30 March 2011 | Tierney Smith
Carbon, Energy, Africa, Asia, Australia, Europe, North America, South America

 

Carbon offset credits can help businesses to reduce their CO₂ emissions, while at the same time enhancing their business image amongst an increasingly environmentally aware customer base. However, their effectiveness is questionable and they should be used to enhance, not instead of, a significant carbon reduction programme.

What is offsetting?

Businesses, governments, organisations and individuals are all responsible for reducing the carbon emission they create. Carbon offsetting is essentially paying others to reduce emissions, or make an equivalent greenhouse gas saving on your behalf.

More and more businesses are taking advantage of carbon offsetting, and if done in the right way, offsetting can reduce the impact of their actions and help raise awareness of climate change issues. However, the DECC emphasise that offsetting is not a ‘cure’ for climate change and the most effective way to combat climate change is to reduce emissions.

When to offset?

Before offsetting, a company should first identify the carbon emissions they produce, by working out their carbon footprint.
 
They should the work out how they can avoid or reduce emissions, e.g. through insulation, installing renewable energy, travelling less, turning down the thermostats, and switching off lights, computers etc at night.

Finally, once a  business has attempted to reduce emissions they can then offset their emissions, using an offsetting scheme.

Why offset?

As offsetting emissions involves a business first measuring their carbon footprint , some believe the activity helps companies to raise awareness of their emissions. Combined with action taken to reduce emissions, carbon offsetting can help to tackle climate change.

Responsible offsetting projects can reduce CO₂ emissions by avoiding the release of CO₂ that would have otherwise happened. On a global scale this can help to maintain the balance between production and reduction of emissions.

Carbon offsetting can have a major advantage for businesses, raising their profile within the public, as a sign that they do really want to have a negative impact on climate change.

Before a company can offset, an individual or organisation must have calculated their emissions and know how many tonnes of CO₂ they wish to offset. Once this is done credits can be brought from emissions reductions projects for the equivalent amount.

Offsetting options

Carbon offset schemes can come in many forms, and many groups now fill the offsetting area, offering simple methods for businesses to reduce their CO₂ emissions. The majority of offsetting projects involve investing in projects in the developing world that reduce emissions or absorb greenhouse gas from the atmosphere.

Typical projects include:

• Tree planting,
• Renewable energy technologies,
• Biofuel cultivation,
• Improving building efficiency.

Carbon offsetting projects approved by the United Nations often substitute fossil fuel power with clean energy sources in developing countries and encourage investment into new, cleaner technologies. Such projects can also have additional benefits, creating local jobs.

Debate surrounding offsetting

There are many concerns surrounding carbon offsetting, most markedly that projects that companies may buy into will not make a real difference in terms of CO₂ reductions. Research from the University of Stanford found that a least a third, and possibly two-third of projects used for offsetting would have happened anyway, without the extra money provided by the scheme, with offsets having no impact at all.

Although many schemes are well intentioned, unregulated projects can open businesses up to reputational problems, depending on the schemes they may invest in. Research by Carbon Retirement, an offsetting group, found that only 28 pence of every £1 that is spent in offsets goes into the projects in question.

Forestry offsetting is particularly criticised, as the amount of CO₂ absorbed into a forest depends widely on the type of tree planted and how long the forest lives for, which is said to unpredictable.

Many are also concerned that businesses and individuals will use offsetting as a ‘cure’ to the problem of climate change, and the focus placed on offsetting could detract from that placed on reducing and avoiding emissions. In a Friends of the Earth publication entitled “A Dangerous Distraction” they found that ‘passing the buck’ – making climate change an issue to be tackled in the developing world rather than within their businesses – has become a problem.

The study also found that there is uneven focus throughout the developing world in offsetting projects; 55 per cent of offset projects can be found in China, while less than 2 per cent can be found in Africa.

What help is available?

For businesses not wanting to fall into the trap, some help is available. A Quality Assurance Scheme (QAS) for carbon offsetting was launched in February 2009, which hopes to provide consumers with confidence that the offset credits they purchase are reducing the effect of their emissions.  

Consumers can look for the Quality Mark being advertised by offset providers. However, this currently only allows Kyoto-compliant international credits (CERs, EUAs and ERUs) and not Voluntary emissions reductions VERs.

The global offset market is dominated by the EU where companies are legally obliged to mitigate CO₂ emissions partly by purchasing carbon offset credits via the European Union Emissions Trading Scheme (EU ETS) cap-and-trade system.

This system allows credits from Clean Development Mechanism (CDM) to be imported into the market and traded in order for businesses to comply with established caps on the total amount of CO₂ they are allowed to emit. The EU ETS covers over 45% of Europe’s greenhouse gases, accounting for 79% of transactions by value.

Businesses can profit from investing in projects endorsed by the CDM. A Certified Emissions Reduction (CER) is a type of emissions unit issued by the CDM which can be traded on the carbon offsetting market and which can be held by governmental and private entities on electronic accounts.

A different way to offset

The Carbon Retirement offers a different way for companies to offset. Rather than investing in projects in developing countries, Carbon Retirement focuses on removing emissions from the developed world.

They do this by buying out EUA credits from the European Union Emissions Trading Scheme, therefore limiting the amount of emissions trading under the scheme.

A Carbon Retirement spokesperson said: “We cater for everyone from individuals through to FTSE 100 Clients. Those offsetting less than 100 tonnes can do so through the website. SMEs will benefit from getting marketing support included in their offset price; they will get a stamp to use on their promotional materials and website and a support pack to help them to communicate their carbon neutrality.”

The scheme is approved as a Government Assured Offset and has received a lot of praise from businesses and environmentalists alike.

It is clear that if offsetting is done correctly it can provide some real benefits for businesses looking to make a positive move to reducing their CO₂ emissions. It is important that investing in a offsetting project, whether in the developed or developing world, businesses must invest time to make sure the right scheme for the company is picked.  

 

Image: Marfis 75 | flickr
 

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