Carbon neutrality is a trend that the entire world community is striving for. Business transformation is taking place everywhere. This is a lengthy process that requires qualifications and resources. Many companies are not yet able to make this transition quickly and painlessly for their existence. However, it is also impossible to ignore the global adaptation to the green economy, ESG trends.
The carbon footprint compensation mechanism — offsetting – comes to the rescue.
The mechanism of cross-border carbon regulation, which provides for the sale of certificates for carbon products imported into the EU, is offsetting – greenhouse gas compensation. Europe is adopting a policy in which it sets such a goal as achieving carbon neutrality, so that the concentration of greenhouse gas emissions does not exceed the norm, and the temperature on Earth does not rise.
To compensate for greenhouse gas emissions, various tools are emerging, such as the cap and trade system – trading quotas for greenhouse gas emissions. The system works as follows: companies create a certain limit on emissions, if they exceed it, they undertake to buy certificates for the greenhouse gas emissions produced.
It is worth noting that certificates are not just another document issued by the state, they are the implementation of climate projects.
Examples:
Determines which projects can be issued certificates, and which projects cannot. There is also the principle of rationality, in which certificates can be issued for projects that are economically impractical without certificates (additional incentives). In other words, if it is economically profitable for a company to modernize production, then it should not apply for additional financing through the issuance of certificates.
Examples:
When a company modernizes its production, it reduces the carbon footprint of its products, hence the products become more competitive in the market. There should be no double counting, that is, the company cannot make carbon-neutral products, on the one hand, while also issuing certificates for this carbon. Artificial economic logic works on climate projects for issuing certificates.
When cement is supplied to Europe, for example, carbon leakage occurs, that is, each ton of cement is approximately equal to a ton of greenhouse gas emissions. If thousands of tons of cement were taken to Europe, then thousands of tons of carbon dioxide were taken away. Accordingly, if carbon products were imported, the CBAM mechanism says that it needs to be absorbed back, for this you need to buy certificates on the exchange for the amount of emissions released, then there is a netting, respectively, now the company has no carbon footprint, it has been compensated.
Suppose a company is building an object for the purpose of selling or subletting it in order to plant trees on its territory and make a carbon landfill. For this, you can get a carbon credit within Russia or within the framework of voluntary trade in carbon units. So far, Europe does not recognize any carbon units from the outside. There are very strict carbon projects, for example, Gold Standard or Verra.
If you go to Google’s website, he writes about his carbon neutrality since 2007, this means that the company bought certificates and thus compensated for its carbon footprint. Google is mainly engaged in offsetting. There are also companies that are prohibited by the internal strategy of sustainable development ofsetting. They must independently achieve carbon neutrality. Decisions about offsetting are made based on the individual policy of the company, its climate strategy. For example, the international certification of buildings permits the use of ofsetting, but first you need to prove that the building is energy efficient. In this case, offsetting is the last option, after the process optimization stage.
In the process of building certification, you will not be able to get a carbon loan. It is believed that the consumer – building is more of an emissions generator. However, if you imagine that a built building absorbs greenhouse gases during operation, then you will be able to get a loan. For example, a building generates more electricity than it consumes or has a waste consumption technology.
In order to compensate and optimize greenhouse gases, it is necessary to calculate their emissions according to international GHG Protocol and ISO standards. The cost of calculating greenhouse gases for three covers for a large plant, refinery is approximately 3-4 million, because the refinery is a heavy enterprise. The cost of calculations for 1, 2 coverage for a small company, office or small production will be 500 thousand rubles. This is a simple project within one month. Such calculations will allow companies to manage their climate risks and create a strategy to optimize and compensate for their carbon footprint.
HPBS has been developing climate strategies for three years.
We calculate greenhouse gas emissions for companies using Scope 1, Scope 2, Scope 3. To automate calculations, we develop a calculator for calculating greenhouse gas emissions for companies. We develop and verify the EPD declaration, conduct an analysis of the LCA life cycle.
Our clients: retail, banks, oil and gas, metallurgical, processing and manufacturing companies.
HPBS experts have developed trainings on the calculation, optimization and compensation of greenhouse gas according to the best international practices, available at the link.