The ability to access carbon offset credits is a key focus for Hydrodec in seeking to promote sustainability. In September 2016, the American Carbon Registry ("ACR") approved Hydrodec's patented technology as a carbon offset project in the voluntary carbon offset market, creating an incremental revenue stream for the Company and establishing Hydrodec (as far as the Board is aware) as the only oil re-refining business in the world to receive carbon credits for its output. This was the final stage in a long and detailed process (described below) and the approval allows the Company to generate, and monetise, carbon credits. Hydrodec of North America is now generating offsets through the re-refining of used transformer oil, which would otherwise ordinarily be incinerated or disposed of in an unsustainable manner.
A carbon credit, or carbon offset is a financial instrument used to represent the reduction of emission of one tonne of CO2 (carbon dioxide) or CO2e (carbon dioxide equivalent) gases from the atmosphere. Carbon offsets are generated by approved emission reduction projects, and may be traded or sold and used by third party entities to offset the carbon emissions generated by their activities.
There are two primary markets for carbon offsets – the larger compliance market where offsets are traded to comply with emissions limits under the Kyoto Protocol or the EU Emissions Trading Scheme, and the smaller voluntary market.
Hydrodec’s patented transformer oil refining process is the only transformer oil recycling method to date published by the American Carbon Registry (ACR) as an Approved Methodology. The approval process requires rigorous scientific peer review and public comment periods before the methodology can be approved.
For an emissions reduction project to be approved, it must follow an Approved Methodology, and the project plan must demonstrate a number of items including:
- That the project results in a net reduction of CO2 (or CO2e) emissions compared to the baseline scenario
- That the measures undertaken by project are not required or mandated by an existing piece of legislation
- That the measures undertaken to reduce emissions by the project are not already in common practice
- That there is no risk of reversal of the emissions reduction achieved by the project Hydrodec’s project plan for its Canton, Ohio refinery has successfully demonstrated compliance with all of these criteria.
The final stage of approval for the emissions reduction project plan is the validation and verification of the project plan by an external auditing authority in accordance with ISO14064-3:2006 and ISO 14065:2007.