What is a carbon credit or offset?
The Collins English Dictionary defines a carbon offset as “a compensatory measure made by an individual or company for carbon emissions, usually through sponsoring activities or projects which increase carbon dioxide absorption, such as tree planting.”
Carbon offsetting is a wide-ranging and at times controversial subject. Wide ranging because there are many ways that a carbon credit can be delivered to the market. Schemes are as varied as renewable energy investment schemes or methane collection projects through to schemes that destroy industrial pollutants such as CFCs.
Most schemes are very scientific in nature and the inability of the man in the street to comprehend the processes that bring about the reduction or absorption of the CO2. This can often lead to disinterest in the subject or at worst, skepticism around the value and validity of schemes that claim to make a difference to climate change.
Why controversial? Some commentators and NGOs see offsetting as cheating. Friends of the Earth issued a report in June 2009 stating that offsetting was a dangerous distraction, in the context of the global climate change initiative.
This is due to offsetting potentially creating a false impression that as long as individuals, firms and indeed governments could offset emission, then it allowed the user of the offsets to behave as though there was no real need to make a difference in their behavior and keep on emitting as before.
So what is the reality about offsetting? You could fill a library with books on the subject but as previously mentioned, the man in the street wants a simple and sensible answer to the question, are offsets of any real value and what can a carbon offset do for me on an individual level?
I suggest we ask a few very simple questions:
1. Do I believe climate change is a man made condition stemming from our CO2 emissions?
2. If so what can I do about it?
3. If I don’t really believe man is at fault, are there wider environmental issues e.g. pollution, habitat preservation and waste, that are important to me?
4. As a responsible individual, what are the wider environmental considerations I should make personally if I do care?
These are questions I have asked others and myself many times in the last few years. I’m certain that most of people try to learn and understand more on environmental matters and do what they can when they can but the amount of misinformation and confusion around environmental issues can be overwhelming.
So there is always the chance we put the issues to the back of our minds and therefore our behaviors. When we look for leadership in government the issues can frankly become even more confusing and at times frustrating.
There are many contradictions in the governments approach to climate change and the environment that also cause a great deal of skepticism and in some people anger!
Use of the blunt instrument of tax for example. We all know that aviation is a big contributor to CO2, so government taxes airfares in an effort to slow down passenger numbers and therefore emissions.
But does this tax-based approach really stand up to scrutiny? If the strategy is successful less people will fly, so more planes will fly with empty seats. If this continues then flights will be cancelled and this may lead to job loses in the aviation sector and all of the associated industries. A good thing? It’s hard to see how it can be. In November the air passenger duty (APD) is set to rise, but still the aviation industry pays no fuel duty or VAT!
Another big question is where does the tax revenue raised go? Financial support for research & development into more efficient engines? No. In 2007 when the then chancellor Alistair Darling announced the plan to introduce a new per plane tax, the announcement said it would “send better environmental signals and ensure aviation makes a greater contribution to covering its environmental costs”.
So a cynic may say, people will fly and if they do the government can tax them and keep on taxing them. A “shooting fish in a barrel” tax, meaning we know people are going to behave this way so let’s take advantage of the easy targets, with the revenue going toward general revenue raising.
Our overseas aid policies in the UK can also appear to be a contradiction. As we give money in aid to countries such as China, (£38m in 2007 the year before China held the Olympics costing £20bn) and India (£825m 2008-2011), while they continue to increase emissions. China has doubled its CO2 emissions since 2000. India has now surpassed Russia as the fifth largest CO2 emitter growing by 6% in 2009 to 1.7bn tonnes.
CO2 outputs continue to look set to rise as the world economies and the emerging economic forces struggle to come to terms with how to generate the power it need to grow, and governments stumble over and over again on initiatives such Kyoto and Copenhagen.
While all of this confusion and argument goes on around emissions, one the planets greatest natural resource to absorb and store CO2, rain forest, is being destroyed at a rate equal to the size of the UK annually, and this deforestation is taking place in nations that are considered poor and underdeveloped, and are trying to grow economically and be as prosperous as the US and Europe.
And what has the UK government done to support or challenge parts of the world where deforestation seems to be the only answer to their economic growth? Well in 2009 the UK government issued a report which had as one of the conclusions, “the UK government must lobby for an agreement in Copenhagen that includes a mechanism to support capacity building and effective governance in rainforest nations. The Copenhagen agreement must reduce the economic drivers of deforestation”.
Was this agreed in Copenhagen? No.
Carbon offsetting is a global private sector solution depending on the nature and availability of the credits. An example is the type of credit available known as a REDD credit. Reducing Emissions from Deforestation and Forest Degradation. REDD uses market/financial incentives to reduce CO2 emissions from deforestation and forest derogation. Its original objective is to reduce green house gases but it can deliver “co-benefits” such as biodiversity conservation and poverty alleviation.
REDD credits are funded from developed countries to reduce deforestation in developing countries. In recent years, estimates for deforestation and forest degradation were shown to account for 20-25% of greenhouse gas emissions, potentially higher than the global transportation sector.
So in short, supporting credits from a certified REDD project helps combat CO2 by maintaining the capacity of carbon storage within the trees themselves as well as not releasing previously stored carbon back into the atmosphere as a result of the slash and burn techniques used in forest clearance. But equally important, it protects a natural asset that is a unique bio diverse environment that has taken tens of thousands of years in development and cant be replaced once destroyed.
Sceptre Group Limited is a specialist investment firm focused in low carbon financial investments such as sustainable biofuel plantations, agricultural farmland and green technologies.
To learn more contact Sceptre Group via our website: www.sceptreinternational.com