Carbon trading is making headlines in New Zealand with changes to the way the government's proposed Emissions Trading Scheme (ETS) will be phased in over the next few years.
Even with the delays, the ETS will come in to effect for liquid fuels in 2011 with stationary energy (coal, gas, etc) to follow and agriculture joining the program around 2013. Forestry will be the first sector to enter the scheme, effective immediately. The bill is currently before a parliamentary select committee, and is expected to be passed in June.
With a trading scheme on the horizon, the size and power of the carbon accounting industry in New Zealand is set to increase drastically. I met with Julia Hoare and Lara Phillips from the Pricewaterhouse Coopers (PwC) Climate Change Team to gain insight on how the market looks at present, and the following information is based on that interview.
Who is reducing their Carbon Emissions and Why?
Outside of the regulatory environment, the number of New Zealand businesses including some degree of carbon accounting in their day-to-day operation is showing healthy growth. In the voluntary space, these businesses can be organised by their motivation for going carbon neutral:
1. Core committed
Some companies wear their environmental policies proudly. They have a reputation for environmental leadership and base their marketing on it too. They need to keep it real.
2. Economic sense
With good measurement, it's often easy to identify the "low hanging fruit" of carbon emissions - practices or asset replacements that will reduce carbon emissions disproportionate to the cost of implementing new practices (and often saving money in the medium term).
3. Off-shore expectations
As business increasingly considers the environmental profile of its partners, some companies find themselves more attractive to overseas partners by making steps towards being carbon neutral.
All three groups in the voluntary space are interested in the same thing; reducing their environmental impact; but for different reasons. Of course, these motivations don't make a difference to the process:
1. Account for your carbon footprint
2. Reduce your carbon footprint
3. Purchase off-sets that bring you to zero.
PwC tell me that they have worked "quite a bit" in the energy sector - an exciting thing to know given energy's reputation as a big polluter (Of course, New Zealand has a carbon neutral electricity company). They're also popular in the highly competitive services sector, and approved auditors for the CarboNZero program.
What is Counted?
There are three recognised scopes under which the accounting step of this process can be done:
Scopes:
1. Emissions you've created yourself
2. Stuff you use like electricity and heat
3. Indirect stuff you require like employee transport
For the voluntary space, Julie and Lara tell me they recommend clients measure all three scopes, however New Zealand's draft regulation makes only the first scope mandatory.
Under the Greenhouse Gas Protocol, it's mandatory to report scope 1 and scope 2 emissions, but scope 3 is optional.
Is it just about Carbon Equivalents?
As we are aware, sustainability can be a complicated beast, and jumping to conclusions on climate change solutions may get us nowhere fast. Solutions do exist, and can be identified by careful measurement and implementation.
The experts know this, and it's one of the advantages of hiring an external company to advise on environmental progress. It's not just about carbon, especially when you consider some of the reasons for voluntarily reducing emissions - like that it improves perception of your business for customers, workers, and the local community in general. Maybe a more effective way to have your commitment to the environment recognised is to sponsor a clean-up of a local waterway.
But carbon can be measured. It can be reduced and it can be off-set. There are standards and base years and competitors play on an even field: reductions mean reductions and zero means zero.
Image credit: Flickr/Downunderphotos
