Purchasing carbon credits in South Africa

Submitted by: Amanda Botes, Monday, March 19, 2012

<p>A woman stands in front of her retrofitted “green” house that has had refurbishments including the installation of a solar water heater and energy efficient lighting in Green Street, Cato Manor, KwaZulu-Natal. Photo provided by PACE. Photo taken by the Green Building Council of South Africa.</p>

A woman stands in front of her retrofitted “green” house that has had refurbishments including the installation of a solar water heater and energy efficient lighting in Green Street, Cato Manor, KwaZulu-Natal. Photo provided by PACE. Photo taken by the Green Building Council of South Africa.

Purchasing carbon credits enables businesses to offset their emissions to achieve carbon neutrality.  Although organisations should first look at mitigating their emissions, carbon credits can assist with making up the balance of their emissions that cannot be reduced in the short term. For organisations in South Africa the purchase of carbon credits is currently voluntary. There are many options when it comes to the purchase of carbon credits but is important that the credits purchased are from legitimate projects.

What is a carbon credit?

A single carbon credit represents the reduction of one tonne of CO2 equivalent emissions. There is no set price for carbon credits.  There are two markets that exist for the trading of carbon credits, mandatory markets and voluntary markets.

Mandatory markets for carbon credits

Mandatory markets are run by mandatory carbon reduction regimes such as the Kyoto Protocol and the European Union’s Emissions Trading Scheme. In these markets governments and companies can buy carbon credits in order to comply with the caps that have been placed on their carbon emissions as set under the Kyoto Protocol.  Mandatory carbon credits are traded through the Clean Development Mechanism (CDM) and other schemes.  At this stage no South African organisations are legally required to reduce their carbon emissions.

Voluntary market for carbon credits

The voluntary market allows for companies and individuals to trade carbon offsets on a voluntary basis. The voluntary market helps to achieve emissions reductions with projects that are too small to be registered under mandatory schemes or where countries do not have a Kyoto target.   One of the difficulties with the voluntarily market is surety that carbon emission reduction has actually taken place.   To increase surety regarding carbon credits many sellers either get their credits verified by a third party or subscribe to a voluntary standard.

Voluntary standards

In the case of voluntary standards the carbon project selling the credits signs up with one of the many voluntary standards that exist.  Each standard has its own set of requirements that need to be met for a carbon project to be approved under that standard.  Some of the voluntary standards that currently exist are:

  1. Voluntary Carbon Standard (VCS): A recognised Green House Gas (GHG) accounting programme that can be used by projects to verify and issue carbon credits in the voluntary market..  This standard requires third party verification.
  2. Gold Standard (GS): Established by the World Wildlife Fund for renewable energy and energy efficiency carbon offset projects. In order for a project to be certified under the GS, the project must positively impact on the environment and local community hosting the project.  This standard requires third party verification.
  3. VER Plus Standard (VER +): The VER+ Standard was designed for developers who want to follow similar procedures to the CDM but whose projects cannot be implemented under CDM. This standard requires third party verification.
  4. Climate, Community and Biodiversity Alliance (CCBA):  The CCBA has developed voluntary standards to help identify land management activities that minimise climate change, support sustainable development and conserve biodiversity. The Climate, Community and Biodiversity Standard (CCBS) does not quantify emissions reductions but rather evaluates land based carbon mitigation projects in the early stage of development against biodiversity and community development criteria. For this reason CCBA is often used in tandem with another carbon standard. This standard focuses on land use, land-use change and forestry projects.
  5. Plan Vivo: A standard for designing and certifying community-based payments for ecosystem services (PES) programmes. This standard focuses on land use, land-use change and forestry projects. Third party verification is advised but not a requirement under this standard.

Types of carbon offset projects

1. Carbon sequestration through reforestation or agriculture

One of the most popular ways that organisations offset their emissions is through the planting of trees. Whilst trees do absorb carbon dioxide and can have benefits for communities and biodiversity, planting trees cannot viably offset the entire globe’s emissions because of the scale of industrial carbon emissions. Carbon sequestration projects using trees typically have a long time frame as trees only reach maturity after many years.  The carbon offset of these projects also vary considerably depending on factors such as the vegetative cover of land prior to the project, the species of trees, density of planting, the local climate and future potential local climate change.

2. Renewable Energy

Investment in renewable energy projects, such as wind energy, solar or hydropower, displaces fossil fuels as a feedstock for energy production.

3. Energy Efficiency

Similarly investments in energy efficiency projects  reduce the amount of energy required to deliver the same service and so result in reduced emissions from fossil fuels.

4. Methane recovery

Methane is a GHG with a high global warming potential (GWP) of 21 times the GWP of carbon dioxide. When methane is combusted it is converted into carbon dioxide, reducing its GWP. Methane recovery projects include landfill gas to electricity projects, methane recovery from animal manure, and methane recovery in wastewater treatments.

5. Fuel switch

Another way that carbon emissions can be reduced is through projects that switch from one fuel source to another fuel that emits less carbon.

Who can you buy carbon credits from in South Africa?

There are a number of organisations in South Africa that facilitate buying of voluntary carbon credits.  However, there are not many organisations in South Africa that design and implement carbon credit projects themselves.    Two organisations that do are:

Credible Carbon

Food and Trees for Africa

 

Amanda Botes