"Carbon neutral labelling could become like Fair Trade", said The CarbonNeutral Company’s Marketing Director Rebecca Fay, in a recent live chat with Treehugger.com. She made the point that most consumers, presented with two products equal in price and quality, would choose the Fair Trade product. To engage consumers on carbon emissions of products, addressing those first two elements are essential to the middle ground; those who most likely care about the environment but would not prioritise 'eco' over other factors. So an eco-label can become mainstream by its introduction to commonplace products – in Fair Trade’s case, we are now accustomed to supermarket bananas carrying the label – rather than by retailers producing specific 'eco' products.

Crucial, though, to the success of eco-labels is simplicity, and credibility, of message. Only this week, Tesco announced its decision to abandon its current carbon labelling scheme, blaming the amount of work involved and other supermarkets for failing to follow its lead. Tesco’s carbon labelling scheme gave a carbon footprint for a product, but did not offer a simple means for consumers to understand whether this was low or high compared to other products. Carbon neutral is a much simpler concept, giving a clear statement of positive action that has been taken to remove emissions.

M&S demonstrated last year that introducing an environmental label to an item where it’s already trusted for price and quality can really work. The retailer’s Carbon Neutral Bra launched in April 2011 and captured the interest of media, receiving coverage such as this from the Daily Mail. Adding the mark to a popular staple was viewed as ‘making going green even easier’. A simple choice for consumers, backed up by a compelling story of sustainable manufacturing and zero emissions. Rebecca’s final point in the Treehugger discussion was equally as important for any company considering using an eco-label: with so much information available to consumers today, a brand has to be trusted. A relevant and credible ecolabel can enhance a brand’s reputation, but it won’t create it. Rebecca’s discussion with Treehugger on the value and uses of carbon offsetting, communicating it to consumers, and innovation within carbon offset products can be found here. Her discussion on the role of carbon neutral labels starts at [40:41].

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The adage ‘you can’t mitigate what you can’t measure’ is naturally applicable to carbon emissions. Environmental standards and management systems, such as The CarbonNeutral Protocol or the British Standard Institute's PAS 2060, provide the means for a company to start their journey towards sustainability.

At a recent conference on this very subject, one of our clients made the point that they believe sustainable businesses are more robust in a recession and I felt it hard to disagree with them. By implementing and truly integrating sustainable practices, you are naturally taking a longer view on your business activities. This is particularly true when they uncover unexpected inefficiencies and easy wins for improving environmental performance.

My role at The CarbonNeutral Company is to help develop and maintain some of the systems upon which we work. That means I see, first hand, how the simple act of measuring a carbon footprint helps a company better understand not just their footprint, but achieve a more detailed idea of everything they do as a company. This is so often a completely unexpected, but fantastically useful, outcome for our clients as they can easily identify ways of reducing that they wouldn’t have otherwise spotted.

So I was a little surprised when the need for simplicity was raised several times at the recent conference on environmental reporting standards. To my mind, the importance of robust, credible action on climate change outweighs the ease of reporting. In medicine, doctors don’t complain that the human body is too complicated and needs to be simplified before we’ll treat it. They train better surgeons, more competent nurses, create new specialists. That is where I believe environmental reporting is headed.

Robust doesn’t have to mean difficult

Also, “robust” doesn’t have to mean “difficult”. With the involvement of the right people, the right systems and the right processes, “robust” can, instead, mean “everyday”. And this is where people like me come in. Get us involved at the beginning of your journey, either by sourcing them from within your company, or looking outwards to companies that can provide the expertise you need.

Equally, don’t feel that you have to get everything right first time. This is a journey, remember. Consider a first attempt as just that. You’re going to learn lessons that help your business for years. Most importantly, it gives a clear direction on how to change and improve for next time: a lot of standards have built in clauses, allowing a company to state what they weren’t able to achieve and why.

As an industry, we’re seeing leaders emerge who can tackle the challenges raised by ever evolving environmental behaviour and reporting. These leaders have developed the knowledge and the tools to help companies measure their footprint and, if they think it’s important, strive for PAS 2060. They definitely didn’t start out with the knowledge and capability that they have now, but if it’s important enough to do, then it should be important enough to do right.

PAS 2060 and emissions management

As another part of my job, I’m a member of the team that helps deliver PAS2060 verification to our clients. If you’re not in the know about PAS 2060, it is a set of guidelines for effectively and robustly demonstrating carbon neutrality for something. It could be a product or a service (such as a chocolate bar, or the act of delivering chocolate bars), or it could be an “entity” such as a company or even an individual (for example, a chocolate bar manufacturer, or a blogger obsessed with chocolate). The main differences between PAS 2060 and The CarbonNeutral Protocol can be found on our website.

If somebody wants to verify something to PAS 2060, the first thing they need is a robust, transparent Greenhouse Gas footprint assessment that conforms to PAS 2060 for a particular period (most likely a year). Once this is in place, they can decide to achieve carbon neutrality for the period assessed or, alternatively, use that footprint as a baseline from which to reduce and commit to achieve carbon neutrality for the subsequent period. Equally, you could do both. You could have an achievement of carbon neutrality for one period and a commitment to achieve carbon neutrality for the next period.

A commitment to PAS 2060 carbon neutrality also needs to be complemented by a carbon footprint management plan, as well as a reductions target stating how much you intend to reduce your emissions by in the coming period. This can be either in terms of your total emissions or according to some benchmark relevant to your company (number of employees, revenue, etc). PAS 2060 requires ongoing reductions from period to period, so can be challenging. Also, any PAS 2060 verification needs to be backed up by a publicly available evidence pack that transparently states where the numbers have come from and how calculations were performed.

But, as I said earlier, help is out there in the form of environmental reporting experts such as myself. The sorts of quiet numbers types who take pleasure in uncovering ways for businesses to be more sustainable, and ultimately, more successful.

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Climate benefits undervalued

Carbon finance has not made an impact on forest ecosystem protection because forests have been given a bit-part in the market mechanisms of the UN’s Kyoto Protocol (KP). That is unfortunate because forest ecosystem destruction deals a double blow to climate stability – the carbon dioxide emissions from forest destruction (specifically, when burned); and, the loss of their ability to soak up CO2 from the atmosphere on an ongoing basis (their sequestration potential). Conversely, when new forests are established CO2 concentrations in the atmosphere are reduced as carbon is sequestered, and when established forests are protected the sequestration capacity of forest ecosystems increases.

Climate regulation too weak

The largest regulated carbon market, created under the KP, contains a mechanism for accounting for carbon sequestered through land use, land use change and forestry (LULUCF) activities, such as reforestation, in developed countries with reduction targets under the KP.

However, the mechanism is voluntary, and it’s complicated: faced with this combination, it seems member countries have largely chosen to ignore it. Developed countries with specific KP targets may elect whether or not to measure their LULUCF reductions, but if they do so, it must be over the full commitment period under the KP. As the first KP commitment period comes to an end in December 2012, only a few developed countries with positive LULUCF balances are logging their forest carbon reductions against their Kyoto targets.

The KP is now extended until 2020, but has lost two of the most heavily forested signatories along the way – Canada and Russia. So, very little capital will find its way to protecting and extending forests in developed economies because the regulatory drivers for doing so are weak and weakening.

CDM throttles carbon finance

What of forest ecosystem protection in the developing economies that have signed up to the KP but which do not have reduction targets? The KP’s Clean Development Mechanism (CDM) enables developing economies without targets to host reduction projects and sell Certified Emission Reduction (CERs) to entities and countries with targets. Carbon credits traded in this way generate capital funding for the developing country’s reduction projects, and allows the purchasers of the credits to offset any emission shortfall with respect to their KP targets.

However, the difficulty in assuring the permanence of forestry projects led to CDM rules that issue temporary carbon credits (tCERs) to forestry projects. These tCERs have to be confirmed at the end of the KP commitment periods, or replaced. The risks and transaction costs associated with this tortuous approach has stifled interest and investment in CDM forestry projects. Consequently, forest carbon is the ‘bonsai’ of the KP market, accounting for less than 1% of the primary market in carbon credits.

Voluntary Carbon Market standards crack the toughest problems

The Ecosystem Marketplace’s State of the Forest Carbon Markets 2011 reported record investments in forestry and land-use projects in the Voluntary Carbon Market (VCM) in 2010. Its figures show that historically forest carbon finance in the VCM is five times greater than across regulated markets, and growing. This is because the VCM has tackled two thorny issues when it comes to forestry: permanence and land ownership rights.

In the VCM, the Verified Carbon Standard (VCS) introduced its Agriculture, Forestry and Land Use (AFOLU) methodology for generating carbon credits in 2006. Under this approach, the permanence of AFOLU Verified Carbon Units (VCUs) is secured through a buffer pool of credits created, maintained and used to replace credits in projects if and when their carbon gains are reversed. While too early to say definitively, this is looking like a sound fix for the permanence issue.

The second thorny issue that plagues carbon finance in the forestry and land-use sectors is the fact that, unlike technology projects (think of a renewable energy project, say a solar installation), it can be difficult to determine & respect land and carbon ownership rights -- particularly in virgin rainforests and communal lands in developing countries, which are the very regions where carbon finance has the most relevance. Although this issue is not fully solved, work by the Climate, Community and Biodiversity Alliance (CCBA) to set standards for the non-carbon aspects of carbon projects is being applied and improved as land-based carbon projects grow in the VCM.

What is needed to unleash the potential?

Relying entirely on the VCM to generate carbon finance anywhere near the level required to make a dent on emissions from deforestation just ain’t going to happen. The VCM is simply too small to generate the $ billions required. However, the progress made in the VCM can and should be scaled-up. More importantly, it should now be used in the building blocks for forest and land-use carbon finance in the successor agreement to the Kyoto Protocol. That way, the phenomenal progress in the VCM can be used to deploy carbon finance sufficient to make a positive impact on global climate stability.

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What is social media?

Social media involve user participation and/or user generated content. Popular social media platforms include Twitter, Facebook, YouTube, LinkedIn, Wikipedia, Google+ and Foursquare, as well as social bookmarking sites like Delicious, and social news sites like Digg or Reddit.

Specific social media techniques include creating profiles, blogging, micro blogging (also known as tweeting), ratings and reviews, as well as video, photo, podcast and presentation creation and sharing.

I’ll limit my recommendations to the channels and tools commonly used by businesses, including Twitter, Facebook, LinkedIn, YouTube and blogging.

Who is using social media?

Recent research from ComScore says social networking websites reach 82% of global internet users. Facebook now reaches over half of the world's global audience, and accounts for one in every seven minutes spent online around the world. In October 2011, Twitter reached one in ten internet users worldwide, having grown nearly 60% in the past year.

According to Econsultancy, 91% of companies say social media is becoming more important to their overall marketing strategy. In their ‘State of Social 2011’ report, 87% of global company respondents use Twitter as part of their social media marketing strategy, and 82% use Facebook. Other popular platforms for businesses include YouTube (69%) and LinkedIn (57%).

10 hints and tips for using social media to promote green business

1) Profile creation

Think about what you want to achieve and which channels are best for reaching your target audience. For example, if you’re aiming to reach businesses then you may consider LinkedIn and Twitter to be more useful than Facebook.

Ask yourself, what are your objectives for having a presence in social media? Who will manage your social media presence? Does that person or department need guidelines to follow to help represent the company appropriately? A good starting point is to follow companies and brands similar to yours, as well as those that you like. Look at how they use tone of voice to balance being a professional company in an informal medium.

Here are some simple steps to help you create a professional Twitter account, business Facebook page and LinkedIn company profile.

For inspiration why not follow some of our clients including @Arjowiggins, @IcelandicWater and @SkyFutureLeader. You can also follow environmental industry specialists such as @Forum4theFuture, @GuardianSustBiz and @BusinessGreen.

2) Relevant content

Think of what would be of relevance and interest to your target audience, and create and share content with that in mind. By doing this you’ll rapidly grow a fan base of valuable likes, followers and subscribers who will share your content to help you expand your reach.

Think of content you can use in different formats across various channels. For example, a short video interview can be inexpensive to produce whilst letting you benefit from the popularity of online video. A good example includes this interview from TUI’s Director of Sustainable Development.

3) Establishing your expertise

Online forums and groups enable you to engage in debate and discussion on your specialist subject in order to raise the profile of your organisation and establish yourself as an expert. My preferred online forums include LinkedIn groups.

Remember: When participating in online discussions your objective is to demonstrate knowledge and expertise, not sell your services. Trying to use social media as a sales channel will quickly lead to you losing likes and followers, and at worst being banned for ‘spamming’.

Corporate blogs offer you a great way to demonstrate expertise, raise the profile of your organisation, and increase awareness of your environmental achievements. A good example of a company using a blog for this purpose includes our client Commercial Group.

Enabling different people from around the company to write blog posts ensures expert content that it is fresh and interesting, as well as making people feel included. Here are some great tips for writing your own corporate blog.

4) Listen and respond

Social media makes it easy for clients and customers to make contact with your company. Rather than using it as a traditional one-way communication tool where you simply broadcast messages, use it to find the advocates for your company and the influencers for your industry. Where possible engage in conversation with them through social media, and observe the conversations they have to understand their needs and interests more. Social media provides a unique opportunity to engage with your customers in a different way to other communication channels. Depending on the size of your organisation and customer base, you may choose to set up social media accounts that focus specifically on customer service like Thomson Holidays Twitter or First Choice Holidays Facebook accounts.

5) Market trends and competitors

‘Like’ the Facebook pages, ‘follow’ the Twitter accounts, and ‘subscribe’ to the YouTube channel of your competitors to gain valuable insight in to what they are doing as a business to meet growing demand for environmentally friendly products and services. Have they committed to carbon reduction targets? Have they entered or won any green awards? Do they have a CSR policy? Are they using social media to communicate their sustainable business practices?

If the answer to any of these is yes, then what can you as a company do to exceed their achievements and excel as leaders in your field?

If the answer is no, then how can you as a company use social media to gain an edge above your competitors?

6) Using hashtags

If you are unfamiliar with Twitter, then the amount of content may seem overwhelming. Individuals and organisations use hashtags as a convenient way to enable people to sort content in to relevant subjects. For example, if you search Twitter for #environment or #sustainability then you can find content relevant to these topics. Include relevant hashtags in your tweets as a way to allow people to find your content and start following you to find out more.

Here’s a list of popular green hashtags you can use in relevant tweets.

7) Search engine optimisation

There are many factors search engines such as Google use to determine which websites they display in their search results. A big factor is the number of links to a website, and this includes links from social media.

Two of my colleagues recently attended a conference discussing PAS 2060 (similar to our CarbonNeutral Protocol, PAS 2060 outlines the process required to become carbon neutral.) Sending tweets from the event that included hashtag #pas2060 led to our PAS 2060 webpage increasing in the Google UK search results.

Having a webpage that lists your environmental targets and achievements then linking to it in tweets with relevant key words will help as part of your search engine strategy. For more information look at this introduction to search engine optimisation and presentation about social media and search engines.

8) Responding to complaints and criticisms

Many businesses fear social media because of its open nature and the potential for receiving complaints and criticisms in such a public forum. In a world of growing scepticism around green claims, being able to respond to public concerns or questions in social media can be effective to reduce negative sentiment about your company or environmental efforts. At its most effective, being seen to publicly respond to customers can convert negative opinion to positive association for your company. This interesting article provides guidance on turning negative commenters in to brand advocates.

9) Promoting your social media efforts

It’s necessary to promote your social media presence through existing established channels to ensure success. Add social media buttons to your website and email signatures that encourage people to ‘follow’ and ‘like’ you.

You can also benefit from adding ‘social share’ buttons to your website, environmental webpage and blog, that easily allows visitors to share that page with their own Facebook friends, Twitter followers, LinkedIn groups etc. For more information read this helpful social sharing buttons article.

10) Measure

As social media is a more qualitative than quantitative channel of marketing, measuring results can be challenging. Some companies use sentiment monitoring software to measure qualitative variables, although they vary in reliability.

Typical metrics you can measure include followers and likes, the number of visits to your site from social media and how long those visitors stay on your site (tools like bitly and Google Analytics can help with this), which pages people from social media are visiting, retweets of your tweets, comments on your blog, positive and negative mentions of your company or brand within social media, leads and sales acquired, relationships with clients and prospects, and metrics such as Klout which aim to measure your influence.

Econsultancy produces great content covering all aspects of digital marketing, including social media. Read their social media measurement blog post for further guidance.

I hope you’ve found my first blog post to be interesting and useful. Obviously social media is a huge subject so it’s impossible to cover everything in one post. If you have any other hints and tips then please add them using the comments box below. Feel free to follow @carbonneutralco on Twitter to keep in touch with us or link to me on LinkedIn for further hints and tips and to learn more about carbon reduction and its benefits for your business.

Despite the recent fall in CER prices and what that might suggest for the competitiveness of VERs, we don’t expect the trend of voluntary buyers sourcing VERs to reverse. As corporate carbon management programmes evolve they increasingly look to their offset portfolio to deliver social, environmental and economic benefits beyond the core GHG reduction requirement of carbon finance. VER standards offer a level of variety and responsiveness that is best placed to meet these evolving needs. More specifically, VERs continue to be our clients’ offset instrument of choice for the following reasons:

VER standards generate high quality instruments that are real, measurable and additional

VER standards like the Verified Carbon Standard (VCS) and Gold Standard often use well established Clean Development Mechanism (CDM) methodologies as the basis for quantifying project baselines and emission reductions. They follow similar quality assurance processes for verification and validation as the CDM and use the same independent third party verifying organisations, or DOEs. Indeed a significant proportion of projects generating VERs are aspiring CDM projects, and once registered with the CDM Executive Board will generate CERs.

To inspire consumer confidence in the quality of VERs as financial instruments, infrastructure providers have developed robust credit-accounting registries that bring clarity of ownership and transparency to the VER market. Registries utilise serial numbers as an accounting tool to track credit issuance through to proof of retirement.

VER standards are a driver of methodology and technology innovation

The governance structure of VER standards allows them to be more responsive to market needs, meaning they typically lead innovation in terms of project types and project tools. For example, the Verified Carbon Standard (VCS) introduced the buffer mechanism for forestry and land use projects to account for non-permanence risk. In 2010 the VCS approved the first reduced emissions from deforestation and forest degradation (REDD) methodology.

VER standards also have pioneered methodologies for innovative project types, including community bicycle sharing programs, water purification programs, and the destruction of Ozone Depleting Substances (ODS). VER standards have been the first to adopt more innovative and streamlined procedures, particularly in relation to additionality. The Climate Action Registry (CAR), for example, only credits projects that meet a particular technology requirement or benchmark instead of evaluating projects on a case-by-case basis. Such an approach is seen as key to rapidly scaling carbon finance.

VER standards are a driver of social and ecosystem benefit quantification

The demand for projects that go over and above emission reductions comes from voluntary buyers of offsets. Different VER standards have evolved specialist focuses, and have found ways of collaborating to meet the evolving needs of the marketplace.

For example, the Climate, Community and Biodiversity (CCB) Standard does not quantify carbon reductions, but is often combined with VCS projects to certify a forest project’s additional social and environmental contributions. The Gold Standard was designed by NGOs to raise the bar with regard to local stakeholder engagement.

Similarly the Social Carbon Standard has been developed specifically to certify emission reduction projects for their contributions to sustainable development. This is achieved by continuous assessment of the changes in key social indicators such as employment and health and safety conditions, with a focus on improvements over time.

VER standards promote the inclusion of small-scale projects.

Demand for offsets varies, not only by type and location, but also by project size. Corporate buyers often favour smaller scale projects as they have the potential to source all of the projects credits and feel a greater level of ownership.

Project development costs for VER standards tend to be lower than the CDM, due to more streamlined processes, making carbon finance accessible to smaller scale projects. The Gold Standard’s Community-focused Micro-scale Scheme (CFMS) has streamlined its procedures, resulting in lower costs which help project developers to overcome cost barriers.

Project grouping tools like the VCS ‘Grouped Project’ guidelines allow aggregation of similar projects under a single registered programme. The aim is to reduce costs for household-level activities like efficient cook stoves, solar water heaters and biogas to overcome the small-scale threshold and become economically viable

VERs offer greater price stability and range

CER prices are determined by the market price within the EU-ETS, meaning they are subject to its supply and demand dynamics, and directly linked to political forces in play. In contrast, VER prices have remained more stable over recent years. VER prices are influenced by the attributes of the underlying project technology, location and contribution to social benefits. Accordingly, VER prices span a wide range, allowing buyers to identify projects appropriate for their budgets. More stable prices and a wider range of prices means greater price certainty and flexibility for offset inclusive carbon management programmes built around VERs.

As members of ICROA (International Carbon Reduction and Offset Alliance), The CarbonNeutral Company works with standards that meet the highest quality requirements. These quality standards, combined with the track record of innovation and breadth of project types with access to VER finance, provides the voluntary buyer with choice.

VERs offer the flexibility to design a carbon portfolio that meets specific requirements for price, charisma and communication value. VERs have consequently become the instrument of choice for action ahead of and beyond compliance. While some early buyers favoured CERs for the quality of a compliance grade instrument, they now place confidence in the quality VER standards. In 2012, CERs will continue as an instrument of compliance under Kyoto and the EU-ETS. It is unlikely, however, that CERs will regain a meaningful share of the voluntary carbon market.

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"We have made history!" claimed Maite Nkoana-Mashabane, South Africa’s Foreign Minister and President of COP17, as she wrapped up negotiations in the not so early hours of last Sunday morning. I think she’s right - but history can’t be written as success or failure until actions have run their course.

In a previous blog right in the middle of COP17 I looked at some of the problems faced by the negotiations, and explained two concepts that remained central to Durban:

“The 'tragedy of the commons' is a dilemma arising from the situation in which multiple individuals or nations, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this to happen.”

“'Indaba' is a word used in traditional African culture (originally by the Xhosa and Zulu peoples in Southern Africa) for an important meeting held by leaders of a particular community amongst themselves or with representatives of other communities. It’s where people get together to sort out the problems that affect them all, where everyone has a voice and where there is an attempt to find a common mind or a common story that everyone is able to tell when they go away from it.”

Why was this a historic outcome?

History was made in COP17 for two reasons - it was the longest COP on record, stretching a full 36 hours beyond the scheduled finish to allow the 194 participating nations to hammer out a ground-breaking deal.

The deal itself is historic because for the first time countries acted beyond their national self-interest and faced down the ‘tragedy of the commons’ dilemma to agree an internationally co-ordinated response to climate change.

What did Durban deliver?

Nations have acted beyond self interest, and are now committed to a ten year process which will legally bind every country to GHG reductions targets.

All countries within the United Nations agreed to be legally bound to cut their emissions of seven greenhouse gases starting no later than 2020 in an agreement to be finalised by 2015. Nitrogen trifluoride (NF3), with a global warming potential 17,000 greater than CO2, has been added to the original list of six Kyoto Protocol greenhouse gases because its growing use in microchip and solar panel manufacture has increased atmospheric levels four times above historic baselines.

The landmark agreement, “The Durban Platform for Enhanced Action”, redresses the Kyoto Protocol’s (KP) separate treatment of developing and developed countries. This hampered years of talks by allowing large emitting countries such as China and India to escape mandatory cuts, and the US to cry foul and refuse to participate. Therefore, less than 50% of global emissions are actually controlled under the KP.

The US has signed The Durban Platform as it delivered “the kind of symmetry” it was looking for. In doing so it has enabled China and India to do the same. However, it is the EU that is claiming the credit; Chris Huhne, UK secretary of state for energy and climate change, said of the deal: “This is a great success for European diplomacy. We’ve managed to bring the major emitters like the US, India and China into a roadmap which will secure an overarching global deal”.

The hosts of any COP attract fire at some stage of the negotiations, and South Africa was no exception. Whispers in the corridors of the International Conference Centre venue talked of a COP Presidency that lacked ‘urgency and strategy’. But, it made up for that with its informal indabas, allowing negotiators the space to rethink entrenched positions. Supported by the energetic and diplomatic focus of UNFCCC head Christiana Figueres, South Africa delivered what all good indabas do: “a meeting where people sort out the problems that affect them all, where everyone has a voice and where there is an attempt to find a common mind or a common story that everyone is able to tell when they go away from it”.

What sweetened the deal for developing countries?

Solid progress in agreeing the operating principles and governance of the $100bn/yr Green Climate Fund (GCF) reassured developing economies that climate change mitigation will not be used to suppress their development aspirations.

There was conciliatory talk and language about the role of the private sector in the GCF, and also a nod in the direction of money earmarked for Reducing Emissions from Degradation and Deforestation (REDD). Money, of course, that still has to be raised: completing the process takes another year, then fundraising begins.

What about the Clean Development Mechanism (CDM)?

The Durban talks ended six years of debate over whether and how carbon capture and storage (CCS) could qualify for offsets under the Clean Development Mechanism (CDM), clearing the way for the first methodologies to emerge as early as next year.

The new rules force developers to put 5% of Certified Emissions Reductions (CERs) in a reserve, to be awarded to project developers only after site monitors have proved that no CO2 has leaked from the underground store 20 years after the end of the crediting period.

Although the International Energy Agency has estimated 3,400 CCS facilities are needed by 2050 to help keep a global temperature rise below 2°C, observers don’t expect any CCS projects to be registered any time soon because the economics of CCS remains marginal while the price of carbon languishes below €10/t.

A variety of other reforms to the CDM are agreed, but the real issue is whether improved and expanded ability to generate offsets will be met with matching demand within the much reduced, albeit extended, KP.

Recognising that the CDM may become constrained as nations take on targets, the Durban deal speaks to the need for new market mechanisms. The EU wants these to avoid fragmentation of the international carbon market. Quite a meaty subject, and therefore a decision about it is pushed out to COP18 (December 2013 in Doha, Qatar).

What did Durban do for REDD+?

COP17 adopted rules that open the door for a market mechanism that could allow private investors to finance projects that stop deforestation. This move could see billions of private sector dollars invested in forestry in poor countries.

While the text was light on detail, it was the first time that market mechanisms and REDD have been mentioned in the same sentence. It recognises the transformative role that markets can play in driving REDD plus activity around the world, and bodes well for the Voluntary Carbon Market’s pioneering work in this area.

Durban’s Achilles heal

There are three significant challenges locked in to the Durban Platform:

• Meaningful action is being put off for ten years at a time when scientists maintain action is needed now
• Emission pledges made so far are expected to take humanity to a world 4oC warmer on average than in pre-industrial times by the end of the century
• The focus is mainly on mitigation and many believe that adaptation needs to be more prominently on the agenda

These ‘elephants in the room’ are why Durban deal is dubbed the ‘Platform for Enhanced Action’ – invoking the aspiration that the roadmap to 2015 and 2020 will not just be a process for setting targets, but targets that really do deliver atmospheric concentrations of GHGs sufficient to stabilise the climate and avoid the need for wide-scale adaptation over and above the blinkered and insufficient focus on mitigation.

What happens to the Kyoto Protocol now?

As part of the deal, the EU and nine other countries will be subject to a second round of targets under the Kyoto Protocol, a 1997 pact that legally bound around 40 countries to cut emissions 5.2% under 1990 levels by 2012. Instead of running out at the end of 2012, fresh targets will run to 2017 or 2020.

However, Canada, Japan and Russia have announced that they will not continue with their commitments and Australia and New Zealand are making similar noises, leaving countries responsible for less than 15% of global emissions within the extended KP. And big polluters such as China, U.S, and India, will only be bound by voluntary pledges made at the previous two U.N. climate summits in Cancun and Copenhagen.

So what happens by when?

2012: Climate negotiators meet in Qatar to start drafting new treaty

2013: Remaining Kyoto Protocol countries start a second commitment period

2015: A new international emissions pact to be finished

2020: The new emissions pact takes effect.

Whichever way one looks at this, a ten year transition plan sounds rather worrying under the circumstances.

Is this really going to work?

It’s very hard to call the outcome of Durban as so much depends on what targets are set and whether they will close the ‘gigatonne gap’. But Durban gives us cause for optimism, as was well expressed by Achim Steiner, Executive Director of UNEP:

“The outcomes of Durban provide a welcome boost for global climate action. They reflect the growing, and in some quarters unexpected, determination of countries to act collectively. This provides a clear signal and predictability to economic planners, businesses and investors about the future of low carbon economies.

A number of specific commitments agreed in Durban also indicate that previous decisions on financing, technology and Reduced Emissions from Deforestation and Forest Degradation (REDD+) are moving to implementation.

The big question many will ask is how this will translate into actual emission reductions and by when? Whatever answer will emerge in the coming months, Durban has kept the door open for the world to respond to climate change based on science and common sense rather than political expediency.”

What does this all mean for business?

When we spoke to Christiana Figueres in the run-up to COP17 she made a provocative statement in response to our question about how business was expected to deploy capital under these deeply uncertain circumstances, responding: “Let’s not get trapped in a Catch 22 – business waiting for government, government waiting for business. Business has plenty to go on – the megatrend is clear. We must decarbonise our economy. Business has to create 5x more wealth for every tonne of carbon. Surely that is enough certainty..?” At the time, we didn’t think it was.

Now I believe many more businesses will quit questioning whether to factor in a carbon price to their strategies, and climate change into their operational plans, and simply get on with it by doing just that.

In conclusion

In 1894, the Times of London estimated that by 1950 every street in the city would be buried nine feet deep in horse manure. Politicians began to formulate policy responses to the problem. But, before they could implement them, the Ford petrol automotive came along and put the manure issue firmly in the rear view mirror.

If business heeds the words of Christiana Figueres, and with solar energy within a couple of years of price parity with (non-subsidised) fossil fuel energy, there is the faint possibility that by the time the Durban deal translates into a legal binding agreement, technological advances in renewable, distributed power could make it obsolete.

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On the first day of the second week of COP17, representatives from seven nations described how their governments support voluntary action ahead of, or beyond climate regulation. This is of increasing importance as the Durban Climate Summit will at best leave a five year gap before a comprehensive global climate deal is struck and we’ll need all the help we can get along the way.

Monday evening’s event was the second in a series initiated in 2009 to open a dialogue and encourage closer collaboration between Government and Industry stakeholders in the Voluntary Carbon Market (VCM).

Therefore, we were able to start proceedings by reviewing challenges identified in the first, and the extent to which they have been overcome. Back in 2009, a number of barriers to greater deployment of voluntary action were identified, namely:

• Lack of established standards;
• Weak governance of offset standards and offsetting practices;
• Lack of independent registries;
• Perceived conflicting role with regulated markets; and,
• Confusion amongst consumers on how the VCM works & adds value.

The remarkable progress made since 2009 was evident when Edward Hanrahan, Director of Climate Care and Co-Chair of ICROA, reviewed these and reported that all barriers have been removed or at least substantially reduced. In summary:

• The ICROA Code of best practice for voluntary offsetting has established an international, third party audited self-regulatory system for the VCM, which accepts international offsets under recognised quality standards such as the VCS and Gold Standard which are supported by independent registries.
• Aggregated demand in non-regulated corporates has become substantial – providing an opportunity for Governments to ‘get behind’ voluntary action at scale – while we wait for a broader compliance regime. Edward highlighted:
  • A substantial shift from consumer to business which is increasingly using offset-inclusive carbon management as part of overall business strategies;
  • Recognition of the voluntary market as a proving ground for new and pioneering methodologies – especially those with sustainable development benefits;
  • Voluntary market success (relative to the CDM) in providing carbon finance in least developed economies;
  • VERs do a better job at supporting ‘charismatic’ high sustainability projects because their prices are less volatile and higher than regulated instruments (CERs);
  • Rapidly increasing recognition amongst informed consumers and corporates that ICROA compliant offsetting makes a real contribution to both GHG reductions and sustainability.

Therefore, it was no surprise that the seven countries which presented their activities to leverage voluntary action showed substantial engagement in voluntary action as a valued complement to their regulatory regimes.

Australia supports voluntary offsetting under a government defined National Carbon Offset Scheme which includes domestic and international offset standards, favouring local forest and land-use projects currently outside newly approved tax to cap & trade system.

Chile’s recently launched Santiago Climate Exchange has the support and interest of Government as a mechanism to pilot and engage business in early, pre-compliant action on GHG reductions using internationally recognised offset standards.

China has a government designed and developed voluntary offset scheme promoted to and used by Chinese businesses which draws credits from forest carbon projects developed to local standards.

France reported its support for voluntary action in the first event in 2009, and has now turned its attention to the Joint Implementation mechanism under the Kyoto Protocol to spur investment in domestic projects.

Japan’s extensive government support for voluntary action is reported in some detail in an earlier blog on developments in Japanese carbon markets, and we got an update on steady progress as well as a substantial premium for domestically generated offsets under the government supported J-VER scheme.

South Africa’s surprise insight was the provision within its proposed carbon tax regulations of the (possible) option of reducing carbon tax liabilities by offsetting through local projects.

United States has shut down the Federal EPA Climate Leaders program, which included domestic offsetting that was profiled in the first event, but reported that voluntary or pre-compliance offset standards and methodologies are being selectively included in emerging State and regional cap & trade schemes like the one launching in California.

Costa Rica wasn’t able to join our panel as their representative was called into negotiations, but put on record the detailed plans that underpin that country’s voluntary commitment to be carbon neutral by 2021.

Across that sample of countries and beyond, governments have responded positively to developments in the voluntary carbon market and are embracing a variety of opportunities to utilise voluntary offsetting to accelerate and leverage their regulatory efforts. We noted that while the diversity of ‘home-grown’ initiatives are effective in engaging domestic consumers and businesses, they often have quite high transaction costs, and their related offsets can lack depth, liquidity, and scale. That issue will be solved when national initiatives increasingly turn to internationally recognised standards to promote linkages across national boundaries. Further, direct government incentives, such as those being discussed here in South Africa, will be critical to ensuring scale, and a steady progression from voluntary to regulated action.

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“The 'tragedy of the commons' is a dilemma arising from the situation in which multiple individuals or nations, acting independently and rationally consulting their own self-interest, will ultimately deplete a shared limited resource, even when it is clear that it is not in anyone's long-term interest for this to happen.”

“'Indaba' is a word used in traditional African culture (originally by the Xhosa and Zulu peoples in Southern Africa) for an important meeting held by leaders of a particular community amongst themselves or with representatives of other communities. It’s where people get together to sort out the problems that affect them all, where everyone has a voice and where there is an attempt to find a common mind or a common story that everyone is able to tell when they go away from it.”

Governments, NGOs, pundits, the press and media will run us through the usual gamut of emotions about the annual COP - from passionate optimism about the need to take action immediately, right through to abject despair about the lack of political leadership and ability to agree the very basis of what that action should be.

In an earlier blog on November’s UN Climate Change Conference I looked in some detail at what the likely outcomes could be in Durban. So, we don’t have to cover that ground again here – although I will come back to those when the outcomes are known at the end of next week.

But two important things I did highlight in that preview were the importance of a sound process up to the task, and the inclusion of business’s voice in that process. Those are critical success factors we can keep an eye on through the two-week event.

A sound process is critical to the outcome – but elusive

Somewhat predictably, the COP opening plenary was beset with problems of process right from the start as the acceptance of the agenda was delayed when items suggested by India were objected to by Singapore (etcetera)... and the plenary had to mark time while this and other matters were sorted out. As the usual patterns emerged, my mood swung somewhat towards the despair end of the spectrum.

But really -- should we despair?

Climate change is the biggest and thorniest example of the ‘tragedy of the commons’ dilemma I can think of, and with 7 billion people’s interests at stake, and trillions and trillions of dollars invested in over a century of fossil-fuelled economic growth, this was never going to be a walk in the park. However, the scale of the challenge means that same old, same old processes aren’t going to cut it.

South African ‘Indaba’ delivers a glimmer of optimism

And so when the South African COP Presidency announced an informal consultation with all Parties and Stakeholders -- an Indaba! – to break down the roadblocks, a small measure of optimism was restored. Early signs are positive as the Indaba continues into its second day today.

Not a silver bullet of course, but it was a similar process that bought South Africa a critical decade of stability after the apartheid regime surrendered power to a fully democratic South Africa in 1994. Soon after, Nelson Mandela established South Africa's Truth and Reconciliation Commission, popularly considered a model of constructive engagement. Led by Bishop Desmond Tutu, it lanced the boil of bitterness that could have brought the new South Africa to its knees. And business has been able to deploy capital and human resources to generating wealth so critical to removing the economic remnants of apartheid that will continue to impact the country for some generations to come.

Will the Indaba work its magic again? Maybe, but certainly not without adherence to its core principles – all voices heard, with respect, and with commitment to understanding the prerequisites for a successful outcome. Will business be listening and contributing? Maybe...

Bringing business and government together via the CMIA and IETA

However, in case the COP’s Indaba descends into disarray or turns down the volume on the voice of business, I shall do a small bit on behalf of the Climate Markets and Investors Association (CMIA) and the International Emissions Trading Association (IETA, including ICROA) to ensure government and business are indeed working on this together.

This coming Monday 5th, I chair a ‘mini-indaba’ co-hosted by these two organisations with representatives from nine countries (including Australia, China, Japan, and the US) and from carbon businesses to discuss how voluntary carbon markets can complement and leverage regulatory regimes during this period of continued uncertainty. If you happen to be in Durban, and would like to tune-in and contribute, please drop me a line at jonathan.shopley@carbonneutral.com . Also, let me know if you’d like to get a copy of the report from the event, which will be authored by Molly Peters-Stanley of The Ecosystem Marketplace, and published online in January.

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Recently I travelled to the foothills of Mount Kenya to visit the Meru and Nanyuki Community Reforestation Project, so I and a client could meet the communities benefitting from carbon finance and project developer TIST and see the project first hand.

My abiding takeaways were of industrious and creative farmers collaborating with a view to effect long term change; of the impressive network of local people who were using technology to empower and manage a very broad scheme; and of vastly different ecosystems all within a few kilometres of each other.

The Meru and Nanyuki project integrates reforestation to sequester carbon with community development activities. It combines hundreds of individual tree planting activities while enabling local communities to improve access to food and create additional sources of income beyond subsistence farming.

Over four days we visited seven different farmers, attended a ‘monthly Cluster meeting’ (for groups of farmers) and participated in a training session for farmers new to the programme.

The farmers we met shared a belief of the need to look beyond short term benefit and to recreate a land that would be prosperous for future generations. Many talked of the effects of land deterioration where trees had been felled and of the boon derived from mixed land use and the increased water retention of forested areas.

Their knowledge of the types of trees to plant, and their pride in how they are now working together as a community to conserve and share water to sustain these trees and their other crops, was palpable. They spoke highly of the support they were given through TIST – and of the fact that they had not just been handed the answers but instead given the tools to work them out for themselves. This stretched beyond trees into wider sustainability solutions such as rudimentary biogas power and efficient and healthier cook stoves. Given the variety of eco-systems and solutions in such a small area the benefits of this support approach were clear – with groups sharing best practise through their cluster meetings and the monthly TIST newsletter.

This project had such energy and grass root benefit, as well as a scalable support platform, that it is hard to imagine how it won’t continue its fast track growth.

From the lush fertile slopes of Mount Kenya to the semi-arid planes below we met farmer after farmer who was enthusiastic about the change they could bring, and thankful for the additional income from carbon that enabled them to afford items such as water tanks to nourish their crops.

The strong inter-dependence of the farmers, the quantifiers, and the auditors who operate the programme on the ground, combined with the clear guidelines that TIST instils (honesty, transparency, accuracy, mutual accountability) left a strong sentiment that what had been built so far was just the beginning.

More and more local people are realising that planting trees through a scheme such as this means that they no longer have to sacrifice long term land quality for short term gain – but in fact can improve their quality of life now while improving the quality of the land that future generations will inherit.

Read more about Meru and Nanyuki, and other carbon offset projects available through The CarbonNeutral Company on our carbon offset projects page.

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Here are their arguments why – and for a full account of the event, download our report here.

Peter Boyd, COO of The Carbon War Room

“A price on carbon helps to make initiatives profitable.”

Peter believes that there are many opportunities for forward thinking businesses to harness the opportunity in climate change mitigation activities that already have a negative cost of abatement.

But while he sees no reason to wait for government to act, he believes a rising price of carbon would mean even more initiatives moving to a negative cost of abatement: Government’s role is to use legislation to “level the playing field”.

Dame Helen Alexander, President of the CBI until June 2011, Chairman of the Port of London Authority and Incisive Media

Experienced business leader Dame Helen Alexander – who has board level roles with carbon-intensive businesses such as Rolls Royce and Centrica – does not believe that businesses should be expected to act ahead of government:

“Business wants certainty and clarity in order to be able to plan and for investment to come through. To push the button on investment, companies need policy, planning frameworks, and comprehensible carbon pricing.”

She asserted that in the current economic climate “companies are worried about keeping jobs in the work force” so they need a price mechanism in order to drive a focus on climate change mitigation.

Jonathon Porritt, Co-founder of Forum for the Future, former chair of the UK Sustainable Development Commission

Jonathon supported the efforts of business, but expressed the view that alone, their achievements would be limited:

“Unless governments frame the carbon markets and a low carbon future more intelligently even the most heroic efforts of business won’t prosper.”

Jonathon called for a carbon price to “even the playing field”, saying a medium term transition to renewables was “inconceivable without getting to the highest price of carbon as fast as possible”. Without it, incumbent high-carbon business don’t internalise a price, and innovation is curtailed.

Paul Donovan, Global Economist, UBS Investment Bank, Co-author of ‘From Red to Green? How the Financial Credit Crunch could Bankrupt the Environment

Paul supports a carbon price in addition to market forces, saying that the “imperfect” carbon pricing element coming in to supply chains is “sort of working”. He cautions against raising the cost of carbon by adding complexity, as this would be a “disincentive to invest”.

Paul expressed a view that the cost of capital is set to increase as a result of the financial credit crunch, impacting the availability of investment, and that an ill considered pricing scheme could exacerbate this.

The panellists were addressing an audience of business leaders brought together in a joint event hosted by The CarbonNeutral Company and UBS. Despite the different standpoints of the panel, the message for government seems clear: a carbon price will help business, but make it simple, allowing businesses to increase the effectiveness of their actions, not see them compromised by complication. Read the full report.

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