Offsets!!!Offsets!!!by Dian Putrasahanby Dian Putrasahan

DefinitionDefinition

Environmental OffsetEnvironmental OffsetDoing an environmental good that would compensate Doing an environmental good that would compensate environmental harm that was put in.environmental harm that was put in.

Carbon OffsetCarbon OffsetA carbon offset zeros out (offsets) all or part of the A carbon offset zeros out (offsets) all or part of the

carbon dioxide emissions of a party, by reducing the emissions carbon dioxide emissions of a party, by reducing the emissions -- or increasing the carbon dioxide absorption -- of another -- or increasing the carbon dioxide absorption -- of another party. This reduces net greenhouse gas emissions with the aim party. This reduces net greenhouse gas emissions with the aim of combating global warming. Effectively offsetting the of combating global warming. Effectively offsetting the emissions of an activity makes that activity "carbon neutral".emissions of an activity makes that activity "carbon neutral".

Types of OffsetTypes of Offset

Carbon, particularly carbon dioxideCarbon, particularly carbon dioxide

Other greenhouse gases such as CHOther greenhouse gases such as CH44, NOx, , NOx,

VOC, HFCs, etc. VOC, HFCs, etc.

Ecological (endangered species)Ecological (endangered species) Relocation of sea turtle populationRelocation of sea turtle population

Carbon offsettingCarbon offsettingSequestration (plant trees, pump COSequestration (plant trees, pump CO22 into the into the

ground or bottom of the ocean)ground or bottom of the ocean)

Buy carbon credits (originally allocated by the Buy carbon credits (originally allocated by the government and meets national emission government and meets national emission target)target)

Purchase carbon allowances - investing in Purchase carbon allowances - investing in other emission reduction projectsother emission reduction projects

Reduce amount of COReduce amount of CO22 release release More energy efficientMore energy efficient Renewable energy vs fossil fuel/coalRenewable energy vs fossil fuel/coal

Prevent carbon release (capture CHPrevent carbon release (capture CH44 from from

landfills and using CHlandfills and using CH44 as natural gas) as natural gas)

Different Levels of ImplementationDifferent Levels of Implementation

Global/International (Kyoto Mechanisms, Olympics, FIFA Global/International (Kyoto Mechanisms, Olympics, FIFA World Cup, Super Bowl, G8 summit, etc.)World Cup, Super Bowl, G8 summit, etc.)

National/Government (Environmental Agencies, National/Government (Environmental Agencies, Regulations)Regulations)

Commercial/ Industrial (Regulations and voluntarily)Commercial/ Industrial (Regulations and voluntarily)

Public Community (Music bands, Neighborhood, schools, Public Community (Music bands, Neighborhood, schools, etc.) etc.)

IndividualsIndividuals

Kyoto MechanismsKyoto Mechanisms

Also known as Flexible Mechanisms, it encompasses the Also known as Flexible Mechanisms, it encompasses the Emissions Trading (ET), Joint Implementation (JI) and the Emissions Trading (ET), Joint Implementation (JI) and the Clean Development Mechanism (CDM) Clean Development Mechanism (CDM)

These are mechanisms design under the Kyoto Protocol to These are mechanisms design under the Kyoto Protocol to help lower overall cost of achieving emissions standard. help lower overall cost of achieving emissions standard.

These mechanisms were highly favored by the US even These mechanisms were highly favored by the US even before they decided not to ratify on the Kyoto Protocol.before they decided not to ratify on the Kyoto Protocol.

http://en.wikipedia.org/wiki/Flexible_Mechanisms

EU ETSEU ETSEuropean Union Emissions Trading Scheme was created in European Union Emissions Trading Scheme was created in

conjunction with the Kyoto Protocol, and is the world’s first conjunction with the Kyoto Protocol, and is the world’s first international COinternational CO22 emissions trading program that limits the emissions trading program that limits the amount of COamount of CO22 emissions from the large installations throughout emissions from the large installations throughout the EU.the EU.

It uses a market-based platform to provide incentives for reduction It uses a market-based platform to provide incentives for reduction of GHG emissions in a cost effective manner. The scheme of GHG emissions in a cost effective manner. The scheme operates through the trade and allocation of GHG emissions operates through the trade and allocation of GHG emissions allowances within the members of 25 countries in the EU. allowances within the members of 25 countries in the EU.

Phase I: (Jan 2005 – Dec 2007) It only covers COPhase I: (Jan 2005 – Dec 2007) It only covers CO22 gas emissions. gas emissions. Focused on power sector and energy-intensive industrial sector, Focused on power sector and energy-intensive industrial sector, it represents close to 50% of European emissions. it represents close to 50% of European emissions.

Phase II: (2008-2012) Potentially cover 5 additional GHG Phase II: (2008-2012) Potentially cover 5 additional GHG emissions. CDM and JI will be introduced through Linking emissions. CDM and JI will be introduced through Linking Directives. Directives.

Currently, it doesn’t allow ETS COCurrently, it doesn’t allow ETS CO22 credit to be obtained from credit to be obtained from carbon sinks, such as tree planting. carbon sinks, such as tree planting.

http://en.wikipedia.org/wiki/EU_ETS

Joint ImplementationJoint Implementation

An arrangement which allows Annex-1 countries with An arrangement which allows Annex-1 countries with GHG reduction commitment to invest in emissions GHG reduction commitment to invest in emissions reduction projects in another industrialized country as reduction projects in another industrialized country as an alternative to reducing emissions in their own an alternative to reducing emissions in their own countries. countries.

Since the countries involved have emissions Since the countries involved have emissions reduction requirements, JI projects cause less reduction requirements, JI projects cause less concern on spurious emissions reduction than CDM.concern on spurious emissions reduction than CDM.

Credits awarded in JI projects are called Emission Credits awarded in JI projects are called Emission Reduction Units (ERUs), where one ERU is Reduction Units (ERUs), where one ERU is equivalent to a reduction of a tonne of COequivalent to a reduction of a tonne of CO22 emission. emission.

http://en.wikipedia.org/wiki/Joint_Implementation

Clean Development MechanismClean Development MechanismSimilar to JI, however, it is geared towards investing in emission Similar to JI, however, it is geared towards investing in emission

reduction projects in developing countries. reduction projects in developing countries.

In theory, it allows buyers to dramatically reduce the cost, while In theory, it allows buyers to dramatically reduce the cost, while maintaining same emission reductions without CDM. However, in maintaining same emission reductions without CDM. However, in practise, emission reductions could be worse than with CDM.practise, emission reductions could be worse than with CDM.

The purpose of the CDM was to help industrialized countries to meet The purpose of the CDM was to help industrialized countries to meet their emission reduction targets, as well as assist developing their emission reduction targets, as well as assist developing countries to have sustainable development while contributing to the countries to have sustainable development while contributing to the stabilization of GHG concentrations in the atmosphere. stabilization of GHG concentrations in the atmosphere.

What going to prevent the Annex-1 countries from making unlimited What going to prevent the Annex-1 countries from making unlimited use of CDM? use of CDM?

Article 6.1 d) has a provision that use of CDM be ‘supplemental’ to Article 6.1 d) has a provision that use of CDM be ‘supplemental’ to domestic actions to reduce emissions.domestic actions to reduce emissions.

Credits in CDM are awarded as Certified Emissions Reductions and is Credits in CDM are awarded as Certified Emissions Reductions and is equivalent to 1 tonne of COequivalent to 1 tonne of CO22 emission. emission.

Problems with CDMProblems with CDM

http://www.newint.org/features/2006/07/01/carbon-offsets-facts/

Correlation of EUA prices and Fuel PricesCorrelation of EUA prices and Fuel Prices

Point Carbon, 2006

Growth of Emission Growth of Emission Reduction ProjectsReduction Projects

Point Carbon, 2006

Individual Voluntary OffsetsIndividual Voluntary OffsetsSwitching to renewable energy sources, which can reduce COSwitching to renewable energy sources, which can reduce CO22 output output

by ~20% compared to fossil-fuel driven energy.by ~20% compared to fossil-fuel driven energy.

Using energy efficient light bulbs and appliancesUsing energy efficient light bulbs and appliances

Replacing loft insulation with solar panelsReplacing loft insulation with solar panels

Walk/bike to work, or use public transportation that uses renewable Walk/bike to work, or use public transportation that uses renewable energyenergy

Investing in sustainable projects to offset remaining carbon footprintInvesting in sustainable projects to offset remaining carbon footprint

Education/Outreach to the increase public awarenessEducation/Outreach to the increase public awareness

Voluntary Carbon OffsetVoluntary Carbon Offset

What about traveling by plane? Currently What about traveling by plane? Currently can’t really reduce emissions from flight can’t really reduce emissions from flight travel. One could try carpooling and travel. One could try carpooling and driving with a good gas mileage car. If one driving with a good gas mileage car. If one really has to fly, the next option is then to really has to fly, the next option is then to compensate COcompensate CO22 emissions emissions tree planting or investing in organizations that tree planting or investing in organizations that

focus on the use of renewable energyfocus on the use of renewable energy

ConclusionConclusion

Carbon market has created a new interplay between Carbon market has created a new interplay between energy commodities and strengthened energy market energy commodities and strengthened energy market interactions. The carbon market places a cost on interactions. The carbon market places a cost on emissions and a value on reductions, and leads to large emissions and a value on reductions, and leads to large scale reductions in the near term. This makes it a good scale reductions in the near term. This makes it a good option for the world to transition into a low-carbon option for the world to transition into a low-carbon economy.economy.

Carbon offset has its flaws. It is a start in reducing COCarbon offset has its flaws. It is a start in reducing CO22 emissions, but it is definitely NOT a solution. emissions, but it is definitely NOT a solution. Where possible, reducing carbon emissions is the best Where possible, reducing carbon emissions is the best option. Compensation for COoption. Compensation for CO22 emissions is the second emissions is the second option when reduction is not feasible. option when reduction is not feasible.

WebsitesWebsites

http://en.wikipedia.org/wiki/Carbon_offsethttp://en.wikipedia.org/wiki/Carbon_offset

http://carbonfund.org/site/pages/why_offset_carbon/http://carbonfund.org/site/pages/why_offset_carbon/

http://www.davidsuzuki.org/Climate_Change/What_You_Can_Do/http://www.davidsuzuki.org/Climate_Change/What_You_Can_Do/carbon_neutral.aspcarbon_neutral.asp

http://www.theclimategroup.org/http://www.theclimategroup.org/

http://www.newint.org/issues/2006/07/01/http://www.newint.org/issues/2006/07/01/

http://www.myclimate.org/index.php?lang=enhttp://www.myclimate.org/index.php?lang=en

http://www.climatecare.org/http://www.climatecare.org/

http://www.e-bluehorizons.com/http://www.e-bluehorizons.com/

http://www.terrapass.com/http://www.terrapass.com/

http://www.climatebiz.com/index.cfmhttp://www.climatebiz.com/index.cfm