Offset positive by Green Futures

a greenfutures special publication

Offset Positive

Buying change: the case for carbon offsets

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Every organisation and individual has, like it or not, a carbon footprint. Even with the most determined efforts to cut emissions at source, we are all still responsible for some carbon dioxide and other greenhouse gases going into the atmosphere, so causing global warming. We can choose to ignore this, and take no action to tackle the consequences of those unavoidable emissions which might dwarf everything we’ve been able to cut. Or we can take responsibility for them. One way of doing so is to ensure that an equivalent amount of carbon is either absorbed, or avoided being emitted, elsewhere. This can be achieved by financing the introduction of renewable energy or energy efficiency measures to replace the need for fossil fuels, or by conserving or planting forests, to absorb carbon from the atmosphere. This, in essence, is carbon offsetting. In practice, this is usually achieved through buying credits from emissions reduction projects, preferably those which are accredited to an internationally recognised standard. These standards are becoming increasingly rigorous and robust, particularly on the ‘voluntary market’, allowing companies to fund such schemes with confidence. Increasingly, these standards include provision for wider social and environmental benefits, particularly among less well-off communities in developing countries. Such socially progressive offsets simultaneously reduce carbon emissions and improve the quality of life of people who are threatened by the impacts of climate change.

Front Cover Photo © Gareth Bentley

As such, they can be a powerful tool for sustainable development. www.greenfutures.org.uk

greenhouse gases, whilst generating real value for the communities and nations involved. For those who are still doubtful about that kind of value, I have only one question: when you’ve done everything you can to reduce your own carbon footprint through changing your lifestyle and being super efficient at home, work and play, what are you going to do about the rest? Ignore it – or deal with it by finding the best possible offset product on the market? That’s the challenge that confronted Forum for the Future right from the start. So we dealt with it – in an effort to be genuinely carbon neutral. And we’re proud of the offset initiatives in which we’ve invested to make that possible.

Jonathon Porritt is Founder Director of Forum for the Future.

Photo © Walter B. McKenzie / Getty

For a surprisingly large number of environmentalists, offsetting is a still a dirty word. Deep scepticism about the Kyoto Protocol’s Clean Development Mechanism, combined with a few early stories about dodgy deals, persuaded several ‘green gurus’ to adopt stridently hostile positions. This sowed the seed for doubt in many people’s minds, with the result that offsetting is still not seen as it should be: that is, as making a critical and hugely beneficial contribution to a low-carbon society. Don’t get me wrong. We’re no more sympathetic to ineffective, poor quality, ‘socially blind’ offsetting than any of these critics. Every emerging market, without exception, has its fair share of rubbish products. But in this Special Edition, we invite you to share our excitement at the other end of that market, represented by a growing number of schemes and organisations doing exactly what it says on the tin: cost-effectively achieving measurable reductions in emissions of

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A simple piece of human-powered technology has revolutionised lives across northern India, reports Martin Wright, and sparked fierce debate about the morality of offsetting.

Pump In the middle of a field on the plains of northern India, farmer Ram Dyal is making a point. One hand grabbing my sleeve, he wraps his other round a sturdy bamboo pole. “This”, he says, slapping it for emphasis, “has lifted poverty from our valley. It has lifted poverty from my home.” He’s speaking through an interpreter, but looking me hard in the eyes to make sure I understand. ‘This’ is a simple treadle pump, costing around $30, which uses a couple of hours a day of human power – Ram Dyal’s feet and those of his family – to raise water from a tubewell to irrigate the fields. It doesn’t sound that exciting – a bamboo frame and treadles, a simple two cylinder pump, and a long plastic tube thrust deep into the soil. But its effects are nothing short of revolutionary. Because by enabling crops to be grown all year round, rain or drought, it transforms the livelihoods of the rural poor.

A rural revolution Take Ram Dyal’s family. Since installing the pump, they’ve diversified on a grand scale, growing garlic, cauliflower, cabbages, tomatoes, cucumbers, herbs and

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spices, for their own consumption and for sale. As a result, everyone’s better fed, healthier – and much better off, thanks to selling surplus crops. This means they no longer have to decamp en masse in the dry season to work for an unreliable pittance as labourers on the notoriously hazardous building sites of one of India’s burgeoning cities. Instead, the children can stay at school, and the family no longer lives in fear of losing their land. It’s a success story repeated, with variations, among hundreds of thousands of families right across northern India, where the relatively high water table lends itself to such technology. The pumps were developed by International Development Enterprises, India (IDEI) and now form the heart of a thriving network of energy entrepreneurs – manufacturers, retailers and installers which has generated sales of approaching two million pumps in total. Studies by the World Bank and the Acumen Fund confirm that families with treadle pumps enjoy better nutrition, health, income and prospects than they did before. It is a triumph of simplicity and scale: a straightforward, robust technology: living proof that dramatic improvements in quality of life don’t have to

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come from the use of fossil fuel. As such, it was a fitting winner of an Ashden Award for Sustainable Energy (it was as an Awards Judge that I was lucky enough to see the project and talk to dozens of its beneficiaries at first hand). Heart-warming stuff – but what has this got to do with offsets? The answer lies in the alternative: the diesel pumps, which, despite their shortcomings, had been spreading rapidly across the country. By replacing diesel, or removing the need for its adoption, the introduction of treadle pumps is avoiding the emission of substantial quantities of CO2 (around two-thirds of a tonne annually per pump). And that makes it an ideal candidate for offset funding. Emissions credits bought on the voluntary market through ClimateCare have enabled IDEI to roll out the treadle pump programme much faster and further than would have been possible otherwise. It’s not been the only success story of this kind. Numerous other small-scale renewable energy schemes, from solar electricity to clean, energy-efficient cookstoves; from biogas digesters to micro hydro, have been boosted thanks to emissions credits sold by ClimateCare and

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other offset providers. Together, they exemplify just what can be achieved through the best sort of voluntary offsets. Get them right, and they don’t simply result in measurable carbon reductions – important though these are. They also produce measurable improvements in the quality of life of ordinary people, particularly the rural poor in developing countries – and the quality of the environment on which they depend. Who could possibly argue with that?

Photo © Sarah Butler - Sloss/Ashden Awards

action Water of life: treadle pumps bring prosperity to Indian farms

Enter the backlash Brendan O’Neill, for one. Writing in Spiked Online in 2007, the influential commentator lambasted the treadle pump offsets as nothing short of “eco-enslavement”. ClimateCare, he argued, was “encouraging people in the developing world to ditch modern methods of farming (such as diesel pumps)… so (its clients) can fly around the globe with a guilt-free conscience on the basis that, thousands of miles away, Indian villagers, bent over double, are working by hand … doing hard physical labour … rather than using machines that emit carbon.” “Feeling guilty about your two-week break in

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“Hard work? It’s only walking up and down…!” Bhikram Singh, a vigorous seventy-nine year old, is one of life’s enthusiasts. “In the old days”, he told me, “I just had one crop, the wheat. I used to use the diesel pump, but it was expensive, and I couldn’t always hire one when I needed it, and it washed all the topsoil over to one side of the field. I really wanted to get out of that mess...” The great advantage of the treadle pump, he explained, was the way it sent just the right amount of water, at the right time, across the fields, at a steady trickle which allowed the moisture to sink into the soil rather than sluice it away. “Now I get three or four crops a year ... we can eat so much better. I buy new clothes for all the family. Next year I’m renting more land so I can expand…” Wasn’t the pumping hard work? “Nooo! It’s only walking up and down! It’s like climbing a hill. If you want hard work, try carrying the water all the way from the well, like we used to.” (I tried the pump; once I’d got used to the rythym, the effort felt like cycling gently uphill at a slow but steady pace. Others have described it as being like a step machine at the gym.) Then Bhikram pointed at his knee. “See this? It used to be swollen and painful. Now, the pain’s eased and the swelling’s gone down…” Across the field, a girl aged 12 or so leapt onto a pair of treadles, laughing and showing off to me that she could work it, too. Photos of children like this have sparked allegations in the West that such ‘human scale’ technology encourages child labour. To which the only answer is: yes, children – mainly teenagers, but some younger – do indeed work the pumps: on average for around 30 minutes a day, according to an Acumen study, either before or after school. This is hardly child labour of the sweatshop variety; more a case of helping out on the family farm, a commonplace for children across India. Far better to spend half an hour on the pump and the rest of the day in school, than long months on a building site…

Barbados … living it up with cocktails on sunlit beaches?”, added O’Neill with a flourish. “Well, offset that guilt by sponsoring eco-friendly child labour in the developing world! Let an eight-year-old peasant pedal away your eco-remorse…” And so on, at some length. It was wonderfully polemical stuff – and wildly wide of the mark, at least as far as the facts were concerned (see box, ‘Hard work?...’). But O’Neill’s central claim – that carbon offsets were no more than a rich Westerner’s guilt-trip – struck a chord with many. It epitomised the backlash which erupted against offsets in the mid-2000s, and which still has considerable influence today. In some respects, it was inevitable. Offsets had become a bit of a green fashion badge among celebrities, with everyone from Coldplay to Atomic Kitten releasing ‘carbon neutral’ albums. Such a surge of pop star glamour might have made life easier for the picture editors (the lissom bodies of the Kittens being a welcome alternative to yet another biogas digester), but it was a red rag to the bullish scepticism of your average journalist. Set against a lifestyle rich in planes and limos, offsets could easily look like a token gesture – and in

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some cases, they probably were. O’Neill is no environmentalist – quite the contrary – but his views found echoes in the green movement too. From George Monbiot to Greenpeace, many argued that offsets effectively ‘legitimise’ carbon emissions: after all, why bother with the thorny task of reducing CO2 when you can simply pay someone to do it for you? Some described it as ‘buying complacency’ – a guilt-free pass to carry on as normal. Monbiot and others even likened offsets to the indulgences sold to medieval sinners to earn time off purgatory. And one website memorably satirised the whole process by offering unfaithful partners the chance to become ‘Cheat Neutral’. Want to betray your spouse? Simply pay £2.50 to someone who pledges to stay faithful… Dubious motives aside, other more concrete criticisms fuelled the backlash. Under close scrutiny, some early offset schemes looked at best ineffective, and at worst no more than a scam, providing little or no assurance that the money invested was really going to make a difference. A few high-profile failures drew withering fire. Coldplay supported a mango plantation

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Photo ÂŠ Martin Wright

Making the connection: by bringing solar power to remote communities, offset funding can speed development

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Photo © Vikram Raghuvanshi - iStock

project in India to help offset emissions from a world tour. The trees were planted, but someone forgot to ensure they were watered… Forestry offsets in particular attracted flak. If you’re relying on trees to sequester your carbon, you have to ensure they’ll be there for decades to come – up to a century, in fact. Which, at a time of growing pressure on land resources, is a big ask. Investing in renewables and energy efficiency, which displace carbon emissions rather than soak them up, sounds more certain. But, as with forestry, it leaves the nagging ‘additionality’ question: would the development have happened anyway without your support? Because if it had, you couldn’t credibly claim that it was offsetting ‘your’ emissions. And at a time of massive investment in such technologies, that is an extremely hard call to make. Some of these shortcomings were perhaps inevitable in a market that was less than two decades old, and maturing fast. And the critics have done everyone a service by prompting the offset industry to examine its practices and draw up new, more robust standards.

Guilt-tinged or gilt-edged? But it’s worth dwelling here a little on that core question: are offsets merely an easy distraction from taking real responsibility for our own emissions? The honest response is: yes, possibly, on occasion. There have no doubt been some, usually individuals rather than companies, who have bought carbon offsets as a token gesture, with little or no intention to modify their lifestyles further. These are the caricatures savaged by O’Neill and others. However, even if that were the case, the criticism would only be valid if the offsetter would otherwise have taken more direct action to cut emissions. And there’s precious little evidence that this is so. Take a hypothetical Land Rover driver, who might, one assumes, be quietly reassured that his miles have been offset thanks to the company’s deal with ClimateCare. Then he reads that it’s all a con. So does he think: “Hang on, this offset stuff isn’t all it seems… I need to do more,

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Development potential Many see a promising marriage between offset projects and more conventional development. “Africa is littered with half finished projects, where, say, clean water provision’s been put in and then the funding’s dried up”, says ClimateCare’s Edward Hanrahan. “Many of these projects also reduce carbon emissions, which can provide a sustainable source of finance.” He promotes a vision whereby charities identify the most worthwhile aid projects and build relationships at the sharp end, and offset providers can focus on achieving verification and building relationships with corporate buyers.

much more…?” And so the scales fall from his eyes, and he gives up his car, gets on his bike, and stops flying to his weekend pad in the Med? It seems, to say the least, unlikely. The decline in numbers of individuals buying offsets over the last five years has hardly been matched by a surge in personal commitment elsewhere. And it’s not surprising. A large part of offsets’ early appeal was to people who genuinely wanted to do the right thing, but were never going to buy into making revolutionary lifestyle changes – no matter how much they were hectored by environmentalists. For them, the relentless ‘carbon-sin’ rhetoric simply had the effect of chipping away at their willingness to help out. And it failed to acknowledge the very real limits of ‘carbon austerity’ in industrial societies with a carbon-intensive infrastructure. One in which, unless you’re a monk on the one hand, or a wealthy green gadget freak on the other, it’s hard to get through your daily round without emitting significant amounts of carbon.

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Photo © George Clerk - iStock

So it’s not surprising if, rather than abandon offsetting their car emissions and taking to the bicycle instead, many appear to have used the backlash as a trigger to do nothing at all. And for those who were always inclined to feel cynical, the criticisms have given them the perfect excuse for inertia. They have decided, as it were, that it is better to curse the darkness than light a single candle… Corporate buyers have taken up some of the slack, with volumes rising year on year apart from recession-hit 2009, but the negative press has made many wary of being associated too closely with offsets, whether or not they think they are effective. As Paul Monaghan, Head of Ethics and Sustainable Development at the Co-operative Bank, puts it: “All the negative publicity just gives companies another excuse not to buy... The green movement”, he concludes, “has shot itself in the foot here.” A thorough investigation by the UK Parliament’s Environmental Audit Committee, published in 2007, concluded that the voluntary offset market could play an important role in both cutting emissions and raising awareness - and it urged both government and business to get behind it. But by then, the cynicism was well entrenched. Forum for the Future’s Jonathon Porritt describes the reaction to voluntary offsets from fellow green activists as “nervous, muddled and hostile,” with commentators distracted by the “variable and uncertain” aspects of the evolving market, along with simple ignorance of what it can achieve. “Inevitably some companies have dropped out,” because of the negative publicity, he notes – and that means more greenhouse gases are being emitted than they otherwise would be.

Emissions impossible And there’s the rub. Everyone involved agrees that offsets should never be the sole, or even the prime, strategy for cutting carbon. That should always begin at home. But unless you source all your energy from renewables, transport all your products in electric trucks, never step on a plane, train or bus, let alone consume anything made in a Chinese factory, you’ll still have some

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carbon emissions against your name. So what are you going to do about them – unless you offset? Intriguingly, such evidence as there is suggests that, contrary to the activists’ rhetoric, individuals and companies who make a positive choice to offset don’t, as a rule, end up merrily burning more fossil fuels, smug in the knowledge they’ve atoned for their sins. More often, it seems to act as a prompt for more engagement, rather than less. And in the worst case scenario, as ClimateCare’s Adam Harvey points out, even if the offset gesture is token and the motive is guilt, the money spent is still out there, doing some good. In time, of course, there might be a genuinely global carbon market, where these transactions happen seamlessly, driving down carbon emissions. Until then, investing in socially progressive offsets can make a direct, tangible difference to both your carbon footprint and the quality of life of some of the world’s poorest people, none of whom, it’s pretty to safe to assume, give a damn whether that funding has precisely balanced your emissions or not. On which note, it’s worth reminding ourselves just why we’re concerned about carbon emissions in the first place. It’s not because we have some abstract obsession with atmospheric chemistry. Rather, it’s because we fear the human consequences of climate change. These will be felt all the harder, and sooner, by people like Ram Dyal and his family, people who are in every sense on the front line of climate change. So when we invest in a rigorous, pro-poor offset scheme, we’re achieving two goals simultaneously. We are both fulfilling our responsibility to reduce our environmental impact – and improving the quality of life of those threatened by it. Get offsets right, then, and they’re about much more than simply balancing emissions; they’re about speeding sustainable development, right across the globe. Martin Wright is Editor in Chief of Green Futures, and a Visiting Judge for the Ashden Awards for Sustainable Energy.

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Raising the Anyone coming to offsetting for the first time could be forgiven for thinking they’d fallen into an alphabet soup. So here’s a (very simple) guide to the essentials.

The market for carbon as a traded commodity consists of two main sectors: • Regulated, or ‘compliance’, carbon markets, which are governed by international rules defined in the Kyoto Protocol, and which include Clean Development Mechanism (CDM) projects. (Some uncertainty hangs over CDM’s future post-2012, with negotiations for a successor to Kyoto still very much in the balance.) A number of national schemes also fall into this category. • Voluntary carbon markets, which are unregulated and include a range of different trading relationships and voluntary project standards. Many emphasise social benefits as well as carbon ones. These markets differ radically in the way they operate and who they cater for. The compliance market is aimed mainly at large energy-intensive industries that need to purchase huge numbers of credits (usually at the cheapest possible price). Although open to all, this market is dominated by companies who have compulsory targets under the Kyoto Protocol or other national or regional

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‘cap-and-trade’ systems. As such, the credits they buy tend to be generated by major industrial-scale projects – such as cleaning up emissions from Chinese factories – which have relatively few benefits for local communities, and are hardly inspiring stories to tell. The CDM projects share, in theory, the ambitions of the Millennium Development Goals for alleviating poverty. However, unless they are certified to the Gold Standard (see below), this remains more theory than practice. In contrast, the voluntary market, which is what any company considering offsetting out of choice will be dealing with, has a much wider range of customers, from individuals to large companies, with very different needs and aspirations, resulting in a much broader range of projects. For these buyers, voluntarily purchasing relatively lower volumes of credits, price is often not the overriding concern. They are for the most part buying because they see the ethical, strategic or reputational benefit of doing so, and so the provenance of the credits, and the story behind them, become more important factors in their purchasing decisions. The voluntary market can also act as a kind of proving ground for technologies, which later go on to be

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Photo ÂŠ Simon Bond

standards

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Photo © JetJock / iStock

Sunset sector: the regulated market focuses on heavy industry

recognised in the compliance market. This happened with efficient cookstoves, for example, and may well do so with water filters (which qualify for offset funding because they avoid the need to purify water by boiling it – usually using wood as fuel). Because the compliance market is regulated internationally, you might assume it is more tightly governed. In fact, there have been a number of high-profile allegations of dubious behaviour or worse. Recently, it was alleged that some Chinese chemical companies were deliberately ramping up production of HFC-23, a highly potent greenhouse gas, purely to make money from its destruction via CDM finance. That’s not to say the voluntary market has always been a pillar of rectitude. In its early days at least, a lack of rigorous standards undoubtedly saw some poor projects slip through the net. But partly because of all the criticism, voluntary standards have recently become a great deal tighter, under the influence of the International Carbon Reduction and Offset Alliance (ICROA). This includes the vast majority of respectable offset providers, and was itself set up to promote the highest standards of

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industry practice. The standards are not entirely uniform, however, and that’s no bad thing. It can help encourage innovation, and spur providers to design products for a range of buyers. And because the voluntary market is just that – voluntary – it is buyers who have the bargaining power: this in itself is helping drive standards up, as after all the criticism, no-one wants to be seen buying – or selling – a sub-standard offset.

Raising the standard There are now around 20 standards covering the voluntary market, offering various degrees of rigour. Some are specialist – aimed at forestry offsets, for example. As Jonathon Porritt points out, though, while a wide range of standards may encourage innovation, it also ferments confusion among consumers. Now, however, two have have emerged as widely respected, notably the Gold Standard and the Voluntary Carbon Standard (VCS). Each standard is endorsed by ICROA, and includes tough verification elements to avoid the classic ‘elephant

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traps’ of non-additionality, leakage and impermanence (see box). On top of this, it is now standard practise among ICROA members to guarantee offsets, so if they don’t materialise from one project, another must be provided as a replacement. Further assurance is provided by the rapid adoption of a registration system. First established in 2007, this allocates a unique serial number to each project and each tonne of CO2 reduction achieved, and keeps a record of all the purchases. Offsets are tracked for life, traded securely and ‘retired’ permanently. So in theory this means they cannot be double counted, and project developers and offset providers alike cannot cheat the system. In a surprisingly short time, the registries have made the voluntary carbon market as transparent, if not more so, than the regulated market. All this rigour makes it doubly frustrating that, for now, the UK Government has failed to include any of the voluntary market standards in its best practice scheme, which only recognises offsets validated by the CDM – a decision described by Forum’s Iain Watt as “utterly pointless… The Government was meant to be setting acceptable standards for the voluntary market, now participants are just not bothering (with UK verification).” ICROA decries “the marginalisation of voluntary projects”. Hanrahan agrees, arguing that if the Government is serious about encouraging offsetting as a key strategy, then it really should recognise the Gold Standard and the VCS. Such has been the outcry from inside and outside the industry, that many expect the Government to change its mind on this before long.

Where does the money go? The main types of projects funded through the voluntary market are as follows: • Renewable energy (eg solar, wind, hydro and biomass) • Energy efficiency (eg improved cookstoves, CFL or LED lights) • ‘Fuel switching’ (eg crop waste substituting for wood in stoves; biogas schemes – animal and human waste used to produce cooking gas via anaerobic digestion; and coal to gas) • Forestry (includes conservation, improved management, agroforestry and tree planting) • Emerging technologies (such as water filters, which reduce emissions principally by avoiding the need to boil water on a wood-fired stove). The average price per tonne of CO2 equivalent saved in 2009 was £4.16. But prices vary widely, depending on the provider, the technology, and the extent of social and other benefits included. As a rule, solar and some forest projects come out as more expensive than simpler energy efficiency ones. Offset providers often package high cost offsets together with lower cost projects. This helps support projects with a high social impact that may cost a little more. In 2009, the voluntary market accounted for 94 million tonnes of CO2 equivalent, with a combined value of US$387 million.

Photo © Martin Wright

Nishant Bioenergy’s cookstove – using crop waste instead of LPG

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Photo © Nikada / iStock

Green horizons: forest offsets are controversial, but could be crucial to conservation.

Seeing the wood for the trees: offsets and forests Forestry was the earliest target for offset funding, and no wonder. Everyone loves the idea of planting trees for the future. One of the first specialist offset companies (along with ClimateCare) was originally called Future Forests – now the Carbon Neutral Company. Some early forest offsets drew sharp criticism, however, and were found wanting on the three key ‘tests’ of additionality, permanence and leakage. Wary of being associated with something so controversial, many organisations stopped buying forest offsets altogether. But recently they’ve returned to favour, not least because of renewed focus on the speed and scale with which the world’s tropical forests are being destroyed. This has in part been encouraged by the conclusions of the Stern Review, which warned that rainforest loss alone would, in just four years, release more carbon into the atmosphere than every flight from the dawn of aviation until 2025. Forest conservation is also now part of the global climate negotiations, with attention focused on the potential to reduce emissions

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caused by deforestation or degradation (REDD, as it’s known). While there is no guarantee that this will deliver, it could end up providing a massive shot in the arm for rainforest protection (see ‘Forest futures’, GF74, p26). Already, some forest governments are eyeing up the success of Belize in attracting funding from Norway (which is channelling its substantial oil earnings into forest protection). Peru, for example, wants to incorporate REDD into a broad conservation strategy that will cover 54 million of its estimated 64 million hectares of rainforest, with a final goal of eliminating all emissions from deforestation and degradation. A number of forest projects have now won accreditation under both regulated and voluntary standards, such as Plan Vivo, specifically designed for forestry by the Edinburgh Carbon Management Centre. While any forest offset will require fierce scrutiny to make sure it meets acceptable standards, it’s fair to say that it’s no longer the neglected member of the family.

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Elephant traps (and how to avoid them) Three key tests for any credible offset scheme Additionality If a project funded by offset money would have happened anyway, without that finance, then it can’t credibly claim to offset carbon. So, for example, if China were to insist that all new power generation projects in a particular district must be renewable, then any renewable energy offset projects yet to be undertaken there would fail the additionality test. Safeguard Thorough checks carried out as part of a verification process, ensure that there were no funds already in place to enable such a project, or that it wasn’t simply required by law. Additionality remains a complex issue. “It is part of the risk of our business,” explains Edward Hanrahan. “It’s one reason why we specialise in real development projects in the least developed countries, especially in Africa,” as in such regions, it is far less likely that the projects would have gone ahead without carbon financing.

Leakage If implementation of a project causes higher emissions elsewhere, these are referred to as leakage. It’s a particular danger when conserving an area of forest

which may already be under pressure, since that could simply result in the forest destruction happening nearby – for example, by people gathering firewood. It can also be a risk where investment in renewables might lead to polluting power (for example, diesel generators) simply being shifted elsewhere. Safeguard Ensure that there is adequate protection for any neighbouring forest; or if the project involves tree planting, make sure that this doesn’t displace agricultural land. Establish careful baselines for all relevant activity in the region of the project concerned.

Permanence Usually referring to forest projects. If you buy credits now which assume the trees are still going to be there, soaking up carbon, in 30 years time, you’re risking all the accumulated CO2 being released should the forest be inadvertently destroyed or felled. Safeguard As well as trying to make sure there is long term land tenure, to minimise the threat of nasty surprises, responsible providers sometimes use a virtual ‘buffer zone’: holding back a proportion of credits in case of unforeseen circumstances such as these.

Photo © sharply done / iStock

…But would they have been there anyway?

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Offsets in

Glowing prospects Rajendra Chitragi is a fruit merchant in the coastal town of Kumta, in the southern Indian state of Karnataka. With no connection to the grid, he used to rely on kerosene lanterns to keep his shop open through the evening. But the dim light, smoke and risk of fire weren’t much of a draw for customers, and he got fed up with

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the ongoing fuel and maintenance costs. Then he heard about Orb Solar, a Bangalore-based company that aims to make solar energy affordable and accessible, by combining installation and post-sale support with help securing low-interest loans. Compared with kerosene, photovoltaics offer a cleaner, safer and more reliable source of light. And the electricity generated can be used to power other appliances, too, with long-term

cost savings. Orb Solar calculates that – by exchanging a 2.5kwh diesel generator for a PV array with a capacity of 1KW – a company can save 470,000 rupees (US$10,000) over ten years. Today, the panels on Chitragi’s shop roof power a number of low-energy 11W lamps and an 18W electric fan. And he claims the move has already boosted his business. “Solar lights attract people at night time,” he says, “especially during power cuts.” It’s just one example of how a reliable source of light and heat can mark the beginning of greater transformation across a community. It can give local entrepreneurs the chance to expand their businesses, resulting in an influx of new jobs and skills. Or it can help to improve public services. Take the Gandhi Hospital in Udupi. It recently invested in two solar thermal systems, providing a 24-hour supply of hot water for the first time. “Now we can offer our patients a better service at a lower cost”, says Dr Harishchandra, the Managing Director. As India’s largely coal-powered grid struggles to meet demand for electricity, there’s growing enthusiasm for alternative sources. The success of Orb Solar is testimony to this, with forty branches in Karnataka alone, and further franchises across India.

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Photo © Adeel Halim

From Cambodian kitchens to Argentinian sugar mills, offset projects are cutting emissions and spurring development.

action Lavishing carbon finance on simple improved cook stoves may seem something of an extravagance – especially if they only save 0.4 tonnes a year each. But with over one million sold in Cambodia alone in the last five years, that’s getting on for half a million tonnes. Which is scale, by any reckoning. The vast majority of Cambodians depend on charcoal for cooking – not great news in a nation so badly hit by forest loss. But GERES, a French NGO with extensive experience in the region, has worked with local designers to come up with a new model of stove which uses far less fuel – and emits far less smoke… The result? Less pressure on the country’s forests, and less respiratory disease for its households. Retailing at just $5 or so, the locally made stove has proved highly

popular with residents in Phnom Penh, the capital. In a project validated by the Voluntary Carbon Standard, ClimateCare has sold over 400,000 tonnes worth of emissions reductions made possible by the new stove. Most families in towns and cities across Ghana, too, cook their meals on charcoal, using a metal grate or shallow ‘coal-pot’. Much of the heat escapes, which means more fuel is needed. This has serious consequences in a country with one of the highest rates of deforestation in Africa. The Ghana Stoves project is introducing the Gyapa, an insulated and efficient cook stove, to families in Ghana. It cooks food more quickly, requires less fuel, and gives off less smoke – saving time, money and health. And, thanks to carbon finance, it can be sold at an affordable price.

The new boiler is expected to avoid 22,267 tonnes of CO2 emissions per year. It’s a flagship project that, with further support from carbon finance schemes, could be replicated in mills across the region. And carbon savings aren’t the only positive outcome. Local farmers profit from the sale of

waste biomass, even as the mill makes savings by generating electricity on-site – as opposed to forking out more for oil as the price soars. And Nahar Mill is putting the savings towards a more resilient local community, by funding new medical services, materials for schools and flood defences.

King charcoal

Photo © Adeel Halim

Spinning tales The Nahar Spinning Mill started out in 1980 in Ludhiana – the industrial hub of Punjab which some affectionately dub the “Manchester of India”. Back then it was a small affair, with just 800 spindles producing worsted yarn and hosiery. Today, the 335,000 spindles of the Nahar Group supply t-shirts and other garments to major international high street brands, such as GAP and Quicksilver. Spinning isn’t the only industry in Punjab. The mills sit among the northern plains where basmati rice, famed across the world for its fine aroma, is cultivated. Now, with international markets creating opportunities for economic growth, the demand for a clean and reliable source of energy is linking the two ancient industries. The abundance of husk waste produced by the rice milling process is being used by the spinning mill to meet its energy requirements. Previously, the Nahar Mill’s operations relied heavily on a sporadic and unreliable supply of energy from the grid (mostly from coal power) and on fuel oil. But a new 5MW rice husk-fired boiler produces steam to generate electricity, meeting all the mill’s demand. Unlike fossil fuel combustion, the carbon released in this process doesn’t add to the total atmospheric content, as an equivalent amount will be taken up again.

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Green Futures January 2011 17

The sweetness of sugarcane is in the juice. Less sweet is bagasse – the fibrous residue left behind when the stalks are crushed. But it contains a significant amount of energy, which can be harnessed to drive the sugar manufacturing process. Sugar mills have been using waste biomass in this way for hundreds of years. Take La Providencia, a mill in the province of Tucumán, Argentina, where 60% of the country’s sugar is produced. It was built in 1882, when new trading opportunities brought by the railway sparked a golden age for the industry, and is today the country’s third most important mill, producing 13,000 tonnes a year. Its manufacturing process has always relied on a mixture of bagasse, natural gas and fuel oil to generate steam. But an inefficient biomass boiler meant that not all the bagasse was used, and that meant a higher proportion of fossil fuels in the mix. In 2005, a new high pressure biomass boiler was installed at the mill, funded through a ClimateCare carbon finance scheme. It has

significantly increased the amount of waste bagasse that can be used in the sugar production process, reducing dependence on fossil fuels and avoiding an estimated 50,000 tonnes of CO2 emissions per year. It’s part of a wider initiative by parent company Arcor Group to increase the efficiency and reduce the environmental impact of sugar production. It’s replacing traditional burning methods with mechanisation, which eliminates the need to wash the cane before processing – cutting down on both atmospheric pollution and water use. By-products of the production process are also being put to good use, with cane mud cachaza collected to replenish depleted soil and repair eroded land, molasses sold to yeast manufacturers, and excess bagasse sent on to paper mills. Private investment in such measures is limited, with much of the funding for infrastructure tied to petrochemical companies. But with further funding from carbon finance schemes, projects such as this could be replicated in all 19 sugar mills across Argentina and elsewhere.

Photo © Justin Locke/National Geographic Society/Corbi

Carbon and cane

White heat

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In the Russian town of Onega by the White Sea, an old coal-fired power station has been replaced with an efficient wood-fired biomass plant that will provide warm water and heating for 12,000 residents. With temperatures regularly falling below -35oC in winter, finding a reliable way to warm up is no optional extra. The coal-fired boiler had been attached to a hydrolysis plant, but this went bust a few years ago, leaving the administration to search for alternatives. What they found was a clean, renewable and reliable source of fuel, available in the form of waste biomass from the Onega sawmill. It cost €7.5 million to build a new plant – but the carbon emissions avoided by replacing coal with waste biomass have already generated €5 million through offset schemes. And there are wider benefits for the community. Employees at the plant no longer have to put up with the dust, noise and fumes of the coal combustion process, and local farmers are using the ash (a by-product) as fertiliser.

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Fixing a drink

Want to offset your cuppa? Even with the best of intentions, tracing the footprint of every bean and tea leaf is no piece of cake. But last year Cafédirect made a start, calculating the carbon emissions of its entire supply chain – including over 40 producers, in 14 different countries. Now, as part of a three-year strategy to shrink the print, it’s offsetting 5,000 tonnes of CO2 over six years, through the CEPICAFE reforestation project, which is undergoing validation by the Carbon Fix forestry offset standard. It’s a collaboration involving nine caserios (villages) in the Sierra Piura, northern Peru, and a number of local and international NGOs. Together, they are developing a long-term forest management programme to enable the sustainable extraction of precious resources, including timber, firewood and shade-grown coffee. Reforestation will address some chronic problems in the area, such as soil depletion and erosion. In addition, 10% of the income from the carbon credit sales will fund climate change adaptation strategies with coffee farmers.

Warm winds The district of Bahce nestles in the Nur mountain range on southern Turkey’s Mediterranean coast. Agriculture is a big part of the economy, employing around half the workforce, but a combination of widespread soil erosion on the hillsides and poor infrastructure keeps the region’s productivity in check. Neighbouring trade centres Adana and Osmaniye attract much of the local industry, leaving Bahce struggling with low employment and literacy rates. It’s hardly surprising, then, that proposals to build Turkey’s largest wind farm in the area

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met with enthusiasm from the residents. The project offered local people immediate jobs in the construction phase, as well as long-term opportunities in operation and maintenance, and the chance to skill up in a new sector. It also promised new roads and a local, reliable source of electricity, in a region where the neglect of basic infrastructure had long hindered growth. The contrast to the knee-jerk opposition which any wind farm proposal triggers in Britain could not be greater. Early in the planning process, a community engagement project found that the heads of the two villages nearest to the proposed site had never heard

of renewable energy – although one had seen wind turbines on TV. Now they share Gokcedag Mountain with the 54 turbines of the Zorlu Wind Farm. The farm is connected to the national grid via a 9km transmission line, and contributes around 512GWh of electricity a year. It’s expected to save an average of 288,262 tonnes of CO2 equivalent annually, by reducing the pressure on coal-fired plants. Before Zorlu, large-scale hydro was the only significant source of renewable energy in Turkey. But rapid growth in demand for power is drawing new investment in clean technology, and – with high wind speeds year-in, year-out – this may not be the largest farm for long.

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Offsets: the business experience Without offsets,“business is missing out on an opportunity to contribute to a significant reduction in global emissions” says Sally Uren, Deputy Director of Forum for the Future. We profile the experience of three leading companies, all of whom offset via ClimateCare, and look at some of the key issues affecting offsetting decisions in the future.

Last resort – or most bangs per buck? Everyone agrees that offsets are only one tool available in the carbon cutting kit. The question is: at what point is that tool wielded? Most argue that it should only be brought into action when other options have been exhausted. For Iain Watt, climate expert at Forum for the Future, the guiding mantra is “Avoid – Reduce – Replace. Avoid creating emissions in the first place, reduce them through energy efficiency, and replace high-carbon sources of energy with low- or zero-carbon ones. Offsetting may play an important part but it should not be the priority of your carbon management strategy.” Others stress that, once you’ve plucked the ‘low-hanging fruit’ in terms of emissions reductions at home, it can be perverse to spend large amounts on ratcheting them down just a little further, when the same money could achieve vastly greater reductions elsewhere in the world – and deliver all sorts of social benefits too. Edward Hanrahan cites one client (he won’t name names) who was so fixated on the ‘reduce first, then offset’ hierarchy, that they spent a cool £80,000 on highly sophisticated lighting controls to cut a final 100 tonnes of CO2: an achievement that would have cost just £75 via offsets. “If they’d spent their original budget on offsets, they would be a substantial net contributor to

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emissions reduction”. Some companies, he suggests, have taken irrational decisions in an effort to appease ‘offset sceptics’, when they might have achieved more, both for the climate and their bottom line, by taking a more cool-headed approach to calculating the maximum potential carbon which could be saved per dollar invested – or, in other words, how to achieve the biggest bang for their available bucks. At the Co-op, Paul Monaghan is keen to stress that offsets are only part of the picture. “We are also doing a host of other things. Virtually all of our three thousand properties support a green electricity tariff. As part of this we've entered into long-term purchase agreements that guarantee new power generation is created, and have begun to erect wind farms on our farmland. We've also pioneered the use of micro-generation, and house the UK's largest applications of solar PV and micro wind.” But he adds: “To say you should only offset once all other options have been exhausted is daft: it’s like saying waste recycling activities should be discouraged as they incite people to duck the higher imperative of waste minimisation.” Zelda Bentham of Aviva agrees. “Our view is that genuine reductions in carbon emissions to the atmosphere are beneficial – whether they come from a company’s own operations, a compliance trading scheme or from voluntary (offset) projects that help economic progress in a more sustainable way.”

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Aviva Last year, UK-based insurance company Aviva calculated its global CO2 emissions at 104,351 tonnes – and paid to offset it in its entirety. It added an extra 5% to drive carbon reduction above and beyond its own footprint. The bill came in at £620,000. Over 100,000 tonnes may seem a lot – but it’s down 20,000 against the 2006 baseline, thanks to a range of initiatives to reduce its impact. They include behaviour change (cutting out unnecessary travel through the use of teleconferencing, for example), introducing more efficient ICT systems, and buying electricity from renewable energy companies. Aviva only buys offsets certified through the rigorous Gold Standard or Voluntary Carbon Standard schemes (see p10). Since 2006, approximately half of its spend has gone towards wind energy projects, avoiding over 220,000 tonnes of carbon emissions, with a further 100,000 tonnes offset through biomass and hydropower schemes. The company favours projects in those countries where it has a market presence – which include the giants of East Asia (China, India, South Korea), and some ‘developing’ nations (from Romania to Sri Lanka), Google, which has made a big splash with recent announcements on investing in renewables (see GF77, p6), also sees offsets as part of its carbon reduction portfolio — despite the fact that it took until May of this year for the company to finish buying the credits for the energy it used back in 2007. Head of Green Energy, Bill Weihl, says this is because tracing carbon offsets back to particular projects and verifying that they actually reduce emissions — and by how much — is a tricky business. At Forum for the Future, Deputy Director Sally Uren believes that “it’s important to look at carbon reduction per dollar invested. You can invest millions in a new manufacturing process and take 5% off your overall footprint – or you can invest the same sum in projects and deliver millions of tonnes of carbon savings.” But she sounds a cautionary note. “The priority is to reduce your

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as well as some major European countries (France, Italy, Spain). Supporting the development of clean energy is a good way to improve the prospects of communities vulnerable to climate change. But it’s not the only way, Aviva believes. Funds raised through offset schemes also support projects aimed specifically at the rural poor: hence Aviva’s purchase of credits generated by IDEI’s treadle pump scheme (see p4). It has also purchased a total of 22,000 tonnes from CO2Balance, a Kenyan carbon management company that distributes super-efficient cookstoves which require 50% less wood than a traditional open fire. Kenya is not a country in which Aviva operates, but one it considers to “suffer more from the effects of climate change, both in terms of speed and impact” than most. The project not only reduces the number of trees felled for fuel, but has created over 200 new jobs in production. It also supports local industry by sourcing all materials used to build the stoves (bricks, cement and cast iron) in Kenya. Such local, human-scale projects, says Zelda Bentham, Senior Environment Manager at Aviva, “have a resonance with our employees”.

baseline impacts as quickly and effectively as you can.” It’s one echoed by Jonathon Porritt. “Offsets have to be a major factor,” he acknowledges, but they shouldn’t be purchased purely because they deliver the biggest reductions per pound or dollar. The basic ‘reduce first’ hierarchy is sound, he says, because “offsets alone will never get us to where we want to be. They must be seen as part of an integrated energy management strategy; and the main driver of that (where most companies are concerned) is energy cost and security of supply.” If you neglect opportunities to cut emissions, then any amount of offset spending risks being dismissed as “a gesture”, he warns.

History, Geography It’s all very well to cut emissions now – but what

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about those you’ve created in the past? They’re still out there in the atmosphere, warming the world. Offsets are arguably the only option in the carbon management toolkit that can make amends. Imagine you’ve finally achieved a completely zero-carbon lifestyle – but that your cumulative carbon emissions in the past total, say, 250 tonnes. You can only credibly claim to be carbon neutral if you take action now to offset that total. “Because emissions are cumulative and historic”, argues ClimateCare’s Edward Hanrahan, “it’s not enough to say ‘Reduce: then Offset’. It should first be ‘Offset’ (to tackle your past emissions); then ‘Reduce’ (your present ones as much as possible), then ‘Offset’ (the remainder).” Your emission is my emission Complacency is a dangerous thing. A year or so ago, British politicians were quietly congratulating themselves on achieving impressive cuts in carbon emissions. Until,

that is, studies began to emerge showing that a significant chunk of carbon pumped out of factories in China and elsewhere was the result of meeting demand for consumer goods in the UK. It became all too clear that if emissions incurred in the production of imports are included in the national total, the picture is very different. It’s hardly surprising. Much of what we consume is now produced abroad, and this applies particularly to carbon-intensive manufactured goods. So countries like China effectively emit on our behalf. This realisation has implications not just for Government, but for any company with an international supply chain. Globalisation is making a nonsense of national targets. Businesses such as Marks & Spencer are starting to realise this, says Iain Watt. “Being neutral in the stores and offices is one thing, (but) now they’re looking at how much carbon it takes to get a product on the shelves”, which includes assessing emissions from production and

Growing opportunities: a reforestation project in Uganda

The Co-operative Group The Co-op takes “a scientific approach, rather than a philosophical one”, says Paul Monaghan. Instead of buying offsets for image reasons, he says, it does so to bring it closer to achieving its goal of carbon neutrality. Since 2000, the Co-op has offset over 400,000 tonnes of CO2. It raises funds for the scheme by pinpointing a few carbon-intensive things that its customers commonly do, such as driving a car, buying a home, or taking a flight. As part of its mortgage scheme, the Co-operative Bank anticipates the carbon emissions of a household for the lifetime of the mortgage, and offsets one fifth of that total. The car insurance scheme works in a similar way, offsetting 20% of exhaust carbon. The Co-operative Travel offers customers the opportunity to offset the carbon emitted through aviation fuel. This is part of a wider initiative to reduce the footprint of the Group’s travel outlets by using

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electricity from renewable sources, as well as offsetting core management and funding research into sustainable tourism. Then, in 2007, the Co-operative Insurance Services announced that it would “go beyond carbon neutral”, offsetting 110% of all operational emissions, plus the impact of any unavoidable business travel. The Co-op buys its offset credits through ClimateCare and, like Aviva, supports the treadle pump scheme. It funded the installation of over 61,000 treadle pumps in 2008, expected to result in 27,500 tonnes of avoided CO2 emissions over a five-year period. And it also backs the Cambodian cookstoves initiative (see p18). It only buys voluntary offsets from developing countries, says Monaghan, because the relative social benefits are normally much greater – and there is more certainty that the projects would not have gone ahead anyway (in other words, not fall at the ‘additionality’ hurdle).

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Jaguar Land Rover Jaguar Land Rover offsets 100% of the CO2 emissions produced through its manufacturing assembly processes, and via a scheme launched in 2007, offers Land Rover customers the opportunity to offset the emissions of their first 45,000 miles – an option integrated at point of sale. Jaguar customers can also choose to offset emissions via the Jaguar website. “We’re in a position to invest in projects that would not otherwise get off the ground”, says Fran Leedham, Head of Environment and Sustainability, recognising the sheer weight of investment potential yielded by the group. “But it’s not a standalone thing”, she asserts. “It’s part of an integrated approach to carbon reduction.” Jaguar Land Rover is investing £800 million in research and development to improve the efficiency of its cars and manufacturing processes. But, with an average lead time of five years from the design of a car to its production, carbon offsetting enables the group

transportation. And then there are those incurred when the consumer puts it in her car and drives home. Such ‘secondary’ emissions are thought to be about ten times those incurred ‘in house’: so all the effort made to improve office and store efficiency and buy green energy is dwarfed by comparison. Some companies are taking this approach a step further, says Watt, extending it to all operations upon which the company depends, internal and external: “It’s a broader, more holistic view of the issue, that takes into account the company’s exposure to potential cost risk associated with carbon emissions”, he says. For Paul Monaghan, this all strengthens the case for offsetting. “The thing about the climate is that it doesn't give a jot where the carbon originates. Whether it's avoided in the UK, or offset in India, a tonne of reduction is a tonne of reduction is a tonne of reduction.”

unlimited potential to achieve more. Their present contribution to curbing the vast amount of carbon emitted is just a drop in the ocean. In 2007-8, voluntary offsetting prevented around 25 million tonnes of carbon dioxide from entering the atmosphere. During the same period, the US alone released around 6 billion tonnes… Offset totals may be small now, but many observers believe we have barely scratched the surface. As carbon costs rise, driven by the UK government’s long term emission reduction goals, says Jonathon Porritt, more and more companies will be keen to adopt policies that move them towards carbon neutrality. “At the moment the market does not reflect the real price for carbon”, he says. “The carbon price is so low it is not important to most companies”, but as the true costs are reflected and carbon prices rise, carbon offset volumes will inevitably, continue to grow. “We simply are not going to hit our targets (without securing cuts elsewhere)”, he argues. And that means “offsets must be a major factor” in tackling emissions.

Future positive? Whatever offsets’ achievements to date, there’s almost

to make an immediate difference. Jaguar Land Rover expects to offset around 3 million tonnes of carbon dioxide by 2012. “The scale of the offset scheme is very significant”, says Chief Executive at Forum for the Future. “It’s not a permanent part of their carbon strategy”, she clarifies. “It’s a way for them to do their bit while the technology catches up.” Jaguar Land Rover’s offset scheme supports emissions reductions projects in 14 different countries spanning Africa, Asia, Eastern Europe and South America. The portfolio includes the development of renewable energy sources, such as a wind farm in China and a series of small scale hydro plants in Tajikistan. These two initiatives combined are expected to avoid 150,000 tonnes of carbon emissions a year. The offset scheme also supports energy efficiency initiatives, such as low carbon lighting and cookstoves, as well as the promotion of new technologies that offer to reduce emissions in communities and industry alike.

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Offset Positive is a Green Futures Special Edition, produced in association with ClimateCare. ClimateCare: www.jpmorganclimatecare.com Editor: Martin Wright Contributors: Jeremy Bowden, Anna Simpson, Thalia Vounaki, Martin Wright

Green Futures is the leading international magazine on environmental solutions and sustainable futures. Founded by Jonathon Porritt, it is published by Forum for the Future, which works with leaders from business and the public sector to create a green, fair and prosperous world. www.greenfutures.org.uk www.forumforthefuture.org

Production: Katie Shaw Design: Declan Buckley Printed on Sylvan Silk paper, made from 100% de-inked waste and FSC certified sources, by Beacon press, using their pureprint® environmental print technology and vegetable based inks. Published November 2010 © Green Futures Registered charity no. 1040519 Company no. 2959712 VAT reg. no. 677 7475 70

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