Carbon offsetting schemes have a vital role to play in the ongoing effort to tackle climate change, and corporate-led programmes can have a huge impact
The destruction of vital forests in Zambia is threatening precious wildlife and reducing biodiversity. With deforestation in sub-Saharan Africa driven by a complex mix of factors, conservation is an issue here that seems unlikely to be tackled by multinationals based in the developed world.
Yet a long-term forest conservancy project helping farmers and communities in Lusaka Province was exactly the sort of initiative that attracted the attention of BP Target Neutral, a non-profit programme run by BP to help customers reduce their emissions. Why? Because of its carbon-offsetting schemes.
In an effort to tackle climate change, firms have been voluntarily engaging in carbon offsetting since the 1990s. This is a method of balancing the carbon footprint of an organisation or its customers, thereby mitigating the environmental damage it causes.
So, for every tonne of CO2 emitted, the equivalent is removed elsewhere via its investments in environmental projects around the world.
This process, also known as buying carbon credits, is usually a secondary step in emission reduction for leading firms. So says Antoine Diemert, programme director at the International Carbon Reduction and Offset Alliance (ICROA), a not-for-profit organisation working to define international best practice in this field.
“Our members look at their own carbon footprint and first make reductions internally wherever possible,” Diemert says. “Only then do they look to offset their residual emissions, which are big in some companies.”
There is a “healthy appetite” to participate in this so-called voluntary carbon market, according to a recent research report from the ICROA and Imperial College London.
Business Leadership on Climate Action: Drivers and Benefits of Offsetting states that in 2016 “some 43.5 million carbon credits were removed from the marketplace – the equivalent of eliminating 9.3 million cars from the road for a year”.
The report adds that offsetting has a vital role in bridging the gap between the reductions pledged by the signatories to the 2015 Paris accord and what they need to do to keep global warming below 2°C and so avoid catastrophic climate change.
Offsetting also delivers significant socioeconomic benefits. These include conserving natural ecosystems and biodiversity; improving access to clean water and effective sanitation; and alleviating poverty and ill-health.
An earlier report by the ICROA and Imperial College, 2014’s Unlocking the Hidden Value of Carbon Offsetting, estimated that removing 1 tonne of CO2 from the atmosphere through offsetting will deliver an average of £500 in socioeconomic and environmental benefits to the communities involved.
BP Target Neutral has been investing in a host of offsetting schemes. One based in north-western Mexico, for instance, is providing high-efficiency cookstoves for rural communities.
These are designed to reduce the amount of firewood used for cooking. Open fires, on which a quarter of the country’s 130 million population relies, are inefficient and contribute to deforestation. They also present a serious health risk.
The new stoves can reduce households’ wood consumption by up to 58 per cent, helping to reduce deforestation and preserve biodiversity. Each one is expected to cut about 2.7 tonnes of CO2 a year.
They also offer cost savings (reducing users’ demand for increasingly expensive fuel woods); health benefits (reducing exposure to smoke from open fires); and female empowerment (reducing the amount of time that women and girls are expected to spend on gathering wood).
Between 2012 and 2016 the project’s supplier, C-Quest Capital, and its partners installed 25,000 high-efficiency cookstoves. They are now targeting 35,000 installations a year by 2019.
Transforming animal waste into a precious resource
There’s a wide variety of carbon-offsetting opportunities for businesses to get involved with to help achieve a goal of carbon neutral status.
And while reducing greenhouse gas emissions across internal operations is the first priority in any carbon management strategy, companies such as M&S have acknowledged that buying carbon credits allows them to have a greater impact “far more quickly than only making reductions in our own operations”.
The beauty of offsetting schemes, however, is not just their positive impact on the environment but that they also have a significant socio-economic dimension.
Diemert explains that they can bring about improvements for communities such as preserving local natural ecosystems, bettering health and sanitation conditions, and helping to drive economic growth.
“These social benefits that are derived as a result can be motivation for corporates to buy carbon credits,” he says. “Projects range from tackling deforestation and biogas programmes to distributing clean cookstoves.”
The 2016 study by Imperial College London calculated the economic, environmental and social value of different kinds of projects.
The research established that cookstove programmes deliver an additional £545 in social, environmental and economic value per tonne of CO2 reduced.
A biogas project to deliver sustainable energy through biodigesters and move away from relying on solid fuel can deliver additional value equal to £229 for every tonne of carbon emission reduction.
One such example is a biogas programme in a particularly disadvantaged area of China, the Sichuan province, which aims to bring clean and affordable energy to a million low-income rural homes that own livestock.
The project, which forms part of BP Target Neutral’s portfolio, involves installing biodigesters that store and turn manure into a methane-based product to be used as fuel for cooking stoves, rice cookers, water heaters and lighting.
Effectively, it means a switch from coal as the main energy source used by families.
Data as at November 2016 shows that more than 395,000 heavily subsidised biogas plants had been installed since the project began in 2012.
The programme has prevented 1.9 million tonnes of equivalent carbon dioxide from being emitted into the atmosphere. Further emissions have been reduced simply because manure is not left to decompose in open deep pits.
The scheme is delivering a number of key co-benefits.
First, since biogas produced by the digesters burns cleanly without producing ash or smoke, it’s less of an indoor air pollutant, thereby reducing the risk of respiratory infections such as pneumonia and improving health and wellbeing.
Households have also been able to enjoy improved sanitation by connecting toilets to the biogas systems. In addition, it’s a more cost-effective solution for households that no longer have to buy coal for their cooking.
This particular project has also brought a significant economic boost for the region’s communities. Originally set up as a government programme, carbon finance has been used to scale up the project.
Across the region, there are more than 10,550 staff working to install biodigesters in rural households as part of that programme.
Around 2,000 people, mainly farmers and bricklayers, have been trained as biogas technicians to build the biogas plants and are employed on a permanent basis by the Sichuan Rural Energy Office.
Life goals – for industry
Businesses are increasingly aligning their socially responsible polices with those aimed at caring for the climate.
The upshot is a variety of corporate-led programmes that have a broad socioeconomic impact and do more than only address the carbon agenda.
Two developments have been the spur for a greater focus on sustainability – the signing of the Paris Agreement in 2015 aimed at trying to prevent catastrophic climate change and the launch of the UN’s Sustainable Development Goals in 2016.
The 17 targets are a universal call to action to end poverty and protect the planet, with businesses seen as playing a key role in helping to bring about positive and lasting change.
Many organisations are now working to calibrate their policies with these hugely valuable goals.
A PwC report, SDG Reporting Challenge 2017 – Exploring business communication on the global goals, reveals that 62 per cent of companies mentioned them in their reporting.
Significantly, 79 per cent of companies that prioritised the goals said they were taking action on climate change (Goal 13) – the highest proportion than for any other of the goals.
As businesses look for ways to tackle the Sustainable Development Goals as well as meet their commitment to reduce harmful emissions, high-quality carbon offsetting schemes can be an effective vehicle to addressing both, hand in hand.
Toshiba, for example, has embarked on a range of projects that balance its CO2 emissions but also deliver community-level “livelihood and environmental” benefits in Africa.
Its combined activities cover 10 of the 17 Sustainable Development Goals, including ending poverty, ending hunger, ensuring healthy lives and promoting wellbeing, and ensuring access to water and sanitation for all.
One project is providing access to safe water for communities in Uganda by repairing boreholes that have fallen into disrepair, so preventing families from having to use unsafe water from streams and swamps. Carbon credits are generated since less wood is needed to boil water to make it safe.
The aim is for an estimated 41 million litres of safe, clean water to be provided by this year.
BP Target Neutral’s portfolio of emission reduction projects is also assessed with the Sustainable Development Goals contribution in mind so bringing long-term benefits for local communities.
In addition, projects must comply with standards approved by the International Carbon Reduction and Offset Alliances that ensure emissions reductions are real, measurable, permanent, additional, independently verified and unique.
A hydropower programme in China, for example, is meeting three targets: providing affordable and clean energy, offering decent work and economic growth and improving industry, innovation and infrastructure.
A network of 95 small run-of-river hydropower stations in rural areas of south-western China that generate electricity has eradicated the need for fossil fuel-based power plants, reducing more than 544,310 tonnes of CO2 per year.
The scheme means that communities and families now have electricity 24 hours a day, improving reliability of power. However, the projects have also benefited from carbon finance, providing funding for additional activities and resources such as agricultural training, a public library, eco-education programmes for children and hydropower station safety training.
In addition, hundreds of new jobs have been generated during construction and in running the micro-hydropower stations.