Wednesday, 4 April 2007

The Offset Theory --- Part I

Dear readers, You worry about climate change or you don't !!! The concept of emission offset has been a rage in recent media coverages and news reports related to efforts on climate change. In this post I shall try to discuss out what offsetting means. In the next post i.e. Part II, we can discuss intricacies involved and how to ensure that offsetting is actually some thing real !!!!!

A list of Carbon offset providers is compiled at Eco Business Links where in comparison is also made on per tonne price of CO2. It goes as high as 30$ (where does that come from). Some of them may not be listed on this link.

What exactly is Carbon Offsetting?
Step 1: The green house gas emissions from a particular activity, service, events are calculated using various assumptions in a conservative manner. (Estimated to a higher side)

Step 2: These many emissions will be nullified by participating in a project activity which is reducing emissions. ( I know this is confusing let me try to explain this)

Lets say you are going to do an 'Activity - A' using certain set of technologies and processes or methods lets name it 'Approach -1'. (Like most possible approach to do this 'Activity A' in given conditions).

Now through some special enhancement in the process, technology etc. the way of doing things change and new approach is say 'Approach -2'.

Now Emissions ('Approach -1') > Emissions ('Approach -2'), this has to be true to claim emission reductions.

So emissions achieved in changing approach to do an 'Activity - A' becomes:

ER (emission reductions) = Emissions ('Approach -1') - Emissions ('Approach -2')

Now comes the part where your money comes in. Lets say the above equation results in about saving 100 tonnes of Carbon dioxide (CO2). now an estimate can also be made on difference of investment or return from 'Activity - A' to calculate extra cost gone into changing approach:

Extra cost = Investments + Returns ('Approach -1') - Investments + Returns ('Approach - 2')

Now this extra cost depends on so many factors like type of activity (change in fuel pattern, use of renewable sources for power, change in technology etc.), place of activity and any specific constraints for that project.

So coming back to Step 2, you actually buy carbon credits i.e. emissions reduced from this 'Activity -A' and nullify the emission you made in Step - 1.

From this we assume that cost of each tonne reduction of CO2 should be

Extra Cost / 100 tonnes of CO2 ( for this particular case as described above)

But believe me you might be ending up paying a lot more than that for each tonne.

So now we know how you can offset some or many of these:
Emission from air travel
Transportation i.e. fuel usage.
Big events, conferences. (That thing is in fashion)