Carbon Offsetting: Now or Never!
This year’s Climate and Society class is out in the field (or lab or office) completing a summer internship or thesis. They’ll be documenting their experiences one blog post at a time. Read on to see what they’re up to.
By Tom Witt, Climate and Society 2014
I’m saving quite a lot this summer. Purchasing 1000 Certified Emission Reductions (CER) will not only offset my lifetime carbon footprint, but also help support the Adaptation Fund of the UN Framework Convention on Climate Change (UNFCCC). The associated cost should be linked to the social cost of carbon — that is the marginal cost for society of emitting one ton of carbon — but at the moment, it’s not. But first let me introduce myself. Since June I’ve been an intern in the Communications and Outreach Programme of the UNFCCC, gaining insight of the processes within the Climate Change Secretariat.
Market-based mechanisms, through which offsets are traded, are a good indicator of the social cost of carbon. CERs were trading around $16 per ton of carbon dioxide equivalent or about $58 per ton of carbon. This is somewhat close to the peer-reviewed social cost of carbon average of $43 per ton of carbon. There’s a high degree of uncertainty attached to that number, though, due to a number of factors such as climate sensitivity and the economics of climate change.
Price Drop of 99 Percent
Besides the other developed countries that ratified the Kyoto Protocol, the largest demand for CERs has been coming from the cap and trade scheme of the European Union. The 2011 economic downturn and low mitigation targets by countries contributed to both an unintentional reduction in emissions and plunging CER prices. Today, a CER is traded for $0.22. Prices have even sunk below $0.15 some days. This dramatic price drop has limited the Clean Development Mechanism’s (CDM) ability to deliver real emission reduction and incentivize sustainable development, as the funding is no longer there.
Greening the Blue
The UNFCCC is now exploring options to increase demand for the CDM and its CERs. One of their strategies has been to start their own climate neutral campaign. This includes a three step process: calculating one’s climate footprint, reducing what is possible and offsetting the remaining footprint. The UNFCCC organization has been climate neutral since 2012, benefitting from the highest environmental standards applied at the headquarters. Other UN institutions follow this example, but for some it is harder: Peacekeeping Operations still have by far the largest footprint.
The Climate Change Secretariat takes it to the next step: Employees are encouraged to look at their personal footprint, reduce what they can and offset the rest with CERs. This initiative aims to increase demand, and make CERs easier to access for everyone, including companies that want to improve their social responsibility and countries seeking to take voluntary climate action.
Taking the Chance
Back to the deal I was talking about earlier: I have been flying a lot, shame on me. I can’t help it — I love traveling and getting to know other cultures. But now is the time to make it right and pay for my sins. The CERs that will be retired are in the Adaptation Fund, so I mitigate my footprint and help vulnerable communities to adapt to climate change. Prices are extremely low, but each credit is still high quality as it still represents one ton of carbon dioxide avoided or reduced. Negotiations next year in Paris will hopefully lead to an universal agreement, pushing demand of CER’s back to the level of the social cost of carbon, which increases every year.