What are greenhouse gases?
Over the past two decades, scientists have concluded that human generated greenhouse gases have been the primary cause of climate change over the past century. These greenhouse gases are found in the earth’s atmosphere and absorb or emit thermal radiation directly from the sun, or indirectly from the sun’s radiation being reflected back into the atmosphere. The absorption and emission of the sun’s thermal radiation within this greenhouse gas layer creates a warming blanket layer which surrounds the earth, helps regulate the temperature of the earth’s atmosphere, and has allowed life to develop on the earth’s surface. The most common forms of greenhouse gas are water vapor, carbon dioxide, methane, nitrous oxide, and ozone and we measure these gases in terms of metric tons. Since each type of greenhouse gas (GHG) has a different level of contribution to the global warming effect, gases other than carbon dioxide are measured in terms of carbon dioxide equivalent tons, or tons CO2e. For example, methane, per ton, has a 21 times greater greenhouse gas effect than CO2, therefore 1 ton of methane is equal to 21 tons of CO2e while 1 ton of carbon dioxide is equal to 1 ton CO2e.
While these greenhouse gases are essential to the earth’s mild climate, relative to neighboring planets, human activity is causing the atmospheric concentrations of greenhouse gases to grow rapidly, causing an increase in the global greenhouse gas warming effect. This increase is caused primarily by the creation of carbon dioxide from the burning and combustion of carbon-based fuels, such as coal, natural gas, and petroleum. Although climate temperatures fluctuate naturally, we are currently experiencing unprecedented levels of warming: the 10 hottest years on record have all occurred since 1990, based on global average temperatures. This increase in average global temperature is leading to the melting of polar ice, global sea level rise, changes in local climate patterns and other serious adverse environmental consequences.
Initial Action
In 1988, the World Meteorological Organization and the United Nations Environment Program established the Intergovernmental Panel on Climate Change (IPCC) to assess “the scientific, technical and socioeconomic information relevant for the understanding of the risk of human-induced climate change.” The IPCC’s first report became the basis for the creation of the United Nations Framework Convention of Climate Change (UNFCCC), a legal, non-binding treaty signed by international delegates at the United Nations Conference on Environment and Development in Rio de Janeiro in 1992. This agreement established the role of developed countries to take the lead in addressing climate change by voluntarily reducing their carbon dioxide emission levels to 1990 levels by the year 2000. However, it was soon recognized that a stronger commitment towards emission reductions was needed, which resulted in the Kyoto Protocol, negotiated in Kyoto, Japan, during the Conferences of the Parties meeting of 1997.
The Kyoto Protocol went into effect in 2005, and calls for industrialized (Annex I) countries to reduce GHG emissions by 5.2 percent from their 1990 level of emissions during the first compliance period from 2008 to 2012. To assist Annex I countries in achieving their GHG reduction commitments, the Kyoto Protocol established the use of carbon emissions credit trading through three defined “flexible mechanisms”:
Emissions Trading: A defined mechanism which allows Annex I countries the ability to trade GHG emission reduction credits, and put these tradable credits towards achieving emission reduction goals.
Clean Development Mechanism (CDM): A system which give an Annex I countries the ability to fund the creation of emissions reduction projects in a non-Annex I country in exchange for GHG emission reduction credits which can be used towards achieving their own emissions reduction goals.
Joint Implementation: Similar to the CDM, this mechanism allows for an Annex I country to fund an emissions reduction project in another Annex I country, in exchange for GHG emission reduction credits.
These “flexible mechanisms” allow for Annex I countries to trade and use (also known as ‘retiring’) emissions credits which were originated from outside of their own countries’ boarders, provided the project and credits adhere to specified standards. These mechanisms rely on the unique properties of GHG emissions which remain equally environmentally harmful independent of the country where the emissions were generated. Since we all share the same atmosphere, an emission of one ton of CO2 is equal to an emission of another ton of CO2, regardless of location. As climate change is an international issue, CO2 reductions, regardless of location, are equally beneficial to slowing rising global temperatures.
Accounting
To effectively reduce atmospheric emissions and complement the trading of carbon emissions credits, GHG accounting procedures have been created and standardized to eliminate double-counting issues and to create GHG emissions reports (known as inventories) that are comparable from one year to the next and from one emitter to another. These necessary elements have lead to the acceptance of the Greenhouse Gas Protocol, created by the World Resources Institute and the World Business Council for Sustainable Development. Within the Greenhouse Gas Protocol, categories, known as scopes, are established to standardize the categories under which emissions are reported:
Scope 1: Direct Emissions: GHG emissions that occur from sources owned or controlled by the reporting organization, such as boilers, vehicles, furnaces, etc.
Scope 2: In-Direct Emissions Caused by Electricity Production.
Scope 3: Other In-Direct Emissions: GHG emissions that result from the activities of the organization but are not owned or controlled by the organization. This includes production of purchased materials, transportation of purchased fuels, employee travel, etc.
When conducting a GHG inventory, it is necessary to categorize emissions under these scopes to better understand your organization’s carbon emissions profile, and to create a GHG management plan. An effective GHG management plan will highlight potential carbon reduction strategies, such as the purchasing and retiring of carbon emissions credits, also known as carbon offsets, and internal emissions reduction programs. Examples of internal reduction strategies include energy efficiency improvements, green building, and the use of renewable energy.
Offsets
Carbon offsets are emission reduction credits created by carbon reduction projects, sold in units of 1 ton CO2e, which are sold in voluntary and mandatory (compliance) carbon trading programs, and are eventually retired to offset, or ‘cancel out’ activities that result in the emission of GHGs. Within a compliance market, offsets are valuable cost-containment tools that allow regulated entities to meet near term emission reduction targets while developing and transitioning to low carbon internal operations. For those corporations and individuals who are not regulated by law to reduce their carbon emissions, offset provide an opportunity to negate unavoidable emissions, support clean technology and enhance environmental quality in offset project locations. Additionally, in emerging compliance carbon markets such as the U.S., organizations and companies who have participated in the voluntary carbon market gain a competitive advantage and valuable knowledge about a burgeoning market.
Since carbon offsets can be created from a large range of different types of carbon reduction or carbon storage (sequestration) projects across the globe, independent third party standards and verification are necessary to maintain environmental quality and validity. A high quality standard ascertains that the carbon offset originated from an emission reduction project is real, quantifiable, additional, and permanent. Additionally, some standards require the realization of project benefits in addition to emission reductions, known as co-benefits. Third party standards such as the Voluntary Carbon Standard, the Gold Standard and the Climate Action Reserve maintain these rigorous levels of quality in the offsets they approve, leading to an increase in buyer confidence and market acceptance.
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