News & Events
How Carbon Offsets and Data Management Improve Sustainability
28 October 2016
The concept of carbon offsets has become well known over the past decade, with governments committing to environmental data analysis and carbon reduction goals, global corporations speaking of offsetting emissions, airlines enabling customers to pay more to offset their flight and even a handful of apps letting you calculate and offset your personal carbon footprint on your smartphone.
To many private citizens, however, discussions of carbon offsets still seems strange. Why should spending more for a flight make you feel better about the environment? How does paying for emissions in one scenario help reduce emissions in another?
What is a carbon offset?
A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in one instance in order to compensate for or “offset” emissions made elsewhere. The six main greenhouse gases are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), perfluorocarbons (PFCs), hydrofluorocarbons (HFCs) and sulfur hexafluoride (SF6), each of which poses uniquely damaging long-term risks to the health of people and the environment.
The goal of carbon offsets is to achieve an overall reduction in carbon emissions over time by funding, expanding and supporting “green projects”. The idea is that as more countries, organisations and communities support environment-friendly initiatives, the world as a whole will move toward a lower carbon output.
Markets for carbon offset projects
There are two markets for carbon offset projects: the smaller, voluntary market for individuals (e.g., via airline tickets), corporations and governments, and the much larger compulsory market for companies that must comply with regulated carbon emission caps. If an environmental data analysis shows that an organisation exceeds their emissions cap, they must buy carbon offsets, meaning they’re effectively made to support eco-friendly activities in proportion to their detrimental activity.
The larger compulsory market is governed partly by obligations set under the Kyoto Protocol, which extends the UN Framework Convention on Climate Change (UNFCCC). Originally agreed in 1992 and in effect since 1994, the UNFCCC is an international treaty built on the premise that global warming exists and human-made CO2 emissions have caused it.
The treaty seeks to “stabilise greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system”, meaning to prevent dangerous interference by humans.
The “Clean Development Mechanism”
In order to have a meaningful and measurable way to trade offsets, the Kyoto Protocol established the Clean Development Mechanism, which provides environmental data analysis, measurement and validation of green projects to ensure they provide authentic activities that would not otherwise be undertaken.
Companies offset their emissions by buying CDM-approved Certified Emissions Reductions (CERs). The most popular projects are often related to energy efficiency and renewable energy, such as solar, wind and hydroelectric projects.
The size of this market is considerable, and it is growing. The developed economies in the western world bear the largest burden, as they carry greater responsibility for global warming due to their historical role in pollution throughout their industrialisation.
The European Union Emission Trading Scheme
The largest emissions market is backed by the EU: the European Union Emission Trading Scheme or EU ETS. According to their 2013 fact sheet, “the EU ETS covers more than 11,000 power stations and manufacturing plants in the 28 EU member states as well as Iceland, Liechtenstein and Norway. Aviation operators flying within and between most of these countries are also covered. In total, around 455 of total EU emissions are limited by the EU ETS.
As the main market for credits generated by emission-saving projects around the world, the EU ETS is a major source of investment in environmentally sustainable development in developing countries. The system is the world’s biggest emissions trading market, accounting for over three-quarters of international carbon trading.”
Traceable data management is critical
For large organisations accountable to such sustainability requirements and regulations, accurate, consistent and traceable environmental data management is critical to successful operations. Environmental data compliance is important both for corporate reputation and financial reasons. Emissions above the allowed caps can incur significant costs, so keeping continuous track of emissions data is necessary to facilitate proper planning, control and management.
Emissions to air, as with carbon dioxide and other greenhouse gases, is a highly complex issue to track, with several measurable and non-measurable contributing factors. There are several systems available to track, manage and process environmental data and calculate emissions, but the level of complexity and amount of data each environmental management software platform can handle varies greatly.
To ensure consistent environmental data analysis and management and accurate calculations, it’s vital for organisations to choose an environmental data management system that is built to handle the frequency, volume and type of data they must collect.
Meeting sustainability requirements
It’s important to note that where compliance is concerned, audits will be involved. Company auditors no longer focus solely on the financial performance of their organisations; today larger, often industrial corporations also offer an annual sustainability report. Under the EU ETS, all members are required to have certified third-party verification of all emissions data. Individual governmental regulations and quotas have their own checks, controls and auditing requirements.
For all sustainability requirements—internal, external, governmental or regulatory—traceability and transparency are paramount needs for successful environmental data management reporting. When selecting an environmental data software solution, organisations can take an important step towards improved environmental performance and reporting by looking for a system that supports their objectives, complexity and data volume.
For more information about carbon offsets, data collection and how an environmental data analysis platform like Emisoft can benefit your organisation, get in touch with our specialist team or request a demo customised to your specific needs.Return to News & Events