FAQs

What do you mean by ‘offsetting’ carbon dioxide emissions?

We can’t stop CO₂ being produced when we burn gas or use electricity – it’s an inevitable part of the process of combustion. Instead, the EquiClimate approach to cancelling out, or offsetting, the CO₂ emissions of each person is to prevent an equivalent amount of CO₂ being generated later elsewhere, through withdrawing emissions ‘credits’ from the Emissions Trading Scheme market.

See how EquiClimate works/ offsetting carbon emissions

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How can the EU’s Emissions Trading Scheme be used for CO₂ offsetting?

The EU’s Emissions Trading Scheme (EU ETS) is a Europe-wide market mechanism, created to deliver reductions in Europe’s CO₂ emissions – at the least cost. ‘Allowances’ for emissions are given annually to significant producers of CO₂ across the EU, such as steel works, cement factories or generating units. At the end of the year, each facility has to report the amount of CO₂ they have produced, in reports that are audited by government. Each company also has to declare its holdings of allowances.

Companies are very heavily fined if they have produced more CO₂ than they have permits for – a big enough fine to act as a real deterrent. The EU has thereby ‘capped’ the amount of CO₂ that can be produced from commerce and industry.

But to make the system more flexible, companies are allowed to trade allowances or permits between themselves and between authorised traders.

EquiClimate is a registered trader in the Scheme. We can therefore buy allowances in the wholesale (inter-company) market. When we purchase these permits, we reduce the total number in circulation. As the total number of in circulation is the ‘cap’ of CO₂ production in Europe, when we buy allowances and retain them (‘‘retiring’ them from the market) we tighten the cap on CO₂ production. Effectively, when we buy and retire permits, companies in Europe are pressurised to produce less CO₂ – because the permits we hold will never be presented to cover any CO₂ produced.

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Why bother with these CO₂ allowances? Why don’t you invest in tree-planting schemes or indigenous CO₂ reduction projects as some other CO₂ offsetting schemes do?

We want to be absolutely straight with our customers. If we charge you a certain amount of money for 1 Tonne of CO₂ offset, then we want to be absolutely certain that 1 Tonne of CO₂ is offset as a result. We found that there was just too much uncertainty with so-called carbon abatement schemes and couldn’t make that promise in that context. The growth rate for trees (and thus the amount of CO₂ they absorb) depends on local conditions and forest management, and CO₂ will be re-released if the trees burn down or are used for combustion. International standards for indigenous carbon abatement projects are at an early stage – there are as yet relatively few UN-endorsed projects.

The EU ETS is fully aligned with the Kyoto Treaty and monitored by the EU Commission and the governments of the member states. Removing a certain tonnage of carbon allowances from circulation will definitely reduce the CO₂ produced by the specified amount.

Certified Emissions Reduction certificates (CERs) that come from UN-approved schemes are now admitted to the EU ETS. We are seeking to purchase some CERs to offset our customers’ Carbon Dioxide production.

See How EquiClimate works/ Is this the only way of offsetting?

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So when I offset my CO₂, money will go to big business. Isn’t this just lining the pockets of polluters?

The EU ETS was designed to reduce the amount of CO₂ produced in Europe with a ‘carrot and stick’ approach. Because of the high charge for permits and their restriction, there is both growing pressure on, and real incentives for, industries to make their processes more sustainable.

If, for example, a cement factory figures out a new way of producing the same amount of cement whilst emitting less CO₂, which requires expensive changes to the cement factory or its production process, then the cement company can help fund these changes by selling the allowances that have been saved as a result of the changes they’ve made. Thus, money invested in EquiClimate is directly reducing the CO₂ produced in Europe.

See About Emissions Trading/ How does the scheme work

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Isn’t offsetting just an easy way out for people who don’t want to change their lifestyle?

We encourage all our customers to reduce their CO₂ footprint by using less energy, whether in their home or in their travel arrangements.  However, once that is done we believe that CO₂ offsetting is both a valid approach and a unique opportunity for those who wish to go one step further to reduce their impact on the environment.

See About changing lifestyle

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The EU CO₂ ‘cap’ isn’t robust enough. I’ve heard that some EU governments have ‘fiddled’ the system to give their industries more allowances and thus a competitive advantage against those industries in other EU States.

Phase 1 of the EU ETS, which ran for three years from January 2005 to December 2007, had some issues with oversupply.  There were suspicions that some national governments gave out more allowances than were needed in order to help their national industries. 

As a result, in preparation for Phase 2, the EU Commission was much tougher on national governments and almost all of the national governments’ proposed allocations were significantly scaled back.  As a result, the price of Phase 2 EUAs has almost always been above £10 per tonne.  EquiClimate offsets are based on the retirement of Phase 2 carbon allowances.

In January 2008 the EU Commissions latest proposals included that the allocation of allowances should take place centrally rather than within individual nations.

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I’ve heard that offsetting is a waste of time as the timescale over which CO₂ is reduced is measured in the tens of years.

Carbon reduction timescales are certainly an issue in carbon offsetting.  With drastic cuts in CO₂ emissions over the next 20 years seen as necessary to avoid the worst effects of climate change, offsets that operate over a longer timescale than this (e.g. tree planting schemes) are of highly questionable value.  However, with Phase 2 of the EU ETS in force from 2008 to 2012, offsets that use this mechanism – including EquiClimate – deliver their CO₂ reduction within that timescale.

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I’ve heard criticism of some of the projects that offset companies have supported with money raised from customers’ offset purchases.

These concerns do not apply to EquiClimate as it is not a project-based offsetting scheme.  Instead, greenhouse gas ‘allowances’ are purchased and withdrawn from the EU Emissions Trading Scheme, which, therefore effectively lowers the cap on industrial CO₂ emissions in the EU.    

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