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4. Offset Project Types (last edited for revision 1.2) Most companies invest in a variety of different carbon offset projects. Most projects can be broadly categorized into three main types: renewable energy, energy efficiency and sequestration projects. These three categories are discussed in more detail below. Projects that do not easily fit into one of the three categories include projects that reduce non- CO2 emissions, for example: •
Flaring of landfill gas, which is comprised of about 50% methane. Methane
is about 21 times stronger as a greenhouse gas than CO2. Flaring landfill
gas reduces these methane emissions. In this paper, we focus on the three main categories of renewable energy, energy efficiency and sequestration. We do not provide further analysis of projects that do not fit these categories. This is not a reflection of their quality but the result of the limits of this paper. Projects are implemented either internationally or domestically. We discuss below the implications of project location. Renewable
Energy 4.1
Renewable Energy Economic, geographic, social, and political factors all need to be considered to establish the feasibility of renewable energy projects. Many renewable energy projects have high up-front capital costs, although they may offer high rates of return (Martinot, 2000). Legislative hurdles and local opposition to a project can further complicate the implementation of such projects. Projects that are implemented in poorer nations are often much more cost effective but such projects can easily be compromised by a lack of local capacity and the needed infrastructure to operate the new technology. Project staff may introduce the new technology and then leave the project site without creating a sustainable situation under which the new technology can be maintained and repaired (Martinot, 2000; Turkenburg, 2000). Moving away from fossil fuel based electricity production to renewable energies is crucial for the long-term protection of the global climate. We therefore recommend offset projects that lead to the production of renewable energy. 4.2
Energy Efficiency Energy efficiency projects need to be carefully evaluated
for their economic, environmental and social benefits. In developing nations,
new technologies need to be introduced alongside building the necessary
local capacity to make the projects sustainable (Martinot, 2000). Because of the decentralized nature of energy-efficiency projects, monitoring and evaluating energy efficiency projects can be challenging. Establishing a baseline and estimating emissions reduction for small decentralized projects is difficult and labor intensive. Despite the issues that can arise with energy efficiency projects, such projects have great potential in decreasing greenhouse gas emissions. Well implemented energy-efficiency projects are among the best offset projects. 4.3
Biological Sequestration (1) The amount of carbon sequestered by vegetation depends upon a number of factors including the age of the trees, their growth rate, local climatic conditions and soil conditions. Additionally, the carbon intake may be altered over time as temperatures and carbon dioxide concentrations in the atmosphere change with global warming. While greater concentrations of carbon dioxide may increase the growth of trees, greater cloud cover can reduce light and thus limit growth. Additionally, photosynthesis is reduced when temperatures are above optimal levels (Clark, 2003; Brown, 2000; Osborne, 2005). If global warming is to be controlled, a transition away from fossil fuels is imperative. Therefore, carbon sequestration should not be seen as a long-term solution. Predictions state that only 10% of human emissions over the next 100 years can be offset by forests (Hamilton, 2002). One of the largest challenges that arise with carbon sequestration is measurement. The carbon cycle in trees is complex. During the day, plants synthesize carbon dioxide yet at night and under stress situations (e.g. drought and heat) the process reverses and plants respire CO2. Furthermore, the carbon cycle is altered by seasonal changes in temperature and precipitation (Hadley, 2002). Leakage must also be considered to properly measure project benefits. Leakage is the unanticipated loss of carbon reductions. For example, farmers may be moved off a given plot of land to allow a project to plant trees for sequestration, but the farmers may clear trees in another location to begin farming there. Thus the project may not be able to claim a net reduction in carbon emissions (Brown, 1999). A final issue concerning measurement is permanence. For a LULUCF project to realize its full potential of sequestration, it must last. There are two main ways that the benefits could be negated. First, natural events such as fires, pests, or diseases could destroy a forest. Second, the forest could be cut down by human activity. In either case, the intended sequestration would be negated (Brown, 1999). Additionally, the age of the forest impacts carbon uptake; young forests absorb more carbon than older ones but mature forests store more carbon per acre in trees and soil and their biological value is also much higher. A tree plantation that is harvested at relatively short intervals and then replanted can have a high rate of carbon sequestration. Yet, while such a system of monoculture may have high carbon benefits, its ecological value is low, specifically in terms of biodiversity. Ultimately, the exact tons of carbon sequestered might be less important than considering which projects help the transition to a low carbon economy. Both energy efficiency projects and renewable energy projects promote a more efficient, lower carbon economy, while LULUCF projects constitutes at best a stop gap measure that might ensure the protection of valuable biodiversity in old growth forests, at worst it can negatively impact biodiversity and also hamper the development opportunities of poor subsistence farmers in developing nations. Clearly, land use management and reforestation projects are vitally important to protect and restore watersheds, ensure clean drinking water and protect biodiversity. Yet we feel that such projects should be implemented to secure exactly those benefits and not to achieve carbon sequestration. We do not mean to discredit all LULUCF projects. May of them are well planned and implemented. But because of all the uncertainties involving bio-sequestration projects, and because of the vital importance that renewable energy and energy efficiency play in guiding us towards a low-carbon society, we do not recommend buying voluntary carbon offsets that are largely based on LULUCF projects. Added comment
1/27/2007: 5.
Offset Project Location 5.1
Projects in Developed Nations (Annex 1 Countries) Cumulative
CO2 Emissions from 1800-1988: Projects in the North are often not as cost-effective to implement as projects in developing countries. Additionally, those who feel a moral responsibility to help developing nations may not be satisfied with these projects. Large-scale domestic projects, such as wind farms, are susceptible to high upfront costs and political hurdles. However, technical know-how and verifiability of projects are easier to establish domestically than in a developing nation. Yet there are also some drawbacks to domestic projects implemented in rich nations. Some of the issues involving double-counting and the risk that voluntary offset projects just replace other carbon mitigation measures which would have had to be implemented in order for the country to meet its Kyoto obligations discussed in Section 3.2. Also, aside from large renewable energy projects, voluntary domestic carbon projects are often small-scale. That means that the change they facilitate is marginal and does not facilitate more comprehensive policy change. On the contrary, the argument can be made that such projects hamper more forceful regulatory action (see Section 2.1). 5.2 Projects in Developing Nations (Non-Annex 1 Countries) International projects are usually implemented in developing nations because of their cost effectiveness (Hanson, 2004). The Clean Development Mechanism (CDM) of the Kyoto Protocol puts in place a framework to implement such projects. It allows industrialized countries with a greenhouse gas reduction commitment to invest in emission reducing projects in developing countries as an alternative to what is generally considered more costly emission reductions in their own countries. The CDM is supervised by the CDM Executive Board and is under the guidance of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). Clients may be attracted to projects in developing nations for moral reasons. Developed, rich countries are largely responsible for creating climate change which in turn will cause most harm in the poorest populations of developing nations. In a best-case scenario, international projects can bring resources, technology, infrastructure, and know-how to poorer nations and provide many additional benefits to the country (Edwards, 2003; Agarwal, 2002). However, there are several criticisms of international projects. First, such projects allow developed countries to avoid domestic emissions reductions. Without strong domestic political action the dependence on carbon fuels in developed nations will continue to grow and renewable energy sources will not be sought. Therefore emissions will continue and the threat of climate change will increase (Agarwal, 2002). Second, developed nations are placing others at a long-term disadvantage. When all the cheaper emissions reductions are made by foreigners, developing nations will later only be able to make the expensive changes. Additionally, as the Kyoto Protocol does not require developing nations to reduce their emissions during the first phase , they will not be credited for these reductions (Agarwal, 2002). Finally, there are also monitoring and evaluation concerns. To be sure that emissions reductions do occur, projects must be adequately monitored and evaluated. First, an accurate baseline for emissions must be gathered and then the project must be monitored to assure proper functioning. After that, long term follow up is needed. These evaluative goals are particularly difficult to meet when the project occurs on a small scale and operates in a remote location (Meyers, 1999). It is also worth pointing out that many carbon offset projects are somewhat experimental in nature, for example, introducing a new technology. The burden when such a project does not live up to expectation represents just a small cost for Northern institutions, but a failed solar power project in an Indian village can have far reaching negative consequences on that community. Apart from the primary problem – a lack of reliable power supply – unsuccessful projects hamper associated infrastructure development and opportunities to build capacity. The advantages and disadvantages of projects in developing nations therefore depend very much on how projects are designed and implemented . Because there are also major concerns with projects implemented domestically, we do not recommend one over the other but we stress the importance of projects that can prove clear additionality, sustainable development benefits, permanence, and contribute to the long-term goal of a carbon free, highly energy efficient economy. High standard and verification requirements such as the Gold Standard and the Voluntary Gold Standard help maximize the benefits of projects implemented in non-Annex 1 countries. Back
to the top 1 Much research is currently done on geological sequestration – the underground injection of CO2 emitted by fossil fuel power generation. At this point, geological sequestration is very costly and does not offer an alternative to the transition from fossil fuels to renewable carbon-free sources. |
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