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									3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007




                 Green-e GHG Product Standard
                 Electronic Comment Form


Date of Form:                   December 19, 2006
Comment Due Date:               January 31, 2007
Response Recipient:             CRS at comments@resource-solutions.org
Response Options:               E-mail (preferred) to comments@resource-solutions.org
                                Facsimile to (415) 561-2105
                                U.S. mail to address provided below

The Green-e Program requests comments on the proposed Green-e GHG Product Standard.
Any interested stakeholder is welcome to comment, and we encourage you to circulate this draft
standard to any other interested parties for comment.

Please provide specific comments and site page and line number or section number and title for
any deletions and/or substitutions of text. If there is a section or language you oppose, it is very
important that you provide alternative language that would enable you to change your comments
to support that language or section.

How the Comment Forms will be Recorded and the Process Going Forward

Stakeholders have until January 31st to submit comments. The Green-e GHG Advisory Group
will review stakeholder comments and CRS’ recommendations and help determine the revisions
needed. CRS will forward a final revised Standard taking into account stakeholder comments and
GHG Advisory Group discussions to the Green-e Governance Board for consideration. CRS staff
will place on the Green-e website all comments received and a written synopsis of how each
material issue was addressed in draft revisions. Authority to approve the Standard or request
further revision resides with the Green-e Governance Board.

The Green-e Governance Board will weigh the balance of comments and degree of consensus
achieved in making their final decision of whether to approve the proposed standard or whether
to approve a modified version of the standard. If the Green-e Governance Board does not
approve the draft standard, they will instruct the Green-e staff to continue to work with
stakeholders to develop a proposed standard.




                                                                                                   1
                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007


Electronic Comment Form

Contact Information
Name:               Gabe Petlin__________________
Organization:          3 Phases Energy Services_______
Address:               Presidio of San Francisco
                       6 Funston Ave., Suite A
                       San Francisco, CA 94129__________
Phone:                 (415) 595-1679__________________
Email:                 gpetlin@3phases.com_____________

Green-e GHG Product Standard

Please comment on the proposed standard for the Green-e GHG Product Standard
(http://www.resource-solutions.org/mv/ghgstandard.html).

Comment Space:
(Add additional pages if necessary)

Introduction

3 Phases Energy appreciates the opportunity to submit comments on the Green-e GHG Product
Standard. This initiative is very timely and offers great benefit to the rapidly developing
voluntary GHG reduction market, and will serve to increase quality, standardization,
transparency, and consumer confidence in the marketplace. We applaud the Center for Resource
Solutions for their leadership, transparency, and efficacy in this important effort.

1) Comment: Why the Green-e GHG Product Standard is Needed

3 Phases Energy has observed that no retail product standard exists today for voluntary retail
GHG reduction products and this is a logical fit for Center for Resource Solutions which has 10
years of retail product certification and consumer protection experience. CRS is filling a gap in
the emerging voluntary GHG market where no standards exist for the 40-50 retail GHG
marketing organizations active today.

3 Phases Energy also observes that many legitimate project-level GHG offset standards and
protocols are available today, but very few are being used by retail GHG product marketers. The
market today is an ad-hoc collection of organizations using a great range of definitions of what
constitutes legitimate GHG offset products and approaches vary considerably in terms of basic
consumer transparency and protection. CRS is clearly not creating new project-level GHG offset
standards, but is wisely calling for voluntary GHG product marketers to standardize their use of
established and emerging transparent third party verified offset standards at the wholesale and
                                                                                                 2
                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007

project level. CRS is proposing appropriate screening criteria to select eligible GHG offset
standards.

A case in point for the need for greater standardization of voluntary GHG products is the recent
study prepared by Clean Air Cool Planet (CACP): A Consumer’s Guide to Retail Carbon Offset
Providers. The CACP Guide found that many of the early stage GHG product marketers
are using non-transparent proprietary carbon offset methodologies and the vast majority
of retailers do not have their offsets verified by independent third parties. This guide
ranked 7 top carbon offset retails and found that only 3 of the top 7 providers actually use
third party verification at the offset project level according to established transparent
independent standards. None of the top 7 providers use third party retail certification of
their GHG products.

3 Phases Energy concludes that the early voluntary GHG retail market very much needs
standardization at both the retail and project/wholesale level. Today’s retail market is dominated
by organizations that are essentially saying to customers: Trust us; we know quality when we
see it. This balkanized state of the market is somewhat normal for new markets, and some of
these early “self-certified” GHG marketers are intelligent, well-meaning, and trustworthy
organizations. Clearly the long-term success of the voluntary GHG market requires a transition
towards market standardization where third party verification of offsets against credible
transparent standards is an absolute necessity and transparency and certification at the retail
product level becomes common practice. The overarching benefit of this standard is that
consumers will understand what they are buying and get what they paid for with a high
degree of certainty.

3 Phases Energy welcomes the Green-e GHG Product Standard and offers the follow comments
on the draft standard.

2) Comment: Principles for Determination of Eligible Sources of GHG Reductions are
Appropriate in Scope and Stringency

3 Phases Energy believes the principles are appropriate in scope and stringency under this
standard. We have heard the argument from some parties that this standard is process-based and
will set no bar for standards. We thoroughly reject this argument. Few standards will hold up to
this test and those that do will demonstrate high integrity. Let’s hold off pre-judging the
standards until they actually apply for approval! We will all have 30 days to comment on the
standards that do apply to CRS and we can be assured that an independent and impartial advisory
board will thoroughly review both the applying standards as well as stakeholder comments from
all parties.

3) Comment: CRS Needs to Resolve the Question of Whether and How Green-e Certified
RECs Will Qualifying as Eligible Offsets

Renewable energy is an eligible offset technology under numerous international GHG offset
standards including VCS, Gold Standard and the CDM, so it is clear that renewable energy

                                                                                                   3
                           Green-e Program • Center for Resource Solutions
                Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007

projects can generate offsets if any of these standards get approved by CRS. The question
remains whether Green-e certified RECs will become eligible offsets under the Green-e GHG
Product Standard. 3 Phases Energy is not making formal comments on that question until a
formal proposal is made by CRS on how Green-e certified RECs will become eligible offsets
under the Green-e GHG Product Standard. We believe there is broad consensus today around
making Scope 2 indirect GHG reduction claims based on the purchase of Green-e certified RECs
and that is the dominant use today of Green-e certified RECs. There is also broad consensus that
renewable energy projects are carbon neutral and are critical to solving Global Warming. The
policy question of whether Green-e certified RECs will become eligible offsets under the Green-
e GHG Product Standard needs to be resolved as an immediate order of business once the
Green-e GHG Product Standard is approved. 3 Phases Energy recommends that CRS put forth a
proposal detailing how and under what conditions Green-e certified RECs will become eligible
offsets under the Green-e GHG Product Standard. Further, the Green-e GHG Product Standard
should ratify the consensus existing today around Scope 1 and 2 emission claims and provide
simple and clear guidance to customers, marketers, the media, GHG registry administrators, and
stakeholders on what the common ground is around making GHG reduction claims. This should
be done for both commercial and residential customers.

4) Comment: Surplus Regulatory Compliance Emission Reduction Units Should
Automatically Qualify

Surplus regulatory compliance emission reduction units by definition represent real, measurable,
verifiable, additional, and beyond BAU emission reductions and should therefore qualify
automatically under the Green-e GHG Product Standard and not have to formally apply through
process proposed by CRS. 3 Phases Energy recommends that CRS compile a list of these types
of regulatory compliance instruments and announce their eligibility in the 1st round of approvals
subject to stakeholder comment. Examples include and are not limited to: ERUs and EUAs
under the EUTS, CERs and JI credits under the UNFCCC CDM and JI program, NOx
allowances under the US EPA Clear Air Act emission trading programs, and any other
allowances/offsets approved under a government mandated cap and trade program for
greenhouse gasses. A voluntary buyer purchasing a regulatory compliance GHG credit knows
with certainty that they are removing one 1 ton of GHG from the pool of allowances and credits
and therefore forcing entities subject to the mandatory cap to create or buy an additional
reduction in order to meet their obligation. One potential argument against this proposal is that
sometimes government mandated cap and trade regimes over allocate allowances as had been
argued in the EUTS. We all recognize that long term GHG caps are what is need to solve Global
Warming and a lot of eyes will be watching to make sure the allocations are done right. It would
not be feasible to expect CRS to second guess large government GHG trading regimes and their
allocation methodologies.

5) Comment: CRS Should Recommend Standardization of Carbon Calculator
Methodologies

CRS could provide a valuable service in standardizing consumer carbon calculator
methodologies. A great number of GHG offset and REC marketers use carbon calculators on

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                           Green-e Program • Center for Resource Solutions
                Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007

their websites to help customers calculate their overall GHG footprint from electricity, gas,
automobile travel, shipping, rail, and airline flights. A recent study by Tufts University found
that carbon flight calculators produce GHG emission results that vary by a factor of 2 for the
same flight. This is perfect fodder for journalists looking to smear fledging green industries.

3 Phases Energy strongly encourages CRS to adopt a single recommended methodology for
consumer carbon calculators and make it a requirement for all certified product marketers to base
their claims on. Short of making it mandatory even publicly recommending a preferred
methodology would have a similar affect on promoting standardization.

6) Comment: CRS Should Recommend Standardization of Emission Displacement
Quantification from Renewable Energy

3 Phases Energy also recommends that CRS state publicly a required standard methodology for
calculating the emission displacement benefits of renewable energy for purposes of both indirect
and direct reduction claims under current and future program rules. The variance in methods
used again gives fodder to many critics and it would help tremendously if this industry came
together around one standard approach.

7) Comment: The Application Process for Determination of Eligible Sources of GHG
Reductions is Appropriate but Needs to Address Certain Programs That May Not Apply

3 Phases Energy believes the application process is appropriate for determination of eligible
sources of GHG reductions. It is easy to see how institutions such as the Gold Standard,
Voluntary Carbon Standard, and the Chicago Climate Exchange, etc. would likely submit their
own applications. It is unclear how large and complex entities like the UNFCCC CDM would
proceed. Many verified emission reductions (VERs) sold in the voluntary market are from CDM
approved projects where the VERs are validated by UNFCC CDM official Designated
Operational Entities (DOEs). These VERs don’t always become CDM Executive Board
Certified Emission Reductions (CERs) for variety of administrative and practice reasons, but
these VERs are still high quality credits. There are literally scores of CDM approved offset
methodologies and it would be onerous to approve them one by through the CRS process. 3
Phases Energy proposes that the CDM be considered an eligible sources of GHG reductions for
the Green-e GHG Product Standard under a prescribed set of conditions that would include:
        Project Design Document (PDD) is validated under the CDM by an official DOE
        Project VERs are verified by an official DOE
        Verification report and VER purchase contracts are reviewed by Green-e

8) Comment: CRS Should Actively Solicit the First Round of Eligible GHG Offset
Applications and Approve the First Round in a Reasonable Time Frame

The need for a strong pool of eligible offset standards and offsets is critical to the timely launch
of the Green-e GHG Product Standard to insure successful market uptake by retailers, suppliers,
and customers alike. We should avoid having a slow trickle of one or two offset standards
available in the beginning which would create a situation where the program takes off in fits and
                                                                                                   5
                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007

starts. 3 Phases Energy recommends that CRS proactively solicit a first round of GHG offset
standards to apply to Green-e in a coordinated fashion. CRS should target high quality standards
and institutions that are likely meet the CRS criteria.

9) Comment: CRS Should Provide Informal Review of Potential GHG Offset Standards
Prior to the Formal Public Review

Prospective GHG offset standards should have the opportunity to engage CRS’ Advisory Board
with an informal review of potential eligibility prior to formal public review. Some standards
might decide that the risk of public rejection are too risky and choose to not participate. Informal
review would give them the chance to gage the feasibility of eligibility and in some cases may
influence certain changes to be more in line with CRS policy.

10) Comment: A negative screen of potentially controversial project types is not necessary.
Instead, uniform labeling standards will ensure that consumers have adequate information
to express their preference for specific project types. (Section 7.2)

There are currently 55 approved methodologies under the UN’s CDM Program. While the
regime is highly flexible and open to new methodologies, over 1,500 projects fit into one of these
methodologies and 80% of those projects use the top ten methodologies. It is likely that a similar
set of activities and technologies will characterize offsets across many GHG certification
programs.

Criticisms are sometimes levied against product certification bodies for what they allow instead
of what is actually offered by the market. Green-e should not get lured into a slippery game of
picking winners and losers, but instead focus on uniform product labeling and disclosure.

In the voluntary market, regime protocols have so far focused on the scientific validity of
carbon reduction claims rather than on questions of public perception of project types. Some
have suggested that the Committee give special consideration to questions of public acceptance
of potentially controversial projects.

Such projects include:
• Fossil fuel switches (to other fossil fuels)
• Fugitive emissions from fuels (e.g., coal bed methane)
• Energy distribution
• Enhanced oil recovery
• High global warming potential projects, such as hydrofluorocarbons, perfluorocarbons,
sulfur hexafluoride, and nitrous oxide
• Cement projects
• Nitric acid
• Supply side energy efficiency projects




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                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007

If any of the above project types were to become eligible under the Green-e program no one is
required to buy them. Thus a negative screen is not needed, rather good disclosure is called for
to create an informed buying public.

We recommend that the Committee let public perception shape project development through the
action of the marketplace, rather than by picking winners. The Committee can strengthen the
market by making sure that consumer labeling is as clear as possible.

Specifically, we recommend the Committee create labeling standards for the top project types
and require marketers to disclose the portfolio percentages prominently at the time of purchase.
When possible, these project types should be linked to Web-accessible, consumer-friendly
disclosure language. This process may seem burdensome, but it will allow participation from
diverse project types and help defuse unfounded criticism that hidden industrial-scale projects
form the large part of the voluntary market. Buyers should always know what they are buying
and get what they pay for.

Additionally, we support a Standard that allows partial acceptance of a GHG certification
program, such that only certain categories of projects are allowed. For example, Green-e may
find that a regime’s allowances don’t meet the CRS criteria while its offsets do.

11) Comment: CRS Should Conduct Outreach to Ensure the Stakeholder Community is
On Board

CRS should invest time and resources reaching out to stakeholders who may not know about this
comment period or who have intentionally held back from participating.

12) Comment: CRS Should Collect Sufficient Product Marketer Certification Fees to
Insure the Program is Well-Funded and Can Promote the Brand

The program needs to be sufficiently funded so that CRS can properly administer it and promote
it to become the wide spread accepted quality standard for voluntary retail GHG products.

13) Comment: The Application Review Process for New Retail Product Certifications
Should be Rigorous to Weed Out “Bad Apples”

With 40-50 carbon “shops” out there and maybe more CRS needs to carefully review prospective
applicants for retail certification before granting Green-e certification. For example, a new
applicant receives certification in January, but might not undergo portfolio verification until the
following year. Suggested pre-certification check-list items might include:

a) Required level of customer support: We recommend a minimum level of 9-to-5
telephone support for vendors in this marketplace and a minimum turn around time of 3 days on
email inquiries. Wide adoption of these standards will help assure that responsible firms
committed to long term customer relationships are participating in the
market.

                                                                                                   7
                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007



b) Prominent listing of GHG offset regimes and project types: A new applicant should have a
standardize product content label available and online prior to receiving certification license.
This should include a summary listing of the project types and selected GHG
certification regime on product content labels and marketing materials distributed to
customers.

c) Accurate Customer Communications and Full Disclosure Requirements:
CRS should review a new retail applicant’s marketing materials to insure their accuracy and
conformity to all CRS marketing and disclosure guidelines.

A 90-day check-up could be instituted in the 1st year of certification to insure adherence to
requirements. After the 1st Reporting Year verification is complete vendors should be required
to web-publish their CRS-approved annual verification reports as a matter of transparency.

14) Comment The Committee should consider mechanisms through which the Standard
can incorporate future carbon credit streams as verified reductions once they become
verified.

A common industry concern involves the sale of a stream of carbon credits in advance of the
project producing verified emission reductions. This type of financing structure is innovative but
puts customers at risk of paying for reductions that may never occur, or worse of being
fundamentally misled into believing that the reductions have occurred when in fact they have
not. This is a challenge to accommodate the rigorous consumer protection regime envisioned by
CRS with future streams of yet to be verified emission reductions.

A simple approach is to allow “futures” type products to be marketed as forward purchase
products where only the verified reductions can be disclosed as having occurred as opposed to
counting a 20-30 year stream of future reduction up front in the year of the purchase. Customers
could still enter into forward purchase agreements, but retailers would disclose only the
reductions that have been verified.

We hope that common ground can be found between these two market models.
Some suggestions for the committee to consider:
• Futures model products could achieve certification if they clearly labeled reductions
achieved in the current maturity and communicated the tabulated schedule of reductions
to consumers under their forward contract. For example a firm selling a 12,000 lb offset
to a consumer in a 20-year futures model would simply state “2007 reduction: 600 lbs; 20
year support at this level” next to any and all reduction claims. A full tabulation could be
shown post-purchase as a part of a product content label.
• Futures model products should include additional consumer projection for project risk.
For example, futures model products should include an insurance requirement to address
project risk. This insurance would name an administered trust as the beneficiary, and in
case of project or counterparty failure, be funded to achieve purchases as outlined by the
original contract from other marketplace projects achieving similar reductions under the

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                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129
3 Phases Energy Comments to Green-e GHG Product Standard January 31, 2007


same Standard.

15) Comment: Third Party or Independent Verification

A few times the term “verification” is used sometimes with reference to third party independent
verification and sometimes without. 3 Phases Energy recommends that CRS make standard its
definition of the term third party independent verification to mean only verification by
independent third parties according to a transparent approved standard under this program.

Conclusion: GHG Voluntary Market Standardization is Needed

The Center for Resource Solutions is the right organization to lead this process and to create the
Green-e GHG Product Standard. CRS deserves commendation for their leadership efforts in
this area. The overarching benefit of this standard in the opinion of 3 Phases Energy is the
transition from the “We know quality when we see it” self-certification stage of the market to a
new era based on credible transparent standards, independent third party certification and
verification, consumer disclosure and protection, and integrity of communications.

3 Phases Energy welcomes the Green-e GHG Product Standard and appreciates the opportunity
to submit comments. Thank you.

Sincerely,


Gabe Petlin
Director Utility Partnerships and Renewable Energy Certificates

About 3 Phases Energy:
In operation since 1994, 3 Phases Energy is committed to promoting and implementing
renewable energy options for businesses, utilities, governments, and institutions through Green
Direct Access, green pricing support services for utilities, retail and wholesale sales of
Renewable Energy Certificates and Carbon Offsets and onsite efficiency and solar photovoltaic
installation. For more information, visit www.3phases.com.




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                            Green-e Program • Center for Resource Solutions
                 Presidio Building 97 Arguello Blvd • PO Box 29512 • San Francisco, CA 94129

								
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