Carbon offsets are for life, not just for Christmas

The complete guide to carbon offsetting

Christmas tables this year will have no fear of running out of conversation. After being separated for so long, the tales of lock-down will provide for ample repartee. Throw in a few corona conspiracies and some Trump jokes and settle in for the sleigh ride. Later in the afternoon though, the winds of conversation could shift, bringing climate change to the table. Pull up a seat old foe. Let’s chat.

Right before our eyes the greatest threat to our existence is changing our planet and our way of life. Over the past century the planet has warmed 0.81 degrees Celsius and Australia even more, reaching 1.52 degrees above average in 2019. Small increases in average temperatures result in big increases in the number of extremely hot days. High temperatures contribute to heat-related deaths around the world, exacerbate bushfires, impact economic productivity and limit the time we are able to spend outside. We can expect a decrease in cool season rainfall across many regions of southern and eastern Australia, likely leading to more time in drought, yet more intense, extreme rain events that are associated with flooding.

The Intergovernmental Panel on Climate Change (IPCC) says that in the next 10 years the world must begin to significantly reduce CO2 emissions. If we continue to use fossil fuels the way we currently do, modelling shows we will be on track for a 4-degree increase in temperatures this century. This would be absolutely devastating.

But what if we took action to considerably cut emissions? The IPCC modelling shows a best-case scenario that if we cut emissions to limit warming to 1.5 degrees – as set out under the Paris Agreement – we may be able to stabilise the future climate, limit the increase of extreme weather events and heat-related deaths, and importantly to Aussies, save the Great Barrier Reef.

To achieve this scenario, we need to act quickly. Australia’s emissions for the year to March 2020 were 528.7 Mt CO2-e. We emit less than 2% of global emissions, but so do most countries: 40% of global emissions come from countries that each emit less than 2%. So even if the largest emitting countries decarbonise, it won’t be enough. Every country needs to act.

Australia’s electricity generation is the largest source of our country’s emissions, followed by stationery energy (manufacturing, mining etc), transport, agriculture, fugitive emissions, industrial processes and waste.

There is no doubt that we need significant and immediate investment in renewable energy and biofuels. But it takes time for financing and infrastructure to be implemented to see zero-emissions from these sectors. Similarly corporate innovation and smart policy is vital. But all too often we see the lack of haste applied here. And then there is the requirement for changes in consumer behaviour. We’re improving, but slowly. Ultimately we need all of these solutions and many more. The climate change problem is so enormous, so perilous that we need all available means, and then some. Which brings me to the role of carbon offsetting.

What is carbon offsetting?

In the simplest of terms, carbon offsetting is a type of trade – the purchase of one carbon offset funds a project that either removes greenhouse gas emissions from the atmosphere (e.g. planting forests) or prevents these emissions from occurring in the first place (e.g. by replacing a coal-fired power station with a wind farm).

One carbon offset represents one metric tonne of greenhouse gas emissions reduced or removed from the atmosphere.

For most organisations, going carbon neutral today is not possible without the use of offsets. In this way, carbon offsetting enables organisations (and their customers) to take immediate, impactful action on climate change.

Why do we only refer to carbon?

There are seven main greenhouse gases: carbon dioxide, methane, nitrous oxide, chlorofluorocarbon, hydrofluorocarbon, sulfur hexafluoride and nitrogen trifluoride.

Each greenhouse gas has a different impact on climate, called the global-warming potential (GWP). For instance, methane’s GWP is 25 while for nitrous oxide it’s 298. We convert the amount of each greenhouse gas into the equivalent amount of carbon dioxide with the same GWP. This is called the carbon dioxide equivalent (CO2e) and makes it possible to measure the greenhouse gases and determine their individual and combined contributions to global warming. This is why carbon offsetting is typically transacted in ‘carbon’ or CO2e.

Local action, global impact

Pollution and emissions do not stay within international borders. CO2 in the atmosphere spreads across the globe and is an international problem. Therefore, you can purchase offsets anywhere in the world and contribute to global emissions reduction. In many cases, carbon offset projects are located in developing countries because community and economic co-benefits from the project will have a bigger impact there. However, you may choose to purchase offsets locally due to the co-benefits that may positively impact your own supply chain or market.

Climate change is an international problem that cannot be solved without global support. We need individuals, organizations, and governments around the world to commit to climate action, because just one protected rainforest or carbon zero country cannot solve the problem. This is why supporting projects around the world through carbon offset funding plays a critical role in the solution to climate change.

So an organisation emitting from its facilities in Australia can certainly invest in Australian projects like our Indigenous cool fire projects, but also have the option to support international projects like renewable energy in Asia or cleaner cookstoves in Africa.

How do you know the offset is really happening?

TEM only purchases carbon offsets from projects that are verified at the highest international standards.

Projects are verified by an independent third-party like the VCS Program and the Gold Standard who ensure each project meets strict criteria to deliver measurable and permanent emissions reductions additional to a business-as-usual scenario. Following compliance with the relevant third-party, the project is then issued with carbon offsets, each with a unique serial number. If the project demonstrated a reduction in emissions of 1000 tonnes, they would be issued with 1000 carbon offsets.

Once TEM purchases carbon offsets from a project, they are then retired, ensuring the offset cannot be traded again, and completing the carbon offset cycle for our clients.

What types of projects produce carbon offsets?

TEM procures offsets from a diverse portfolio of international and domestic projects, including projects in every State/Territory across Australia and every continent in the world. All of our offsets are compliant under the Australian Government’s Climate Active Carbon Neutral Standard. Our projects are all accredited under a strict third-party verification standard. These standards have a rigorous set of rules and requirements to ensure each project delivers real, permanent, and additional benefits.

Some of the carbon offset project choices offered by TEM include:

• Right-way Fire – Arnhem Land in the Northern Territory is prone to extreme, devastating wildfires that affect the landscape, people, plants and animals. These projects comprise an entirely Aboriginal-owned, not-for-profit carbon farming business created by Aboriginal Traditional Owners in Arnhem Land to support their engagement with the carbon industry. Arnhem Land Fire Abatement (ALFA) currently supports Traditional Owners to manage five fire projects across an area of over 80,000 km2.
• Wind Energy – Across India, wind farms introduce clean energy to the grid which would otherwise be generated by coal-fired power stations. Wind power is clean in two ways: it produces no emissions and also avoids the local air pollutants associated with fossil fuels. Electricity availability in the regions have been improved, reducing the occurrence of blackouts across the area. In constructing the turbines new roads were built, improving accessibility for locals. The boost in local employment by people engaged as engineers, maintenance technicians, 24-hour on-site operators and security guards also boosts local economies and village services.
• Rainforest Protection – Projects across South America, Oceania and Africa protect millions of hectares of native forests which secure wildlife habitat and support local communities. For example, projects across Peru protect large, in-tact expanse of rainforest that would otherwise be cleared, preventing the release of millions of tonnes of greenhouse gas emissions each year. Protecting the forests secures the carbon stored within the organic matter. These projects diversify landholder income and put a value on retaining the forests by supporting sustainable agroforestry including cocoa ​and coffee production. In addition to reducing emissions, ​protecting rainforests secures vital habitat for millions ​of endemic and endangered rainforest species of ​animals and plants.
• Clean Cook Stoves – The vast majority of the rural population in Malawi cook on highly inefficient, traditional three-stone fires, often located inside poorly-ventilated kitchens with small windows. This not only causes severe household air pollution and chronic respiratory, heart and eye disease but imposes a material health burden on women and children who are responsible for preparing meals. This offset project builds clean, efficient stoves that slow down the combustion of wood, significantly improving indoor air quality and reducing health risks. Malawian women, or community artisans, can build their own stoves with training and support using provided brick moulds.
• Bush Regeneration – Widespread land clearing in New South Wales has significantly impacted local ecosystems. This degradation and loss of plant species threatens the food and habitat on which other native species rely. Clearing allows weeds and invasive animals to spread, affects greenhouse gas emissions and leads to soil erosion and salinity. Located in Western New South Wales, this project works with landholders to regenerate and protect native vegetation. The area harbours a number of indigenous plant species which provide important habitat and nutrients for native wildlife. By erecting fencing and actively managing invasive species, the project avoids emissions caused by clearing and achieves key environmental and biodiversity benefits.

What is meant by the ‘vintage’ of a carbon offset?

Just like wine, the ‘vintage’ of an offset indicates the year the offset was created. For example, a 2016 offset from a forest conservation project denotes the tonne of carbon measured and independently verified through the additional growth of the forest in that year.

What does additional mean?

Additionality means that if the emissions reductions were not implemented by an offsetting project, then they would not have occurred anyway. This ensures that offset sales only finance projects that cause additional emissions reductions above business as usual.  Simply put, because the carbon offset project exists, there are less carbon emissions entering or floating around the atmosphere than if the project did not exist.

Does TEM use ‘stapled’ credits that blend biodiversity units with carbon offsets?

TEM only procures carbon offsets that are recognised under the Australian Government’s Climate Active standard and have undergone a strict process of due diligence, including site visits and reviews of project development documentation against recognised offset standards. The ‘stapled’ biodiversity credits offered in market are not part of any third-party industry standard and as such are not audited or verified. For this reason, TEM does not include stapled offsets in our portfolios.

Stapling can expose the buyer to several risks:

• Stapling can lead to an organisation investing in a project outcome that is not managed under the same strict scientific, environmental and social integrity standards as an Australian Carbon Credit Unit (ACCU) which is governed by the Clean Energy Regulator(CER)
• Stapling is often done alongside of a lower cost international unit which devalues the international unit and can deemphasise its need for a high standard of due diligence
• Stapling can give the impression that the verified carbon offset and associated emissions reduction / avoidance has been delivered in Australia. This is not the case and has led to market confusion that presents a brand risk for those making the carbon neutral claim as it gives the false impression the verified carbon abatement has been achieved through the domestic part of the stapled unit’s activity

Shouldn’t we exhaust all emissions reduction activities before using carbon offsets?

Offsetting belongs as a critical part of any climate risk management strategy, not just at the tail end once all other options are exhausted. Building in offsets today has the advantage of a) building internal capacity in carbon markets b) it prices in the cost of carbon into doing business today c) helps drive further investments into much needed climate finance and d) demonstrates sound risk management in view of new regulatory operating environments, including Task Force on Climate-related Financial Disclosures (TCFD).

What are the corporate leaders doing?

TEM works with powerful, influential brands across many sectors to implement impactful net zero strategies. Here are a couple of examples:

• Qantas – One of Australia’s most trusted brands, Qantas partners with TEM to deliver their Fly Carbon Neutral customer offset program. With a customer choosing to offset their flight every 59 seconds, Qantas has offset more than 3 million tonnes of carbon pollution. According to Qantas CEO, Alan Joyce, the international airline industry will be the first industry to attain carbon-neutral growth on international flights, by the year 2021.
• Webjet – Australia and New Zealand’s largest online travel agent Webjet understands the increasing demand for sustainable travel and together with TEM has developed a solution allowing customers to continue to explore the world without leaving a carbon footprint. TEM is supporting Webjet in the launch of its global carbon offset program Sustainable Traveller. By integrating our BlueHalo^TM carbon offset technology into the online booking flow, Webjet is empowering passengers to offset their flight emissions and take action on climate change.
• QBE – One of the largest insurance companies in the world, QBE was able to achieve carbon neutrality for its business operations in 2018. This became possible through energy efficiency, a reduction in air travel and other sustainability practices. In addition, QBE also offset more than 47,000 tonnes of residual emissions.
• Lendlease – A construction, property and infrastructure company that has presence in several countries, Lendlease has its headquarters in Sydney, Australia. 47 of their properties have already signed commitments to becoming carbon neutral by 2025. Hybrid generators, energy efficient machines and appliances and electric cranes have already started reducing their carbon footprint.
• Voyager – For winemakers, environmental sustainability is at the forefront, and the same is true for Voyager Estate. A journey that started in 2004 is hurtling towards completion in 2023, wherein the vineyard will become certified organic. The vineyard is moving towards sustainable farming, by making a transition to farming methods as per Australian Certified Organic (ACO) specifications.

As we find ourselves celebrating the spirit of the season, let’s consider inviting that old foe named climate change to the table for an open, honest discussion. Because as much as people refuse to believe it, the company we keep does have an impact on our choices. We can inspire better ones. Could there be a better Christmas gift than a healthy future planet?

Elise Margaritis is TEM’s Creative Director; dedicated to engaging hearts before heads, obsessed with indoor plants, believes in magic.