What you don't know about greenhouse gasses could be costing you

May 8, 2008
Peter Garforth makes sense of carbon sequestration and offsets.

This column has repeatedly stressed the potential to drastically improve industrial energy efficiency. When combined with measures specifically aimed at further reducing greenhouse gases, such as adding renewable energy and cogeneration, most greenhouse reduction targets can be met or exceeded.

Beyond that, companies are increasingly looking at so-called carbon offsets, including sequestration, to meet future reduction obligations, whether regulatory or voluntary.

Carbon sequestration is a fancy word for different ways of storing manmade greenhouse gases to prevent their release into the atmosphere. These days we’re hearing a lot about sequestration from the electrical generation industry, more in the context of future possibilities than current realties. Around the world, there are a few scale projects to develop power plants that capture and compress the vast amount of carbon dioxide produced when electricity is generated, and store it for eternity in underground geological formations.

It’s a long way from being ready for prime time, but carbon capture and storage probably will be a part of the planet’s carbon-management strategy. If successfully deployed, it will inevitably increase the cost of electricity derived from higher-carbon fuels. This underscores the need to have a deep understanding of the direct and indirect sources of greenhouse gases from your energy uses, and to be ready to manage the effects on cost.

Geological sequestration won’t be an option for most companies, but nature gives us another way of storing carbon that is proven, immediately available and measurable. Large-scale reforestation with suitable trees is a proven and effective way to store large amounts of carbon dioxide. The value of forests goes far beyond absorbing greenhouse gases. They stabilize land and prevent erosion, reduce flood risks, produce local microclimates and ecosystems and, in time, provide valuable raw materials. Supporting forest-based sequestration will become a popular way to contribute to companies’ carbon-reduction obligations.

Most current and planned climate laws recognize that it might be more cost-effective for a company to meet its greenhouse gas reduction targets by supporting carbon-reduction projects elsewhere than on its regulated sites. As an example, the new Lieberman-Warner Act working its way through Congress allows emitters to meet a significant part through balancing reductions, or offsets, in other U.S. domestic or international projects. From a climatic point of view, the logic is clear. A reduction is a reduction, whether it’s achieved at Site A or Site B. To meet the environmental objectives, the only condition is that the offset project actually delivers the carbon reduction.

From a business point of view, the choice of offsets can be another source of competitive advantage. The first obvious place to look is in a company’s operations, nationally or internationally, for qualifying cost-effective projects that meet the required emissions reductions. This brings us back to the need for effective global understanding and management of a company’s own carbon footprint. The next place to look will be in the facilities of key suppliers and customers. What better way to meet emissions targets than by making your suppliers or customers more competitive? This highlights the importance of understanding the entire energy value chain of the business, from raw material to final consumption.

Yet another area to seek out offsets will be in projects such a large-scale forestation in places associated with the company’s facilities. This won’t only be a clear demonstration of being a good neighbor; it will be easier to control the quality and effectiveness of the project. It also will be an attractive source of volunteer opportunities for employees.

If none of these choices offers suitable offset opportunities, there’s a growing pool of brokers who are consolidating emissions reductions projects and selling qualified offsets. The buyer would be well advised to research these carefully, as many might not be as rigorous as they should be when it comes to selecting and auditing projects. Make sure the brokers are following the rules that will be acceptable under current and future laws.

Offsets are a valuable way to contribute to global climate mitigation. Offset projects can directly enhance the overall business without going to the brokered offset marketplace. However, a disciplined focus on site productivity is likely to yield years of compliant reductions, allowing you time to develop a structured long-term offset strategy that delivers maximum business and environmental gains.

Peter Garforth is principal of Garforth International LLC, Toledo, Ohio. He can be reached at [email protected].

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