The Secretive World of Environmental Attributes - and Why Transparency Matters

Nearly 10 years ago, I first discovered that environmental attributes carry real financial value - and the secretive world of climate finance has lured me in ever since. I am not alone. Many are still trying to decode this secretive world.

As a former Toronto Police officer, I spent a decade unraveling mysteries yet environmental attributes should not remain shrouded in such secrecy that only a select few can understand. 

Back in 2016, my then landfill gas startup’s “go or no go” decision was based on financials and signing a long-term offtake agreement with a gas utility. My engineering partners had developed a proprietary renewable natural gas (RNG) technology process and the eye-opening world of renewable energy solutions made me appreciate how we can transition away from fossil fuels… but the barrier is “can we afford to implement the technology?” 

While researching - and do I love to dig into research as it is ingrained as a trained investigator and also from my brief stint in law school - I learned of how renewable natural gas from Quebec was profitable all because of the environmental attributes. The physical molecule of methane was sold by gigajoules into the regulated utility in the province yet the environmental attributes were able to be sold anywhere in North America. The splitting of the physical gas sale from the Renewable Thermal Certificate (sold by the dekatherm) opened up the possibility for landfill gas to be financially feasible. 

Yet there I was faced with an offtake offer from the utility that only allowed for a small percentage premium for my RNG over and above what conventional fossil fuel derived Natural Gas was worth. Was the utility counting on a small developer not understanding the real value of my RNG? It appeared that way for months with each meeting and email plus the draft purchase contract. 

While I was a Toronto Police officer, I was selected to attend the Canadian Police College for the (then) Hostage and Barricaded Persons Negotiators Course. It was eye opening education and helped steel my negotiation skills for my policing career and over a decade later in 2015 I dovetailed this education into an executive certificate in business negotiations from the University of Notre Dame. The world of business negotiations had shifted to an ethical approach of seeking the “win-win” instead of the out-dated and distasteful “win-lose” or “lose-lose” style of yesteryears. 

To negotiate for a win-win, the collaborative approach is required and that predicates all parties are honest and forthright. Yet this approach also is built on all parties understanding their value and contributions in the opportunity. I knew that my RNG could be sold in two ways to the utility and with two different values: molecules of methane with the renewable attributes or only as molecules of methane. I could separate the renewable attributes from the deal and sell the renewable attributes anywhere in North America once the methane molecules entered a North American grid-tied utility. 

Unsaid in the negotiations was that this utility could have secured a supply of RNG and used the molecules locally and resell the renewable attributes themself for pure profit in the range of a 328% profit margin. This was an important pivot point and having a stranded asset by virtue of high transportation costs to market outside of the utility left the RNG project unable to advance. That said, a decade later there is a Federal landfill gas protocol and the project opportunity landscape has changed for the better.

Understanding the market value of a product or “thing” is where negotiations must start and agreed between negotiating parties to achieve a successful mutually beneficial deal. 

Having transitioned further into environmental attributes since 2016, the more commonly known carbon offset and carbon credit markets are where most of my work is concentrated. And unfortunately, the old school one-sided negotiation tactics continue in carbon deals. 

For project developers, understanding the value and ownership of environmental attributes can be the difference between a viable project and one that never breaks ground. Too often, developers sign away the rights to their renewable attributes without realizing they represent the true profit center - not the molecules, megawatts, or offsets themselves. Transparency in these markets isn’t just an ethical issue; it’s a financial safeguard. When developers know the worth of their environmental attributes, they negotiate from strength, attract better partners, and ultimately accelerate real climate action.

My next piece will start peeling the proverbial onion on the mysterious world of carbon here in Canada and throughout the globe. The carbon market shouldn’t remain a privilege of insiders. Transparency is the first step toward a fair and efficient market. And in the process of peeling onions we know it can cause tears and discomfort for some!

Proudly not written with AI,

AJ Bird