Offsets

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Offsets!!!

• by Dian Putrasahan

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Definition

• Environmental Offset
• Doing an environmental good that would
  compensate environmental harm that was put in.
• Carbon Offset
• A carbon offset zeros out (offsets) all or part
  of the carbon dioxide emissions of a party, by
  reducing the emissions -- or increasing the
  carbon dioxide absorption -- of another party.
  This reduces net greenhouse gas emissions with
  the aim of combating global warming. Effectively
  offsetting the emissions of an activity makes
  that activity "carbon neutral".

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Types of Offset

• Carbon, particularly carbon dioxide
• Other greenhouse gases such as CH4, NOx, VOC,
  HFCs, etc.
• Ecological (endangered species)
• Relocation of sea turtle population

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Carbon offsetting

• Sequestration (plant trees, pump CO2 into the
  ground or bottom of the ocean)
• Buy carbon credits (originally allocated by the
  government and meets national emission target)
• Purchase carbon allowances - investing in other
  emission reduction projects
• Reduce amount of CO2 release
• More energy efficient
• Renewable energy vs fossil fuel/coal
• Prevent carbon release (capture CH4 from
  landfills and using CH4 as natural gas)

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Different Levels of Implementation

• Global/International (Kyoto Mechanisms, Olympics,
  FIFA World Cup, Super Bowl, G8 summit, etc.)
• National/Government (Environmental Agencies,
  Regulations)
• Commercial/ Industrial (Regulations and
  voluntarily)
• Public Community (Music bands, Neighborhood,
  schools, etc.)
• Individuals

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Kyoto Mechanisms

• Also known as Flexible Mechanisms, it encompasses
  the Emissions Trading (ET), Joint Implementation
  (JI) and the Clean Development Mechanism (CDM)
• These are mechanisms design under the Kyoto
  Protocol to help lower overall cost of achieving
  emissions standard.
• These mechanisms were highly favored by the US
  even before they decided not to ratify on the
  Kyoto Protocol.

http//en.wikipedia.org/wiki/Flexible_Mechanisms
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EU ETS

• European Union Emissions Trading Scheme was
  created in conjunction with the Kyoto Protocol,
  and is the worlds first international CO2
  emissions trading program that limits the amount
  of CO2 emissions from the large installations
  throughout the EU.
• It uses a market-based platform to provide
  incentives for reduction of GHG emissions in a
  cost effective manner. The scheme operates
  through the trade and allocation of GHG emissions
  allowances within the members of 25 countries in
  the EU.
• Phase I (Jan 2005 Dec 2007) It only covers CO2
  gas emissions. Focused on power sector and
  energy-intensive industrial sector, it represents
  close to 50 of European emissions.
• Phase II (2008-2012) Potentially cover 5
  additional GHG emissions. CDM and JI will be
  introduced through Linking Directives.
• Currently, it doesnt allow ETS CO2 credit to be
  obtained from carbon sinks, such as tree
  planting.

http//en.wikipedia.org/wiki/EU_ETS
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Joint Implementation

• An arrangement which allows Annex-1 countries
  with GHG reduction commitment to invest in
  emissions reduction projects in another
  industrialized country as an alternative to
  reducing emissions in their own countries.
• Since the countries involved have emissions
  reduction requirements, JI projects cause less
  concern on spurious emissions reduction than CDM.
• Credits awarded in JI projects are called
  Emission Reduction Units (ERUs), where one ERU is
  equivalent to a reduction of a tonne of CO2
  emission.

http//en.wikipedia.org/wiki/Joint_Implementation
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Clean Development Mechanism

• Similar to JI, however, it is geared towards
  investing in emission reduction projects in
  developing countries.
• In theory, it allows buyers to dramatically
  reduce the cost, while maintaining same emission
  reductions without CDM. However, in practise,
  emission reductions could be worse than with CDM.
• The purpose of the CDM was to help industrialized
  countries to meet their emission reduction
  targets, as well as assist developing countries
  to have sustainable development while
  contributing to the stabilization of GHG
  concentrations in the atmosphere.
• What going to prevent the Annex-1 countries from
  making unlimited use of CDM?
• Article 6.1 d) has a provision that use of CDM
  be supplemental to domestic actions to reduce
  emissions.
• Credits in CDM are awarded as Certified Emissions
  Reductions and is equivalent to 1 tonne of CO2
  emission.

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Problems with CDM
http//www.newint.org/features/2006/07/01/carbon-o
ffsets-facts/
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Correlation of EUA prices and Fuel Prices
Point Carbon, 2006
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Growth of Emission Reduction Projects
Point Carbon, 2006
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Individual Voluntary Offsets

• Switching to renewable energy sources, which can
  reduce CO2 output by 20 compared to fossil-fuel
  driven energy.
• Using energy efficient light bulbs and appliances
• Replacing loft insulation with solar panels
• Walk/bike to work, or use public transportation
  that uses renewable energy
• Investing in sustainable projects to offset
  remaining carbon footprint
• Education/Outreach to the increase public
  awareness

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Voluntary Carbon Offset

• What about traveling by plane? Currently cant
  really reduce emissions from flight travel. One
  could try carpooling and driving with a good gas
  mileage car. If one really has to fly, the next
  option is then to compensate CO2 emissions
• tree planting or investing in organizations that
  focus on the use of renewable energy

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Conclusion

• Carbon market has created a new interplay between
  energy commodities and strengthened energy market
  interactions. The carbon market places a cost on
  emissions and a value on reductions, and leads to
  large scale reductions in the near term. This
  makes it a good option for the world to
  transition into a low-carbon economy.
• Carbon offset has its flaws. It is a start in
  reducing CO2 emissions, but it is definitely NOT
  a solution.
• Where possible, reducing carbon emissions is the
  best option. Compensation for CO2 emissions is
  the second option when reduction is not feasible.
  

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Websites

• http//en.wikipedia.org/wiki/Carbon_offset
• http//carbonfund.org/site/pages/why_offset_carbon
  /
• http//www.davidsuzuki.org/Climate_Change/What_You
  _Can_Do/carbon_neutral.asp
• http//www.theclimategroup.org/
• http//www.newint.org/issues/2006/07/01/
• http//www.myclimate.org/index.php?langen
• http//www.climatecare.org/
• http//www.e-bluehorizons.com/
• http//www.terrapass.com/
• http//www.climatebiz.com/index.cfm