F2: Additional value enabled by project: For many projects, beyond the revenues from selling ERCs, the project activities also create products or services that generate additional non-ERC revenue, or enable resource savings with tangible cost reductions. In this regard, two contributions are accounted for:
- Non-ERC revenue: Taking the per-unit price of non-carbon resources generated by the project, multiplied by the amount of non-carbon resources generated by the project that would not have been possible without the ERC project.
- Cost savings: Taking the per-unit price of resources saved by the project, multiplied by the amount of resources saved by the project that would not have been possible without the ERC project.
These are additional contributions by the project that can be valued in dollars and allocated to the project’s stakeholders, which are distinct from the socioeconomic value criterion (S2) which considers the co-benefits of the project to the broader community or economy and that may be more complex to quantify in value dollars.
Figure 3.3 Guideposts for rating additional value enabled by project
Values and guideposts for rating | Rating |
|---|---|
| 1,000 and above: $1 spent on ERC generation generates at least $1000 of additional value | |
| 100 to below 1,000: $1 spent on ERC generation generates at least $100 to less than $1000 of additional value | |
| More than 0 to below 100: $1 spent on ERC generation generates more than $0 to less than $100 of additional value | |
| 0: Project does not generate any additional value |
This criterion will be rated based on the proportion of the additional value calculated—contributed by the sum of the project’s non-ERC revenue and cost savings—relative to the project’s cost of ERC generation, taking into account only the cost attributable to ERC generation. This value will reflect the extent to which a per-dollar investment to generate ERCs from the project will enable other sources of economic benefit. Suggested benchmarks are indicated in the guideposts above to rate this value. These can be adjusted according to the projects in consideration or as appropriate to the purpose of the exercise. See Figure 3.3.
While the NPV of the project’s non-ERC component is provided as an optional measure for reference in the initial profiling stage, given that this value will largely depend on the business model of the project and its project activities, the evaluation of this criterion at this stage focuses on its total absolute value. The NPV of the project’s non-ERC component will only be used for the more detailed assessment conducted for Step Three.