Research debunks carbon offsetting myths

What are the main myths are carbon offsetting? The Unlocking Potential/State of the Voluntary Carbon Markets 2017: Buyers’ Analysis has listed four of them and proceeded to debunk them.

CARBON OFFSETTING MYTH 1: Companies that buy offsets are just buying their way out of their obligations.

Our research shows the opposite: companies are purchasing offsets as one of many ways to fulfil their carbon reduction obligations. Those companies that do buy offsets are doing so as part of an overall carbon management strategy and they mostly use offsets to tackle emissions they can’t eliminate internally. Some companies, like Disney and Microsoft, have created an internal “price on carbon,” where the company charges itself for every ton of carbon it produces and uses that income to purchase offsets. The idea is that incorporating carbon into the company’s bottom line will focus attention on emissions and accelerate reductions.

MYTH 2: Offsets don’t represent real reductions. 

In the early days of carbon markets in the early 2000’s, voluntary offset quality was a mixed bag—some projects were well-planned and some were not. A few unscrupulous “carbon cowboys” made headlines after their offsets were found to be double-counted or illegitimate. But carbon markets have come a long way since then. Carbon standards require developers to demonstrate that their emissions are:

MYTH 3: Offsetting barely makes a dent—it’s not sufficient for the large-scale change we need.

This one might be sort of true, but that’s because offsets are designed to be part of an overall reduction strategy and not a substitute for one. Companies surveyed in the report typically offset less than 2% of their total emissions, usually because they’re using offsets to compensate for just one segment of that total, like employee travel or the carbon footprint of a single product. Even the small percentage, however, represents a tangible impact on the climate. As more companies sign on to initiatives like the Science-Based Targets or the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA), the percentage of emissions they offset may go up.

MYTH 4: Offsetting is niche or arcane.

A lot of prominent brands use offsetting, including household names like General Motors, Delta Air Lines, and Microsoft, all of whom were among the top five buyers on the voluntary market in 2014.

Of the nearly 2,000 companies who publicly disclosed emissions data to CDP in 2014, 248 (17%) invested in projects to reduce carbon emissions outside of their immediate operations.

Of the 140 MtCO2e in offsets reported to the CDP, companies purchased nearly 40 MtCO2e (with the remaining companies either producing offsets for sale externally or offsetting internally within their supply chain). This is equal to the carbon sequestered by 1 billion tree seedlings grown over 10 years.

Would you like to know how to, incorporate Carbon offsetting into your business, contact Nishanthi on nishanthi.lambrichs@climateneutralgroup.com

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Green Drinks 2017: celebrating eco-transport

October 2017 was Transport Month in South Africa. In line with the occasion, the recent Green Drinks Cape Town event held on 28th September at GreenCape, highlighted and celebrated all modes of eco transport – from bicycles and electric scooters to carpooling and using your feet.

Like many other countries in the world, the transport sector in South Africa has a high carbon footprint and is, therefore, a key driver of climate change. “Transport in South Africa consumes the most energy of all sectors,” explained Khanyiselo Kumalo, Sustainable Transport Analyst at GreenCape, who kicked off our special EcoMobility Green Drinks event. The gathering took place a month ago at the offices of GreenCape, which was established to promote the development of the green economy in the Western Cape.Kumalo added 40% of the Rainbow Nation’s emissions are due to from how people, goods, and products travel from A to B. Personal transport is a key culprit. “54% of commuters use their own cars for regular travel,” he said, noting that besides emissions this causes traffic jams.

Driving change with EcoMobility

This is where EcoMobility comes in, a term used to describe travel through integrated, socially inclusive, and environmentally friendly options. This includes walking, cycling, public transport and other climate-friendly innovative ways of moving around including electric forms of transport.
“Our electric scooters are clean, green, and cost-effective,” said Andy Le May, Founder and CEO Ewizz Electric Scooters, in his presentation. “They produce zero emissions and need zero petrol and zero oil. Electrics are our inevitable transportation future.”

Fighting traffic jams and emissions

Tech entrepreneur Chris Megan added that to reduce transport-related emissions and traffic jams, we also need to relook the way we are using our personal cars. “Cape Town has the worst congested roads in South Africa,” he said, noting that the Mother City’s CBD has to absorb 260,000 cars every day.

That is why he developed uGoMyWay, a carpooling and lift-sharing application that connects drivers and passengers to share rides and associated costs. Megan: “The only sustainable solution to emissions and congestion is to have significantly fewer private vehicles on our road.”

Fewer cars, better streets

Marcela Guerrero Casas said she agreed that carpooling is a step in the right direction. However, the best way to reduce emissions and congestion is for people to walk or cycle where they can. Her social venture Open Streets Cape Town aims to sensitize Capetonians into that direction by changing how they use, perceive and experience the streets around them.

The organisation does this by regularly closing off parts of the Cape Town for motorised vehicles, transforming them into open spaces for pedestrians. “We believe streets should enable safer and more cohesive communities, provide platforms for creative expression of local cultures and values, serve as places for recreation and social interaction, and provide choice in how we move around the city,” Guerro Casas said. “By embracing the concept of Open Streets Cape Town, all of us can create shared places that embody respect for all and help bridge the social and spatial divides of our city.”

More talks followed, including a presentation by David Parry-Davies, editor of Enviropedia magazine, about the 2018 Eco-Logic Awards and a snapshot on the economics of decarbonising transport in South Africa by Tara Caetano, Energy Economist at the University of Cape Town.

According to Franz Rentel, one of the Organisers of Green Drinks Cape Town and director of Climate Neutral Group in South Africa, The Special edition of Green Drinks was a huge success.  “Some of the talks were true eye-openers,” he said, adding that the fact that the event was well-attended can be seen a great sign. “We had people from all walks of life and all industries attending. It shows that the concept of EcoMobility, in a world that is dominated by fossil fuels, is becoming an increasingly important priority. This is a fantastic step forward!”

Words: Miriam Mannak, Social Media and Content / Climate Neutral Group in South Africa, 24 October 2017

ABOUT GREEN DRINKS CAPE TOWN: Green Drinks is part of the Green Drinks International movement. Now active in 600 cities worldwide as a casual, unstructured event that brings together environmentally-minded Capetonians for a relaxed, agenda-free evening of networking and great conversations. Whether you have been working in the environmental and sustainability fields for a while or are a newcomer: this is your chance to meet like-minded people who are working for NGOs, government and business as well as academia and researchers to share information and make new friends. Although Green Drinks Cape Town aims to be an organic and casual event, it tends to lead to new synergies of ideas and new business connections. Attending the event could even lead to landing your new dream job! 

 Next Green Drinks: 26 October at Tjing Tjing Rooftop Bar, Cape Town CBD. Bring your friends, thoughts and ideas: everyone is welcome!

Is South Africa Ready for Electric Cars?

By: Jana Hofmann, Leading Researcher, Climate Neutral Group, 23 October 2017

Electric cars are on their way to hit the global automotive market. Countries like Great Britain and France have published their intention to ban sales of petrol and diesel cars by 2040 as part of their ambitious plan to meet their targets under the Paris Agreement and to deal with high pollution in cities. Technological innovation, such as long-lasting battery and increasing number of charging points is likely to drive down the costs of electric cars and to encourage ever more consumers to buy electric vehicles. According to research conducted by the International Energy Agency (IEA), China, Japan and US are currently the leading markets for electric car sales.

We have taken a closer look at the development of electric cars in South Africa and to what extent electric vehicles can have an impact on country’s emissions and improve air quality.

(Source: IEA, 2017)

Why should South Africa go electric?

South Africa is the most developed and technologically advanced country in Africa. Its economy is dominated by a large energy intensive coal mining industry. In terms of greenhouse gas emissions, the electricity sector accounts for about 66% of SA’s CO2 emissions total, followed by the transportation sector with 13%, the industrial sector with 12%, the residential and commercial and public service sectors with 6%, and the other sectors with 3%. Road transportation is responsible for the largest fuel consumption in the transportation sector accounting to 91% of overall emissions.

The transportation sector is still dealing with the legacy of apartheid spatial planning, which resulted in unequal urban development and fragmented human settlements forcing people to travel long distances from home to work. However, the transportation sector is regarded as a crucial engine for economic growth and social development in the country. For example, owning a private car is a key symbol of economic success and represents a big aspiration for many South Africans. While the vehicle ownership and the demand for transport is steadily increasing in South Africa, transport is having a significant impact on air quality, land resources and biodiversity. We have already witnessed a brown-coloured smog over Cape Town during some winter and summer months. The accumulation of gaseous and particulate pollutants can cause increased risks of respiratory diseases, lung cancer and heart disease, and impose a burden on the medical health care system resulting in substantial medical costs.

Under the Paris Agreement, South Africa has made a commitment to reduce its GHG emissions by 34% by 2020 and 42% by 2025 under the business-as-usual (BAU) levels. The National Climate Change Response Paper directly addresses the transport sector, aiming to improve the efficiency of the government vehicle fleet by 2020 and to encourage new efficient vehicle technologies, such as electric vehicles. The Department of Transport published its “Draft Green Transport strategy” revealing that it plans to roll out 3 million electric cars on the road by 2050, with R6.5 trillion invested in the industry over the next four decades. However, is this a realistic plan?

What is the current situation of electric cars in South Africa?

Currently, there are only 300 pure electric cars out of 7 million conventional vehicles on the road. There are only 40 stations at which electric cars can be charged. Local manufacturers are charged a 25% tax duty on electric cars, while 18% of import tax is applied to conventional vehicles. On top of the import tax, there is also a luxury tax to pay as only a few electric vehicles are sold in the country. The local manufacturer are BMW and Nissan. The starting price of an electric car is around R500,000 ($38,000 or €32,000). It looks like the electric car market currently attracts consumers in the high-end market. To enable electric vehicles to become mainstream cars, their purchase price must be adjusted to make it affordable for an average consumer. However, what are the costs of running an electric vehicle?

The charging costs depend on the vehicle’s efficiency. For example, Nissan Leaf 2016 model can drive up 190 km on a full battery, consuming 21.25 kWh per 100km. Based on the research conducted by the uYilo e-Mobility Technology Innovation Programme at Nelson Mandela Metropolitan University, the average South African drives approximately 30,000 km per year, which is equivalent to R30.40 per 100km or R9,120 at the household kWh consumption rates (Eskom, 2017). Compared to the current petrol price of R12.81 it appears that an electric car is much cheaper to run than a conventional petrol vehicle. Although an electric car requires less attention in terms of a regular service (e.g. changing clutch, radiators or fuel pump), it may need a specialised maintenance due to its advanced technology. These costs are still unknown.

To be in line with the efforts to reduce carbon emissions and to improve air quality in urban areas, the City of Cape Town has taken progressive steps and scheduled the arrival of 11 electric buses by the end of 2017. The City of Cape Town aims to become the first city on the African continent to use electric buses for public transport. The electric buses will be supplied by the Chinese green energy firm BYD, who will also provide the City of Cape Town with charging stations for buses, data management systems, spare parts, technical support, training for the bus drivers and fleet maintenance services to replace batteries if required. The electric buses aim to be in operation in 2018. This initiative will not only help reduce air pollution in the city, but also create jobs for local residents.

Although electric cars are the key to improving local air quality and mitigating climate change, I argue in my study conducted at the University of East Anglia that it is an ineffective and counterproductive activity to promote electric cars as long as the electricity sector is largely powered by coal. The introduction of electric cars is sensible if the electricity sector is decarbonised by using renewable energy sources.

Currently, South Africa does not have sufficient infrastructure yet to support the roll out of electric cars. The electric vehicle industry is under-developed and heavily taxed. Electric cars are still a long way from becoming mainstream vehicles in the country. However, we are seeing an inevitable global trend towards hybrid and electric cars. South Africa can either be a passive player or embrace the technological change. While the country is making slow efforts to decarbonise its electricity sector, it can introduce some practical steps, such as implementing subsidies and lowering import duties for manufacturers to encourage electric cars entering the market.

While electric cars have the potential to reduce CO2 emissions and to minimise other harmful pollutants, they will not resolve the traffic congestion experienced by commuters in major South African cities like Cape Town, Johannesburg and Durban. To resolve this problem, all three tiers of South African government, local, provincial and national need to promote less use of private cars on the road, make more investments in public transport and to introduce variety of modes and initiatives favouring pedestrians and cyclists

For more information, contact Jana Hofmann on jana.hofmann@climateneutralgroup.com

Colombia’s carbon tax: is South Africa next?

In June 2017 Colombia, as the third developing country in the world after Mexico and Chile, has successfully passed new environmental and carbon tax legislation. This new scheme allows Colombian organisations to offset 100% of their tax liabilities. What does the Colombian carbon tax entail and what type of carbon offset projects are allowed to participate? We compare and contrast the Colombian carbon tax with South Africa’s proposed carbon tax bill and offsetting rules, with the objective to discuss the importance of a carbon tax law in South Africa.

Colombia’s commitment to climate change

Colombia has successfully ratified the Paris Climate Agreement, committing to reduce emissions by 20% by 2030, 30% below Business-as-Usual (BAU), with international support. President Juan Manuel Santos, who was inspired by Al Gore’s words, has been debating the introduction of the carbon tax since 2011. The Colombian government admitted that more than 70% of Colombian territory is vulnerable to global temperature rises. To be more precise, the majority of the population lives in the elevated Andes, where water shortages and land instability are already a reality, and on the coast, where the increase in sea level and floods can affect key human settlements and economic activities.

While many critics have expressed their scepticism regarding the sincerity of Juan Manuel Santos’s administration concern for environmental sustainability, the Colombian Government ultimately approved a tax on fossil fuels (Part IX, Impuesto Nacional al Carbono) equivalent to approximately US$5/tCO2e payable by producers and importers of fuels in December 2016. Furthermore, in June 2017, the Colombian government finalised the rules and conditions of carbon offsetting to allow high-quality carbon credits to be used against the carbon tax obligations. Unlike South Africa, where the use of carbon credits is proposed to be capped at only 5% to 10%, Colombian entities can offset 100% of their tax liability by investing in carbon offset projects. In addition, carbon credits generated outside of Colombia are eligible until the end of 2017, after which only Colombian carbon credits can be used. By allowing a cap of 100% as well as non-domestic credits during the first few months of the scheme, helps boost market liquidity – crucial in the early stages of any new domestic carbon scheme.
We have briefly reviewed the carbon tax and offset rules in Colombia and compared them to South Africa in the table below:

Colombia and South Africa are considered upper middle-income countries. Both countries are rich in natural resources (e.g. gold, silver, platinum, oil and coal). Although Colombia faces a number of challenges, such as armed conflicts, illegal drug problems, disjointed urban and rural contexts, and limitations in subnational administrative capacity, the country has stepped up the fight on man-made climate change. It has followed the example of other Latin American countries, such as Mexico and Chile, who also put a price on carbon and make fossil fuel industries accountable for their emissions.

Where does South Africa stand?
South Africa is an important and active player in global climate change negotiations. The country has a very strong national climate change response agenda and a highly advanced regulatory and law enforcement framework. Nevertheless, the country faces political instability and corruption that unfortunately is delaying the enforcement and implementation of environmental regulations, and discourages private investment and the uptake of low carbon technologies. The delay in the signing of the power purchase agreements of the Renewable Energy Independent Power Producer Procurement Programme (REIPPP) is one example of many.
The South African carbon market is currently in limbo and if the carbon tax bill does not become law sooner rather than later, the country will miss the opportunity to ensure a much needed, and overdue, transition to low carbon economy which will help generate more employment and make South Africa more globally competitive. Therefore, it is crucial that the revised carbon tax bill, which was supposed to be tabled in Parliament mid-2017, is released as soon as possible. Whilst Colombia has transparent and straightforward carbon tax rules and offsetting legislation, South Africa is still in process of clarifying and simplifying the procedures. How long will it still take South Africa to sign the carbon tax into law? The government has a chance to follow the example of Latin American countries and to become a role model for all African countries in cutting its emissions. The challenge the South African government faces is not only to design and to implement an effective carbon tax and carbon offset regulations but also to carefully balance the energy needs, development priorities and environmental objectives.

Author: Jana Hofmann, Leading Researcher, Climate Neutral Group. For more info, contact Jana at jana.hofmann@climateneutralgroup.com

Emissions offsetting: closing the main carbon tap of your business

By Danielle de Bruin, Programme Manager Mobility / Climate Neutral Group in The Netherlands

A car leasing company called us recently with a query around sustainability and transport. “We are not offsetting emissions because we think prevention is better” was one of the statements. Upon concluding our telephone conversation, during which we agreed on many points, one issue lingered on.

Prevention is better than offsetting: is that true? To find an answer, we will need to look at two things:

1. Can companies prevent climate change just by reducing their carbon emissions?

The answer is no. Reducing emissions is not enough. Of course, every little bit helps and lowering your overall emissions from your fuel consumption and energy use is something you should definitely do. This is however not where it ends.

After all, if your kitchen is flooding because you have left the tap open, you must close the tap and mop the floor. By reducing your company’s fuel and energy consumption, thus carbon footprint, you are closing your carbon emission tap only a little, say by up to 20%, if you are doing everything right.

The problem is that you can’t ignore the remaining 80%. A transition to electric transport could be a structural solution, but it could take many years before we reach that point. Do we have time to wait for this? I don’t think so. You can’t say: “I am sorry your kitchen is flooded. I will return next month to close the tap.”

2. Is there a difference between reducing emissions and offsetting?

The answer is no. Please allow me to explain why.

In the Netherlands, our infrastructure is largely based on fossil fuels. We fill up our cars with petrol and diesel and the bulk of our electricity is generated from coal. We all know how much effort it takes to change this: coal plants aren’t after all easily closed. In essence, we are all on the fossil fuel highway together, whilst making hairpin bends towards a more sustainable economy. Meanwhile, dozens of emerging markets around the world are developing rapidly, and are embarking on a similar path as the developed world a good few years ago. These countries will have to make the same hairpin bends in 20 years’ time to get rid their fossil fuels.

What is offsetting all about?

Offsetting means investing in sustainable energy projects in countries which are developing at a fast pace to prevent reliance on fossil fuels. One can, for instance, invest in wind turbines in India. With this, you are investing in clean, sustainable electricity grids from the word go – preventing emerging economies from becoming dependent on fossil fuels.

In other words, does offsetting equal reduction?

The answer is: yes. Offsetting is much more than closing the tap or mopping the floor. Offsetting your emissions means you are aware of the fact that greenhouse gases originate from several taps and that you have to close the largest, not just the most obvious. We essentially all benefit from offsetting.

The following day, I called the lease company and explained the above. The result? The firm in question is now one of our clean transport ambassadors in The Netherlands, and it is persuading their clients to offset their emissions. What about you?

The above is applicable to South Africa. Please contact us to see how your company can start reducing and offsetting its carbon emissions.