Business

Briefing: carbon trading

Are carbon-offsetting and carbon-trading projects practical tools for tackling global warming, or do they just make people feel better? In the first of four articles on dealing with greenhouse-gas emissions, Maryann Bird provides an overview.

Without carbon, we wouldn’t be here. Nor would any plants, animals or other earthly organisms. Roughly 18% of the weight of our human bodies is carbon. The element is essential to life as we know it. And, it is the basis of organic chemistry — the study of the carbon compounds that, in their natural and synthetic forms, outnumber those of all other chemical elements combined.

Today, carbon is at the centre of the next chapter of the story of life on earth. It is an unfolding tale, as the planet’s inhabitants confront the huge challenge presented by climate change.

One carbon atom, when combined with two atoms of oxygen, produces carbon dioxide (CO2), which is most often encountered as a colourless greenhouse gas. Carbon dioxide – the most plentiful greenhouse gas — isn’t totally a bad thing. CO2 is part of the earth’s carbon cycle and part of the human metabolic process. We exhale it, while plants, bacteria and algae absorb it as part of the complex and critical biochemical process of photosynthesis. However, according to the consensus of scientific opinion, excess amounts of CO2 produced by human activities are being trapped in the earth’s atmosphere, heating up the planet’s air and oceans.

“An increasing body of observations,” said the Intergovernmental Panel on Climate Change (IPCC) in 2001, “gives a collective picture of a warming world and other changes in the climate system … There is new and stronger evidence that most of the warming observed over the last 50 years is attributable to human activities.” In the intervening six years, the evidence has strengthened, while the pace of climate change has accelerated and its political profile has risen. (The IPCC is currently finalising a “rigorous” report, Climate Change 2007, providing a “comprehensive and up-to-date assessment of the current state of knowledge on climate change”. Due to be approved at a meeting in Valencia, Spain, in mid-November, the “synthesis report” of the IPCC’s Fourth Assessment Report will integrate the core findings of three working-group reports issued earlier this year.)

As the planet heats up, various methods of limiting or diminishing the amount of carbon dioxide (the most plentiful of the greenhouse gases) in the atmosphere have been suggested. Current debate on the subject mostly involves economic or political matters at a policy level. But what should we do about our own every-day contributions to the greenhouse-gas levels – levels boosted by home heating and cooling; electricity use; travel by car, train, ship and – particularly — plane; and myriad other routine consumptions? What about manufacturing, energy production, agriculture, mining, logging and other industries? Even water vapour and flatulent, belching cows play a part in greenhouse-gas creation.

Innovative experiments are under way, such as “seeding” the oceans with iron particles in the hope of stimulating blooms of tiny phytoplankton, which pull CO2 down from the atmosphere, helping to lower temperatures. Some scientists postulate that CO2 removed from the atmosphere in this way could be sequestered for centuries when organic matter created by photosynthesis sinks to the seabed. A California-based eco-restoration organisation called Planktos recently began a two-year test of the theory in the Pacific Ocean.

Right now, however, two of the most common methods for addressing the issue of global warming are carbon offsetting and carbon trading. Offsetting is presented as a way of balancing (or mitigating) emissions with an equivalent “saving” of CO2 elsewhere – and, wishing to become “carbon neutral”, many individuals, groups, businesses and governments are getting into the act. The United Kingdom, for example, plans to have a voluntary “code of best practice” for the offsetting industry in place by the end of 2007.)

Carbon trading, on the other hand, is a system in which countries or companies within certain industrial sectors are set emissions targets. Those that exceed their targets need to buy “allowances” – carbon-emissions (or CO2 equivalent) rights that are measured in tonnes – from others with allowances to sell. Conversely, those not reaching their permitted emissions level are free to sell their “surplus” to others. Another option for some carbon-emitting companies is to invest in projects abroad that – in theory, at least – are designed to “reduce” anticipated CO2 emissions levels. The Kyoto protocol, a 1997 amendment to the United Nations Framework Convention on Climate Change (UNFCCC), includes these mechanisms. The agreement runs until 2012, and what happens after that has not yet been agreed.

Offsetting and trading schemes, while widely touted, have come in for criticism: for allegedly passing the problem on, rather than alleviating it; for merely salving consciences; for privatising the public or societal cost of carbon pollution; for, in the case of some projects, dispossessing ordinary people of their land and water.

Carbon Footprint, a commercial British company, is one of many offering a flight-emissions calculator to encourage air travellers to think about – and do something about — the impact of their journeys. It suggests, for example, that an individual flying one way between London and Shanghai – a total distance of 9,200 kilometres — will be responsible for 1.059 tonnes of CO2.

Offsetting that flight, according to Carbon Footprint’s website calculations, can take the form of a roughly US$16 payment toward tree-planting in Kenya’s Rift Valley or $18 to support global clean- and renewable-energy projects through the company’s Clean Energy Fund. The projects, says Carbon Footprint, are independently verified against its Voluntary Carbon Standard (VCS), which aims to set a “credible” global standard. Its criteria, the company says, mean that its project-based voluntary emission reductions are “real, quantifiable, additional and permanent.”

While that may be so – Carbon Footprint’s calculator uses metrics supplied by the British government – some critics of flight offsetting see such schemes as discouraging people from changing their behaviour. Frequent flyers, they say, may feel entitled to keep taking to the skies, so long as they pay a relatively small amount of money to a carbon-offset project. Other critics challenge the value of some of the projects that are funded, particularly those involving tree planting. Trees are ineffective in soaking up the volume of carbon emissions created by burning fossil fuels, many scientists argue, and absorption rates are uncertain. Others say there are no guarantees that new trees won’t be cut down or burnt shortly after they are planted, thereby producing more greenhouse gases.

The British writer and activist George Monbiot has been particularly critical of carbon-offset schemes, suggesting that they are “one of our favourite means” of tackling global warming: “paying other people to clear up the mess we’ve made”. Writes Monbiot: “[P]erhaps the most destructive effect of the carbon-offset trade is that it allows us to believe we can carry on polluting. The government can keep building roads and airports and we can keep flying to Thailand for our holidays, as long as we purchase absolution by giving a few quid [British pounds] to a tree-planting company. How do you quantify complacency? How do you know that the behaviour the trade induces does not cancel out the carbon it sequesters? In other words, I think it is fair to say that a scam is being perpetuated … We know that climate change will impoverish many people. We now know that it will make others very rich – but their money-making schemes will have precious little to do with saving the planet.”

Monbiot considers the trade in carbon offsets to be an excuse for business as usual, and has compared it to the sale of indulgences by the 16th century Catholic Church. Others have referred to “gift certificates for your conscience” in a “largely unregulated” market.

A Roman Catholic indulgence from 1521

A Roman Catholic indulgence from 1521

However, carbon-offset providers and many environmental NGOs point out that voluntarily doing something about individual carbon emissions is better than doing nothing, and the existence of the projects will at least make more people think about their lifestyle choices. And, under the leadership of the environmental organisation WWF and others, a “gold standard” was developed to help allay concerns that some emission-reduction projects were not making a positive contribution to reducing carbon levels.

Britain’s CarbonNeutral Company has been in the forefront of voluntary action for over a decade. The company argues that the “rapid rise” in voluntary action has been stimulated by a “huge discrepancy” between the reduction in global emissions likely to be delivered through mandatory regulation and climate scientists’ estimate of what is actually required to protect the planet.

Despite the urgency of the situation, according to CarbonNeutral, “less than a third of global greenhouse-gas emissions are managed within regulated regimes. Even if mandated target reductions are achieved, they will led to a reduction of less than 3% of global emissions against a 1990 baseline by 2012. In the meantime, countries out of the regulated systems are increasing their emissions substantially. So, the world has yet to implement an effective means of reducing emissions in absolute terms.”

Climate Care, considered the world’s leading carbon-offsetting organisation, reports that it has delivered one million tonnes of CO2 reductions over the past decade – the equivalent of “taking 300,000 cars off the road for a year”. Mike Mason, the founder of the British organisation, said in an August 2007 statement: “If we are in a hurry to tackle climate change, and we need to make real reductions quickly, voluntary offsets need to be recognised as a core part of everyone’s reductions strategy.” Mason also hit out at the criticism of “this important tool in fighting climate change”, saying it “runs the risk of undermining consumer confidence in the market and curbing the rapid growth of this hugely important market”.

Indeed, the day may come — in the not-too-distant future — when individuals are allocated personal carbon-emissions allowances within a national carbon budget. Like the large CO2 emitters operating under the European Union’s Emission Trading Scheme (ETS) – the world’s largest multi-national emissions-trading project – individuals would have the right to buy and sell emissions permits. Those with low-carbon lifestyles could sell their unused credits, while individuals with bigger carbon footprints could purchase additional permits.

What was once considered “blue-sky thinking” – unrealistic and impractical — in this regard is now being taken seriously in several quarters. Britain’s Department for Environment, Food and Rural Affairs (Defra) commissioned a personal-carbon-trading study by the Centre for Sustainable Energy (CSE) in Bristol, England. The CSE’s report in late 2006 concluded that a personal carbon allowance and trading system has – in Defra’s words – “the potential to achieve emissions savings in a fairer way than carbon taxes. The government is now developing a work programme which should provide the information to lead to a decision on whether or not a personal carbon allowance is a realistic and workable policy option.”

Britain’s Royal Society for the Encouragement of Arts, Manufactures & Commerce (RSA) also is exploring, through its Carbon Limited project, how a personal trading scheme might work and what its social and economic impacts might be. Taking the emissions issue into their own hands, a network of about 20 Carbon Rationing Action Groups (CRAGs) has sprung up around Britain, and there are a few in the United States as well. While each group makes its own rules, their goal is identical: to reduce the carbon footprints of themselves and their communities.

As climate scientists and environmental campaigners have pointed out, however, offsetting already-created emissions should come second to creating fewer emissions in the first place. Convincing ordinary people to voluntarily simplify their lifestyles, and businesses to genuinely put planet above profit, is the massive challenge facing us all.

 

Maryann Bird is associate editor of chinadialogue

Homepage photo by Damien via Flickr

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