Total energy investment
€380bn–€456bn
Clean energy investment
€53.9bn (12%–14% of total)
Carbon funds under management by 2006
€5.3bn
1.2 billion tonnes of carbon traded globally, of which five million tonnes is in the voluntary sector. | | Source: New Energy Finance/International Energy Agency |
Life will soon become easier for inhabitants of several communities in the Mexican highlands thanks to Climate Care, a company that sells carbon offsets. Women in the villages, who sell tortillas baked on open fires, will each receive an efficient stove that cuts wood use by 60%, reducing illnesses and deforestation and preventing the emission of three tonnes of CO2 per year. This will earn Climate Care three credits of one tonne of CO2 each, paid for by a European consumer who has emitted three tonnes by flying, switching on the heating or burning fossil fuels such as oil or coal through some other daily activity. The result is an offset, or neutralised greenhouse gas emission. “Our stated aim is to tackle climate change, not to make a profit, but we have to make profit in order to survive,” says Climate Care CEO David Wellington. His company is one of dozens of carbon market participants that have sprung up in recent years in Europe, the US and Australia. These companies set up clean and renewable energy projects in developing countries, funded by consumers in mature economies – in other words, they make money by arranging fuel switches to save the planet. This beneficent foundation for a business may seem extraordinary, but it is attracting many new market entrants each year. Climate Care sells its offsets at around €10 per tonne (about half the emissions from one passenger’s transatlantic flight), which includes a portion of the cost of the project itself, overheads and management fees. The company’s carbon offset sales rose from €838,000 in 2005 to €1.3m in 2006. Climate Care will commit €8.8m to new projects in 2007, following the completion of a series of partnerships with service sector organisations such as travel companies and supermarkets that want to become carbon neutral – that is, to offset all of their emissions. “2007 is the bumper year; climate change has gone up the agenda so much in the last 12 months, and we’re suddenly reaping the rewards,” says Wellington. Future years could bring further sharp increases. A 2006 study by consultancy ICF International suggested that global demand for voluntary offsets could reach 400 million tonnes of CO2 or equivalent (known as “CO2e”) by 2010, compared to 5-10 million tonnes now. Other European offset retailers reporting high growth levels include Atmosfair in Germany and MyClimate in Switzerland. The companies can set their own rules for assessing carbon credits, in which case they are operating in the voluntary carbon market, or they can voluntarily participate in the regulated carbon market set up within the framework of the Clean Development Mechanism (CDM). The CDM started to operate because several nations agreed to cut greenhouse gas emissions such as CO2 and methane by 2012 under the Kyoto Protocol. In Europe, heavy industry and energy companies are also individually regulated and are being set increasingly stringent greenhouse gas emissions caps. If they exceed these caps, they must buy carbon credits that pay for clean energy projects in emerging markets, where such projects are cheaper to develop and where they benefit poorer communities. |