Beruflich Dokumente
Kultur Dokumente
survey 2008
Contributors
Lisa Ashford
Jill Barker
Claire Davey
Neal Dikeman
Josh Harris
Rachel Mountain
Niall Thorburn
Matthew Wheeland
Acknowledgements
The primary markets on the development side are very active with new projects
coming on line around the world to meet an increase in real demand for VERs and
the expected increase in corporate’s looking to balance their unavoidable emissions.
In the US, the rapid expansion in demand appears to favour US-located emission
reductions, and this same force is shaping the types of offsets most in demand.
Forestry remains a standalone sector, which has a real mix in sentiment from buyers.
You either love it or you hate it. Whether the projects are reforestation or avoided
deforestation, they appear to have mixed feedback in part owing to the lingering
questions about effectiveness, immediacy and risk in investing in said projects.
Conversely, the types of projects most favoured by this survey’s respondents are
well-known projects which have an immediate impact, projects of the ‘charismatic
carbon” variety: energy efficiency and wind power. Landfill and agricultural methane
collection projects also scored highly in this study.
Interestingly, despite the growth in project development the market has witnessed
increases in primary market prices. On the other hand, global economic difficulties
do seem to be pushing secondary market prices downwards, thus squeezing the
difference between primary and secondary pricing. This perhaps reflects the reduced
risk of developing projects as the markets grow and also an increased confidence
among larger organisations in originating their own offset projects in the primary
markets, a result that surprised us from our survey responses.
ECOSECURITIES CARBON OFFSETTING TRENDS SURVEY 2008
This report was based on data collected from 65 large and multinational
organisations. The responses were collected via an online questionnaire
posted on www.greenbiz.com, www.climatebiz.com, www.cleantech.org,
www.ecosecurities.com, www.2degreesnetwork.com between the 23rd July 2008 –
22nd August 2008. In addition EcoSecurities also directly emailed more than 300
contacts from their own in house database in order to ensure the response sample
was geographically and sectorially diverse. It should be noted that due to the nature
of the websites used for distribution and the contact details within our in house
database, the respondents may have been heavily weighted towards companies
already interested in green issues. For each question, the opportunity was given to
participants to nominate alternative answers or further comment in order to add
further weight and validity to the overall results. All survey specific information was
confidential and for the basis of this report, all responses have been aggregated.
Voluntary carbon markets are stated to be booming around the globe, growing
nearly 350 percent in value between 2006 and 2007, according to one recent
study.1 Driven in large part by business and policy makers in the U.S.A., where
voluntary markets are the only game in town, the market for ‘over the counter’
offsets is developing and shows no signs of abating, even as the RGGI cap-and-
trade initiative comes online in early 2009.
Earlier studies have looked at activity in voluntary markets, notably the invaluable
‘State of the Voluntary Carbon Markets’ reports created by the Ecosystem
Marketplace and Carbon Finance in 2006 and 2007. Those reports and others
detail the activity occurring in the production and retail spheres of the carbon
markets, but no report has yet explored how the end business consumer is
approaching, shaping and making use of voluntary markets.
As activity in the voluntary markets grow, we are seeing noticeable shifts in the
types of offset credits in demand, where companies are investing their offset dollars
and why, and who is driving the adoption of offsets on a business-by-business
basis. The market is clearly becoming better regulated, at least in part through
project developers and carbon retailers efforts to create best practise procedures
and also though the UK governments long awaited best practise guidelines for
carbon offset providers. Demand for different types of offsets shift based on factors
ranging from availability to price to public perception, and as a result business
customers of the voluntary offset markets play a major role in shaping the future
of carbon trading.
As a first look into the purchasing behaviour of carbon offset customers, this study
gives offset providers and business leaders alike a way to see where companies are
already investing their carbon dollars, and to gauge the direction of the voluntary
carbon markets.
In practice carbon offsets are generated as the result of a greenhouse gas emission
reduction project delivering measurable reductions in emissions through a variety
of technologies, including renewable energy, waste gas to energy and forestry.
The projects create emission reductions by for example displacing more fossil fuel
intensive activities or by reducing the direct release of GHG into the atmosphere.
2 Getting to Zero: Defining corporate carbon neutrality. Clean Air Cool Planet and Forum for the Future.
ECOSECURITIES CARBON OFFSETTING TRENDS SURVEY 2008
01 Response by sector
We received 65 responses from leading organisations covering a diverse number
of sectors. The majority of respondents operate on a global basis and the sectors
covered range from IT and Manufacturing through to FMCG and Automotive. The
largest individual group of respondents could arguably be from sectors that have
a customer facing business and thus are more engaged with these questions on
a day-to-day basis. For one of the first surveys of its kind it was extremely pleasing
to see the depth and breadth of responses from organisations.
POLIC
PHA
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TELECOMS
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CO
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NS
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22
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N
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FMC
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MANUFACTURING 5%
13%
L 8% FIN
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12%
Y
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02 Carbon management strategies
Over 77% of respondents either had deployed a carbon management strategy
or were in the process of developing one. This shows that the penny has well and
truly dropped in terms of companies recognising that implementing a carbon
management strategy can deliver real benefits and cost reductions.
23%
43%
I Yes
I Under development
I No
34%
No 8
Not yet 9
Yes 48
I Number of responses
0 10 20 30 40 50
ECOSECURITIES CARBON OFFSETTING TRENDS SURVEY 2008
The top 3 most effective emission reduction activities were seen to be:
Surprisingly, only a handful of responses (8.7%) stated that they had switched to
renewable energy. Perhaps this highlights the lack of choice of competitive renewable
tariffs from electricity suppliers or the difficulties facing companies (leased premises,
planning etc) with micro-generation.
What have been the most simple and effective internal emission reduction activities?
22.8%
33.9%
I Energy efficiency
I Recycling
I Employee behaviour change campaign
8.7% I Renewable energy
I Improving transport logistics
25.2% 17.3%
Results showed that over circa 59% of organisations’ environmental objectives were
set at Board/Senior Management level though it is clear that responsibility for the
carbon footprint of a company can fall into a broad range of departments.
On the one hand, identifying a decision maker or unit for carbon management
decisions does not appear to follow any traditional rules and is difficult to plot.
On the other, senior management seem to be taking the lion’s share (40%) of
responsibility, perhaps pushing the climate change agenda into the boardroom.
It is interesting to note that very few organisations (7%) seemed to have listed CSR
as being responsible for setting environmental objectives – this may indicate that only
the larger organisations have a dedicated CSR function.
The fact that only 7% of respondents listed Marketing as being involved in defining
environmental objectives would suggest that for the companies involved in the
survey their carbon management strategies are not so driven by image/branding.
This suggests that scepticism about companies conducting ‘green washing’ in
the media may be disproportionate with the reality.
Board 19%
Marketing 7%
HR 2%
CSR 7%
Procurement 4%
Operations 15%
Sustainability/Environment team 6%
All 3%
03 Carbon offsetting
An encouraging 88% of responding companies are either offsetting/looking to
offset or would consider offsetting in the future. In contrast, only 4% of the sample
surveyed would never offset. If 74% have already implemented internal emission
reduction activities, the fact that 56% of companies already offset or will consider
offsetting in the next 1-2 years suggests that offsetting is valued as a complementary
part of an organisation’s overall carbon management strategy. However, a small
minority of respondents (8%) claimed to be unsure how to proceed with regards to
carbon offsetting. This supports consumer research which shows that there is still
some confusion with regards to offsetting and what positive results it really brings.
This is a challenge to the industry and government to ensure that there is up to
date relevant information available to explain the key issues.
The fact that companies are planning ahead with regards to their offsetting is a
good thing. 25% of companies are planning to offset in the next 1-2 years. If they
are already considering this, then it gives them time to get up to speed with market
best practise with regards to standards for example or speak to a number of offset
suppliers to make sure they achieve the best possible result for their carbon offsetting
programme. This might mean that they can match projects to geographies where they
have operations or focus on finding key projects that represent the companies brand.
4%
8%
31%
I We already offset all /part of our
unavoidable emissions
I We are looking to offset our emissions
within the next 1-2 years
I We would consider offsetting at some
32% point in the future
I We have not decided/ unsure how to do it
I We would never consider offsetting
25%
04 Offset providers
From the range of options provided in the survey, EcoSecurities, The Carbon Neutral
Company and JP Morgan Climate Care were ranked as being the most widely known:
The responses should, however, be taken in the context that EcoSecurities conducted
the research and that the Chicago Climate Exchange CCX was not included as an
‘offsetting company.’
EcoSecurities 17.2
Terrapass 5.9
My Climate 3.8
The regions which received the most ‘not preferable’ ratings were Australasia, the
Middle East and Western Europe. However, Western Europe did receive quite a high
number of ‘highly preferable’ ratings which may show that some buyers in Europe
do want to support local or domestic projects.
Though the Kyoto Treaty participants generally accepted the principal that the location
of an emission reduction does not affect its benefit, the responses received suggest
that there are psychological preferences amongst VER buyers. This may well be due
to the fact that the type of global corporates that answered the survey, are likely to have
international operations potentially in Asia or South America this can often drive demand
for projects in specific locations.
It is not clear why the Middle East was ranked least preferable from the options. It may
be because relatively few, if any voluntary only projects have been developed in the
Middle East and so buyers have not necessarily seen projects from this location. Also in
terms of pre registration VERs, projects tend to be oil and gas related sectors so may
not fit into buyers preferred project types.
North America
Africa
Western Europe
South America
China
Middle East
Australasia
India 65.4
Africa 62.8
China 60.8
Australasia 46.7
Not preferable
Australasia 40.0
China 25.5
Africa 21.6
India 21.2
Attitudes towards forestry and avoided deforestation projects remain divided with
a broadly equal number of people saying such projects are desirable as undesirable.
Historically offsetting was mainly done with tree planting schemes and a few of these
schemes were poorly managed and openly criticised by the media, but the pendulum
is swinging back the other way. There are now several well respected organisations
and NGO’s who run credible tree planting schemes that provides real uplift to the
local communities as well as delivering verified emission reductions. Buyers are
often attracted to the dual benefits of social and environmental sustainability but it
is still a buyer beware market and corporates should conduct due diligence on the
organisation and the scheme. As the CDM market has failed to support forestry
projects on a large scale due to the complications of methodology, ideally the
voluntary market is well placed to support such projects. The Voluntary Carbon
Standard innovative approach to addressing permanence combined with the Climate
Community and Biodiversity Standard for testing social and environmental benefits
are gaining market acceptance from buyers. In addition, since the conference of
parties in Bali, the importance of avoided deforestation in mitigating climate change
was highlighted and a number of corporates are beginning to become more familiar
with the concept of this project type. It is possible that all these reasons cause such
a split in attitudes. It will be interesting to see the results in further studies to see if
this will shift towards parties believing that these projects are more desirable.
The development of avoided deforestation projects under the Voluntary Carbon
Standard and growing support for avoided deforestation from advocates such
as Prince Charles in the UK should crystallise this demand however, currently
avoided deforestation is the second least preferable project type.
3 Gold Standard toolkit v.2 July 2008. Annex 3 Guidance on projects type eligibility.
Desirability of project types
Wind
Renewable biomass
Forestry
Avoided deforestation
Other
Wind 95.2
Small scale local projects e.g. cooking stoves, light bulb 75.4
Forestry 63.5
Not desirable
Forestry 33.3
Small scale local projects e.g. cooking stoves, light bulb 23.0
Wind 3.2
CCAR 47.2
What would be most important to you when selecting a carbon offset supplier
Price
Brand/reputation
Client list
I Extremely important
Location of company I Important
I Doesn’t matter much
I Deal breaker
Location of projects I N/A
Experience in market
Relationship
Recommendation
CSR values
Offset vintages
In contrast, the location and client list of the offset supplier were relatively low in
importance as selection criteria. This implies that the quality and variety of offsets
are more important than partnering with a local/domestic supplier.
Brand/reputation 85.5
Price 77.8
Relationship 77.8
Recommendation 77.7
09 Method of procurement
Over 23% of respondents want to or already originate and develop their own
projects. This is curious given the complexity, expense and above all risk of project
development. The advantage of bypassing the carbon developer is a potentially lower
priced VER per tonne. Whilst developing your own emission reduction projects may
be feasible for larger organisations with huge energy procurement needs, this is not
necessarily the case for small to medium sized organisations.
The joint second most popular route to procure offsets is through a project
developer such as EcoSecurities or a Carbon Broker such as CO2e. Relatively
few respondents conduct tenders when buying offsets (5%). This share may grow
although the increase in transparency in the market through project databases and
websites being made public may make the purchasing process somewhat easier
than previously. 10% will rely on recommendation which underlines the importance
of suppliers’ reputation and track record.
Project developer 21
Carbon broker 21
Carbon retailer 14
Industry recommendation 10
Other 5
According to the survey the projects to command the highest prices were energy
efficiency and renewable energy. It is interesting to note, that these technology types
are the only two types eligible for Gold Standard accreditation.
Low prices for forestry projects seem to reflect indecision in the marketplace and
differing attitudes towards forestry offset projects. On average, industrial gas and
large hydro-electric offsets command the lowest prices from the sample.
The responses received establish a guideline price for issued VER by methodology,
allowing for a ranking of emission reduction methodology by price. Energy efficiency
commands the highest average price per tonne (€13.10) followed by wind (€12.60)
and renewable biomass (€11.90) in third place. This correlates with energy efficiency
taking top place in the most desirable methodology.
These prices are higher than anticipated for VERs, however due to the lack of
understanding of the question and the somewhat poor response rates, given the
overall sample size, this is somewhat unsurprising.
ECOSECURITIES CARBON OFFSETTING TRENDS SURVEY 2008
The prices we see in this survey for energy efficiency, wind and renewable biomass
is around the midpoint between EcoSystems’ Gold Standard and VCS pricing. As
pricing is so specific to each project type, vintage and project attributes it may be
difficult to draw conclusions here without further analysis and more detailed questions.
Average price
Wind 12.6
LFG 10.2
Forestry 7.6
10 13 16 19 112 115
Average price
When seeking offsets, companies are basing their purchases not only on those
qualities mentioned above, but also the experience and reputation of the offset
provider. Although a handful of providers hold the lion’s share of recognition amongst
these companies, the large number of different offset providers given in response to
this survey shows the breadth of the market.
Looking forward, it remains to be seen just how much the global economic situation
will affect both the size and growth of the voluntary markets, but also the prices on
those markets. Our respondents expressed a much higher than expected interest in
developing their own offset projects, a move that has previously been considered
too expensive and potentially risky to be viable on a large scale.
As more companies (including those respondents taking part in this survey) begin to
implement their carbon management strategy, it will be interesting to see the demand
patterns become more clearly defined. The corporate buyers of emission reductions
will become savvier and the push towards quality will no doubt continue. In addition,
as more climate initiatives take shape and move towards implementation, notably the
RGGI and Western Climate Initiative programs in the US, the landscape of voluntary
offsets will continue to shift considerably. We look forward to reporting those
changes to you next year and in the years to come.
Contact details
EcoSecurities ClimateBiz
UK Matthew Wheeland
1st Floor Park Central Corporate office
40-41 Park End Street 405 14th Street, Suite 1414
Oxford, OX1 1JD UK Oakland, CA 94612
info@ecosecurities.com matt@greenerworldmedia.com
Tel: +44 1865 202 635 Tel: +1 510 550 8285
Fax: +44 1865 251 438 Fax: +1 510 550 8369
Ireland
Registered Office
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ireland@ecosecurities.com
Tel: +353 1613 9814
Fax: +353 1672 4716
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us@ecosecurities.com
Tel: +1 212 356 0160
Fax: +1 212 780 0941
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us@ecosecurities.com
Tel: +1 503 231 2727
Fax: +1 503 231 2728
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