From the Archives: New Fossil Fuel Sources and Climate Change

Over the past few months the debate about new fossil fuel sources has gotten pretty...intense. In the U.S. environmentalists are campaigning in the courts and in farmers fields to halt the Keystone XL pipeline, which will provide easier market access for petroleum from Canada's tar sands.  Here in the U.K. campaigners are working to slow the spread of hydraulic fracturing, which enables drillers to access abundant but otherwise difficult to access shale gas.

This is an important debate, and one I discussed in a blog post over three years ago. Rather than rehash that discussion, I will reprint that March 2009 post below:

Peak Oil: Will We Freeze or Roast? Originally posted 18 March 2009

When I was in graduate school in the early 1990s, M. King Hubbert was a name known only to fellow energy nerds. Now, he's so popular you can get regular news alerts.

Hubbert developed a mathematical model describing how production from an oil well or entire oil producing region tends to increase at a predictable rate, until it hits a - predictable - peak and then declines. Hubbert used his model to predict the year of peak oil output for the United States, and it has been used more or less successfully for other oil producing regions since then.

In addition to forecasting output growth for particular regions, the Hubbert Curve and peak oil theory can be applied to oil production for the world as a whole. But as recently as 2005, the International Energy Agency (IEA) dismissed the concept. Mainstream energy agencies tended to assume that oil production could increase indefinitely as new investment and technology are brought to bear. If a peak exists, they argued, we are nowhere near it.

This matters because when the world's leading climate scientists prepared their 2007 report on global warming trends and impacts, they turned to the IEA for their best estimates of fossil fuel consumption. The IPCC works by consensus, and its reports tend to refer only to the most authoritative sources. The IEA estimates showed that conventional fossil fuel use would continue to grow without end, and this prediction is reflected in all the pessimistic warnings about global temperature increases and climate change.

Times have changed. The IEA is now predicting that we will reach global peak oil between 2020 and 2030 (more pessimistic scenarios argue that we reached the global peak last year). So oil production will top out much earlier than anticipated.

Less petroleum production means fewer petroleum-related greenhouse gas emissions. In fact, manyindependent models suggest that, once peak oil (and coal) is factored in, we simply can't burn enough traditional fossil fuels to reach the worst-case global warming levels.

Let me repeat that: Most climate models that incorporate peak oil theory predict a temperature rise of less than 2 degrees Centigrade. A major change to be sure, but far less than the IPCC's "business as usual" scenario for global warming.

So, this is good news, isn't it? Climate change is solved because fossil fuel production will decline sooner than predicted, right?

Not so fast. What are we going to use for our vehicles when the oil starts to run out? Shall we simply switch off the lights and freeze?

In 2006, Alex Farrell and Adam Brandt, researchers at the University of California at Berkeley's Energy and Resources Group, published a paper that examined the cost, availability and climate change implications of substitutes for conventional petroleum. These are liquid fuels derived from heavy, difficult to process resources like tar sands, oil shale, and coal.

The Berkeley team found that it would be commercially viable to produce synthetic petroleum from these heavy fuels at oil prices of less than US $50 per barrel. What's more these resources are so abundant that they would keep pump prices relatively low.

In other words, peak oil means less petroleum, but not an end to fossil fuels. For those who worry that peak oil means society will collapse into "Mad Max" - style anarchy, that's good news.

The bad news is that these fuels have a much greater climate change impact than conventional oil. Using tar sands and heavy oil results in about 50% more CO2 per unit of energy than regular petroleum. Synthetic fuels made from coal nearly doubles the greenhouse gas emissions, and using oil shale could result in up to 3X the emissions per unit of energy. To quote the authors:

"Overall...the oil transition is not a shift from abundance to scarcity: fossil fuel resources abound. Rather, the oil transition is a shift from high quality resources to lower quality resources that have increased risks of environmental damage, as well as other risks."

Sadly, peak oil is not the solution to climate change. If anything, a poorly planned response to peak oil could accelerate global greenhouse gas emissions growth.

There is an alternative. We have the technical know-how to produce energy from low- or zero-emission sources. Solar, hydropower, wave and tidal, wind, and geothermal energy are clean sources of hydrogen and electricity, and carefully chosen biofuels can provide high energy-density liquid fuels.

Scaling up these clean energy technologies at the rate required to compensate for peak oil and limite climate change is a challenge. But as discussed in an earlier article, the required investments by governments, corporations and communities are no larger than other causes on which we have spent billions. The need is arguably as great, if not greater, because poorly planned energy investments made today will have a huge impact for decades to come.

Which FTSE 100 Company Has The Best Carbon Reporting?

(This is a guest post by Carbon Clear CEO Mark Chadwick, and was originally published via the 2Degrees Network.)

"Best" is clearly a subjective term... At Carbon Clear we have developed criteria for what we believe represents best practice in carbon management, and we score company reports to assess their carbon management maturity.

On Wednesday 17th October at 08:30am we will be announcing the results of our 2012 research and will reveal the top 20 companies from the FTSE 100. Our maturity model looks for more than just measurement and disclosure. We also look for broader signs of carbon management maturity, including reduction performance, engagement and strategy.

Last year's top 10 were the following:

1. BSkyB
2. M&S
3. Aviva
4. Pearson
5. RSA
6. GSK
7. Hammerson
8. Kingfisher
9. Sainsbury
10. Tesco

This year's results contain some surprises, some new entrants and some that have fallen in the rankings.

The event will be held at Carbon Clear's office near King's Cross, London and will run from 8:30 to 10:30 on Wednesday October 17th. See our website for more information.

If you’re from a FTSE 100 company, or are interested in improving your carbon management performance please contact Rachel Hunter (rhunter [at] carbon-clear [dot] com) or on 0203 589 9423 to request a place at the briefing.

Mandatory Carbon Reporting: Lessons from the CRC

The UK's Mandatory Carbon Reporting requirement is expected to become law on 6th April 2013. As I mentioned previously, there are still a number of questions surrounding this proposed legislation. What is more, the final consultation is still open, meaning some details may yet change.

Carbon Clear conducted a survey last month on corporate attitudes to Mandatory Carbon Reporting. Worryingly, we found that the lack of specifics has led nearly 3/4 of respondents to adopt a "wait and see" approach to the legislation.

We've been here before, with the Carbon Reduction Commitment Energy Efficiency Scheme (CRC). When the first consultation was launched in 2006 for what was then called the "Energy Performance Commitment", most corporates ignored it.  By 2008, with the first qualification year underway, most companies with whom my team spoke were still in denial. "It will never pass into law," they claimed, "We're in the middle of an economic crisis!"

In March 2009, the full CRC consultation commenced and it became clear that the Labour Government wasn't going to back down.  And still many firms decided to wait and see.  At that point, the claim became, "The Tories are more business-friendly; they will cancel the scheme once they come into power."

Fast forward to October 2012, and as we all know the CRC hasn't been cancelled - at least not yet.  However, it has changed considerably since 2008. The timings have shifted repeatedly, the rules for purchasing allowances were only finalised in 2010, the league table has been amended, and the specifics of the reporting requirements have been updated.

Most notably, the CRC has changed from a type of cap-and-trade scheme into something that looks suspiciously like a carbon tax. While the £12/tonne CO2 payment represents only a small portion of most companies' energy spend, it will bring billions to a cash-strapped Treasury.

What is most interesting and relevant for businesses potentially affected by Mandatory Carbon Reporting, is that it is the outputs remain a work in progress: the inputs have remained remarkably consistent.  If your company is captured in the CRC, you must:

• Define the organisation
• Identify your locations
• Locate supplies
• Identify meters and suppliers, and
• Prepare your evidence pack.

The consistency in the CRC's input requirements matters because the rest of the CRC rules were not finalised and did not come into force until March 2010 - only a month before the first compliance year started!Carbon Clear clients who started preparing for the CRC in 2008 and 2009 were generally well-prepared to meet the legislative requirements in April 2010. Some companies were even able to take reasonable steps in 2008 to ensure they did not quality for the CRC.

Those who took a "wait and see" approach until March 2010 (or later) found CRC compliance to be a significantly more stressful process.

Something similar seems to be happening with Mandatory Carbon Reporting.  The majority of companies so far have taken no steps to prepare, beyond setting up a watching brief.

I believe this is a missed opportunity. If history is any guide, the final Mandatory Carbon Reporting rules will only be released at the last minute. Companies that wait too long before taking action may be setting themselves up for unnecessary hardship.

While some uncertainty remains around the specifics, we already know what goes into Mandatory Carbon Reporting: firms must measure all their Scope 1 and 2 emissions for all Kyoto greenhouse gases. For some large and complex businesses, this will be easier said than done.

As I've stated previously, companies that already report their emissions to the Carbon Disclosure Project or other schemes will have a head start, even though the specific reporting outputs may differ.  Once you are collecting your data in a robust and consistent manner, it is a relatively simply matter to produce a range of different reports.

What is more, we consistently find that firms who measure their carbon emissions begin to look at their operations in a different light and identify valuable efficiency and cost saving measures that strengthen their bottom line. Indeed, a sound carbon monitoring and reporting system sets the stage for a well-designed carbon management programme and transforming your company into a climate change leader.

There are scores of detailed policy lessons we can learn from the CRC.  But the main lesson that we and our customers have learned is that uncertainty is no excuse for inaction. Indeed, early action is good for business.

Mandatory Carbon Reporting: What's the Big Deal?

There are just 26 days left before the 17 October  close of Defra's Mandatory Carbon Reporting consultation.

As I mentioned in a previous blog post, the formal requirements are not particularly detailed. Many of the biggest companies are already reporting their greenhouse gas emissions via the Carbon Disclosure Project and what is more, Mandatory Carbon Reporting, unlike the EU ETS and CRC, does not attempt to put a price on carbon or mandate reductions.

So why would Defra go through all the trouble?

In a phrase, climate change. The British Government made history with its 5-year carbon budgets, which established a path to an 80% emissions reduction target by 2050.

The most powerful tool in the Government's current arsenal is the EU Emissions Trading Scheme. Participating installations are responsible for approximately 48% of the country's emissions, but the low carbon price reduces incentives to invest in longer term reduction measures.  Similarly, the Carbon Reduction Commitment Energy Efficiency Scheme (CRC-EE) targets firms responsible for 10% of the country's emissions but energy represents on average 3% of these company's costs.  For these companies, the £12 carbon price in the CRC is rarely enough to justify massive energy reduction investments.

Note that the EU ETS and CRC schemes combined do not cover 58% of the UK footprint due to double counting. Most of the large companies covered by the CRC purchase energy from ETS compliant utilities. The ETS works to drive supply side reductions while the CRC drives demand side reductions.  The problem is that those reductions aren't coming fast enough.

Mandatory Carbon Reporting gives the Government a third arrow for its quiver. According to the latest CDP report, the subset of FTSE 350 companies that voluntarily report their emissions had a combined Scope 1 and 2 footprint of over 487 million tonnes CO2e for their worldwide operations. This is remarkably close to the UK's national carbon footprint total of 470 million tonnes CO2e.  Broadening this to the 1,000 or more firms covered under Mandatory Carbon Reporting would give a combined footprint considerably larger than the entire country. The emissions covered under Mandatory Carbon Reporting, then, are potentially several times larger than any other carbon reporting measure in the Government's arsenal.

Here's where it gets interesting. Defra's Impact Assessment for the draft Mandatory Carbon Reporting consultation estimates that firms will achieve a 4% emissions reduction simply by improving their footprint reporting.  In other words, they assume that forcing the Board and investors to pay attention to the company's footprint will lead to carbon savings, without requiring carbon caps, taxes, or mandated technology measures.  Of course, not all of those global emission reductions can be counted against the UK's carbon budget, but with so many of the largest emitters covered under Mandatory Carbon Reporting, these "easy" reductions will make a material contribution to Government carbon saving efforts.

In addition, the current reporting proposal is only the first step. In 2015 Defra will review the programme with an eye to broadening it to cover every large company in the UK, public and private.
 And should the need arise for a cap and trade system or carbon tax covering these companies at some point in the future, Defra will already have their emissions data at the ready.

Even though Mandatory Carbon Reporting looks like business as usual at first blush, its wide net makes it a very big deal indeed.

Carbon Clear's Autumn Breakfast Briefings: Telling the Story

There are only two days to go before the launch of Carbon Clear's autumn Breakfast Briefing series. A good deal of thought went into these sessions, and I like to think they come together to tell a compelling story.  Here's how they fit together.

The first session, on 20 September, will cover the UK Government's new Mandatory Carbon Reporting legislation, which I blogged about a few weeks ago.  I'll be joined at that session by my colleague Vincent Reulet and by Mardi McBrien, MD of the Carbon Disclosure Standards Board.

We'll be talking about why the Government is pushing for mandatory carbon reporting, how this new requirement fits in with other carbon reporting efforts like the EU ETS, the Carbon Disclosure Project and the Carbon Reduction Commitment Energy Efficiency Scheme (CRC), and how companies can both comply with this legislation and use it to gain competitive advantage.  Should be an informative and dynamic event.

A few weeks later, on 2 October, we will be talking about what I sometimes refer to as Carbon Offsetting 2.0.  After the first wave of carbon offsetting in the mid- to late-2000s, there was a lull.  Now, a new crop of companies, from Microsoft to Marks & Spencer, are announcing carbon neutrality programmes.  We'll be discussing how this new round of carbon offsetting differs from the first, and how other companies can benefit.

Then, on 17 October we will be unveiling our Carbon Maturity whitepaper.  Our crack team of consultants has pooled decades of accumulated experience working with over a hundred companies to develop a model of corporate carbon maturity.  We've found that companies at each stage of the maturity curve share certain characteristics and encounter similar obstacles before moving on to the next level.  This applies to both their internal carbon management activities and their carbon offsetting initiatives.  Delegates at this briefing will learn how the carbon maturity model works, and how to benchmark their companies' performance against other businesses.

The breakfast briefing series, then, tells a story.  We start with carbon footprinting and show how it can go from being a burden to a source of competitive advantage.  We then move on to carbon offsetting and show how it has evolved to become a source of real business value for the largest companies.  And then we describe how companies around the world are developing increasingly sophisticated carbon management programmes that deliver benefits for management, employees, investors and the wider community.

I think that's a story that every company should hear. Join us, and help tell the story.

Who's Afraid of Low Carbon Prices? Part 3: Not Australia

Last week I attended a briefing at the Australian High Commission in London.  The Victorian Government (the Australian state, not the 19th century ruler) hosted a session for carbon market participants to present the latest updates to the country's ambitious greenhouse gas cap-and-trade scheme.

The Australian carbon pricing initiative begins as a straightforward carbon tax, set at A$23 (€19), indexed to inflation and payable by the largest 500 or so industrial polluters.  European carbon allowances, by contrast, were trading below €8 yesterday. That price difference initially attracted howls of protest from industry lobbyists.

From July 2015, however, Australia switches from a carbon tax to a cap-and-trade scheme linked to the EU-ETS.  That means Australian companies will be able to buy European credits (EUAs), and to an extent UN-issued CERs to comply with up to 50% of their carbon reduction obligations.  Similarly, Europeans will be able to buy Australian Allowances to satisfy EU abatement requirements.

The EU-Australia linkup is not a marriage of equals, however.  The EU is directly responsible for 11% of global greenhouse gas emissions, while Australia emits just 1.5% of the global total - about the same as the United Kingdom.  The additional supply of relatively cheap EU allowances is expected to dwarf the additional demand for allowances generated by Australia's emissions-intensive firms.  If the business-as-usual EUA price remained at €8 in 2015 and all else being equal, we should expect the carbon price for the linked systems to equalise much closer to the EUA price - somewhere around €9.30.

This analysis indicates that linking the two carbon trading schemes might cut the Australian carbon price in half.  In reality, the EU expects the carbon price to rise by 2015, but still much lower than the Australian carbon tax level.  Isn't that bad news for Australia? Surely we need high carbon prices to drive emission reductions?

That might be true if the Australians had magically built a dome over their country and were the only people affected by the carbon emissions.  The reality is that Australia's greenhouse gas emissions contribute to climate change across the planet.  Similarly, the CO2 from a Polish or American power station adds to the global atmospheric buildup contributing to droughts and flooding in Australia.

Global atmospheric circulation means that an emission reduction anywhere helps the climate everywhere and vice versa.  If we need to save 1 million or 1 billion tonnes of CO2, it doesn't matter too much where that savings happens.  What is important for climate change is that this savings happens sooner rather than later.

As I discussed in an earlier blog post, the emissions trading scheme is a price discovery mechanism that helps us identify the most cost effective emissions reduction opportunities across the entire scheme.  So a relatively low carbon price for a combined Australia-EU trading systems means there are significant opportunities to reduce green house gas emissions with minimal economic impact.  It means the Australian Government can make its contribution to curbing global climate change even cheaper and faster than before. The market can work, and that's a good news story.

It also means that there are still major carbon reduction opportunities that we (including Australia) are not pursuing.  And that's bad news.  One analysis says that global greenhouse gas emissions need to peak by 2015 and then decline year on year if we are to limit average global temperature increases to a damaging but not wholly catastrophic 2 degrees.  A low carbon price means we continue to fight this battle with one arm tied behind our collective back.  It means governments are still failing to set sufficiently ambitious targets to set us on a path towards a low-carbon future.

What Defra's Greenhouse Gas Reporting Consultation Won't Tell You

In late July I tweeted the news that the UK Department for Food, Environment and Rural Affairs (DEFRA) has released the final consultation on its proposed mandatory carbon reporting legislation.

If you went to Defra's website and download the consultation documents following that announcement, you might have felt somewhat confused and more than a little disappointed.  It all feels rather vague.

The draft consultation document from late last year, and Defra's ensuing feedback document released this spring each ran to dozens of pages focusing on the technical minutiae of setting organisational footprint boundaries based on operational versus financial control, whether or not to include Scope 3 emissions in the footprint, and the pros and cons of reporting all six Kyoto categories of greenhouse gases.  In the end, Defra expressed strong views on how these and other points should be addressed, and went to some length to justify those decisions.

The final consultation document totals just six pages and lacks specificity on most of these important points.  Required reporting standard? Not specified. Financial versus operational control? Not clearly specified. Penalties for non-compliance? Silence. What is more, the final consultation document appears to change the inclusion criteria that determine which companies are covered under the proposed legislation, narrowing them in one regard and substantially broadening them in others. You can find Defra's greenhouse gas reporting consultation page here - as I said, it's a relatively quick read.

When Nick Clegg announced the introduction of mandatory carbon reporting at the Rio+20 summit, it was touted as proof that the UK was leading the world in its response to climate change.  So why the sudden absence of detail?  I have three theories.

The first is political. The initial consultation documents clearly were written by technical specialists, who were focused on getting things right.  The final legislation needs to be read into the House of Commons and debated by politicians.  The more detail is included, the more likely the legislation will get delayed due to time pressure or tripped up by a Member of Parliament who objects to one or more provisions.  Seen from this perspective, short and sweet is the way to go.  Perhaps Defra will choose to issue clarifications containing the detail once the legislation is passed.

The second potential reason for this approach is to maximise the number of companies who report.  I call this the "boiled frog" approach.  By refusing to define rigidly what companies must report and how they must report it, Defra might be making it easier to comply.  Given the choice between companies submitting poor quality or incomparable data versus no data at all, my preference would be to get poor quality data. After all, we know the footprint isn't zero, and this flawed initial number gives us something with which to start.  Defra can then issue additional guidance as time goes on to improve the quality of data that companies submit and ensure that it becomes easier to make  comparisons between companies or industry sectors.  The responding companies, meanwhile, can gradually begin to implement better data collection and quality assurance systems - perhaps with less internal resistance than if they tried to jump from no carbon reporting to industry best practice all at once.

And the third potential reason Defra may have chosen to keep it simple, is that many of the largest companies already report their carbon footprints in a reasonably consistent way via the Carbon Disclosure Project.  CDP respondents report their greenhouse gas emissions using ISO 14064 or the GHG Protocol and answer the same standard questions about their carbon footprints.  Carbon Clear is a CDP accredited Consultancy Partner, and while respondents' footprints are not directly comparable, they do tend to take a similar approach.  I expect UK listed firms that already report their emissions to comprise the bulk of the total footprint covered under the Government's mandatory carbon reporting scheme.  As a result, Defra may have decided they did not need to reinvent the wheel.

The real reason is likely to include some of each of these, and perhaps some others that never see the light of day.  Whatever the reason, the result in the short term is confusion for firms that don't yet know whether they will be included, nor what they need to report.  Based on our previous conversations with Defra and the CDP, our team at Carbon Clear is able to tease some extra detail out of the current legislative draft, and will aim to give our clients a head start in preparing for the advent of mandatory carbon reporting in the UK.

Science: It Works on Mars and on Earth

On Sunday the NASA Mars Science Laboratory rover, nicknamed Curiosity, landed on the Red Planet and began beaming pictures home.  This isn't a space exploration blog, but I'll explain the relevance in a moment.

As you might imagine, landing a 900-kilogram, six-wheeled, plutonium powered robot car on another planet is not easy. In fact, this was the most difficult and complex Mars landing attempt to date. Let's run through the main challenges:

1. Build a plutonium-powered robot vehicle than can operate semi-autonomously for an entire year, tolerate sub-freezing temperatures, radiation, dust storms and the vacuum of space.

2. Fit that vehicle into the nose cone of a 58-meter rocket, fill that rocket with an explosive mix of kerosene and liquid oxygen, aim it at the point in space where you expect Mars to be in eight months' time and fire it off.

3. Eight months later, drop the space capsule into the Martian atmosphere at 20,000 kilometers per hour.  If it enters at too steep an angle it will burn up; too shallow and it will skip away and be lost in space.  It's now 154 million miles away - too far for mission controllers to steer it in real time, so you will have to have made the capsule smart enough to make its own high-speed course adjustments.

4. Once the capsule has slowed from to only a thousand miles and hour, jettison the heat shield and pop open a parachute. This will slow it even more.  Again, the capsule is too far away for humans to control directly, so this has to happen automatically.

5. Once the capsule is 1.1 miles off the ground, fire the eight retro-rockets on the descent vehicle. These will steer the lander and bring the whole SUV-sized assembly to a hover over the surface of Mars. Yes, this has to happen autonomously, too.

6. Once the assembly is hovering on its retro-rockets, lower the robot car gently to the surface on a 7.5 meter nylon cable.  When the car has touched down, cut the cord and fly the rocket assembly off to crash a safe distance away.

7. If the vehicle is okay, it will begin sending photographs to Earth.  The signals will go from the rover to a space observatory that has been orbiting Mars for the past six years.  That orbiter will then bounce the signal off another orbiter that has been circling Mars for ten years in order to reach Earth! The mission controllers on Earth will find out fourteen minutes later whether it all worked.

And amazingly, it all worked!  The Curiosity rover is sitting safely on the surface of Mars and Scientists and engineers are celebrating a trove of exciting photos and video footage.

The successful Curiosity landing was a triumph of science and engineering.  We can use these tools to make accurate predictions about a long chain of complex events. And we can use our knowledge and ability to achieve complex and ambitious goals.

Here on Earth, few goals are as complex and ambitious as tackling climate change.  But the science is unambiguous.  We know what is causing climate change and we know that greenhouse gas emissions need to drop.  We even know what emission sources to address and already have the tools to do it.  Reducing greenhouse gas emissions to safe levels doesn't require any new technological advances or scientific inventions.  Existing clean energy, energy efficiency, resource efficiency and forest management systems can do it.  Renewable energy use is soaring across the world, major carmakers are bringing high-efficiency hybrid cars to market, and ever-larger forest protection projects are being launched in Asia, Africa and Latin America.  We know what to do and how to do it, but we're not yet doing it fast enough.

It is clear that governments can't get us there on their own. Politicians' incentive structures make it difficult to make major changes to the built environment and to our energy, transportation and agricultural systems. Governments have an important role to play in promoting transparency, overcoming market distortions, and ensuring a level playing field, but when government is slow to act individuals, communities, civil society and businesses should not hesitate to get involved.

Around the world, companies are switching to renewable energy and improving efficiency, restructuring supply chains to reduce their carbon footprint and save money, and investing in innovative emission reduction projects that help people in the developing world make the transition to a low-carbon future.

Compared to landing a one-tonne rover on Mars, the scientific challenges preventing us from tackling climate change look almost easy.  And the Curiosity rover is there, showing us what we can accomplish when we have the determination.

Carbon Clear Job Posting: Interim Communications Manager

We're recruiting!  Do you know a talented Communications Manager who's passionate about helping companies tackle climate change?

Due to an anticipated staff vacancy we are looking for an experienced Communications Manager to help us share our experience and successes with our customers.  The Interim Communications Manager has day to day responsibility for presenting Carbon Clear to the world via the internet, printed materials, and at relevant industry events.

Learn more on our Careers Page: http://carbon-clear.com/uk/about_us/careers.

(Update one year later: Thanks to those who responded. The role has been filled now and we're delighted to have a permanent Communications Manager on the team.)

Going Mainstream

This is interesting:

At Carbon Clear, we've been saying this for years, but nice to see this mantra make the cover of CFO Magazine.  (Hat tip: @greenmondaynews)

U.S. Heatwaves: "Weather" versus "Climate"

It's summer, and that means it's time for another round of record-breaking heatwaves in the United States.

The heatwave of the past week has triggered forest fires across the western states. Washington, DC staggered under 104-degree (F) temperatures - the air conditioner load helped prolong a five-day blackout across the eastern states. Back in the 1990s aid agencies used photos of the earth at night to flag underdeveloped countries where people had to live without electricity.  I never thought I'd see those types of images for the suburbs of Baltimore and Washington DC:

Washington-Baltimore on June 28, 2012

A less brightly-lit Washington-Baltimore on June 30, 2012

This is not the first time large parts of the U.S. have faced a massive heat wave.  In fact, they are becoming so common that it might be safe to consider record-breaking temperatures the "new normal".  Which brings us once more to the topic of climate change.

We might define "weather" as the meteorological conditions when you look out the window.  Is it raining? Is it hot?  Weather varies day by day, and it's difficult to predict more than a week in advance.  "Climate" refers to the typical conditions we might expect at a given time of year.  San Francisco is normally foggy on summer afternoons, Montana is typically frigid in winter.  A freak storm or unexpected heat wave is bad weather.  Searing temperatures every summer, year in and year out - that sounds more like climate. If that's not the climate we used to have, then it would be fair to say that the climate is changing.

Climate scientists are generally careful not to attribute any particular weather event to climate change.  Their models of overall change are predictions of longer-term trends.  But the weather we're seeing is beginning to match those predictions.  How long before "longer term" becomes "now"?

Posting Resumes: Mandatory Carbon Reporting and More

It's been a busy few weeks and I have built up a backlog of stories about which to blog. I'll try to make up for it with a series of short posts about some of the more interesting stories of the past month, including air conditioners in the developing world, mandatory carbon reporting in the UK, ocean acidification, the Vauxhall Ampera, and yet another series of heat waves in the US.  Stay tuned!

Tweeting Against Fossil Fuel Subsidies is Fine, but...

There is a 24-hour "Twitterstorm" currently running to mark the Rio+20 environmental conference in Brazil.  The #EndFossilFuelSubsidies tweet-a-thon is being organised by environmental group 350.org, to help push the issue onto the agenda of world leaders attending the conference.

The logic behind the campaign is obvious: fossil fuel combustion is the single largest source of man-made greenhouse gas emissions.  We burn excessive fossil fuels in part because we fail to factor their environmental impact into the price.  Carbon taxes and cap-and-trade schemes are intended to help send more accurate (higher) price signals and thereby reduce demand.  However, not only are we failing to implement aggressive carbon pricing schemes, nations around the world actually offer  billions of dollars of subsidies that lower the price of fossil fuel production and consumption. Other subsidies are non-financial: relaxing environmental restrictions in protected areas reduces compliance costs for fossil fuel producers, making it easier to increase supply at a given price.

 What would compel otherwise rational decision makers to support such an illogical policy?  In a nutshell, it's a lack of joined up thinking.  Why subsidise fossil fuel production?  To shift the supply curve out to the right - increasing supply, reducing price, or both, as seen below:

Why do we need to increase supply?  Because we are consuming increasing quantities of fossil fuels.  Why are we consuming so much? Because we are not using renewables.  Because our buildings are inefficient, and we travel long distances in inefficient vehicles, and we manufacture large quantities of products in inefficient factories.

Why subsidise fossil fuel consumption? Because otherwise influential voters would revolt, poorer members of society would face fuel poverty, and manufacturers would threaten to take jobs elsewhere. Why are voters, households and employers sensitive to the price of fuel? Because their homes, vehicles and buildings use energy inefficiently and because they do not generate much, if any, of their own local power.

In other words, when confronted with the challenge of people using energy wastefully and failing to use locally available renewables, national leaders have responded with subsidies that boost production and lower the price of fossil fuels!  You can see how policy makers might find this response rational on a case-by-case basis, but from a broader systems perspective the case for these subsidies becomes ludicrous.  This "solution" becomes even more appalling when one considers the environmental cost.

A "big-picture" systems view can tackle these challenges simultaneously from an economy-wide and a local level.  If it is too expensive to drive vehicles long distances when people must face the full cost of fuel, then we can find ways to reduce vehicle miles per person or per tonne of goods: putting homes or factories closer to offices, increasing fuel efficiency, and using mass transit to reduce the number of cars people need to own.  If fuel costs are making homes unaffordable and businesses uncompetitive, then we can find ways to get the same benefits with less fuel: switch to renewables, where the "fuel" (sunlight, wind, etc) is free; or improve building and appliance efficiency so less energy is wasted.

#EndFossilFuelSubsidies is a clever campaign, but we need more systems-level thinking if it is to become more than a slogan that disappears after 24 hours.

Small but Mighty: The 2012 State of the Voluntary Carbon Market Report

The State of the Voluntary Carbon Markets 2012 report was launched yesterday at Carbon Expo in Cologne, Germany. The Ecosystem Marketplace team has done a tremendous job, reaching across the industry to collect masses of data on carbon project transactions by project type, standard, geography, and a host of other criteria, and then slicing and dicing this data to tell a coherent story about supply, demand, and buyer behavior.

Analysts, investors, and project developers rely on the State of report to help them make informed decisions and grow the market.  This is an extremely valuable service, and somewhat surprisingly, Ecosystem Marketplace provides  all this information free of charge via their website.  It's a public service, and a valuable one.  Carbon Clear is a proud sponsor of the report. Just one more way we contribute to the low-carbon economy.

A key finding from this year's report is that the voluntary carbon market has continued to grow strongly, even in the midst of an international economic and financial crisis.  In fact, 2011 was the best year ever in terms of over-the-counter transactions. Excluding one very unusual 2010 transaction on the now-defunct CCX system, carbon credit sales volumes rose 28% in 2011, and the average price per tonne rose, too.

In many ways, the launch of the 2012 report marked the coming of age of the voluntary carbon market.  The organisers of Carbon Expo operate mainly in the compliance market, focusing on carbon credits from the Clean Development Mechanism and EU Emission Trading Scheme (EU ETS).  With thousands of industrial emitters covered under the EU Emission Trading Scheme (ETS) and scores of brokers and investment banks transferring credits back and forth, the compliance market is well over a hundred times larger than the voluntary one.  To an outsider, a Carbon Expo session focused on the voluntary market would seem a side show, unlikely to be of interest to the majority of delegates. In the event, Ecosystem Marketplace was allocated a small room away from the main hall in which to launch their report on the voluntary market. They didn't even  have a microphone.

And then something quite unexpected happened.  The main hall of Carbon Expo sat half-empty, while delegates flocked to Meeting Room 2 to listen to Molly Peters-Stanley and the rest of the panel. They filled every seat, sat on the floor, stood against the walls and spilled out into the corridor beyond to hear the latest news on the voluntary market. There were nearly as many people standing outside as managed to make their way in.  In the photo below you can just make out the throngs in the hallway craning their necks to see into the room.

Why such a big crowd to hear about a relatively small market?

The voluntary market has an importance and influence that belies its size.  First, it has been a source of experimentation and innovation that has shown time and again how carbon finance can deliver clear livelihoods benefits to families and communities in developing countries.  Voluntary carbon projects are often more effective at channeling resources into pro-poor initiatives like improved cook stoves and safe drinking water.  Many methodological innovations, like sampling-based monitoring and "suppressed demand" started in the voluntary carbon credit standards and have subsequently found their way into the much larger UN-backed Clean Development Mechanism.  So the voluntary market can help compliance market players get a taste of what's coming next.

Second, and importantly, the voluntary market continues to experience fundamental growth even in difficult economic times.  It has provided one of the only consistent sources of good news fight against climate change.  As I discussed in an earlier blog post, the factors that affect buying decisions in the voluntary carbon market are quite different from those that drive most compliance credit purchasers.  In the past it may have been easy for some observers to assume that voluntary market credits were "second best" - an unconsidered approach would be to assume verified emission reductions (VERs) were inferior because they sat outside the U.N. regulated system, and therefore that customers bought them only because they were less expensive than compliance credits.

That view would have been wrong.  The reality is that VERs are not inferior, just different.  Depending on your criteria, they may often be superior.  And these different characteristics result in different market outcomes.  Over the past year, many types of voluntary credits have held their value while CDM credit prices (CERs) are in free-fall.  The growth paths of these two markets are diverging as well.  While the total value of CDM transactions grew as a result of investor hedging and arbitrage strategies, both the volume and average price of over-the-counter VERs rose as a result of continued strong demand, leading to a 29% rise in market value, according to Ecosystem Marketplace.  The decoupling of compliance and voluntary credit market behavior demonstrates that the voluntary market increasingly is able to stand on its own.  Delegates at Carbon Expo sensed this, even before the results of the State of the Market survey were released.

The State of the Voluntary Carbon Markets 2012 report is packed with enough tables and graphs to satisfy any data junkie. Go read it yourself.  After all, it's free.

But if you want only one take-away from the reams of data in the report, it is this: the voluntary market has stepped out of the shadow of the compliance market, and more and more companies recognise the benefits of using voluntary offset credits as part of their carbon reduction initiatives.

The Carbon Clear team is already busy digesting the detailed data from the report.  We'd be delighted to share our analysis, and look forward to hearing from you.

Carbon Expo, the Facilities Show and Sustainability Live!

 Event season is well and truly upon us.  In mid-May the Carbon Clear team hits the road to appear at environmental and business conferences and exhibitions across Europe.  Three major events in three weeks and today is the halfway point.

Last week Shefali Modi, the head of our carbon reduction team, gave a talk at the Facilities Show at NEC Birmingham.  The Facilities Show is the biggest facilities management exhibition in the UK.  For a group of professionals who focus everyday on how businesses respond to climate change, this was a can't-miss opportunity.  Addressing the built environment may be our single greatest lever in our efforts to tackle climate change.  From concrete (carbon emissions from cement kilns) and timber (deforestation), to energy and refrigerant use, to the provision of parking and bike storage areas, the decisions we make about buildings and facilities will drive much of our response to climate change.

Shefali spoke about "Carbon Management in Practice" to a packed house as part of the show's 'Sustainable FM Academy'.  Later she participated in a panel debate called "The Great Energy Discussion".  It's always great to reach out to such an important sector, and we look forward to continuing the many conversations that begun during the event.

This week, a team of our best and brightest are exhibiting at Sustainability Live! (the exclamation point is part of the name, but we'd be excited anyway).  Sustainability Live! is the UK's leading water, energy, environmental, land and sustainable business exhibition and we started going years ago.  For us, this is a great opportunity to meet old and new business contacts, learn about the latest developments from other service and product providers in the industry, and of course get everyone excited about the benefits we provide to companies looking to transform their relationship to carbon.

If you're at Sustainability Live! this week you can find us on stand S15.

Next week, from 30th May - 1st June, I'll be in Koln (aka Cologne), Germany with some of my colleagues to attend Carbon Expo 2012.  Carbon Expo is the big daddy of business-focused climate change conferences.  This year it is taking place just down the road (figuratively speaking) and one week after the policy-focused (and controversy-filled) United Nations Bonn Climate Change Conference. The policy decisions resulting from the Bonn Conference will ultimately affect companies that participate in the EU ETS, the evolution of compliance markets in other countries, and the voluntary carbon market.  As a result, I expect some lively discussions at Koln in the wake of that event!

Carbon Clear is a major sponsor of the 2012 State of the Voluntary Carbon Market report, published annually by Ecosystem Marketplace. "The State of" report is the most widely read voluntary carbon market publication and the 2012 edition will be launched at Carbon Expo on May 31.  We'll be there for the side event marking the launch, and will have copies of this important report available on our stand immediately after the launch.

You can find us at Carbon Expo on stand B057.

If you're attending any of these events, be sure to come over and visit us.  If not, you can always contact our team via the Carbon Clear website.

Raising the Speed Limit - Not the Solution the UK Needs

The UK Government is set to announce a consultation about increasing the highway speed limit to 80 miles per hour.  The idea, first floated last September, is meant to contribute to economic growth by reducing losses associated with time spent behind the wheel.  The main justification given by Government ministers for this proposal is that vehicles are much safer than they used to be, more than offsetting any increased safety risk

This is a very curious argument from a government representative, but it's largely beside the point. Speed limits didn't drop in the U.S. and UK because of safety concerns.  They dropped so that those economies could save fuel, and so that motorists could save money.  While road safety advocates can argue the case for and against a higher motorway speed limit, we'll focus on the carbon impact.

As the graph above indicates, higher speeds generally translate into greater fuel consumption, and thus greater greenhouse gas emissions.  This result should be obvious to anyone who has stuck his or her hand out of the window of a moving car.  40% of a car's fuel is used at highway speeds simply to push air out of the way, and the amount of power required to overcome wind resistance increases along the cube of the velocity.  In other words, driving 14% faster (from 70mph to 80mph) will result in much more than a 14% increase in fuel consumption - the actual figure is closer to 20%.  This is bad news for companies and individuals looking to reduce their carbon footprints.

Airlines around the world have already put the Government's claims to the test.  They have tested their customer base and determined that, within limits, fuel savings trump faster arrival times.  Indeed, commercial airliners have been flying 10 mph slower since 2008 in an effort to save fuel.  In the U.S., JetBlue has added two minutes to each flight, saving over $13 million a year on jet fuel.

Even this superficial analysis shows that cutting carbon and saving money go hand-in-hand.  Money saved on fuel can go into hiring staff, purchasing goods and services, and making productive investments.  Increasing the speed limit seems like a very curious way to help the economy.