Carbon offsetting in the EU: who's buying what, where revealed for the first time
We've launched a brand new map and report today illustrating just how much offsetting is going on in Europe. Our new offset map allows you to explore where offset credits being imported into the EU originate from – for the first time it is now possible to see exactly who is buying what from where.
And what it reveals is that the majority of the offsets used come from just three countries: China, India and South Korea and that they are made up of credits generated from chemical plants, reducing emissions of HFCs and N2O. This is not a surprise since these are the cheapest credits available since it costs very little to destroy these powerful greenhouse gases. This has drawn criticism since it leads to huge profits for the companies investing in these projects. In addition, the investment delivers no environmental or social benefits beyond the carbon saving. Many argue specific regulations banning these emissions would be far more cost efficient way of uncovering these emissions cuts. However, without these regulations in place these emissions would have occurred so there is at least a clear carbon saving.
We’ve also been able to identify which companies are doing the most buying of offsets thanks again to a collaboration with Carbon Market Data. Spanish power company Endesa tops the list with their part-owners ENEL, an Italian power company, coming in second. Power companies are in general subject to tight caps so it is not surprising that they are big users of offsets.
But companies with as many or more permits than they currently need are also using offsets. ThyssenKrupp's Duisburg steelplant in Germany offset 56% of its emissions in 2008 and in the UK Corus is a big buyer of offsets despite having surplus emissions permits. It makes sense for companies to do this since they can either use the cheaper offset credits to comply with the caps and then sell the EU allowances they have been given for free for a profit, or bank them for use in the future when they will be even more valuable.
Our aim in releasing this new information is twofold. Firstly to demonstrate how well companies in the EU are adapting to the carbon constraints they now operate under and to challenge the assertions by industry lobby groups that a higher climate target in Europe would be ‘physically impossible’ to meet (as claimed by ENEL) or "fatal" to our steel companies as claimed by Eurofer.
But secondly we also wanted to open up the offsetting market to more public scrutiny so that companies using offsets would be more discerning in their choice of offset credits in the future. The next stage is to add more information to the map to make it easier to identify projects which are doing a lot for the environment from those that might actually be doing very little or even having an overall negative impact. If anyone has information that can help us do this we’d love to hear from you.