10 Questions to Ask Your Carbon Offset Vendor

Investing in carbon offsets is an efficient and cost effective way to quantifiably reduce the environmental impact of your organization. Such investments also demonstrate a strong commitment to combating climate change. Having said that, navigating the world of carbon offsets as a novice can be overwhelming. Even as an educated buyer, market jargon persists, and new standards and offset vendors must constantly be evaluated.

To provide clarity surrounding carbon offset purchases, below are 10 questions you should ask your offset vendor prior to purchasing credits. The questions were developed by Canadian environmental organization, the David Suzuki Foundation, and can be found in their report ‘Purchasing Carbon Offsets’. In reproducing them here, I’ve provided context and/or answers to help you understand what to look for in responses.

1. What are the specific offset project type(s) in your portfolio, and where are they located? (project types refer to wind farm, methane recovery, etc.)

Asking this question will help you to select vendors who can supply credits from projects and places that match your brand identity. For example, a transportation company might be interested in a transportation carbon reduction project, or a company with operations globally might want to support a project in a country where they operate.

2. Have your carbon offsets been certified to a recognized standard (Gold Standard, CDM, VCS, Climate Action Reserve to ensure quality? If so, please list the standard(s).

Make certain the credits you purchase are from third party verified projects of the highest quality and whose reductions are monitored annually by outside, independent auditors. The standards above are widely considered the market’s highest.

3. What steps have you taken to ensure the carbon offsets you are sell are additional?

Additionality is a key indicator of whether or not a project is high quality. It is the concept that a project could only occur because of the funds generated by the sale of the offset credits. If the project could have proceeded without carbon finance, then the project is not truly ‘additional’ and does not go beyond a business-as-usual scenario. In other words, your money is contributing to a project that would have gone on without your additional investment. If the project could not have gone forth without carbon financing, then the project passes the Clean Development Mechanism (CDM)’s additionality test. Find out if your vendor’s projects pass the CDM additionality test.

4. How do you ensure that the greenhouse gas reductions that your carbon offsets represent were quantified accurately?

Here again, look for credits that have been certified to well-recognized standards that monitor project performance on an annual basis. Refer to question 2.

5. Are 100% of your offsets validated and verified by accredited third-party auditors?

If this is not the case, you risk having your vendor offset a project that is not third party verified on your behalf. Having third party verification by independent auditors will ensure the project is actually happening and its reductions are real and ongoing.

6. If you are selling offsets that will be created in the future (i.e., through forward crediting), what mechanisms (insurance or otherwise) have you put in place to ensure those offsets will actually be delivered?

Sometimes carbon credits are forward sold, meaning they are sold before completing the certification process. This is because forward selling generates funds to operate the project in the present term, and offers a cost effective option for buyers, as not-yet-certified credits are typically cheaper than their certified counterparts. If buying forward credits, make certain that your vendor provides guarantees to deliver in the event the project fails and the offset you purchased never came about. Such guarantees might include offering you credits of equal value if your forward credits do not materialize.

7. What percentage of your portfolio (by tonnes of CO2e) is made up of offsets from tree planting or agricultural soils projects? If it is a significant percentage (more than 20% of your portfolio), how do you attempt to address permanence risks?

While trees are great for the environment, sequestering carbon as they grow, they do not necessarily make good carbon offset credits. The reason for this concerns permanency. Trees eventually succumb to death due to logging, natural decay, or natural disasters like a forest fire or hurricane. Their presence is not permanent on the landscape, meaning sequestered carbon will eventually be reversed. If you do buy from a tree planting project, make sure your vendor has a mechanism in place to address permanence risks, like holding a certain number of credits in the portfolio that will not be sold, acting as a buffer.

8. Do you use a publicly accessible registry to track and retire your offsets? If yes, list the websites. If no, how do you ensure your offsets are only sold to one buyer?

Purchased credits should be retired in a recognized carbon market registry to guard against double counting (selling the same credit twice). In today’s voluntary carbon market, there are a few key registries used among retailers. For those companies that sell VCS certified offsets, the APX and Markit registries are used to issue, track and retire credits. Find out where your vendor retires credits and if desired, request proof of retirement (e.g. a web screen shot of the registry noting your specific credits as retired).

9. What is your organization doing to educate consumers about climate change and the need for government policy to deal with it?

A top quality vendor not only sells offset credits, but also emphasizes reductions in the consumption of greenhouse gas emissions internally within an organization. Doing this typically means the vendor is committed to more than just selling you offset credits, and wants to contribute more widely to climate change education.

10. Are you a member of the International Carbon Reduction and Offset Alliance (ICROA), which has a Code of Best Practice that members must adhere to?

ICROA is a non-profit formed by leading project developers and retailers of carbon offset credits to drive up industry best practice and provide market credibility. The hallmark of the organization is a code of best practice, to which all members must publicly report. The code requires practices like selling only credits of the highest market quality, taking a measure, reduce and then offset approach towards emission reductions, and offering reduction advice for clients. Visit ICROA’s website to learn more at www.icroa.org

If you are interested in purchasing offsets for your business or organization, Carbon Clear can help identify projects that will meet your offsetting needs. We are both project developers and retailers of carbon credits and thus have an intimate knowledge of the market. Contact us today to learn more.

The CDP’s Carbon Action Initiative: What you need to know

Last week the CDP (Carbon Disclosure Project) announced its new Carbon Action initiative, an initiative led by institutional investors who combined manage assets of over $7.6 trillion dollars.

The initiative is fueled by an overwhelming belief that an increasingly fossil fuel constrained economy will have immense cost and other impacts on the performance of businesses worldwide. And, the investment community wants to know that the companies they invest in are doing something to manage these impacts. The logic follows that reducing costs now and warding off future price increases will deliver greater shareholder value both immediately and in the long run.

To add to this, the signatories of the Carbon Action initiative, which include groups like CCLA Investment Management, Aviva Investors, Boston Common Asset Management, and Calvert Asset Management have said that starting in 2013, they will begin divesting in companies that do not publicly disclose reduction targets to the CDP.

Steve Waywood, Head of Sustainability at Aviva Investors, a founding supporter of Carbon Action, commented, “We believe that the external costs of greenhouse gas emissions will become internalized into company cash flows and profitability. We encourage companies to consider what actions that they can take now to reduce emissions”

Through the Carbon Action initiative, the CDP is encouraging companies to do the following:

1. Measure and report your GHG emissions

2. Make year-on-year emissions reductions

3. Identify and implement investments in GHG reduction initiatives that will have a positive return on investment

4. Publically disclose emission reduction targets

What does this mean for your business? Two things, if you are a Global 500 company, you will have already received your CDP request for information letter. If not, you may experience a trickle down effect if you work with Global 500 companies looking who will be looking for new opportunities to reduce carbon (and costs) in their supply chains.

If you need help with your CDP response, or are interested in protecting or boosting your brand reputation by making an unsolicited response, Carbon Clear can help. Visit http://www.carbon-clear.com/us/services/carbon_disclosure_project

Carbon Clarity: Another Way to Think About Offsets

As part of my occasional series on increased "Carbon Clarity", I’d like to suggest an approach that may help understand how carbon offsets work. 


I've noted many times before that companies and organisations are going beyond compliance to measure and reduce their greenhouse gas emissions, so let’s start with the organisation’s carbon footprint.

While even the most basic carbon management initiative will include a plan for tackling emissions from the company’s own operations and their purchased energy (Scopes 1 and 2), the main carbon footprint standards don’t explicitly require organisations to measure emissions from suppliers, partners, customers and staff. One – dangerous – way to reduce Scope 1 and 2 emissions is to simply outsource those emission-intensive activities to a third party.  A firm could sell off its delivery fleet and hire a courier company to make deliveries on its behalf.  You can make a causal link between the organisation and these emissions, but they’re caused – and controlled – by someone else.

However, companies that ignore their Scope 3 emissions are missing an important opportunity to engage their stakeholders, or worse, are potentially exposing themselves to reputational risks. in the example above, the firm that hired the delivery company isn’t reducing emissions, it is simply shifting the burden to someone else.  Best practice is to take responsibility for those outsource emissions.  My company Carbon Clear is not alone in making this argument: the BSI’s PAS 2060 carbon neutrality standard requires organizations to include their Scope 3 emissions whenever possible, and the latest revisions to the GHG Protocol are also focused on ways to include more of these third-party emissions.

What happens when a company works to reduce their Scope 3 emissions? Generally speaking, they are promising to devote resources to measuring and reducing part of someone else’s Scope 1 and 2 carbon footprint.  They can then take credit for helping make those reductions happen.

This sounds a lot like the definition of carbon offsetting.  An offset is a purchased reduction from outside the organisation’s boundaries, used to count against the organisation’s own footprint.  In both cases, the company is paying for a reduction from a source beyond their immediate control.

To be clear, carbon offsets are not exactly the same as Scope 3 emission reductions. The original emissions from, for example, a factory in India were not included in the organisation’s carbon footprint (unless the organisation happens to own or purchase supplies from that factory).  The purchased reductions from switching fuel sources at that factory therefore would not count as a reduction within the Scope 3 footprint; while the reductions are real and would not have happened without that payment, they're outside the footprint.

Nevertheless, the effect on the environment and the message the company sends to stakeholders are the same.  Both offsets and Scope 3 measures are “outsourced” emission reductions.  The company has leveraged resources to make real, measurable cuts outside its organisational boundaries. As a result, the company has made a greater impact in the fight against climate change than it could have with a more inward-focused approach to reducing carbon.


(To the Carbon Clear homepage)

Carbon Clarity

If you do an internet search for the phrase "carbon management", you will find a range of companies offering their services.  Rather worryingly, a number of these appear to have some confusion as what carbon management really is.  For example, one company seems to suggest it is basically a quick carbon footprint measurement followed by carbon offsetting.  Another seems to think carbon management is basically energy management with an emissions coefficient thrown in to get an equivalent amount of carbon dioxide.

Climate change is one of the most important issues facing the planet, so the more people engaged in carbon management the better - so long as they're doing it right.  Doing it wrong risks wasting time, energy, and money, and potentially delaying the transition to a low-carbon economy.

In this post, we'll discuss what carbon management is, what it isn't and why that difference is so important.

At Carbon Clear, carbon management is all about clarity. Carbon clarity means having the right information and using that information to make good decisions.

More specifically, we view carbon management as a systematic process to identify and address the risks and opportunities presented by climate change.

The basics of our approach are straightforward enough.  As they work through the process, clients who engage our services learn:

• What is my climate change exposure?
• How will my business be affected by climate change?
• How can my business adapt to gain commercial advantage?
• Will my processes need to change in a low-carbon world?
• Are we prepared for these changes?
• What can I do now? What do I need to do?
• What do my stakeholders expect and how can I address them?
• How do I measure success?

So far, so good - nothing that should surprise anyone who has worked with us before.

But there's a difference between saying and doing.  There are a lot of tools out there and a lot of specialist providers who have a hammer in search of a nail.  It's the first part of the definition that gives our approach to carbon management its clarity and power.

Note in particular the use of the phrase "systematic process".  At Carbon Clear we find that it is often counter-productive to pre-judge where a company's greatest exposure to climate change risks and opportunities will lie.  Perhaps the greatest risk is their exposure to energy prices that incorporate a rising cost of carbon.  Perhaps the risk lies in supply chain disruptions caused by increasingly severe weather.  Perhaps the risk is reputational, as the news media, customers and investors punish climate laggards and reward pioneers.

Limited tools can result in limited thinking.  Many larger companies already employ half-hourly energy meters and legislation like the UK's CRC Scheme means the number of meters in use is growing.  Companies can therefore deploy software that enables them to track energy consumption and engage in long term energy planning and targeting. Despite their power, however, these tools are not enough. As we have pointed out before, carbon management involves people throughout the company, from energy managers (the natural users of these software tools), to the HR director, the chief financial officer, and the communications manager. Each of these players will process information in a different way and have a different definition of a successful outcome.  At best, this diversity makes an energy-focused software tool a difficult sell.  At worst, it potentially leaves a company blind to all the other greenhouse gas emission sources in their business and to the other ways that climate change can affect them.

Similarly, unless we understand the resources and constraints available to the company, it may be premature to specify in advance the actions they should take to tackle those risks and opportunities.  Just as a physician will discuss all the options before sending a patient off to surgery, a carbon management professional should help a company understand the choices and trade-offs available to them.  The universe of possibilities is vast: should they invest in energy efficiency, renewable energy, demand management, supply chain optimisation, fuel switching, improved transport management, employee and customer engagement, corporate restructuring, new product development, etc, etc...? The answer, of course, is "it depends".

And within each of these categories lies a potentially bewildering number of specific approaches.  Within the category of energy efficiency should the focus be on improved metering, lights, motors, insulation, load management, user behaviour or some other solution? What's the trade-off between investing to optimise existing equipment and undertaking a retrofit before the current equipment has reached the end of its useful life?  And who decides?

Carbon clarity means using clear, systematic thinking to cut through these complex variables to find the right carbon management solutions for your company.  As the examples above illustrate, carbon management isn't a single tool.  It isn't just a carbon footprint, and it isn't a gadget you can buy.  And while carbon credits may play a role, carbon management isn't just (or even mainly) about carbon offsets.

At Carbon Clear, we're your carbon management partner.  We provide carbon clarity to help you change climate change from a risk to an opportunity. And we help you choose the tools that will translate those opportunities into results.

(Carbon Clear homepage)

Why managing your carbon impact is inevitable

I believe that every business in the UK will be managing its carbon impact in 5 years. Many companies are already doing so, but there are many that are not. Those against it usually argue that investment in non-core activities is difficult, especially in this time of fiscal austerity. While this may be an understandable response, I believe it is short-sighted. Reducing your carbon impact will save you money and strengthen your business, and the sooner you do it, the sooner you can build expertise and enjoy the benefits.

Let’s look at the business case for a moment. Carbon management consultants like us have been harping on about cost savings for years. It’s not just rhetoric, nor is it rocket science. Any organisation that can work out ways to use energy more sensibly will knock a massive chunk off its electricity, gas and fuel bills. As energy prices won’t be going anywhere but up in the future, the savings accumulate accordingly.

Then there is legislation. The coalition turned the CRC Energy Efficiency scheme into a tax as part of its Comprehensive Spending Review, with the additional tax bill for the smallest participants now estimated at over £40,000 a year from 2012. On top of that they face fines for non-compliance if they don’t accurately measure their emissions. So the better you manage your carbon, the smaller your tax bill. And it’s unlikely to stop there. A recent government consultation on corporate law and governance is the first part of the coalition’s commitment to ensure that social and environmental duties are included in company reporting.

The good news is that consumers like to see companies ‘doing their bit’. They might not want to make massive changes in their own lifestyles or pay a premium for green credentials, but they do show a preference for sustainable products and services. A 2009 Europa survey found that more than 8 in 10 EU citizens felt that a product’s impact on the environment is an important element when deciding which products to buy. Brands embracing the low-carbon agenda are associated with a ‘can do’ approach, social responsibility, and innovation.

The flip side of this is, of course, that companies not tackling their environmental impact are at risk of losing out to their more forward-thinking competitors. In a 2010 PwC survey of the FTSE 350, 85% of companies are now disclosing their carbon emissions. They need to, because ethical and environmental procurement is becoming mainstream. So even non-consumer-facing businesses are vulnerable to loss of competitiveness if they supply, for example, to a major retailer such as a supermarket, or to the public sector.

Not convinced? You won’t be alone. But in 5 years time I believe you will be at a disadvantage if you don’t take these messages seriously. I think there is a good chance you’ll wind up managing your carbon anyway, eventually. Best practice suggests adopting a low-carbon approach to build value and bring in new business today. Why wait?

Mark Chadwick is CEO of Carbon Clear, a London-based carbon management consultancy.

What’s on your plate? Agriculture, meat, and carbon

(The following article originally appeared in the 15 November 2010 (no. 108) issue of the IEMA journal "the environmentalist", and is posted here with permission from the publisher.)

Most greenhouse gas reduction initiatives – including those promoted on these pages – have focused on energy industry and transport as these sectors comprise the bulk of measurable human-induced emissions.  In addition, international climate negotiations (UN-REDD) have focused increasing efforts on reducing emissions from deforestation and degradation.

In general, agriculture has received less attention in carbon management policy and legislation, despite the fact that more of the earth’s surface is dedicated to farmland than to cities.   Agriculture is estimated to account for anywhere from 10% to 40% of global anthropogenic GHGs.

One agricultural topic that has received more attention is the environmental consequence of the globalization of food as a commodity product. Should the carbon impact of our globalized food system and meat-intensive diet be part of the debate?  Are there farming practices closer that could reverse this pattern?

                                                                                                               

Loving our Livestock

Modern society seems to have a love-hate relationship with livestock.  An ice cream manufacturer might use images of grazing cows to symbolise fresh, natural products, and yet food scares from BSE to E. coli infections highlight some of the apparent risks of industrial agriculture.

A similar contradictory relationship exists when it comes to greenhouse gas emissions from agriculture. Intensive livestock rearing generates both direct and indirect greenhouse gas emissions, while improved practices can result in quantifiable emission reductions and support the transition to a lower-carbon economy.    The extent to which agriculture is a source or sink for GHGs depends on existing regional land-use and management practices. An important related question is what the alternative uses for the land would be, and whether those uses would generate even greater emissions than agriculture?  

The beef carbon footprint

Greenhouse gas emissions arise at every step in getting a hamburger or steak to our tables, from preparing the soils, to growing the animal feed, to housing and feeding animals, managing their waste, transporting the animal to market, to meat processing, packing, refrigeration, transport, and finally cooking. 

At each stage, GHG emissions are released - and can be mitigated.  How cows are raised– e.g. whether grain fed or pasture raised-makes a difference. Most cattle are fed a diet rich in corn and alfalfa. These grains are often grown using artificial fertilisers produced through energy intensive means and harvested with mechanised farm equipment.    However, the lower GHG intensity of grass-fed cattle is not always better if pastures are overgrazed and cause soil degradation and soil carbon loss.  And the demand for grazing lands can put pressure on nearby forests resulting in significant emissions from deforestation.

The multi-stomached cow, while well equipped to digest otherwise inedible grasses, burps largevolumes of the greenhouse gas methane – anywhere between 100 and 700 litres per animal per day.  The animal waste is also a source of methane emissions if it is stored in large lagoons where it decomposes anaerobically. And depending on the application of manure and/or nitrogen fertilizers for feed crops, nitrogen can be released into the atmosphere as N₂0.  Both methane (CH₄) and nitrous oxide (N₂0) are particularly significant greenhouse gases as the former has a global warming potential 21 times that of CO₂ and the latter, 310 times that of CO₂.

By adding up all of these emissions sources and dividing by the amount of meat produced, it is possible to estimate the carbon footprint of each piece of beef.  According to a 2009 analysis, a 150 gram burger is responsible for approximately 2 kg CO₂ equivalent the same as driving 15 km in an average car.

The cumulative effect of our burger eating is huge.  According to the U.S. Environmental Protection Agency report, “Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2004," beef cattle accounted for 71% of methane emissions in that country in 2004. The FAO estimates that cows and other livestock worldwide are responsible for total 18 percent of greenhouse gas emissions, a bigger share than for transport. As incomes rise in poorer countries, so does global meat consumption, potentially undermining efforts to reduce emissions.

Carbon Management on and Off the Farm

While attention is turning increasingly to the problem of carbon-intensive global livestock production, campaigners, policy makers and journalists have said less about the opportunities for better management practices on domestic farms.  It is possible to adapt the well-tested “reduce, reuse, recycle” hierarchy to our production and consumption of food to find ways to reduce the greenhouse gas impact of the food we eat.

Accordingly, the first approach is to reduce demand of high emissions foods like beef by reducing food waste.   Careful meal planning and better storage can significantly reduce the amount of food purchased and sent to landfill without being eaten.  A second approach is to encourage a shift in favour of lower-carbon protein sources like pork (single-stomach pig), poultry and legumes will reduce GHGs.  In the short term, however, it will prove difficult to separate people from their beef burgers and Sunday roasts.  What is more, these efforts may be swamped by changing diets in the developing world.

Improving practices and finding farm & carbon management synergies

Is it possible, then, to raise cattle that emit less methane, and to reduce emissions associated with feeding them?  Here the results to date have been promising.  Studies have shown that changing pasture can reduce gaseous emissions by 20%, and including garlic in cattle feed can reduce emissions by 50% and lead to healthier cattle[1].  Optimizing the diet of animals not only improves the efficiency of weight gain for animals (i.e. meat) but also reduces the methane emissions. About 6% of the energy input to the cow is released as methane gas from the cow.

Best practices on farms have great potential to mitigate GHGs and improve carbon sequestration. Biomass and carbon comprises much more than the plants and animals immediately obvious on the farm. Land-use practices such as ploughing or tillage intensity can determine the extent to which soil is a sink or source for GHGs. Ploughing up grassland releases up to 84 tonnes per hectare CO2e in England and up to 330 tonnes CO2e per hectare in Scotland.[2] On the other hand, grazing animals can help maintain grasslands if grazing in controlled and pastures are rotated.  By reducing land clearing and minimizing soil disturbance, soil’s role in storing carbon and available nitrogen for plants can be maximised and soil structure and microbial activity can be enhanced to increase agricultural productivity.

In short, best practice pasture management can help soils sequester carbon while, on the other hand, poor practices (e.g. overgrazing, excessive nitrogen use, and forest destruction) will lead to increases in GHGs.  “Using existing technologies and best management practices, US agriculture could sequester 350-550 million tonnes of CO2e per year and current N2O and CH4 emissions could be decreased by 20-40%.”[3] 

Reducing or eliminating nitrogen-based artificial fertilisers as part of a programme of integrated farm management can reduce greenhouse gas emissions from soil.  Spreading manure on croplands has the dual benefits of replacing artificial fertilisers and reducing the volume of methane-generating waste lagoons.

Where waste lagoons are unavoidable, they can aerated to break down the waste aerobically, producing CO2 instead of the more powerful greenhouse gas methane.  An alternative is to capture the methane and flare it or use it to generate renewable heat and electricity.  Feed-in tariffs and standard contracts in the UK and US provide generous incentives for farmers to generate power in this way, in order to displace fossil fuel-fired generation (as described in our article in issue 104 of  ‘the environmentalist’.

A final approach is to look at local land use practices.  The decision about the best use of a given parcel of land is made jointly by landowners, local communities, government and other stakeholders.  Allowing livestock grazing may be considered the best way to preserve open space, which also allows recreation and provides habitat for native species.  The challenge then is to ensure that the practice helps to reduce net emissions rather than contributing to them.

Reducing over-grazing and using perennial grasses helps to maintain soil structure and reduce soil carbon emissions.  Managing sites for some woodland growth can aid carbon sequestration and conservation. Indeed, livestock can be part of a program to control invasive species and encourage native ones.

As farmers in the USA have learnt, wind farms are often a perfect complement to livestock grazing.  Around the town of Klickitat, Wisconsin, landowners have given wind developers permission to install over 600 turbines, generating enough power to supply 300,000 to 400,000 homes.  In this way, local farmers are making a significant contribution to the low-carbon economy. What is more, the landowners earn approximately $18,000 (about £11,000) per year for each turbine on their land – a significant boost to modest local incomes.[4] 

Conclusion

Domesticated livestock have been with humanity since before written records began. It is important that we recognise the carbon cost of our intensive agriculture and food choices, and continue to seek ways to balance our meat consumption with our need to combat climate change.


Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA,CEnv is Managing Director at carbon management company Carbon Clear Limited.

References:

1 Soil Carbon and Organic Farming, Soil Association, November 2009 http://www.soilassociation.org/

2 Climate Change and Greenhouse Gas Mitigation: Challenges and Opportunities for Agriculture, US Council for Agricultural Science and Technology, May 2004

3 Nathan Fiala, “The Greenhouse Hamburger”, Scientific American, February 2009.

4 http://www.decc.gov.uk/assets/decc/statistics/climate_change/1_20100414165435_e_@@_GHGnatstatsrelease140410rev1.pdf

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[1] http://www.thebeefsite.com/news/29884/afbi-study-on-methane-emissions-in-ruminants

[2] Ibid

[3] Climate Change and Greenhouse Gas Mitigation: Challenges and Opportunities for Agriculture, US Council for Agricultural Science and Technology, May 2004

[4] http://www.eenews.net/Greenwire/2010/10/18/

Carbon Neutrality: In From the Cold

(Ed: This article was originally written by Jamal Gore and Suzy Hodgson in October 2009 for the IEMA journal "the environmentalist", but was never published. Nevertheless, its content remains relevant. Enjoy!) 

Companies around the world are increasingly taking action to reduce and offset their greenhouse gas emissions. A few years ago, businesses took pains to publicise their reduction programmes, so much so that in 2007 the term “carbon neutral” gained an official dictionary entry.  However, in more recent years companies have appeared less willing to draw attention to their low-carbon initiatives.

Sorting a market muddle

Some of this reluctance stems from confusion and even cynicism about “carbon neutral” claims.  While most agree that carbon neutrality requires measurement, reduction and offsetting, many claims have been plagued by a lack of transparency.  In one highly publicised example, a computer company was criticised for making its offices and business travel “carbon neutral”, while ignoring the much larger emissions from the manufacture and use of its core product.  Few companies that have gone carbon neutral publicly disclose all aspects of their carbon footprint.

As a result, it has been difficult for stakeholders to understand how organisations’ footprints are measured, and whether internal reductions or offsets have been used to achieve carbon-neutral status.  Without an objective standard and faced with accusations of “greenwash” many companies have understandably wished to keep a low profile.

We think this is a missed opportunity.  By promoting their carbon reduction initiatives, businesses have an opportunity to engage staff and customers and are more likely to stay the course during difficult economic conditions.  

The UK Government and the British Standards Institute (BSI) seem to agree, stepping forward with parallel solutions to address this market failure.  In late 2008, the Department for Energy and Climate Change (DECC) launched an informal process to develop guidance on using the term “carbon neutral”. The main aim was to provide clarity for former Prime Minister Tony Blair’s target to make all Government estates “carbon neutral” by 2012, but also to provide greater clarity for other organisations and serve as a reference to reinforce the Government’s Green Claims Code.

At roughly the same time, BSI began working on a new Publicly Available Specification (PAS 2060:2010) to give guidance on making carbon neutral claims.  BSI was responding to a perceived need from businesses for a consistent approach to carbon neutrality.  BSI intends to serve the interests of a wide range of industrial sectors, both in the UK and abroad, with a PAS that is useful, relevant, and authoritative and potentially serves as a precursor to an ISO standard.

Both the DECC guidance document[1] and the BSI specification[2] have the potential to create a more level playing field for organisations working in this area.  The two documents are generally in lockstep in their references to accepted standards and protocols for carbon footprint quantification and reporting of greenhouse gas emissions (see our article “Whose footprint is it anyway?” in issue 53 of the environmentalist.), and both outline the key stages of carbon management, i.e. determining the subject scope, measuring the footprint, implementing a reduction plan, requantifying the residual carbon footprint, and offsetting.

Setting the scope

 As readers of our previous articles may recall, the boundaries for an organisation’s carbon footprint set the stage for the rest of the carbon management process.  Without a credibly scoped footprint, the organisation’s reduction programme may fail in the court of public opinion.

BSI and DECC take similar approaches to scoping emissions, using the GHG Protocol and ISO 14064 as their starting point.  DECC recommends that at a minimum, emissions within Scope 1 (sources under the organisation’s direct control) and Scope 2 (from purchased energy) be included. In addition, DECC recommends that organisations include their “significant” Scope 3 [other indirect] emissions with guidance for determining significance. 

As DECC does with the word “significant”, BSI provides guidance for determining “materiality” for Scope 3 emissions, stating that “those Scope 3 emissions deemed to be material to the subject shall be included.” To remove doubt about what must be included, BSI states that where the subject is an organisation, “the boundaries shall be a true and fair representation of the organisation’s greenhouse gas emissions (i.e. shall include all emissions relating to core operations including subsidiaries owned and operated by the organisation.)” 

Clearly, “significant” and “material” do leave room for managerial discretion in determining Scope 3 emissions.  DECC and BSI both recognise that organisations will differ in the extent to which they are responsible for, or can influence the emissions of third parties who pollute as a result of the organisation’s activities. Nonetheless, organisations are required to document their decisions transparently. However, differences in interpreting Scope 3 mean that the DECC guidance and BSI specification do not make it easy to rank carbon-neutral organisations in a league table. 

Reductions done right

 Both the DECC guidance document and BSI’s specification require organisations to put in place a programme of internal reductions in order to make a credible claim.  DECC requires three “separate” and distinct management steps - measurement, reducing, and offsetting, specifically stating “a carbon neutral claim consisting only of calculating emissions and offsetting should not be made.”  This requirement addresses those critics of carbon offsetting, who see it as a substitute for reducing emissions within the organisation’s boundaries [see our article “Carbon offsets: a last resort?” in issue 64 of the environmentalist].

BSI takes a different approach. While PAS 2060 requires an ambitious plan for internal reductions, it acknowledges that it may take several years for these plans to bear fruit.  PAS 2060 allows companies to recognise, as part of this longer-term target, reduction activities begun before the carbon reduction claim.  This approach reflects that organisations can often reap significant reductions in the first year, but that subsequent reductions might require significant investment and be realised more slowly.  Requiring a set reduction every year might inadvertently discourage companies from making investments in ambitious long-term emission reduction activities.

Interestingly, neither guidance document specifies a minimum level of internal emissions reduction.  Instead, they require that organisations announce a reduction plan and publicly disclose their progress each year, allowing stakeholders to scrutinise activity and form their own opinions regarding their appropriateness.

Offsets – an essential component

 As for carbon offsets, DECC and BSI acknowledge that, while internal reductions are an important way to demonstrate an organisation’s commitment and set the organisation’s course to a lower-carbon future, internal measures alone are unlikely to lead to zero net emissions. 

Both guidance documents outline the methodology and strict requirements for offsets.  These criteria include requirements that all offsets used to achieve carbon neutrality are:

• Genuine
• Additional
• Without leakage
• Permanent
• Independently verified by a third party
• Transparent (i.e. supported by publically available project documentation on an established registry)

Beyond this point, the two guidance documents diverge.  Recognising the national and international organisations likely to use PAS 2060, BSI does not specify particular offset quality standards, but provides a list of popular schemes that meet these criteria, including the Clean Development Mechanism, Voluntary Carbon Standard, and Gold Standard.  Regardless of the standard, BSI requires organisations to publicly disclose the type and quantity of offset credits used to balance out their residual emissions.  Again, BSI relies on public opinion to drive good behaviour.

DECC, on the other hand, recognises only those offsets that have been accredited under the Government’s Quality Assurance Scheme.  At present, only “compliance” credits from the Kyoto Protocol and the EU ETS can be accredited under this scheme. These credits typically cost twice as much as voluntary credits certified under other schemes – and sometimes even more. While DECC recognises that voluntary carbon credit standards have the potential to meet the criteria for generating quality offset credits, and often provide social and environmental co-benefits, the Department states that it is currently unable to vouch for their quality.  Organisations that wish to use unaccredited offsets are required to demonstrate that they have performed due diligence and met the criteria described above.

Which to use?

As the above points demonstrate, the DECC and BSI documents share a number of common elements: GHG Protocol/ ISO 14064 footprints, a plan for measurable internal reductions, high quality carbon offsets, and public disclosure throughout.

But, the differences between these two documents mean that they are not interchangeable.  DECC is more prescriptive in the timing of internal reductions and the types of offset credits organisations can use to achieve carbon neutrality.  The more flexible BSI approach will appeal to organisations that operate across national boundaries, and to large organisations making significant long term capital investments to achieve their internal reductions, or whose offsetting bill is so large that a reliance on compliance credits might force them to abandon the effort altogether.

On the other hand DECC’s approach, , may be more attractive to organisations that are already demonstrating year-on-year reductions and using compliance credits for their offsetting, or who prefer to rely on an implicit Government endorsement of their lower-carbon initiatives to deal with stakeholder scepticism.  The more prescriptive approach and implied hierarchy of the DECC guidance may offer the impression of increased rigour, even as it excludes some would-be users.

Conclusion

Because these two documents allow organisations to choose the scope for their measurement, reduction and offsetting programmes, they do not facilitate direct comparisons between organisations making carbon neutral claims. Even so, they both have the benefit of making these claims more specific, transparent, and readily verified.  As a result, we expect this guidance help reduce stakeholder scepticism and make it easier for organisations to speak more confidently about their carbon reduction initiatives.

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[1] Department of Energy and Climate Change, Guidance on carbon neutrality, 30 September 2009

[2] PAS 2060:2010 Publically Available Specification for the demonstration of carbon neutrality.

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Happy New Year from Carbon Clear

Best Wishes from the team at Carbon Clear.  2010 was a good year for us, with new offices launching in Spain, Turkey and the United States.

As usual, we have worked to stay on the leading edge of carbon management best practice, and contributed to efforts to support the global transition to a low carbon economy. In addition to providing carbon footprint, CRC, and reduction advice and supporting carbon offset projects, in 2010 we:

• contributed to the launch of the BSI specification on "carbon neutrality" (more on that in an upcoming post);
• guided, via the General Policy Working Group, the first full compliance audit for members of the International Carbon Reduction and Offset Alliance (ICROA);
• became a Core Member of the Carbon Finance Working Group for the Global Alliance for Clean Cookstoves;
• spoke and presented at a wide array of workshops and conferences around the world; and
• did lots more that I'll probably recall on the way home tonight.

In addition, I volunteered to author two chapters ("Energy" and "Climate Change") in the forthcoming second edition of the Institute of Environmental Management and Assessment (IEMA) Practitioner's Handbook.

We expect 2011 to be at least as fruitful, and look forward to working with you.

(Carbon Clear Homepage)

Going Local with 'Home-Grown' Power

This article was originally published on 20 September 2010, in issue 104 of the IEMA journal 'the environmentalist'.


A shift from large-scale energy production overseas to smaller local energy supply and distribution is underway in the UK and US.  In the UK, one of the main drivers for this change has been the establishment of a set of five-year national ‘carbon budgets’ intended to achieve a 34 per cent reduction in greenhouse gas emissions by 2020.

In the US, meanwhile, the overarching driver has been a move towards more secure domestic energy sources, which tend to have more immediate financial benefits and fewer associated environmental and economic risks than imported fossil fuels.

Despite these differing rationales, households, businesses and communities adopting local renewables stand to  reap similar types of benefits:

• reduced fossil fuel consumption and therefore reduced dependence on imported resources;
• improved security of supply and consequently less vulnerability to price shocks;
• more local job creation than with large-scale power plants;
• cleaner energy from renewable sources and less environmental damage, and in particular a reduced carbon footprint; and
• financial benefits to households, companies and other adopters due to reduced electricity bills, government subsidies and feed-in tariffs.

Tipping point
More people are realising that the costs and benefits of renewable energy are not only financial. Indeed, recent events have highlighted the increasing costs of our continued reliance on non-renewable fossil fuels.

This past summer, extreme weather events have occurred across the planet. Temperatures in Moscow reached 40 degrees Celsius for the first time, resulting in thousands dead and widespread forest fires. The heatwave decimated wheat crops and sent global cereal prices soaring. Meanwhile, the Indus River reached its highest level in 110 years causing catastrophic flooding in Pakistan. The misery in Pakistan coincides with major flooding in China, North Korea, Niger, Sudan, Ethiopia and Guatemala.

While no single event can be directly attributed to climate, their occurrence is consistent with the predicted impacts of global warming. The World Bank estimates that developing countries will need between US $70-$100 billion each year to adapt to anticipated climate change impacts on agriculture, infrastructure and human health between now and 2050. When coupled with increasing international competition for limited global petroleum and gas reserves, it becomes abundantly clear that the model for economic development based on fossil fuel consumption is unsustainable.

Betting on renewables price stability
One of the main obstacles to increased use of renewables – high upfront costs despite low to zero cost for the fuel – is increasingly one of the technology’s main attractions. The economics of oil – uncertain and unpredictable – are making renewables a safer bet for many end users. OPEC spot prices spiked in July 2008 at $137.18 per barrel before plunging to $35.48 in January 2009, only to start creeping up to $76.91 by December 2009. This extreme volatility makes it difficult for households, companies and governments to set long-term budgets, and increases financial uncertainty in the midst of a severe economic downturn. For those who can afford the initial investment, renewables can offer the reassurance of long-term price stability needed to plan for the future.

Not only climate change, oil prices and the prospect of dwindling supplies dampened enthusiasm for fossil fuels, but also, in recent months, more immediate environmental and safety risks. The recent BP Deepwater Horizon oil spill was splashed across front pages around the world. This oil spill, surpassing the Exxon Valdez as the worst in US history, ensured increased attention to spills from the coast of Indonesia to the Niger Delta. This negative media attention has helped spur the search for local energy alternatives.

Local power generation – then and now
In the past, electricity generation at the household or building level has generally meant running a diesel or petrol (gasoline) generator. These generators tend to be noisy, polluting, and more expensive than simply buying electricity from an electric utility. As a result, they tend to be kept on standby and used only in emergencies. The recent growth in local generation comes from renewable energy technologies – especially wind, geothermal, biomass, solar thermal and solar photovoltaic (PV).

While small petrol and diesel generators tended to produce more pollution per unit of electricity than utility power plants, most renewable technologies are significantly cleaner, producing (with the exception of biomass) practically zero ambient air pollution at source.

Renewables and regional recovery
Local clean energy is seen as potential source of recovery from the current economic recession. Rebuilding the economy by creating a new energy system is widely predicted to create more jobs. A 2009 report found that renewable energy investments are estimated to generate roughly three times more jobs than an equivalent amount of money spent on fossil fuels.(2)

As Greg Barker, UK Climate Change Minister, commented last month, “Our homes, businesses and communities can become dynamic players in the new energy economy by producing their own green electricity and selling it back into the national grid. New feed-in tariffs – a system of financial incentives to encourage households and communities to produce their own electricity – are at the heart of our efforts to ‘green’ Britain and empower consumers and to create a more local, decentralised energy system.”(3)

While job creation tends to be a lagging economic indicator, the British and American governments have made financial incentives available directly to UK households, companies and other renewable energy adopters  through government subsidies and feed-in tariffs. In the UK, the feed-in-tariff system introduced in April 2010  guarantees a payment of up to £0.42 per kilowatt-hour for renewably generated electricity. A PV installation for a moderately-sized household in London might cost £15,000. Thanks to reduced utility bills and payments from the government feed-in tariff, this investment would produce over the next 20 years a guaranteed annualised return of approximately nine per cent. Few other investments available to households in this economic climate could do as well. Lured by the feed-in-tariff, a number of firms are now offering to provide and install solar panels for free; the firm claims the feed-in-tariff and the property occupant benefits from a lower electricity bill. And as electricity prices are predicted to rise in the near future, the financial benefits only increase.

Planning for renewables
While world leaders from India and China to the US have trumpeted the macroeconomic benefits of renewables, local issues regarding land-use planning can still be a concern. NIMBYism has not gone away, and residents continue to protest against large wind farms ‘in their backyards’. However, the smaller scale and partnership approach employed by local renewables projects can increase acceptance. Moreover, local companies (rather than distant multinationals) are more likely to get community buy-in with ‘home-grown’ and power projects that provide energy at the local level.

“Planning is the big unknown in renewable,” says Ryan Law, founder of Geothermal Engineering Ltd (GEL). “Communities object to mega-projects which supply the whole country, but if people realise they can have a direct stake in local schemes I think this is the key to it. Geothermal is Cornwall’s resource, not a project dumped on the county from outside,” said Law.(4)  After two years of planning with Cornwall County Council, GEL has been granted planning permission to develop the UK’s first commercial geothermal power plant at its Redruth site.

The challenge
The extent to which governments can continue to prop up their economies with large renewable energy  investments remains to be seen. The cost to governments will start to add up quickly as more and more companies and households take advantage of generous tax credits and feed-in tariffs. Most governments have anticipated this issue by gradually reducing the amount the feed-in-tariffs will pay to new adopters in subsequent years.

There are also technical challenges as large numbers of small generators are linked to the grid of electric utilities. While the overall generation from baseline power plants may go down as local power generation rises, utilities will have less control over when and how much electricity will be available, necessitating an investment in additional back-up generation capacity from more expensive power plants. On the positive side, a technical fault or downed power line in one location will not necessarily plunge an entire region into darkness. The more technologically and geographically diverse the local generation systems in place, the less the utilities should need to bring their back-up systems online.

On balance, the benefits appear to outweigh the challenges. There are synergies across the various benefits that extend from the local to the national level via job creation, diversification, and financial savings which could lead to greater spending and investment in the local economies instead of purchasing imported fossil fuels. As we noted in a previous 'Energy and Business' article (‘From credit crisis to carbon crisis’, Issue 68), governments were quick to step in when the global financial system was on the brink of meltdown.

All in all, these investments in renewables should lead to greater energy security and reduced climate change risks in an uncertain world. Given these benefits, local renewables need more – not less – support.

Suzy Hodgson AIEMA is a Principal Consultant and Jamal Gore MIEMA, CEnv is Managing Director at carbon management company Carbon Clear Limited.

Don't Be Afraid to Think Big

Last month the World Meteorological Organization and the United Nations Environment Programme jointly announced that the ozone hole has stabilised.  More specifically, the thinning observed since the 1970s in the high altitude layer of ozone that protects us from ultraviolet radiation has stopped and the hole is beginning to recover.  The ozone layer outside of polar regions is expected to return to pre-1980 levels before 2050, with the polar regions recovering a few decades later.

The story earned a few newspaper headlines the day after it was announced, and then disappeared without a trace.

In reality, this is tremendous good news.  Policy makers and environmental advocates should be shouting from the rooftops.  After all, how often do we get to report that an environmental problem is getting better?

There's another encouraging story here.  It's that concerted global action to tackle environmental challenges works.

In 1987 the nations of the world came together to enact the Montreal Protocol. The Montreal Protocol  represented an historic attempt to phase out entire classes of industrial gases- chloroflourocarbons (CFCs), halons, and methyl bromide - used in everything  from refrigerators and fire extinguishers to hairspray and pesticides.

Wealthy industrialised nations agreed to strict targets for the phaseout, while developing countries were given more leeway before their cuts began.  At the time, industry lobbyists argued against the science of the thinning ozone and complained about the cost of compliance.

But we held firm.  All 196 nations ratified the treaty, and the Montreal Protocol came into force.  There was no economic catastrophe - the costs of transitioning to less harmful gases were much lower than anticipated.  And the ozone layer has begun to recover.  Without the Montreal Protocol unabated destruction of the ozone layer was projected to result, in the words of UNEP Executive Director Achim Steiner, "...up to 20 million more cases of skin cancer and 130 million more cases of eye cataracts, not to speak of damage to human immune systems, wildlife and agriculture."  Fortunately, that threat seems to be receding.

This isn't the first time that we've come together across boundaries to solve major environmental problems.  In the 1970s and 1980s, SO2 emissions from power plants and factories caused acid rain and damaged forests  and waterways in North America and Europe.  Regional trading progammes were launched with strict emissions caps - again over the protests of vested interests who argued that the rules would be unaffordable and cost  thousands of jobs.  The cap and trade programme designers argued that their scheme would achieve  environmental targets at the lowest possible cost to the environment.

And it worked.  Acid rain is largely a thing of the past in industrialised countries, and the cost of compliance was only a fraction of what industry has predicted.

The Montreal Protocol and the regional SO2 trading schemes show what can be accomplished when we're not afraid to think big.  The Kyoto Protocol, national cap and trade legislation in the United States and Australia, and the erstwhile Copenhagen conference last December represented similar efforts.

But we seem to have lost our courage.

The Kyoto Protocol expires in 2012, and prospects for its replacement seem uncertain.  Christiana Figueres, the UNFCC head with whom I worked back in the 1990s, says there won't be a single big agreement to replace Kyoto - the parties simply can't agree. Meanwhile, legislators admit that US climate change legislation is dead in the water, and the Australian government is rapidly backtracking on their climate change plans.  Opponents, sensing blood in the water, are now attacking regional and state-level climate change initiatives in the United States, arguing that fighting climate change will cost jobs.

Big problems call for ambitious solutions.  We took bold, concerted action when CFCs and other chemicals threatened the ozone layer.  We took similarly bold action when acid rain threatened our lakes and streams.  Climate change is an even bigger problem than either of these and yet we fret about the cost and struggle to come to agreement.

When did we become so timid?  How did we become afraid to think big?

We know the nature of the challenge facing us, and we know what needs to be done.  It's time to face our  fears, roll up our sleeves, and get started on the path on the road to a low carbon economy.

(Carbon Clear homepage)

Signs of the Times

According to the New York Times, this summer goes down in the record books as New York's hottest with the temperature hitting or exceeding 90 degrees Fahrenheit (32C) on 34 separate days.

Meanwhile, Pakistan's Indus River has reached its highest level in 110 years and caused devestating flooding, and the temperature in Moscow hit 104F (40C!) for the first time ever. Floods have also stricken Sudan, China, North Korea, Niger and other countries.

Hmm, increasing greenhouse gas concentrations, unprecedented extreme weather across the globe as predicted in the climate models.  I wonder if there's a link?

(Carbon Clear homepage)

"Geoengineering Lite"

Last month the US Environmental Protection Agency imposed stricter regulations on sulphur dioxide (SO2) emissions from power plants.  The rules require more frequent pollution monitoring and the installation of new SO2 monitors in regions considered most at risk from pollution exposure.

This announcement, the first revision to these rules in 40 years, is welcome and overdue.  SO2 emissions from industry and vehicles is a major ambient pollutant, contributing to asthma, bronchitis and premature deaths.  In many parts of the US, the communities downwind of the smokestacks tend to be composed disproportionately of poor people and people of color.  The EPA estimates that implementing the new rules will prevent between 2,900 and 5,900 premature deaths and 54,000 asthma attacks.

And of course, SO2 is a precursor to acid rain.

European countries have also been steadily tightening their air pollution laws to reduce the amount of SO2 entering the atmosphere.

This is good news for the environment and people, but why am I writing about it on Carbon Clear's climate change blog?

SO2 particles are just the right size to block certain wavelengths of light.  Scattered in the atmosphere, millions of tonnes of these particulates block a fraction of the sun's light and provide a planetary cooling effect.  These effects are so significant that the Intergovernmental Panel on Climate Change incorporates assumptions of industrial SO2 emissions in their long-range climate models.  More specifically, they assume that SO2 emissions will continue to diminish over time as more stingent pollution controls are enacted and we switch away from fossil fueled power generation.

And that means we will no longer be able to hide behind the cooling effects of industrial pollution.  It's ironic that cleaning up a pollutant that causes such misery on a local and regional level means we have to work even harder to prevent a warming climate.

This may not be the last we hear of SO2, however.  Given its strong cooling influence and relatively low cost of production, an increasing number of scientists believe SO2 may provide a last-ditch defense against catastrophic climate change.  Faced with abrupt and runaway warming, governments might choose to inject large volumes of SO2 into the stratosphere to simulate the cooling effects of a major volcanic eruption.

While these geoengineering measures might provide short term relief from warming, they are not without their own challenges.  First, the effects on regional climates have not been modelled thoroughly - changing rainfall and temperature patterns may create winners and losers.  Second is the fact that SO2 injection would mask the warming effects of climage change, but would not actually address the cause - greenhouse gases in the atmosphere, nor would it do anything to counter CO2's acidifying effects on the world's oceans.  What is more, SO2 only stays in the atmosphere for a few months or years, at most, while CO2 stays in the atmosphere for hundreds of years.  That means that, once we start injecting SO2 into the atmosphere, we have to keep doing it unless we want to see a dramatic and devastating rebound to higher temperatures.  And of course, geoengineering does not provide the benefits that accrue from decarbonising our energy and transportation infrastructure.

It is clear, then, that geoengineering with SO2 is not a measure to be undertaken lightly.  As countries around the world impose much needed regulation to continue reducing ambient air pollution levels, we will be running a mini-geoengineering experiment, in reverse.  I anticipate that climate scientists will be observing the resulting changes and incorporating them into their models.   It would be a tragedy if we were panicked into adopting geoengineering measures without fully understanding the likely impacts.

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