TH: Is there some truth to the idea that offsetting is just obscuring the work that needs to be done in terms of legislation and reforms to tackle emissions? What should individual offset companies do to contribute to a holistic approach to global CO2 reductions?
BT: Far from obscuring the work that needs to be done, offsetting is at the sharp end of this work — in two ways. Firstly, it gets people and businesses to measure and put a price on their carbon emissions — a crucial step if the economy is to take carbon into account. Secondly, it provides a mechanism for significant flows of finance to support the technologies and innovation that will build the clean economies of the future. Offsetting is a crucial part of a holistic approach: reduce what you can, offset what you can't. Offsets should go hand in hand with reduction. Using the wallet as well as the willpower is the best way for individuals to make the biggest impact they can. Waiting until you're the world's greenest citizen before you offset isn't the way to have the fastest impact on the problem.
TH: How will ClimateCare/JP Morgan keep consumer confidence in offsets high?
BT: Carbon offsets are already starting to make a significant contribution to cutting CO2, with ClimateCare projects achieving verified emissions reductions of over 1.5 million tonnes (ed: a metric tonne is 2,205 lbs.) this year. The criticism falls into the 'principle' and 'practice' categories. The principle enjoys wide support, and is based upon the scientific reality that it does not matter to the planet where a tonne of CO2 is released. Climate change demands a global response that reduces pollution as fast as possible, at the lowest possible cost and the carbon market, of which offsets are a part, is a crucial tool in this — as most environmental leaders, from Nicolas Stern (of the 'Stern Report') to the United Nations, recognize. The 'practice' of credible offsets is a lot more advanced than many think. All our offsets are accredited independently through leading standards such as the Gold Standard, and there will be registries for all of these by the end of the year, which will ensure transparency. Consumers should realize that offsets have come of age, and the quality of credits from leading providers is high and improving all the time.
TH: What is the best advantage ClimateCare gains by becoming part of JPMorgan?
BT: ClimateCare will have greater scale and impact by joining forces with JPMorgan. JPMorgan offers ClimateCare access to thousands of its wholesale clients who want help in reducing their carbon emissions and to the trading and risk management expertise needed to develop a more liquid, transparent market for trading carbon emission reduction credits. The voluntary offset industry is rapidly coalescing around a few quality standards, such as the Gold Standard, with registries soon to be launched. This will answer the remaining concerns and we hope lead to widespread acceptance. To work as well as possible the carbon market needs other standards alongside the CDM (Kyoto's Clean Development Mechanism)
TH: Can you explain why the Gold Standard might be more effective at cutting emissions than CDM?
BT: The CDM has been a successful mechanism within the context of Kyoto for generating robust carbon emissions reductions, however it has not always
been able to create the impetus for innovation of new methodologies that can create carbon offsets to the highest standards of additionality (ed: additionality is assuring projects wouldn't have been built without credits) and that also address and deliver sustainable development benefits as well. For instance ClimateCare is a leader in the development of programmatic offsets from cook stove projects that address the needs of poor communities in lesser developed countries such as Uganda, Cambodia and Ghana. Climate Care has worked with Gold Standard to produce a new and robust methodology for cook stoves that meets CDM additionality standards but also provides sustainable development benefits which companies offsetting outside of a compliance requirement seek to be associated with and want to promote. In time we expect these types of methodologies to be accepted by the CDM board, too.
TH: Has ClimateCare improved the percentage (around 54%) of funds going directly to offset projects? Is 75% still the ultimate goal?
BT: The crucial point is that offsetting is not a charitable act — it is paying for your own pollution. We've always said that it shouldn't be up to the charitable sector to tackle climate change — the whole economy needs to respond.
The question 'how much goes directly to the projects' is not the important question in a functioning market, which should instead be 'are you selling genuine, high quality emissions reductions?' Why? Because in a well functioning market it is what people are prepared to pay for a particular type of carbon credit that will determine its price.
If a carbon reduction company started a carbon reduction project in 2005 that costs $5 per tonne of carbon saved, and now three years down the line the Gold Standard credits command a price of $20, that doesn't mean you shouldn't buy the credits. It means that the market has rewarded them for making high quality carbon reductions. The $15 profit per tonne sends a clear signal: "It pays to invest in carbon reductions/choose the low-carbon option". A competitive and 'liquid' market will push down the profit margin over time.
TH: How do you plan on addressing criticisms that some of ClimateCare's projects don't meet the "additionality" criteria?
BT: All projects originated by Climate Care are independently validated and verified to test for additionality by reputable third party inspectors. JP Morgan along with Climate Care will only accept off sets which meet the highest standards of additionality and, with other participants in this market, is pushing for unified standards and the creation of voluntary market registries that ensure the integrity of the carbon offsets generated. The due diligence of the port the Climate Care portfolio was very extensive with respect to these issues prior to deal completion and included third party analysis. As the market matures JPMorgan will continue to push for the high standards and transparency. All transactions are closely vetted by an Environmental Markets Risk Committee and the Office of Environmental Affairs.
TH: Tree-planting programs have come under heavy criticism by environmental groups and experts who consider them too insecure a way of storing carbon. How can you guarantee offset purchasers that the trees will be around long
enough to ensure their credits are put to work?
BT: ClimateCare has only one forest based project - a rainforest restoration program run in Uganda's Kibale National Park. Our first project is recognized as being a text-book example of responsible restoration of an indigenous ecosystem, where the carbon stored is protected by a well designed program, national law and natural fire resistance once the restored area passes fifteen years.
More about Carbon Offsets from TreeHugger
Offsets Are Big Business: ClimateCare Acquired by JPMorgan
How to Green Your Carbon Offsets, Zerofootprint Guides: Offsetting - Offsetting As A Sop To The Conscience