Pitfalls – (Carbon) and (CO2)

Thinking about 12.5% Carbon Credits currently possible under the EU – ETS, and the Government’s need to negotiate a better deal for it to work for Australia’s Carbon Offsets market and the component CFI programs. Remembering that that program has bi-partisan political support we might think it will be plain sailing.

CO2Land org on 2 Aug 2012 published for educational purposes “Carbon the word most confused” and that story is “the problem is the word ‘carbon’ and carbon is directly linked to abatement and an offsets market.  Whereas the focus issue for farmers is methane production and it is part of the production cycle and it does seem contradictory to imply the backside of a cow can be abated as a constant!”  Then again on other dates 9th, 14th, 17th and 30th Aug each story was directly related to programs that impact on markets and ‘carbon’.

If we feature the UK and how it is handling carbon and we are not alone – In June 2012, 1370 companies listed on the London Stock Exchange had mandatory carbon reporting requirements announced. From 6 April 2013, carbon footprint reports and information will be included in the Director’s Report and financial statements. Thank you ManageCO2 for the heads up. Go to http://www.manageco2.com for their summary.

Notwithstanding, it is the UK Department of Environment Food and Rural Affairs (DEFRA) that established the core requirements under the ISO standards and what is missing in those standards Co2Land org previously explained this was so not to offend world trade bodies. In that context we were talking of Real, Additionality and REC’s and primarily referenced to ISO 14064-2.  DEFRA use similar language to our Government and have started to finalise the exact details of there respective programs and legislation, and use words like ‘the core requirements have been made very clear and are largely consistent with other reporting standards such as the Greenhouse Gas Protocol and ISO 14064-1.” Other similarities are in the reporting of total operations, but it stops at CO2 and that is different to carbon in our context.

The UK requires organisations that operate outside that country have to report emissions for each facility outside the UK.  They also expect that each operational area outside UK will report according to that region. The European Union Emissions Trading Scheme is included – The London Stock Exchange companies listed to report will be required to report emissions that we will recognise as scope 1 – combustion of fossil fuels. However, we (Australians’) have a problem  – the UK is focused on energy related emissions – not all 6 Kyoto gases are covered – only CO2 is covered! They cover off other requirements in other programs and many of them support innovation!

So lets go over the reporting requirements of EU-ETS as it stands today:

Scope 1 – yes

Scope 2 – no

Scope 3 – no

All 6 Kyoto gasses reported – no CO2 only

Each country/region Specific Emissions Factors required in the report – yes

Enforced – yes.

Source: http://www.defra.gov.uk

The challenge for Australian farmers is the to be able to sell credits in Europe with some certainty as their land practice changes most probably and in full likelihood relate to methane production, and that issue is well posted and might help understand what the government meant by 12.5% could be currently generated as credits to meet the domestic demand through the EU ETS and we have a 50% limit on overseas credits. Exploring that 12.5% if you takes our 6 gases and the harm effects of each (CO2-e calculation) across industry you come up with a number very similar where 50% offshore credits are whittled to become 12.5% when only CO2 can be counted! Are you now confused about ‘Carbon’ Farming?

So can we expect the transition from carbon price to Au ETS to EU ETS to see more ‘policy adjustments’ between now and 2015? It could be worth a wager and it will not matter what political persuasion you are either. It will be a global trade adjustment that will bring that about, and if history prevails political decision based on intervention strategies will dictate price not the market forces.

Why not checkout http://www.CO2Ti.com and the Carbon Offset Masterclass – could be a good move.