Aligning Incentives for a Carbon Clear World

A new report by McKinsey & Co, a consulting firm, confirms what Carbon Clear has been saying all along: businesses and individuals can significantly lower their carbon footprint and save money at the same time.

The report says that the United States could cut greenhouse gas emissions by 28% at zero or even negative cost using readily available technology. Carbon Clear's own carbon management work with companies often uncovers even more low-cost carbon reduction options, from changing heating, cooling and lighting systems, to improving vehicle fleet efficiency or revisiting logistics plans. And, as one of the report's authors notes, "These changes have been around for 20 years."

Unfortunately, it isn't always so easy to put these low-carbon money-saving measures into practice.

Landlords and property developers often choose appliances, lighting systems and even building designs based on initial cost - regardless of efficiency. The tenant, with little influence over this initial decision, pays for the energy, either as part of their rent or via the utility bill.

In a nutshell, their incentives are not aligned for a low-carbon future. The landlord does not want to pay more for equipment that won't save her money, and the tenant doesn't get a say, even though he stands to benefit.

A thoughtful carbon management strategy can help better align low-carbon incentives. For example, the landlord and tenant could agree to share the monetary savings from carbon saving measures. In this case, the tenant should be willing to offset the cost of making energy efficiency investments, up to the value of the tenant's monthly utility bill savings. The extra money provides an incentive for the landlord to enact measures she would otherwise not consider. Everyone is better off and we've reduced greenhouse gas emissions.

Carbon Clear can help design other, more sophisticated approaches but the basic principle is the same. Working together, we can create win-win situations that cut carbon.

This isn't just tinkering at the margins. The Swedish utility Vattenfall estimated that there are seven billion tonnes per year of money-saving CO2 reduction options out there. It's possible for us to align the incentives to make them happen.

And that's good news for the climate.

(Carbon Clear homepage)

Eurostar offsets traveller emissions with Carbon Clear

As part of its new Tread Lightly campaign, Eurostar is now providing high-speed carbon-neutral journeys for all its passengers, at no extra cost to the traveller. In addition to its overall plans to reduce its emissions by 25% per passenger journey by 2012, where it is unable to eliminate emissions from a train journey, Eurostar is now offsetting them at its own expense.

Eurostar is working with leading carbon management company Carbon Clear to provide the carbon credits. Following a very stringent selection process, Eurostar and Carbon Clear have worked together to identify suitable projects and are currently investing in an Indian windfarm in Tamil Nadu and a Chinese small hydropower plant. These projects provide both environmental and social benefits by displacing fossil fuels in two of the developing world’s most polluting nations, while helping provide much-needed electricity and employment in poor communities.

Carbon Clear and Eurostar are jointly developing other sustainable energy projects that provide alternatives to traditionally polluting technologies. These include upgrading engines in Philippine mini-taxis and improving the performance of brick-kilns in Nicaragua, one of the poorest countries in Latin America. Without Carbon Clear’s investment these projects would not happen.

Louisa Bell, Head of Environment for Eurostar, said: “We wanted to ensure that we sourced carbon credits from a reputable supplier, and that all our offsetting is done to the highest scientific and ethical standards. We wanted a company that is very close to its projects and could give us the opportunity to be involved in the choice of projects. Following an exacting selection process, we chose Carbon Clear to offset the emissions from Eurostar journeys.”

Mark Chadwick, CEO and founder of Carbon Clear, added: “Eurostar has a made a serious commitment to reduce its carbon footprint, and recognises that offsetting can reduce global emissions now whilst work continues on longer term measures. With Tread Lightly, Eurostar is one the greener options for short haul travel to Europe”.

Government unveils Carbon Offsetting Fund to combat emissions created by civil servants' flights

Sarah Griffiths, BusinessGreen, 12 Nov 2007

The government last week unveiled a new carbon offsetting fund, designed to offset the transport-related carbon emissions generated by a wide range of different public sector departments and organisations, including central government departments, Transport for London and the Royal Household.

DEFRA said government-funded projects will be undertaken in the Philippines, Thailand, Vietnam, India, China and Brazil that "would ensure that the carbon footprint of Government air travel was neutralised by ensuring emissions were avoided elsewhere".

It added that the government fund, which will be managed by EEA Fund Management Ltd, is the first of its kind in the world and will offset all official air travel from central government since 2006 and all future air travel emissions from up to 40 public sector organisations.

"This kind of offsetting is a good way to deal with unavoidable emissions," said Jamal Gore, managing director of offsetting company Carbon Clear. "Without funding from carbon credits, many worthwhile clean energy projects in the developing world would simply not prove cost-effective."

However, Greenpeace spokesman Charlie Kronick argued the new fund would have minimal impact. "This is just plain hypocritical of the government," he said. " Off-setting is a book-keeping trick that can't stop climate change, because once you've burned jet fuel at altitude there's absolutely nothing you can do to stop your emissions changing the climate."

Environment Minister Phil Woolas admitted that offsetting was not a panacea, but argued it still had a valid role to play in tackling climate change. " Offsetting emissions from transport isn't the answer to climate change," he accepted. "However, it's right that we are leading by example and offsetting every ton of CO2 emitted through projects that avoid emissions in developing countries, create jobs and improve the local standard of living."

Original article courtesy of Business Green

The Price of Change

A few weeks ago, the European Environment Agency announced tighter carbon dioxide emissions quotas for the 2008-2012 time period.

This means the price of carbon will rise, and we will see faster action to address the threat of climate change.

Most EU nations have signed the Kyoto Protocol and agreed to legally binding greenhouse gas reductions. Each country, in turn, has set annual emissions targets for power plants, factories, and other large sources of greenhouse gas pollution. Their maximum pollution allowance is gradually reduced each year, and companies have to pay a hefty fine if they exceed their cap.

Policymakers recognise that some emissions reductions will be easier than others, so to help organisations meet their targets cost-effectively, the European Environment Agency has set up the Emissions Trading System (ETS). This is basically a carbon offsetting programme. Under the ETS, a power plant that reduces emissions more than is required can claim credits for the extra savings, and sell those carbon credits onto the market. A factory that exceeds its targets must pay for credits to balance out its extra greenhouse gas pollution or pay the fine.

Of course, if everyone exceeds their target you get lots of carbon credit sellers and no buyers. This is exactly what happened in 2007. The national targets were so generous that firms had to enact few new measures to reduce emissions. The market was floodded with carbon credits, and the price deopped from around Euro 20 in 2006 to just 30 cents a few weeks ago. It's hard to know whether the reductions that produced those credits would have happened anyway, and therefore how much the ETS actually helped the environment beyond business as usual.

The new emissions targets are good news because the European Environment Agency has gone out of its way to make the quotas as tight as possible. Overall, European nations had requested much higher limits for their power plants and factories. Bulgaria, for example, wanted permission to release 67 million tonnes of CO2, but received a target of only 42.3 million tonnes. Overall, the EU Environment Agency cut those requests by an average of 10%, setting an emissions cap of 2.1 billion tonnes of CO2.

As a result, the anticipated price of carbon credits in 2008 immediately started climbing. That means that a lot of more expensive and tougher greenhouse gas reduction measures are cost effective. And that's good news because it means faster action towards a low-carbon future.

(Carbon Clear homepage)