editor’s note: This occasional column aims to highlight problems confronted by small businesses in Colorado and how they were solved. This installment is in the words of John Hodges, president of SunOne Solutions.
THE COMPANY
SunOne Solutions is a Colorado- based company that sells carbon credits on the carbon markets. These types of companies are called carbon credit aggregators, and they develop projects which generate credits, package them and then sell them.
Credits can be created by the sustainable management of land by farmers, ranchers and conservation trusts. Projects could include installing methane capture systems at a landfill or dairy farm, planting trees or building a wind farm.
Carbon credits are a true commodity — they are traded on exchanges around the world and are priced based on market demand and type of credit. The credits are bought by private corporations or public organizations that are voluntarily offsetting their carbon emissions or have an emissions standard they must meet.
While the United States does not have an overarching standard, electric utilities in 10 states buy credits to meet state requirements. U.S. companies cannot sell carbon credits globally because they are not members of the Kyoto Protocol, but they can sell to interested companies or local governments in the country.
THE PROBLEM
When the economy took a dive, economic activity decreased, causing a decline in emissions. Companies, therefore, did not need to offset their emissions with carbon credits.
The capital for developing projects that produce the credits dried up. Some project developers began to fail, and as a project developer, we knew we had to come up with a plan quickly if we were going to continue to employ the 10 staff members we had.
THE SOLUTION
Up to this point, the business plan for carbon credit aggregators like SunOne had been to create as many projects as possible in anticipation of increasing demand on the carbon exchange.
But because the regulatory market was uncertain and capital to develop projects was drying up, we had to change our strategic plan. We changed our focus from the quantity of credits we bought to the quality of the credits. Credits that come from big, empty spaces that are close to credit purchasers are more valuable than credits that come from space in the middle of nowhere, since purchasers want their resources to go back into the local community.
A million-acre conservation trust project in southern Colorado will have credits that are more valuable to the purchasers of the credits in Colorado, because the project is in the same state as the creator of the emissions. In addition, projects that include additional environmental benefits such as protection of endangered species or conservation of wetlands are also considered to be more valuable.
SunOne is now focused on purchasing more valuable projects rather than as many as it can. We have just been named as the No. 1 aggregator of credits by “Point Carbon” magazine, the trade magazine for this commodity. Today, we still employ all 10 folks and hope to be able to grow in the future.
Contact: John Hodges, president of SunOne, 303-500-5017 or john@sunonesolutions.com
