Introduction: what is offsetting?
Offsetting is nothing new – offsetting schemes and providers have been around for more than ten years, and much has been written about them already. Despite renewed focus at the Copenhagen conference (COP15) on the role of carbon credits in climate change mitigation, there remains considerable lack of clarity on what they actually are, how they work, together with their advantages and potential pitfalls.
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Background
After a long period of inaction on climate change, the US is now pushing ahead with a range of regulatory mechanisms aimed at reducing its greenhouse gas emissions, the centrepiece of which is the Climate Change Bill, also known as the Waxman-Markey Bill. While the Bill is not yet guaranteed to become law, there is increasing certainty that US business will face regulation of its carbon emissions in the near future.
Why is data collection so important?
As a result of mounting evidence of climate change and increasing public concern, existing regulatory mechanisms to reduce GHG emissions are being extended from energy-intensive industries to cover large non-energy intensive organisations. The UK’s Carbon Reduction Commitment, for example, includes large service based corporations, local authorities and government. In addition, large corporations are now increasingly expected to report their environmental performance, including GHG emissions, as a result of customer, stakeholder and investor demands.
What are emission factors?
Carbon emission factors, sometimes called carbon conversion factors, are used to calculate the carbon emissions arising from an activity. For the greatest accuracy, the best way to measure carbon emissions would be to monitor them directly as they are emitted, for example by placing a sensor in a power station chimney. Given the large number of different sources of carbon emission that can be associated with a particular activity, this method would quickly become impractical. To simplify the calculation, emission factors were developed by measuring the average carbon emissions associated with a particular activity. Given the complexities of measuring carbon emissions directly, developing emission factors is a technical and scientific challenge.
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What is the CRC?
The forthcoming Carbon Reduction Commitment (CRC), scheduled to start in April 2010, will be the first ‘cap and trade’ scheme aimed at reducing greenhouse gas emissions from non-energy intensive industries. Unlike previous emissions trading schemes, the CRC aims to encourage reductions in electricity use rather than directly limiting emissions from burning fossil fuels.
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