Archive for the Offsetting Category

Suspect carbon offsetting

Posted in Offsetting with tags , on May 13, 2009 by Dan

I recently received a press release from a company called My Emissions Exchange. I get lots of press releases – mostly about ethical shampoo and that sort of thing – but this one caught my eye.

‘MyEEX’ (no relation to German energy exchange EEX I assume) sells carbon offsets. The ‘projects’ behind the carbon offsets are individuals who reduce their home energy bills. You can sign up to MyEEX, enter your baseline bill, reduce your energy use, enter your new bill and MyEEX will create carbon credits that represent the reductions. They will then sell the credits on voluntary offset market – not sure who to – and return some proportion of the money to the individual.

For those of you familiar with the concept of additionality, alarm bells will be ringing. How do we know the baseline bill is not unusually high? How do we know the individual would not have reduced their energy use anyway (making the carbon offsets irrelevant)? Why do people need to be paid to reduce their bills? Who are the buyers anyway?

When I saw this I assumed it was an enterprising but poorly conceived project that probably wouldn’t get that far, but today I spotted a very promotional article in The Times!

“People really want to make a difference by cutting down their carbon emissions, but at the moment it’s all very woolly and they’re not seeing anything concrete from their efforts,” said Paul Herrgesell, the company’s project manager.

“This will let people actively track their energy usage and make money at the same time, both of which will motivate people and make them more aware of their carbon emissions.”

Herrgesell said the firm is hoping to expand the website to measure all types of personal carbon emissions, but is using households bills as a starting point.

“Our vision is to cover personal carbon footprints produced by car and air travel, and even, eventually, food and services,” said Herrgesell.



Animation – Carbon Retirement

Posted in Offsetting with tags , , , , , on November 2, 2008 by Dan

We’ve just produced a short animation about how Carbon Retirement works. Carbon Retirement is a new company I’m involved in. We remove EU Emission Allowances from the EU’s Emission Trading Scheme, reducing the volume of CO2 that can be emitted.

Check out our animation (on the Carbon Retirement homepage, Youtube or below) – we’re really happy with it.

CCX offsets: the money is gravy to us

Posted in Offsetting with tags , , , on October 9, 2008 by Dan

Hidden at the end of an article in Monday’s Washington Post is a clear statement of non-additionality from the owner of a project selling offsets on the CCX:

In the western Virginia town of Christiansburg, the operators of a landfill sell carbon offsets tied to a project that captures methane, a powerful greenhouse pollutant, and burn it in a tall orange flare. They’ve made $43,000 on the Chicago Climate Exchange in just a couple of months.

But that project was put in long before the offsets were sold and for a different reason: to keep dangerous gases from accumulating in a capped landfill. So if the offset market dried up completely?

Nothing would change.

The money “is gravy to us right now,” said Alan Cummins, executive director of the regional authority that runs the landfill. Even without it, he said, “we would always continue to flare.”


Posted in Offsetting on September 19, 2008 by Dan

This is bad:

The CDM “provides member states with a cost-effective means to meet their obligations and is an important flexibility mechanism,” says a UK ‘non-paper’ leaked to the press on 17 September.

Downing Street suggests expanding the scheme to allow EU countries to offset up to 50% of their CO2 emissions reduction obligations – 20% more the current approximate limit of 30% – on the grounds that this would not undermine climate change efforts at EU or global level.

(for Phase 3)

Carbon Retirement is live today

Posted in Offsetting with tags , , , , on July 15, 2008 by Dan

I’ve been working hard over the last few months to set up a company, Carbon Retirement. We buy EU Emission Allowances (EUAs) on behalf of our customers and retire them. This reduces the amount of carbon dioxide that industrial facilities within the scheme can produce and pushes up the price of carbon.

The service is designed for offsetting unavoidable parts of our customers’ carbon footprints. It’s fundamentally different to existing carbon offsetting services in that we don’t fund projects. We think it’s a great idea because it can give a very high level of confidence in the emission reduction.

Do have a look round the site and if you have any comments, let me know by email (inbalance dot blog at gmail dot com) or in the comment section to this post.

Report shows booming voluntary offset market

Posted in Carbon markets, Offsetting with tags , , , , on May 15, 2008 by Dan

The voluntary offsetting market is a murky place. New Carbon Finance and Ecosystem Marketplace have just published their second annual overview report (pdf). It is based on a survey of project developers and other actors in the carbon market, and shows huge growth driven particularly by European demand.

Huge range of prices driven by non climate change considerations

Perhaps the most striking finding in the report is the enormous range of prices paid for voluntary offsets. Different types of project command different prices, ranging around $2.5 / tCO2e (for industrial gas or geological sequestration) up to $50 for Gold Standard (a very selective quality regime) renewable energy offsets.

Carbon markets are based on the premise that avoiding a tonne of CO2e is worth the same in climate change mitigation terms, no matter where or how the reduction is made. Voluntary offsets should therefore have commodity-style prices.

Part of the reason why voluntary offsets don’t behave like commodities is that some customers are interested in ‘co-benefits’. Co-benefits are positive social outcomes for local communities that are delivered in addition to emission reductions. Projects that involve the destruction of potent greenhouse gas by-products from industrial processes have few co-benefits and the report shows they are becoming less popular.

Voluntary offsets cannot prove their additionality. Even the most robust quality regimes give no assurance of the baseline (what would have happened without the funding provided by offsets). Project developers and salespeople therefore use co-benefits, which may be worthy but are irrelevant in terms of emission reductions, to show that the offsets are not a waste of money.

Few projects in Africa

The report shows that a very small and shrinking proportion of voluntary offsets originate in Africa. This is considered worrying, because many people feel that offsetting should support international development.

It’s quite natural that few project-based offsets are derived from Africa. There is only limited opportunity to finance emission reductions in a continent where there are low levels of industrialisation and grid electricity.

Additionality cannot be taken out of the CDM, even if it is impossible to administer

Posted in Carbon markets, Offsetting with tags , , , , on May 8, 2008 by Dan

Ken Newcombe, who founded the World Bank’s Carbon Finance Unit, yesterday described the concept of additionality in the Clean Development Mechanism as “impossible”.

A reduction in emissions is ‘additional’ if it would not have happened without the funding provided by selling carbon offsets through the CDM (mainly as Certified Emission Reductions in the EU ETS).

He rightly points out that additionality is very difficult to measure and has added significantly to the administrative costs of verifying CDM projects. Instead, he proposes a ‘benchmarking’ approach, in which activities that ‘emit below the benchmark’ are allowed to sell offsets.

The thing is, additionality is the basic premise of offsetting. To claim that an investment will reduce emissions by a specific quantity, you must measure the baseline (what would have happened without intervention).

If the CDM is not necessarily additional (which it is not now, but at least it aims to be), emissions will leak out of statutory cap-and-trade schemes like the EU ETS in unknown quantities. Not only that: unknown quantities of money will leak out too as projects that would have happened anyway are given unnecessary funding.

Perhaps the CDM is not the right way to transfer clean technology to the developing world. In fact, CDM is a misnomer – it is not primarily designed to foster clean development, but to reduce the costs imposed on the developed world by the Kyoto Protocol.