Carbon offsetting emerged as a concept during studies for the US National Air Pollution Control Administration in 1967-70, showing different abatement scenarios for mitigating air pollution and identifying cost effective response strategies. ‘Contraction and convergence’, the method for funding clean development and reforestation whilst penalising greenhouse gas emissions was drafted in the early 1990’s and promoted by the Global Commons institute as a fair way to tackle climate change. Many of the founders and signatories to the first statement in favour of the method were members of the green party. The aim of the methodology is to realise a workable transition from reliance on fossil fuels, to provide energy security, and to generate necessary revenue towards clean technologies.
The Kyoto Protocol was adopted in December 1997 with the goal of achieving ‘stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system.’ A comparable benchmark was set at 1990’s levels to reduce it collectively. Governments then set a cap on the amount of pollutants, limiting emissions to the agreed level. Industry is then issued a certain amount of emission permits, if it exceeds this level it is required to purchase allowances or credits from elsewhere. Clean development projects generate these credits, if a project saves one tonne of carbon dioxide or equivalent greenhouse gas from entering the atmosphere it will be issued with one credit, which can then be sold, creating necessary revenue. The majority of emissions trading takes place between established industrialised countries with a less versatile infrastructure, and development sites in emerging economies with less implementation costs.
The price of carbon was negatively affected by the financial downturn, when industrial production slowed, emissions fell, and a large amount of allowances and permits then became available, leading to vast amounts of carbon credits flooding the market. The low price of carbon jeopardizes the clean development projects due to decreased revenue from the credits, it also gives the polluters less of an incentive to change. The price of carbon is flexible through the natural law of supply and demand, but is underpinned by the international commitment targets that are needed to avoid potential environmental disaster. This ‘invisible’ market needs worldwide agreement to meet commitment targets that will work, giving confidence and impetus to this essential process, it is the only real option. Carbon offsetting should not be seen as a long term solution to climate change, but as a necessary stepping stone towards the development of clean energy. It was conceived by scientists not industry, but will remain convenient to the main polluters as long as the price remains low. Awareness and confidence in this process is needed for it to work, to find its real price. Our infrastructure and way of life cannot be sustained unless this essential transition has full worldwide commitment. It is the only real solution within our control.
The Paris Agreement
The Paris Accord is an agreement within the UNFCCC aimed at achieving greenhouse gas emissions mitigations, adapting to the effects of climate change, and driving climate finance beginning in the year 2020. The agreement entered into force in November 2016 after 114 countries ratified it.
Article 2 of the Paris Agreement outlines the aims of the convention as:
- Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change;
- Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production;
- Making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.
It is now time for all corporations to make radical changes to their operations, to take logical steps and responses to a positive change in energy infrastructure.
1. Implement an internal CO2 management strategy and audit the corporations emissions.
2. Identify energy efficiency and cost reduction opportunities.
3. Switch to renewable energy.
4. Liaise with partners and connected sectors.
5. Sponsor sustainable projects by offsetting unavoidable emissions through climate finance.
Scope 1, 2, & 3 Emissions
Greenhouse gas emissions are categorised into three groups or ‘scopes’ by the most widely-used international accounting tool, the Greenhouse Gas (GHG) Protocol. While scope 1 and 2 cover direct emissions sources (e.g., fuel used in company vehicles and purchased electricity), scope 3 emissions cover all indirect emissions due to the activities of an organisation. These include emissions from both suppliers and consumers, as shown in the table below;
Why should an organisation measure its scope 3 emissions?
There are a number of benefits associated with measuring scope 3 emissions. For many companies, the majority of their greenhouse gas (GHG) emissions and cost reduction opportunities lie outside their own operations. By measuring scope 3 emissions, organisations can:
- Assess where the emission hotspots are in their supply chain.
- Identify resource and energy risks in their supply chain.
- Identify which suppliers are leaders and which are laggards in terms of their sustainability performance.
- Identify energy efficiency and cost reduction opportunities in their supply chain.
- Engage suppliers and assist them to implement sustainability initiatives.
- Improve the energy efficiency of their products.
- Positively engage with employees to reduce emissions from business travel and employee commuting.
- Demonstrate leadership.