Chinese Offset Consumption
Katherine Hamilton on August 31, 2009 3 Comments
This summer, the Shanghai- based Tianping Auto Insurance company turned several carbon market stakeholder heads by voluntarily purchasing 8,026 verified emissions reductions (VERs). Chinese companies supply more emission reduction credits than companies in any other nation, but not surprisingly have barely registered as a source of credit demand. For voluntary buyers, carbon offsets are a luxury good and the bulk of buyers are in North America, Europe, Australia and New Zealand. In this context the deal was unique enough to earn print coverage in a recent Economist article, which highlighted the relevancy of the deal and questioned the quality of the credits. However, the purchase was not as Economist claimed, "the first known example of a Chinese company buying credits to offset emissions."
In fact, for the past two years China has been quietly creating its own home grown voluntary carbon market. The Chinese "Green Carbon Fund" was launched by the State Forestry Administration and China Green Foundation in June 2007 to create VER credits in China based reforestation and afforestation projects. The fund has sold credits to companies such as China National Petroleum Corporation and over 700 individuals. For about 1,000 RMB individuals can offset a year of driving and earn the bragging rights of a vibrant green bumper sticker.
ChinaGreenCarbonFund.bmp
Like the VERs purchased by Tianping Auto Insurance, the Green Carbon Fund does not utilize one of the more commonly utilized standards in the international carbon market (most of which did not have forestry methodologies when the fund began). Instead, the Fund has created its own set of methodologies. Learn more from a 2008 presentation or Mandrin readers can check out the Fund's website.
The initiative both exemplifies China's ability to capture and replicate the latest trends, from Prada bags to carbon neutral, and the rise of corporate social responsibility in one of the world's highest emitters of greenhouse gas emissions. Time will tell if Chinese urbanites gobble up offsets as quickly as the cars filling freshly constructed highways. However, as negotiators hammer out international climate agreements this nascent demand for offsets hints at creeping acceptance towards at least non- binding targets and the likelihood that China will continue to seek to set its own rules around GHG emissions reductions.
Wow, great little tid-bit! And fascinating story. I think this merits a fuller story in the Ecosystem Marketplace, maybe with an interview of the buyer to get a better sense of how Chinese offset buyers see the market. Then you can explain the situation to the Economist!
An alternative to carbon offsets is an emissions reduction currency system that uses reductions in emissions by members to back a local currency.
Our group, The Maia Maia Project, is implementing one such scheme in Western Australia. In our system local businesses exchange a trade discount for this local currency. They can then donate it back to school sustainability projects (and gain acknowledgement) thereby enabling a single instance of GHG emissions reductions to create multiple positive outcomes.
Local currencies have been around but the magic of using GHG emissions reductions as a unit of exchange allows these to be controvertible to other schemes anywhere in the world.
These schemes do not compete with offsets, but instead provide an additional positive benefit to consumers - not merely an additional cost of being green. The difference between the benefit and the cost of the two schemes is the opportunity.
Happy to talk to anyone about this who may be interested.
Thanks! Yes, I'm digging deeper with Michael Bennett and an Ecosystem Marketplace article that takes a deeper look at the Green Carbon Fund will be published soon(ish) in early October.