discuss each application, providing clear justification for scores for each criterion to eliminate individual bias. Only projects that meet a certain threshold are considered for inclusion, minimizing risks of under-performance and poor project quality. As our diverse team has subject expertise in a wide range of climate solutions - from forest and landscape restoration to direct air capture - we are able to approach these evaluations with nuance and aplomb.

In addition to our in-house technical expert review, we also consider external ratings of the project’s quality, where available. Groups like Sylvera, BeZero, Calyx Global, Carbon Credit Quality Initiative, and Renoster have teams that produce project ratings, aiming to bring necessary structure, rigor, and consistency to the project review process. However, given the vast universe of carbon projects and the relatively recent introduction of these ratings groups, coverage is spotty, and typically only available for already-issued (ex-post) credits. As ratings methodologies also vary significantly, our team uses these ratings to complement rather than to substitute our own review process, digging into the underlying data and justification for the ratings and mapping them against our own criteria. As before, only projects with the some of the highest ratings in their project category are considered for our portfolios. 

Multiple companies and initiatives have emerged in the carbon market rating space to support customer confidence credit quality.

At times, there are project proposals that are technically complex or have premises based on niche or nascent science. This is where our advisors come in. We have developed an extensive network of scientists and thought leaders at the forefront of their fields; when thorny issues arise during the portfolio review process, we consult respective experts to ensure that our decision-making reflects the best-available science. Based on our findings, external reviews, and consultations, we ultimately determine which projects to support. 

We have developed an extensive network of scientists and thought leaders at the forefront of their fields.

Case Study: The science of methane's climate impact

One instance where our advisory board played a key role in decision-making was around TIME CO2's policy with methane-reducing projects. Because methane is a powerful greenhouse gas but breaks down relatively quickly in the atmosphere, its relative impact to carbon dioxide, or global warming potential (GWP), depends on the timeframe over which that impact is measured. While methane's GWP is around 28 when the impact is averaged over 100 years (GWP100), this figure shoots up to 84 when the impact is averaged over 20 years instead (GWP20). This has important implications for carbon markets; project developers selling carbon credits for methane reductions projects would be able to issue three times the credits for a project if using the GWP20 figure instead of GWP100. Given this conundrum, TIME CO2 turned to our advisory board to ask: based on the best available science, what standard should we use?

The answer was more nuanced than we thought. On one hand, the Paris Agreement follows the GWP100, meaning that the vast majority of credits from methane reduction available on the market are based on GWP100 as well. However, these metrics are regularly being debated and re-evaluated; the scientific community is exploring alternative metrics for accounting for methane and other shorter-term pollutants, which may gain traction and widespread adoption in the future. Armed with this understanding, we have have set our current policy to use GWP100 when evaluating methane-reducing projects, while acknowledging that the metrics are dynamic, and may change over time to reflect scientific consensus.

An increasing number of climate projects seek to reduce methane emissions from livestock, which represent up to 30% of global methane emissions. Photo Credits: Prashanth Vishwanathan / Ashden

Factoring in existing risk mitigation strategies like project, supplier, or methodology level buffer pools, we apply risk adjustments wherever appropriate and relevant. Setting up a portfolio-level reserve of credits, for example, can effectively maintain credit delivery to our customers in a timely manner in the event of individual project underperformance, without being beholden to external procedures - which can take months, if not years, to execute.  Whatever the tool, we seek to ensure that our customers are shielded from variability in project performance and can stand behind their climate claims with confidence.

With quality projects selected and risk mitigation strategies in hand, the focus then turns to executing the portfolio. TIME CO2 enters into Master Supply Agreements with the selected suppliers, including provisions where necessary to address project-specific risks. All credits are retired upon purchase and delivery to our customers, ensuring no future resale of credits; TIME CO2 has also developed a ledger to explicitly track the allocation of credits to our customers, giving customers full peace of mind in avoiding any double counting risk. As our funded projects generate impact beyond carbon credits, though, TIME CO2 collects additional information from suppliers every six months for ongoing projects to provide progress updates. These updates - which include information on latest co-benefit metrics, project achievements, research findings, and more - support customers in communicating about their climate impact. We also use the update reports to inform our own approach and commit to sharing what we learn.

All credits are retired upon purchase and delivery to our customers, ensuring no future resale of credits.

Finding the best projects requires staying ahead of the curve on networking, market research, and new climate regulation, science, and guidance. At TIME CO2, we’ve built our team to do just that, empowering our customers in their climate journey as a result of this high quality due diligence process. 

Want to learn more about TIME CO2?

Andrew Wu

Portfolio manager at TIME CO2. Yale and McGill grad. Former fellow at Conservation International and researcher at World Resources Institute.