Carbon offset
Encyclopedia
A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gas
es made in order to compensate for or to offset an emission made elsewhere.
Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e) and may represent six primary categories of greenhouse gases. The categories include: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydroflourocarbons (HFCs), and sulfur hexaflouride (SF6). One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.
There are two markets for carbon offsets. In the larger, compliance market, companies, governments, or other entities buy carbon offsets in order to comply with caps
on the total amount of carbon dioxide they are allowed to emit. This market exists in order to achieve compliance with obligations of Annex 1 Parties under the Kyoto Protocol
, and of liable entities under the EU Emissions Trading Scheme. In 2006, about $5.5 billion of carbon offsets were purchased in the compliance market, representing about 1.6 billion metric tons of CO2e reductions.
In the much smaller, voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel. Many companies (see list) offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase (such as offsetting emissions related to a vacation flight, car rental, hotel stay, consumer good, etc.). In 2008, about $705 million of carbon offsets were purchased in the voluntary market, representing about 123.4 million metric tons of CO2e reductions.
Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases in the short- or long-term. The most common project type is renewable energy, such as wind farms, biomass energy, or hydroelectric dams. Others include energy efficiency projects, the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects. Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects.
Carbon offsetting has gained some appeal and momentum mainly among consumers in western countries who have become aware and concerned about the potentially negative environmental effects of energy-intensive lifestyles and economies. The Kyoto Protocol
has sanctioned offsets as a way for governments and private companies to earn carbon credits which can be traded on a marketplace. The protocol established the Clean Development Mechanism
(CDM), which validates and measures projects to ensure they produce authentic benefits and are genuinely "additional" activities that would not otherwise have been undertaken. Organizations that are unable to meet their emissions quota can offset their emissions by buying CDM-approved Certified Emissions Reductions.
Offsets may be cheaper or more convenient alternatives to reducing one's own fossil-fuel consumption. However, some critics object to carbon offsets, and question the benefits of certain types of offsets.
Offsets are viewed as an important policy tool to maintain stable economies. One of the hidden dangers of climate change policy is unequal prices of carbon in the economy, which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon - unless carbon can be purchased from that area, which offsets effectively permit, equalizing the price.
defines a carbon offset as “a unit of carbon dioxide-equivalent (CO2e) that is reduced, avoided, or sequestered to compensate for emissions occurring elsewhere”.
The Collins English Dictionary defines a carbon offset as “a compensatory measure made by an individual or company for carbon emissions, usually through sponsoring activities or projects which increase carbon dioxide absorption, such as tree planting.”
The Environment Protection Authority of Victoria (Australia) defines a carbon offset as: “a monetary investment in a project or activity elsewhere that abates greenhouse gas (GHG) emissions or sequesters carbon from the atmosphere that is used to compensate for GHG emissions from your own activities. Offsets can be bought by a business or individual in the voluntary market (or within a trading scheme), a carbon offset usually represents one tonne of CO2-e”.
The Stockholm Environment Institute defines a carbon offset as “a credit for negating or diminishing the impact of emitting a ton of carbon dioxide by paying someone else to absorb or avoid the release of a ton of CO2 elsewhere”.
The University of Oxford Environmental Change Institute defines a carbon offset as “mechanism whereby individuals and corporations pay for reductions elsewhere in order to offset their own emissions”.
, where companies that emit greenhouse gases are required to cut their emissions or buy pollution allowances or carbon credits from the market, under the European Union Emission Trading Scheme
(EU ETS). Europe, which has seen volatile carbon prices due to fluctuations in energy prices and supply and demand, will continue to dominate the global carbon market for another few years, as the U.S. and China—the world's top polluters—have yet to establish mandatory emission-reduction policies.
(RGGI), kicked into gear in Northeastern states in 2009, growing nearly tenfold to $2.5 billion, according to Point Carbon. Western Climate Initiative
(WCI) -- a regional cap-and-trade program including seven western states (California notably among them) and four Canadian provinces—has established a regional target for reducing heat-trapping emissions of 15 percent below 2005 levels by 2020.
Motivations : According to industry analyst Ecosystem Marketplace
, the voluntary markets present the opportunity for citizen consumer action, as well as an alternative source of carbon finance and an incubator for carbon market innovation. In their survey of voluntary markets, data has shown that “Corporate Social Responsibility
” and “Public Relations/Branding” are clearly in first place among motivations for voluntary offset purchases, with evidence indicating that companies seek to offset emissions "for goodwill, both of the general public and their investors."
Pre-compliance & trading : The other main category of buyers on the voluntary markets are those engaged in pre-compliance and/or trading. Those purchasing offsets for pre-compliance purposes are doing so with the expectation, or as a hedge against the possibility, of future mandatory cap and trade regulations. As a mandatory cap would sharply increase the price of offsets, firms—especially those with large carbon footprints and the corresponding financial exposure to regulation—make the decision to acquire offsets in advance at what are expected to be lower prices.
Retail : Multiple players in the retail market have offerings that enable consumers and businesses to calculate their carbon footprint
, most commonly through a web-based interface including a calculator or questionnaire, and sell them offsets in the amount of that footprint. In addition many companies selling products and services, especially carbon-intensive ones such as airline travel, offer options to bundle a proportional offsetting amount of carbon credits with each transaction.
Features of companies that voluntarily offset emissions : Companies which voluntarily offset their own emissions tend to be of relatively low carbon intensity, as they can offset a significant proportion of their emissions at relatively low cost. Voluntary offsetting is particularly common in the financial sector. 61% of financial companies in the FTSE 100 offset at least a portion of their 2009 emissions. 22% of financial companies in the FTSE 100 considered their entire 2009 operations to be carbon neutral.
offsets commonly include wind power
, solar power
, hydroelectric power
and biofuel
. Some of these offsets are used to reduce the cost differential between renewable and conventional energy production, increasing the commercial viability of a choice to use renewable energy sources.
Renewable Energy Credits (RECs) are also sometimes treated as carbon offsets, although the concepts are distinct. Whereas a carbon offset represents a reduction in greenhouse gas emissions, a REC represents a quantity of energy produced from renewable sources. To convert RECs into offsets, the clean energy must be translated into carbon reductions, typically by assuming that the clean energy is displacing an equivalent amount of conventionally produced electricity from the local grid. This is known as an indirect offset (because the reduction doesn't take place at the project site itself, but rather at an external site), and some controversy surrounds the question of whether they truly lead to "additional" emission reductions and who should get credit for any reductions that may occur.
generated by farm animals (by use of an anaerobic digester), landfills or other industrial waste. Methane has a global warming potential
(GWP) 23 times that of CO2; when combusted, each molecule of methane is converted to one molecule of CO2, thus reducing the global warming effect by 96%.
An example of a project using a anaerobic digester can be found in Chile where in December 2000, the largest pork production company in Chile, initiated a voluntary process to implement advanced waste management systems (anaerobic and aerobic digestion of hog manure), in order to reduce greenhouse gas (GHG) emissions.
Almost half of the world's people burn wood (or fiber or dung
) for their cooking and heating needs. Fuel-efficient cook stoves can reduce fuel wood consumption by 30 to 50%, though the warming of the earth due to decreases in particulate matter (i.e. smoke) from such fuel-efficient stoves has not been addressed. There are a number of different types of LULUCF projects:
or the European Emissions Trading Scheme. By purchasing the allowances that power plants, oil refineries, and industrial facilities need to hold to comply with a cap, voluntary purchases tighten the cap and force additional emissions reductions.
Voluntary purchases can also be made through small-scale and sometimes uncertified schemes such as those offered at South African based Promoting Access to Carbon Equity Centre (PACE), which nevertheless offer clear services such as poverty alleviation in the form of renewable energy development. Also, as "easy carbon credits are coming to an end" , these projects have the potential to develop projects that are either too small or too complicated to benefit from legally mandated cap-and-trade programs.
and linked with official emission trading schemes, such as the European Union Emission Trading Scheme
or Kyoto Protocol
, as Certified Emission Reduction
s. European emission allowances for the 2008-2012 second phase were selling for between 21 and 24 Euros per metric ton of CO2 as of July 2007.
The voluntary Chicago Climate Exchange
also includes a carbon offset scheme that allows offset project developers to sell emissions reductions to CCX members who have voluntarily agreed to meet emissions reduction targets.
The Western Climate Initiative
, a regional greenhouse gas reduction initiative by states and provinces along the western rim of North America, includes an offset scheme. Likewise, the Regional Greenhouse Gas Initiative
, a similar program in the northeastern U.S., includes an offset program. A credit mechanism that uses offsets may be incorporated in proposed schemes such as the Australian Carbon Exchange.
s in developing countries. These pumps are used by farmers, using human power, in place of diesel
pumps. However, given that treadle pumps are best suited to pumping shallow water, while diesel pumps are usually used to pump water from deep boreholes, it is not clear that the treadle pumps are actually achieving real emissions reductions. Other companies have explored and rejected treadle pumps as a viable carbon offsetting approach due to these concerns.
involves retiring allowances from emission trading schemes as a method for offsetting carbon emissions. Under schemes such as the European Union Emission Trading Scheme
, EU Emission Allowances (EUA’s), which represent the right to release carbon dioxide into the atmosphere, are issued to all the largest polluters. The theory is that by buying these allowances and permanently removing them, the price of EUAs increases and provides an incentive for industrial companies to reduce their emissions.
of CO2, due to fluctuations of market price. Annual carbon dioxide emissions in developed countries range from 6 to 23 tons per capita.
Accounting systems differ on precisely what constitutes a valid offset for voluntary reduction systems and for mandatory reduction systems. However formal standards for quantification exist based on collaboration between emitters, regulators, environmentalists and project developers. These standards include the Voluntary Carbon Standard
, Green-e Climate, Chicago Climate Exchange and the CDM Gold Standard
, the latter of which expands upon the requirements for the Clean Development Mechanism
of the Kyoto Protocol
.
Accounting of offsets may address the following basic areas:
In a recent survey conducted by EcoSecurities, Conservation International, CCBA and ClimateBiz, of the 120 corporates surveyed more than 77% rated community and environmental benefits as the prime motivator for purchasing carbon offsets.
Carbon offset projects can also negatively affect quality of life. For example, people who earn their livelihoods from collecting firewood and selling it to households could become unemployed if firewood is no longer used. A paper from the Overseas Development Institute
offers some indicators to be used in assessing the potential developmental impacts of voluntary carbon offset schemes:
The Scheme sets standards for best practice in offsetting. Approved offsets have to demonstrate the following criteria:
The first company to qualify for the scheme was Clear
, followed by Carbon Footprint, Carbon Passport, Pure, British Airways
and Carbon Retirement Ltd.
On 20 May 2011 the Department of Energy and Climate Change
announced that the Quality Assurance Scheme would close on 30 June 2011. The stated purpose of the Quality Assurance Scheme was 'to provide a straightforward route for those wishing to offset their emissions to identify quality offsets'. Critics of the closure therefore argued that without the scheme, businesses and individuals would struggle to identify quality carbon offsets.
The standard will provide guidance on what constitutes a genuine, additional voluntary offset credit, set requirements for the verification and retirement of such credits, and provide principles for calculating the emissions of an organisation, product or service which could be offset.
s, a way for the guilty to pay for absolution rather than changing their behavior. George Monbiot
, an English environmentalist and writer, says that carbon offsets are an excuse for business as usual with regard to pollution. Proponents hold that the indulgence analogy is flawed because they claim carbon offsets actually reduce carbon emissions, changing the business as usual, and therefore address the root cause of climate change. Proponents of offsets claim that third-party certified carbon offsets are leading to increased investment in renewable energy, energy efficiency, methane biodigesters and reforestation and avoided deforestation projects, and claim that these alleged effects are the intended goal of carbon offsets. On October 16, 2009 Responsible Travel, once a strong voice in favour of carbon offsetting, announced that it would stop offering carbon offsetting to its clients, stating that "too often offsets are being used by the tourism industry in developed countries to justify growth plans on the basis that money will be donated to projects in developing countries. Global reduction targets will not be met this way".
On 4 February 2010, travel networking site Vida Loca Travel announced that they would donate 5% of profits to International Medical Corps, as they feel that international aid can be more effective at cutting global warming in the long term than carbon offsetting, citing the work of economist Jeffrey Sachs
.
for carbon offset purposes. Critics point to the following issues with tree planting projects:
.
In Nigeria
oil companies flare off
40% of the natural gas
found. The Agip Oil Company
plans to build plants to generate electricity from this gas and thus claim 1.5 million offset credits a year. United States company Pan Ocean Oil Corporation has also applied for credits in exchange for processing its own waste gas in Nigeria. Oilwatch.org's Michael Karikpo calls this "outrageous," as flaring is illegal in Nigeria, adding that "It's like a criminal demanding money to stop committing crimes".
.
Offset projects may also have negative social impacts, for example when local residents are evicted to enable a National Park to be marketed as a carbon offset.
Greenhouse gas
A greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
es made in order to compensate for or to offset an emission made elsewhere.
Carbon offsets are measured in metric tons of carbon dioxide-equivalent (CO2e) and may represent six primary categories of greenhouse gases. The categories include: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydroflourocarbons (HFCs), and sulfur hexaflouride (SF6). One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases.
There are two markets for carbon offsets. In the larger, compliance market, companies, governments, or other entities buy carbon offsets in order to comply with caps
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
on the total amount of carbon dioxide they are allowed to emit. This market exists in order to achieve compliance with obligations of Annex 1 Parties under the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
, and of liable entities under the EU Emissions Trading Scheme. In 2006, about $5.5 billion of carbon offsets were purchased in the compliance market, representing about 1.6 billion metric tons of CO2e reductions.
In the much smaller, voluntary market, individuals, companies, or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation, electricity use, and other sources. For example, an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel. Many companies (see list) offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase (such as offsetting emissions related to a vacation flight, car rental, hotel stay, consumer good, etc.). In 2008, about $705 million of carbon offsets were purchased in the voluntary market, representing about 123.4 million metric tons of CO2e reductions.
Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases in the short- or long-term. The most common project type is renewable energy, such as wind farms, biomass energy, or hydroelectric dams. Others include energy efficiency projects, the destruction of industrial pollutants or agricultural byproducts, destruction of landfill methane, and forestry projects. Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects.
Carbon offsetting has gained some appeal and momentum mainly among consumers in western countries who have become aware and concerned about the potentially negative environmental effects of energy-intensive lifestyles and economies. The Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
has sanctioned offsets as a way for governments and private companies to earn carbon credits which can be traded on a marketplace. The protocol established the Clean Development Mechanism
Clean Development Mechanism
The Clean Development Mechanism is one of the "flexibility" mechanisms defined in the Kyoto Protocol . It is defined in Article 12 of the Protocol, and is intended to meet two objectives: to assist parties not included in Annex I in achieving sustainable development and in contributing to the...
(CDM), which validates and measures projects to ensure they produce authentic benefits and are genuinely "additional" activities that would not otherwise have been undertaken. Organizations that are unable to meet their emissions quota can offset their emissions by buying CDM-approved Certified Emissions Reductions.
Offsets may be cheaper or more convenient alternatives to reducing one's own fossil-fuel consumption. However, some critics object to carbon offsets, and question the benefits of certain types of offsets.
Offsets are viewed as an important policy tool to maintain stable economies. One of the hidden dangers of climate change policy is unequal prices of carbon in the economy, which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon - unless carbon can be purchased from that area, which offsets effectively permit, equalizing the price.
Definitions
The World Resources InstituteWorld Resources Institute
The World Resources Institute is an environmental think tank founded in 1982 based in Washington, D.C. in the United States.WRI is an independent, non-partisan and nonprofit organization with a staff of more than 100 scientists, economists, policy experts, business analysts, statistical analysts,...
defines a carbon offset as “a unit of carbon dioxide-equivalent (CO2e) that is reduced, avoided, or sequestered to compensate for emissions occurring elsewhere”.
The Collins English Dictionary defines a carbon offset as “a compensatory measure made by an individual or company for carbon emissions, usually through sponsoring activities or projects which increase carbon dioxide absorption, such as tree planting.”
The Environment Protection Authority of Victoria (Australia) defines a carbon offset as: “a monetary investment in a project or activity elsewhere that abates greenhouse gas (GHG) emissions or sequesters carbon from the atmosphere that is used to compensate for GHG emissions from your own activities. Offsets can be bought by a business or individual in the voluntary market (or within a trading scheme), a carbon offset usually represents one tonne of CO2-e”.
The Stockholm Environment Institute defines a carbon offset as “a credit for negating or diminishing the impact of emitting a ton of carbon dioxide by paying someone else to absorb or avoid the release of a ton of CO2 elsewhere”.
The University of Oxford Environmental Change Institute defines a carbon offset as “mechanism whereby individuals and corporations pay for reductions elsewhere in order to offset their own emissions”.
Features of carbon offsets
Carbon offsets have several common features:- Vintage. The vintage is the year in which the carbon reduction takes place.
- Source. The source refers to the project or technology used in offsetting the carbon emissions. Projects can include land-use, methane, biomass, renewable energy and industrial energy efficiency. Projects may also have secondary benefits (co-benefits). For example, projects that reduce agricultural greenhouse gas emissions may improve water quality by reducing fertilizer usage.
- Certification regime. The certification regime describes the systems and procedures that are used to certify and register carbon offsets. Different methodologies are used for measuring and verifying emissions reductions, depending on project type, size and location. For example, the CDM uses another. In the voluntary market, a variety of industry standards exist. These include the Voluntary Carbon StandardVoluntary Carbon StandardThe Verified Carbon Standard formerly the Voluntary Carbon Standard is a quality standard for voluntary carbon offset industry. Based on the Kyoto Protocol's Clean Development Mechanism, VCS establishes criteria for validating, measuring, and monitoring carbon offset projects....
and the CDM Gold StandardCDM Gold StandardThe Gold Standard is the world's only independent standard for creating high-quality emission reductions projects in the Clean Development Mechanism Joint Implementation and Voluntary Carbon Market. It was designed to ensure that carbon credits are not only real and verifiable but that they make...
that are implemented to provide third-party verification of carbon offset projects. There are some additional standards for the validation of co-benefits, including the CCBS, issued by the Climate, Community & Biodiversity AllianceClimate, Community & Biodiversity AllianceThe Climate, Community & Biodiversity Alliance is an initiative led by Conservation International, CARE, The Nature Conservancy, Rainforest Alliance, and the Wildlife Conservation Society to promote the development of land management activities that simultaneously deliver significant benefits for...
and the Social Carbon Standard, issued by Ecologica Institute.
Global market
In 2009, 8.2 billion metric tons of carbon dioxide equivalent changed hands worldwide, up 68% from 2008, according to the study by carbon-market research firm Point Carbon, of Washington and Oslo. But at EUR94 billion, or about $135 billion, the market's value was nearly unchanged compared with 2008, with world carbon prices averaging EUR11.40 a ton, down about 40% from the previous year, according to the study. The World Bank's "State and Trends of the Carbon Market 2010" put the overall value of the market at $144 billion, but found that a significant part of this figure resulted from manipulation of a VAT loophole.E.U. market
The global carbon market is dominated by the European UnionEuropean Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, where companies that emit greenhouse gases are required to cut their emissions or buy pollution allowances or carbon credits from the market, under the European Union Emission Trading Scheme
European Union Emission Trading Scheme
The European Union Emissions Trading Scheme also known as the European Union Emissions Trading System, was the first large emissions trading scheme in the world. It was launched in 2005 to combat climate change and is a major pillar of EU climate policy...
(EU ETS). Europe, which has seen volatile carbon prices due to fluctuations in energy prices and supply and demand, will continue to dominate the global carbon market for another few years, as the U.S. and China—the world's top polluters—have yet to establish mandatory emission-reduction policies.
U.S. market
On the whole, the U.S. market remains primarily a voluntary market, but multiple cap and trade regimes are either fully implemented or near-imminent at the regional level. The first mandatory, market-based cap-and-trade program to cut CO2 in the U.S., called the Regional Greenhouse Gas InitiativeRegional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative is a regional initiative by states and provinces in the Northeastern United States and Eastern Canada regions to reduce greenhouse gas emissions...
(RGGI), kicked into gear in Northeastern states in 2009, growing nearly tenfold to $2.5 billion, according to Point Carbon. Western Climate Initiative
Western Climate Initiative
The Western Climate Initiative, or WCI, is an initiative—started by states and provinces along the western rim of North America—to combat climate change caused by global warming, independent of their national governments....
(WCI) -- a regional cap-and-trade program including seven western states (California notably among them) and four Canadian provinces—has established a regional target for reducing heat-trapping emissions of 15 percent below 2005 levels by 2020.
Voluntary market
Participants : A wide range of participants are involved in the voluntary market, including providers of different types of offsets, developers of quality assurance mechanisms, third party verifiers, and consumers who purchase offsets from domestic or international providers. Suppliers include for-profit companies, governments, charitable non-governmental organizations, colleges and universities, and other groups.Motivations : According to industry analyst Ecosystem Marketplace
Ecosystem Marketplace
Ecosystem Marketplace is a US-based non-profit organization that specifically focuses on increasing transparency and providing reliable information for ecosystem services and payment schemes....
, the voluntary markets present the opportunity for citizen consumer action, as well as an alternative source of carbon finance and an incubator for carbon market innovation. In their survey of voluntary markets, data has shown that “Corporate Social Responsibility
Corporate social responsibility
Corporate social responsibility is a form of corporate self-regulation integrated into a business model...
” and “Public Relations/Branding” are clearly in first place among motivations for voluntary offset purchases, with evidence indicating that companies seek to offset emissions "for goodwill, both of the general public and their investors."
- In addition, regarding market composition, research indicates: "Though many analysts perceive pre-compliance buying as a dominant driving force in the voluntary market, the results of our survey have repeatedly indicated that precompliance motives (as indicated by “investment/resale” and “anticipation of regulation”) remain secondary to those of the pure voluntary market (companies/individuals offsetting their emissions)."
Pre-compliance & trading : The other main category of buyers on the voluntary markets are those engaged in pre-compliance and/or trading. Those purchasing offsets for pre-compliance purposes are doing so with the expectation, or as a hedge against the possibility, of future mandatory cap and trade regulations. As a mandatory cap would sharply increase the price of offsets, firms—especially those with large carbon footprints and the corresponding financial exposure to regulation—make the decision to acquire offsets in advance at what are expected to be lower prices.
- The trading market in offsets in general resembles the trade in other commodities markets, with financial professionals including hedge funds and desks at major investment banks, taking positions in the hopes of buying cheap and selling dear, with their motivation typically short or medium term financial gain.
Retail : Multiple players in the retail market have offerings that enable consumers and businesses to calculate their carbon footprint
Carbon footprint
A carbon footprint has historically been defined as "the total set of greenhouse gas emissions caused by an organization, event, product or person.". However, calculating a carbon footprint which conforms to this definition is often impracticable due to the large amount of data required, which is...
, most commonly through a web-based interface including a calculator or questionnaire, and sell them offsets in the amount of that footprint. In addition many companies selling products and services, especially carbon-intensive ones such as airline travel, offer options to bundle a proportional offsetting amount of carbon credits with each transaction.
- Suppliers of voluntary offsets operate under both nonprofit and social enterpriseSocial enterpriseA social enterprise is an organization that applies business strategies to achieving philanthropic goals. Social enterprises can be structured as a for-profit or non-profit....
models, or a blended approach sometimes referred to as triple bottom lineTriple bottom lineThe triple bottom line captures an expanded spectrum of values and criteria for measuring organizational success: economic, ecological, and social...
. Other suppliers include broader environmentally focused organizations with website subsections or initiatives that enable retail voluntary offset purchases by members, and government created projects.
Features of companies that voluntarily offset emissions : Companies which voluntarily offset their own emissions tend to be of relatively low carbon intensity, as they can offset a significant proportion of their emissions at relatively low cost. Voluntary offsetting is particularly common in the financial sector. 61% of financial companies in the FTSE 100 offset at least a portion of their 2009 emissions. 22% of financial companies in the FTSE 100 considered their entire 2009 operations to be carbon neutral.
Sources of carbon offsets
The CDM identifies over 200 types of projects suitable for generating carbon offsets, which are grouped into broad categories. These project types include renewable energy, methane abatement, energy efficiency, reforestation and fuel switching.Renewable energy
Renewable energyRenewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
offsets commonly include wind power
Wind power
Wind power is the conversion of wind energy into a useful form of energy, such as using wind turbines to make electricity, windmills for mechanical power, windpumps for water pumping or drainage, or sails to propel ships....
, solar power
Solar power
Solar energy, radiant light and heat from the sun, has been harnessed by humans since ancient times using a range of ever-evolving technologies. Solar radiation, along with secondary solar-powered resources such as wind and wave power, hydroelectricity and biomass, account for most of the available...
, hydroelectric power
Hydroelectricity
Hydroelectricity is the term referring to electricity generated by hydropower; the production of electrical power through the use of the gravitational force of falling or flowing water. It is the most widely used form of renewable energy...
and biofuel
Biofuel
Biofuel is a type of fuel whose energy is derived from biological carbon fixation. Biofuels include fuels derived from biomass conversion, as well as solid biomass, liquid fuels and various biogases...
. Some of these offsets are used to reduce the cost differential between renewable and conventional energy production, increasing the commercial viability of a choice to use renewable energy sources.
Renewable Energy Credits (RECs) are also sometimes treated as carbon offsets, although the concepts are distinct. Whereas a carbon offset represents a reduction in greenhouse gas emissions, a REC represents a quantity of energy produced from renewable sources. To convert RECs into offsets, the clean energy must be translated into carbon reductions, typically by assuming that the clean energy is displacing an equivalent amount of conventionally produced electricity from the local grid. This is known as an indirect offset (because the reduction doesn't take place at the project site itself, but rather at an external site), and some controversy surrounds the question of whether they truly lead to "additional" emission reductions and who should get credit for any reductions that may occur.
Methane collection and combustion
Some offset projects consist of the combustion or containment of methaneMethane
Methane is a chemical compound with the chemical formula . It is the simplest alkane, the principal component of natural gas, and probably the most abundant organic compound on earth. The relative abundance of methane makes it an attractive fuel...
generated by farm animals (by use of an anaerobic digester), landfills or other industrial waste. Methane has a global warming potential
Global warming potential
Global-warming potential is a relative measure of how much heat a greenhouse gas traps in the atmosphere. It compares the amount of heat trapped by a certain mass of the gas in question to the amount of heat trapped by a similar mass of carbon dioxide. A GWP is calculated over a specific time...
(GWP) 23 times that of CO2; when combusted, each molecule of methane is converted to one molecule of CO2, thus reducing the global warming effect by 96%.
An example of a project using a anaerobic digester can be found in Chile where in December 2000, the largest pork production company in Chile, initiated a voluntary process to implement advanced waste management systems (anaerobic and aerobic digestion of hog manure), in order to reduce greenhouse gas (GHG) emissions.
Energy efficiency
While carbon offsets which fund renewable energy projects help lower the carbon intensity of energy supply, energy conservation projects seek to reduce the overall demand for energy. Carbon offsets in this category fund projects of several types:- CogenerationCogenerationCogeneration is the use of a heat engine or a power station to simultaneously generate both electricity and useful heat....
plants generate both electricity and heat from the same power source, thus improving upon the energy efficiency of most power plants which waste the energy generated as heat. - Fuel efficiency projects replace a combustion device with one which uses less fuel per unit of energy provided. Assuming energy demand does not change, this reduces the carbon dioxide emitted.
- Energy-efficient buildingsGreen buildingGreen building refers to a structure and using process that is environmentally responsible and resource-efficient throughout a building's life-cycle: from siting to design, construction, operation, maintenance, renovation, and demolition...
reduce the amount of energy wasted in buildings through efficient heating, cooling or lighting systems. In particular, the replacement of incandescent light bulbs with compact fluorescent lampCompact fluorescent lampA compact fluorescent lamp , also called compact fluorescent light, energy-saving light, and compact fluorescent tube, is a fluorescent lamp designed to replace an incandescent lamp; some types fit into light fixtures formerly used for incandescent lamps...
s can have a drastic effect on energy consumption. New buildings can also be constructed using less carbon-intensive input materials.
Destruction of industrial pollutants
Industrial pollutants such as hydrofluorocarbons (HFCs) and perfluorocarbons (PFCs) have a GWP many thousands of times greater than carbon dioxide by volume. Because these pollutants are easily captured and destroyed at their source, they present a large and low-cost source of carbon offsets. As a category, HFCs, PFCs, and N2O reductions represent 71% of offsets issued under the CDM.Land use, land-use change and forestry
Land use, land-use change and forestry (LULUCF) projects focus on natural carbon sinks such as forests and soil. Deforestation, particularly in Brazil, Indonesia and parts of Africa, account for about 20% of greenhouse gas emissions. Deforestation can be avoided either by paying directly for forest preservation, or by using offset funds to provide substitutes for forest-based products. There is a class of mechanisms referred to as REDD schemes (Reducing emissions from deforestation and forest degradation), which may be included in a post-Kyoto agreement. REDD credits provide carbon offsets for the protection of forests, and provide a possible mechanism to allow funding from developed nations to assist in the protection of native forests in developing nations.Almost half of the world's people burn wood (or fiber or dung
Feces
Feces, faeces, or fæces is a waste product from an animal's digestive tract expelled through the anus or cloaca during defecation.-Etymology:...
) for their cooking and heating needs. Fuel-efficient cook stoves can reduce fuel wood consumption by 30 to 50%, though the warming of the earth due to decreases in particulate matter (i.e. smoke) from such fuel-efficient stoves has not been addressed. There are a number of different types of LULUCF projects:
- Avoided deforestationDeforestationDeforestation is the removal of a forest or stand of trees where the land is thereafter converted to a nonforest use. Examples of deforestation include conversion of forestland to farms, ranches, or urban use....
is the protection of existing forests. - ReforestationReforestationReforestation is the natural or intentional restocking of existing forests and woodlands that have been depleted, usually through deforestation....
is the process of restoring forests on land that was once forested. - AfforestationAfforestationAfforestation is the establishment of a forest or stand of trees in an area where there was no forest. Reforestation is the reestablishment of forest cover, either naturally or artificially...
is the process of creating forests on land that was previously unforested, typically for longer than a generation. - Soil managementSoil managementSoil management concerns all operations, practices and treatments used to protect soil and enhance its performance.-Practices:Soil management practices that affect soil quality:...
projects attempt to preserve or increase the amount of carbon sequestered in soil.
Purchase of carbon allowances from emissions trading schemes
Voluntary purchasers can offset their carbon emissions by purchasing carbon allowances from legally mandated cap-and-trade programs such as the Regional Greenhouse Gas InitiativeRegional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative is a regional initiative by states and provinces in the Northeastern United States and Eastern Canada regions to reduce greenhouse gas emissions...
or the European Emissions Trading Scheme. By purchasing the allowances that power plants, oil refineries, and industrial facilities need to hold to comply with a cap, voluntary purchases tighten the cap and force additional emissions reductions.
Voluntary purchases can also be made through small-scale and sometimes uncertified schemes such as those offered at South African based Promoting Access to Carbon Equity Centre (PACE), which nevertheless offer clear services such as poverty alleviation in the form of renewable energy development. Also, as "easy carbon credits are coming to an end" , these projects have the potential to develop projects that are either too small or too complicated to benefit from legally mandated cap-and-trade programs.
Links with emission trading schemes
Once it has been accredited by the UNFCCC a carbon offset project can be used as carbon creditCarbon credit
A carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....
and linked with official emission trading schemes, such as the European Union Emission Trading Scheme
European Union Emission Trading Scheme
The European Union Emissions Trading Scheme also known as the European Union Emissions Trading System, was the first large emissions trading scheme in the world. It was launched in 2005 to combat climate change and is a major pillar of EU climate policy...
or Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
, as Certified Emission Reduction
Certified Emission Reduction
Certified Emission Reductions are a type of emissions unit issued by the Clean Development Mechanism Executive Board for emission reductions achieved by CDM projects and verified by a DOE under the rules of the Kyoto Protocol...
s. European emission allowances for the 2008-2012 second phase were selling for between 21 and 24 Euros per metric ton of CO2 as of July 2007.
The voluntary Chicago Climate Exchange
Chicago Climate Exchange
The now defunct Chicago Climate Exchange was North America’s only voluntary, legally binding greenhouse gas reduction and trading system for emission sources and offset projects in North America and Brazil....
also includes a carbon offset scheme that allows offset project developers to sell emissions reductions to CCX members who have voluntarily agreed to meet emissions reduction targets.
The Western Climate Initiative
Western Climate Initiative
The Western Climate Initiative, or WCI, is an initiative—started by states and provinces along the western rim of North America—to combat climate change caused by global warming, independent of their national governments....
, a regional greenhouse gas reduction initiative by states and provinces along the western rim of North America, includes an offset scheme. Likewise, the Regional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative
Regional Greenhouse Gas Initiative is a regional initiative by states and provinces in the Northeastern United States and Eastern Canada regions to reduce greenhouse gas emissions...
, a similar program in the northeastern U.S., includes an offset program. A credit mechanism that uses offsets may be incorporated in proposed schemes such as the Australian Carbon Exchange.
Other
A UK offset provider set up a carbon offsetting scheme which set up a secondary market for treadle pumpTreadle Pump
A treadle pump is a human-powered pump designed to lift water from a depth of seven metres or less. A treadle is a lever device pressed by the foot to drive a machine, in this case a pump. The treadle pump can do most of the work of a motorized pump, but costs considerably less to purchase...
s in developing countries. These pumps are used by farmers, using human power, in place of diesel
Diesel engine
A diesel engine is an internal combustion engine that uses the heat of compression to initiate ignition to burn the fuel, which is injected into the combustion chamber...
pumps. However, given that treadle pumps are best suited to pumping shallow water, while diesel pumps are usually used to pump water from deep boreholes, it is not clear that the treadle pumps are actually achieving real emissions reductions. Other companies have explored and rejected treadle pumps as a viable carbon offsetting approach due to these concerns.
Carbon Retirement
Carbon retirementCarbon retirement
Carbon retirement involves retiring allowances from emission trading schemes as a method for offsetting carbon emissions. Under schemes such as the European Union Emission Trading Scheme, EU Emission Allowances represent the right to release carbon dioxide into the atmosphere, and are issued to...
involves retiring allowances from emission trading schemes as a method for offsetting carbon emissions. Under schemes such as the European Union Emission Trading Scheme
European Union Emission Trading Scheme
The European Union Emissions Trading Scheme also known as the European Union Emissions Trading System, was the first large emissions trading scheme in the world. It was launched in 2005 to combat climate change and is a major pillar of EU climate policy...
, EU Emission Allowances (EUA’s), which represent the right to release carbon dioxide into the atmosphere, are issued to all the largest polluters. The theory is that by buying these allowances and permanently removing them, the price of EUAs increases and provides an incentive for industrial companies to reduce their emissions.
Accounting for and verifying reductions
Due to their indirect nature, many types of offset are difficult to verify. Some providers obtain independent certification that their offsets are accurately measured, to distance themselves from potentially fraudulent competitors. The credibility of the various certification providers is often questioned. Certified offsets may be purchased from commercial or non-profit organizations for US$1–30 per tonneTonne
The tonne, known as the metric ton in the US , often put pleonastically as "metric tonne" to avoid confusion with ton, is a metric system unit of mass equal to 1000 kilograms. The tonne is not an International System of Units unit, but is accepted for use with the SI...
of CO2, due to fluctuations of market price. Annual carbon dioxide emissions in developed countries range from 6 to 23 tons per capita.
Accounting systems differ on precisely what constitutes a valid offset for voluntary reduction systems and for mandatory reduction systems. However formal standards for quantification exist based on collaboration between emitters, regulators, environmentalists and project developers. These standards include the Voluntary Carbon Standard
Voluntary Carbon Standard
The Verified Carbon Standard formerly the Voluntary Carbon Standard is a quality standard for voluntary carbon offset industry. Based on the Kyoto Protocol's Clean Development Mechanism, VCS establishes criteria for validating, measuring, and monitoring carbon offset projects....
, Green-e Climate, Chicago Climate Exchange and the CDM Gold Standard
CDM Gold Standard
The Gold Standard is the world's only independent standard for creating high-quality emission reductions projects in the Clean Development Mechanism Joint Implementation and Voluntary Carbon Market. It was designed to ensure that carbon credits are not only real and verifiable but that they make...
, the latter of which expands upon the requirements for the Clean Development Mechanism
Clean Development Mechanism
The Clean Development Mechanism is one of the "flexibility" mechanisms defined in the Kyoto Protocol . It is defined in Article 12 of the Protocol, and is intended to meet two objectives: to assist parties not included in Annex I in achieving sustainable development and in contributing to the...
of the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
.
Accounting of offsets may address the following basic areas:
- Baseline and Measurement - What emissions would occur in the absence of a proposed project? And how are the emissions which occur after the project is performed going to be measured?
- Additionality - Would the project occur anyway without the investment raised by selling carbon offset credits? There are two common reasons why a project may lack additionality: (a) if it is intrinsically financially worthwhile due to energy cost savings, and (b) if it had to be performed due to environmental laws or regulations.
- Permanence - Are some benefits of the reductions reversible? (for example, trees may be harvested to burn the wood, and does growing trees for fuel wood decrease the need for fossil fuelFossil fuelFossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
?) If woodlands are increasing in area or density, then carbon is being sequesteredCarbon dioxide sinkA carbon sink is a natural or artificial reservoir that accumulates and stores some carbon-containing chemical compound for an indefinite period. The process by which carbon sinks remove carbon dioxide from the atmosphere is known as carbon sequestration...
. After roughly 50 years, newly planted forests will reach maturity and remove carbon dioxideCarbon dioxide sinkA carbon sink is a natural or artificial reservoir that accumulates and stores some carbon-containing chemical compound for an indefinite period. The process by which carbon sinks remove carbon dioxide from the atmosphere is known as carbon sequestration...
more slowly. - LeakageCarbon leakageCarbon leakage occurs when there is an increase in carbon dioxide emissions in one country as a result of an emissions reduction by a second country with a strict climate policy.Carbon leakage may occur for a number of reasons:...
- Does implementing the project cause higher emissions outside the project boundary?
Co-benefits
While the primary goal of carbon offsets is to reduce global carbon emissions, many offset projects also claim to lead to improvements in the quality of life for a local population. These additional improvements are termed co-benefits, and may be considered when evaluating and comparing carbon offset projects. Some possible co-benefits from a project which replaces wood burning stoves with ovens which use a less carbon-intensive fuel include:- Lower non greenhouse gas pollution (smoke, ash, and chemicals), which improves health in the home.
- Better preservation of forests, which are an important habitat for wildlife.
In a recent survey conducted by EcoSecurities, Conservation International, CCBA and ClimateBiz, of the 120 corporates surveyed more than 77% rated community and environmental benefits as the prime motivator for purchasing carbon offsets.
Carbon offset projects can also negatively affect quality of life. For example, people who earn their livelihoods from collecting firewood and selling it to households could become unemployed if firewood is no longer used. A paper from the Overseas Development Institute
Overseas Development Institute
The Overseas Development Institute is one of the leading independent think tanks on international development and humanitarian issues. Based in London, its mission is "to inspire and inform policy and practice which lead to the reduction of poverty, the alleviation of suffering and the achievement...
offers some indicators to be used in assessing the potential developmental impacts of voluntary carbon offset schemes:
- What potential does the project have for income generation?
- What effects might a project have on future changes in land use and could conflicts arise from this?
- Can small-scale producers engage in the scheme?
- What are the 'add on' benefits to the country - for example, will it assist capacity-building in local institutions?
The UK Government's Quality Assurance Scheme for Carbon Offsetting
In an effort to inform and safeguard business and household consumers purchasing Carbon Offsets, the UK Government has launched a scheme for regulating Carbon offset products. DEFRA have created the "Approved Carbon Offsetting" brand to use as an endorsement on offsets approved by the UK government.The Scheme sets standards for best practice in offsetting. Approved offsets have to demonstrate the following criteria:
- Accurate calculation of emissions to be offset
- Use of good quality carbon credits i.e. initially those that are Kyoto compliant
- Cancellation of carbon credits within a year of the consumers purchase of the offset
- Clear and transparent pricing of the offset
- Provision of information about the role of offsetting in tackling climate change and advice on how a consumer can reduce his or her carbon footprint
The first company to qualify for the scheme was Clear
Clear (UK company)
Clear is a UK-based carbon offsetting company, founded in 2007 by Dr Bruce Elliott, Neil Chapman and Ben Hedley.-UK Government's Quality Assurance Scheme:...
, followed by Carbon Footprint, Carbon Passport, Pure, British Airways
British Airways
British Airways is the flag carrier airline of the United Kingdom, based in Waterside, near its main hub at London Heathrow Airport. British Airways is the largest airline in the UK based on fleet size, international flights and international destinations...
and Carbon Retirement Ltd.
On 20 May 2011 the Department of Energy and Climate Change
Department of Energy and Climate Change
The Department of Energy and Climate Change is a British government department created on 3 October 2008 by Prime Minister Gordon Brown to take over some of the functions of the Department for Business, Enterprise and Regulatory Reform and Department for Environment, Food and Rural Affairs...
announced that the Quality Assurance Scheme would close on 30 June 2011. The stated purpose of the Quality Assurance Scheme was 'to provide a straightforward route for those wishing to offset their emissions to identify quality offsets'. Critics of the closure therefore argued that without the scheme, businesses and individuals would struggle to identify quality carbon offsets.
Australian Government National Carbon Offset Program
The Australian government is currently in a consultation period on the regulation of Carbon Offsets.The standard will provide guidance on what constitutes a genuine, additional voluntary offset credit, set requirements for the verification and retirement of such credits, and provide principles for calculating the emissions of an organisation, product or service which could be offset.
Project-offsetting
Less than 30 pence in every pound spent on some carbon offset schemes goes directly to projects designed to reduce emissions. The figures reported by the BBC and based on UN data reported that typically 28p goes to the set up and maintenance costs of an environmental project. 34p goes to the company that takes on the risk that the project may fail. The project's investors take 19p, with smaller amounts of money being distributed between organisations involved in brokering and auditing the carbon credits.Indulgence controversy
Some activists disagree with the principle of carbon offsets, likening them to papal indulgenceIndulgence
In Catholic theology, an indulgence is the full or partial remission of temporal punishment due for sins which have already been forgiven. The indulgence is granted by the Catholic Church after the sinner has confessed and received absolution...
s, a way for the guilty to pay for absolution rather than changing their behavior. George Monbiot
George Monbiot
George Joshua Richard Monbiot is an English writer, known for his environmental and political activism. He lives in Machynlleth, Wales, writes a weekly column for The Guardian, and is the author of a number of books, including Captive State: The Corporate Takeover of Britain and Bring on the...
, an English environmentalist and writer, says that carbon offsets are an excuse for business as usual with regard to pollution. Proponents hold that the indulgence analogy is flawed because they claim carbon offsets actually reduce carbon emissions, changing the business as usual, and therefore address the root cause of climate change. Proponents of offsets claim that third-party certified carbon offsets are leading to increased investment in renewable energy, energy efficiency, methane biodigesters and reforestation and avoided deforestation projects, and claim that these alleged effects are the intended goal of carbon offsets. On October 16, 2009 Responsible Travel, once a strong voice in favour of carbon offsetting, announced that it would stop offering carbon offsetting to its clients, stating that "too often offsets are being used by the tourism industry in developed countries to justify growth plans on the basis that money will be donated to projects in developing countries. Global reduction targets will not be met this way".
On 4 February 2010, travel networking site Vida Loca Travel announced that they would donate 5% of profits to International Medical Corps, as they feel that international aid can be more effective at cutting global warming in the long term than carbon offsetting, citing the work of economist Jeffrey Sachs
Jeffrey Sachs
Jeffrey David Sachs is an American economist and Director of The Earth Institute at Columbia University. One of the youngest economics professors in the history of Harvard University, Sachs became known for his role as an adviser to Eastern European and developing country governments in the...
.
Effectiveness of tree-planting offsets
Some environmentalists have questioned the effectiveness of tree-planting projectsTreeplanting
Tree planting is the process of transplanting tree seedlings, generally for forestry, land reclamation, or landscaping purposes. It differs from the transplantation of larger trees in arboriculture, and from the lower cost but slower and less reliable distribution of tree seeds.In silviculture the...
for carbon offset purposes. Critics point to the following issues with tree planting projects:
- Timing. Trees reach maturity over a course of many decades. Project developers and offset retailers typically pay for the project and sell the promised reductions up-front, a practice known as "forward selling".
- Permanence. It is difficult to guarantee the permanence of the forests, which may be susceptible to clearing, burning, or mismanagement. The well-publicized instance of the "Coldplay forest," in which a forestry project supported by the British band ColdplayColdplayColdplay are a British alternative rock band formed in 1996 by lead vocalist Chris Martin and lead guitarist Jonny Buckland at University College London. After they formed Pectoralz, Guy Berryman joined the group as a bassist and they changed their name to Starfish. Will Champion joined as a...
resulted in a grove of dead mango trees, illustrates the difficulties of guaranteeing the permanence of tree-planting offsets. When discussing "tree offsets, forest campaigner Jutta Kill of European environmental group FERNFERNFERN is a Dutch foundation created in 1995. It is an international non-governmental organization to keep track of the EU’s involvement in forests and to co-ordinate NGO activities at the European level...
, clarified the physical reality that "Carbon in trees is temporary: Trees can easily release carbon into the atmosphere through fire, disease, climatic changes, natural decay and timber harvesting." - Monocultures and invasive species. In an effort to cut costs, some tree-planting projects introduce fast-growing invasive species that end up damaging native forests and reducing biodiversity. For example, in Ecuador, the Dutch FACE FoundationFace FoundationThe Face Foundation is a non-profit organization specialised in carbon offsets through forestry projects. It is based in Arnhem, The Netherlands...
has an offset project in the Andean PáramoPáramoThe term páramo can refer to a variety of ecosystems. Some ecologists describe the páramo broadly as “all high, tropical, montane vegetation above the continuous timberline”. A more narrow term classifies the páramo according to its regional placement - specifically located in “the northern Andes...
involving 220 square kilometres of eucalyptusEucalyptusEucalyptus is a diverse genus of flowering trees in the myrtle family, Myrtaceae. Members of the genus dominate the tree flora of Australia...
and pine planted. The NGO Acción EcológicaAcción EcológicaAcción Ecológica is one of the main environmental organizations based in Ecuador. It is based in Quito.They campaign on a range of issues including oil extraction, exploration and pipeline transport, Amazon Rainforest protection, food sovereignty, biofuels and plantations for carbon offsets....
criticized the project for destroying a valuable Páramo ecosystem by introducing exotic tree species, causing the release of much soil carbon into the atmosphere, and harming local communities who had entered into contracts with the FACE Foundation to plant the trees. However, some certification standards, such as the Climate Community and Biodiversity Standard require multiple species plantings. - Indigenous land rights issues. Tree-planting projects can cause conflicts with indigenous people who are displaced or otherwise find their use of forest resources curtailed. For example, a World Rainforest MovementWorld Rainforest MovementThe World Rainforest Movement is an international NGO and Indigenous Peoples' Groups network involved in efforts to defend the world's tropical forests against the forces that destroy them....
report documents land disputes and human rightsHuman rightsHuman rights are "commonly understood as inalienable fundamental rights to which a person is inherently entitled simply because she or he is a human being." Human rights are thus conceived as universal and egalitarian . These rights may exist as natural rights or as legal rights, in both national...
abuses at Mount ElgonMount ElgonMount Elgon is an extinct shield volcano on the border of Uganda and Kenya, north of Kisumu and west of Kitale.- Physical features :It is the oldest and largest solitary volcano in East Africa, covering an area of around 3500 km²....
. In March 2002, a few days before receiving Forest Stewardship Council certification for a project near Mount Elgon, the Uganda Wildlife AuthorityUganda Wildlife AuthorityThe Ugandan Wildlife Authority is one of the governing bodies that regulates wildlife conservation in Uganda.It was established in August 1996 by the Uganda Wildlife Statute, which merged the Uganda National Parks and the Game Department...
evicted more than 300 families from the area and destroyed their homes and crops. That the project was taking place in an area of on-going land conflict and alleged human rights abuses did not make it into project report. - MethaneMethaneMethane is a chemical compound with the chemical formula . It is the simplest alkane, the principal component of natural gas, and probably the most abundant organic compound on earth. The relative abundance of methane makes it an attractive fuel...
. A recent study has claimed that plants are a significant source of methane, a potent greenhouse gas, raising the possibility that trees and other terrestrial plants may be significant contributors to global methane levels in the atmosphere. However, this claim has been disputed recently by findings in another study. - The albedo effectAlbedoAlbedo , or reflection coefficient, is the diffuse reflectivity or reflecting power of a surface. It is defined as the ratio of reflected radiation from the surface to incident radiation upon it...
. Another study suggested that "high latitude forests probably have a net warming effect on the Earth's climate", because their absorption of sunlight creates a warming effect that balances out their absorption of carbon dioxide. This view is however being challenged by other studies showing that despite the negative albedo effects of temperate forests there is a net benefit and in addition there is weak evidence of a positive albedo effect in the tropics from clouds generated by forests - Necessity. Corporate tree-planting is not a new idea; farming operations have been used by companies making paperPaperPaper is a thin material mainly used for writing upon, printing upon, drawing or for packaging. It is produced by pressing together moist fibers, typically cellulose pulp derived from wood, rags or grasses, and drying them into flexible sheets....
from trees for a long time. If farmed trees are replanted, and the products made from them are placed into landfills rather than recycled, a very safe, efficient, economical and time-proven method of geological sequestration of greenhouse carbon is the result of the paper product use cycle. This only holds if the paper in the land fill is not decomposted. In most landfills, this is the case and leads to the fact that more than half of the greenhouse gasGreenhouse gasA greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
emissions from the life cycle of paper products occur from landfill methaneMethaneMethane is a chemical compound with the chemical formula . It is the simplest alkane, the principal component of natural gas, and probably the most abundant organic compound on earth. The relative abundance of methane makes it an attractive fuel...
emissions.
Additionality and lack of regulation in the voluntary market
Several certification standards exist, offering variations for measuring emissions baseline, reductions, additionality, and other key criteria. However, no single standard governs the industry, and some offset providers have been criticized on the grounds that carbon reduction claims are exaggerated or misleading. Problems include:
- Widespread instances of people and organizations buying worthless credits that do not yield any reductions in carbon emissions.
- Industrial companies profiting from doing very little – or from gaining carbon credits on the basis of efficiency gains from which they have already benefited substantially.
- Brokers providing services of questionable or no value.
- A shortage of verification, making it difficult for buyers to assess the true value of carbon credits.
Perverse incentives
Because offsets provide a revenue stream for the reduction of some types of emissions, they can in some cases provide incentives to emit more, so that emitting entities can later get credit for reducing emissions from an artificially high baseline. This is especially the case for offsets with a high profit margin. For example, one Chinese company generated $500 million in carbon offsets by installing a $5 million incinerator to burn the HFCs produced by the manufacture of refrigerants. The huge profits provided incentive to create new factories or expand existing factories solely for the purpose of increasing production of HFCs and then destroying the resultant pollutants to generate offsets. Not only is this outcome environmentally undesirable, it undermines other offset projects by causing offset prices to collapse. The practice had become so common that offset credits are now no longer awarded for new plants to destroy HFC-23Fluoroform
Fluoroform is the chemical compound with the formula CHF3. It is one of the "haloforms", a class of compounds with the formula CHX3 . Fluoroform is used in diverse niche applications and is produced as a by-product of the manufacture of Teflon...
.
In Nigeria
Nigeria
Nigeria , officially the Federal Republic of Nigeria, is a federal constitutional republic comprising 36 states and its Federal Capital Territory, Abuja. The country is located in West Africa and shares land borders with the Republic of Benin in the west, Chad and Cameroon in the east, and Niger in...
oil companies flare off
Gas flare
A gas flare, alternatively known as a flare stack, is an elevated vertical conveyance found accompanying the presence of oil wells, gas wells, rigs, refineries, chemical plants, natural gas plants, and landfills....
40% of the natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
found. The Agip Oil Company
Agip
Agip is an Italian automotive gasoline and diesel retailer established in 1926. It is a subsidiary of the multinational petroleum company Eni.In 2003, Eni S.p.A...
plans to build plants to generate electricity from this gas and thus claim 1.5 million offset credits a year. United States company Pan Ocean Oil Corporation has also applied for credits in exchange for processing its own waste gas in Nigeria. Oilwatch.org's Michael Karikpo calls this "outrageous," as flaring is illegal in Nigeria, adding that "It's like a criminal demanding money to stop committing crimes".
Other negative impacts from offset projects
Although many carbon offset projects tout their environmental co-benefits, some are accused of having negative secondary effects. Point Carbon has reported on an inconsistent approach with regard to some hydro-electric projects as carbon offsets; some countries in the EU are not allowing large projects into the EU ETS, because of their environmental impacts, even though they have been individually approved by the UNFCCC and World Commission on DamsWorld Commission on Dams
The World Commission on Dams was formed in April 1997, to research the environmental, social and economic impacts of the development of large dams globally...
.
Offset projects may also have negative social impacts, for example when local residents are evicted to enable a National Park to be marketed as a carbon offset.
See also
- Carbon creditCarbon creditA carbon credit is a generic term for any tradable certificate or permit representing the right to emit one tonne of carbon dioxide or the mass of another greenhouse gas with a carbon dioxide equivalent equivalent to one tonne of carbon dioxide....
- Carbon negativeCarbon negativeCarbon negative is an adjectival phrase used to describe any process that removes carbon dioxide from the atmosphere, with the intent to avoid global warming.-Carbon dioxide sinks and carbon negativity:...
- Carbon neutralCarbon neutralCarbon neutrality, or having a net zero carbon footprint, refers to achieving net zero carbon emissions by balancing a measured amount of carbon released with an equivalent amount sequestered or offset, or buying enough carbon credits to make up the difference...
- Carbon retirementCarbon retirementCarbon retirement involves retiring allowances from emission trading schemes as a method for offsetting carbon emissions. Under schemes such as the European Union Emission Trading Scheme, EU Emission Allowances represent the right to release carbon dioxide into the atmosphere, and are issued to...
- Carbon taxCarbon taxA carbon tax is an environmental tax levied on the carbon content of fuels. It is a form of carbon pricing. Carbon is present in every hydrocarbon fuel and is released as carbon dioxide when they are burnt. In contrast, non-combustion energy sources—wind, sunlight, hydropower, and nuclear—do not...
- Ecosystem MarketplaceEcosystem MarketplaceEcosystem Marketplace is a US-based non-profit organization that specifically focuses on increasing transparency and providing reliable information for ecosystem services and payment schemes....
- Live Earth PledgeLive Earth PledgeThe Live Earth Pledge is a petition promulgated by the Live Earth campaign, urging governments to adopt a variety of environmental protection laws....
- Mitigation of global warmingMitigation of global warmingClimate change mitigation is action to decrease the intensity of radiative forcing in order to reduce the potential effects of global warming. Mitigation is distinguished from adaptation to global warming, which involves acting to tolerate the effects of global warming...
- Plantations and natural forest loss
- Renewable Energy Certificates
- Weighted average cost of carbonWeighted average cost of carbonThe Weighted average cost of carbon is used in finance to measure a firm's specific cost of carbon. It expresses how much an organization is expending to either reduce carbon emissions internally or offsetting externally...
- Zero carbon