A carbon footprint is the total amount of carbon dioxide (CO2) and other greenhouse gases emitted over the full life cycle of a product or service. There are a number of more specific definitions available, and a comprehensive review of definitions can be found in ISA-UK research report 07-01. A carbon footprint is usually expressed as grams of CO2 equivalents, which accounts for the different global warming effects of different greenhouse gases (Parliamentary Office of Science and Technology POST, 2006). The carbon footprint is calculated using the Life Cycle Assessment (LCA) method. This established method has been standardized under ISO 14044.
Reducing a carbon footprint
The carbon footprint can be efficiently and effectively reduced by applying the following steps:
- Life Cycle Assessment (LCA) to accurately determine the current carbon footprint
- Identification of hot-spots in terms of energy consumption and associated CO2-emissions
- Optimization of energy efficiency and, thus, reduction of CO2-emissions and reduction of other GHG emissions contributed from production processes
- Identification of solutions to neutralize the CO2 emissions that cannot be eliminated by energy saving measures.
The last step includes carbon offsetting; investment in projects that aim at the reducing CO2 emissions, for instance biofuels or tree planting activities.
Kyoto Protocol, carbon offsetting, and certificates
As recognized on a scientific basis, carbon dioxide emissions to air (and the emissions of other GHG's) are almost exclusively associated with the conversion of energy carriers like natural gas, crude oil, etc. The carbon content released during the energy conversion process reaches the atmosphere and is deemed to be responsible for the global warming process (i.e. climate change).
The Kyoto Protocol defines legally binding targets and timetables for cutting the greenhouse-gas emissions of industrialized countries that ratified the Kyoto Protocol. Accordingly, from an economic or market perspective, one has to distinguish between a mandatory market and a voluntary market. Typical for both markets is the trade with emission certificates:
- Certified Emission Reduction (CER)
- Emission Reduction Unit (ERU)
- Verified Emission Reduction (VER).
The mandatory market
To reach the goals defined in the Kyoto Protocol with least economical costs the following flexible mechanisms were introduced for the mandatory market:
- Emissions trading
- Clean Development (CDM)
- Joint Implementation (JI)
The voluntary market
In contrast to the strict rules set out for the mandatory market, the voluntary market provides companies with different options to acquire emissions reductions. A solution, comparable with those developed for the mandatory market, has been developed for the voluntary market, the Verified Emission Reductions (VER). This measure has the great advantage that the projects/activities are managed according to the quality standards set out for CDM/JI projects but the certificates provided are not registered by the governments of the host countries or the Executive Board of the UNO. As such, high quality VERs can be acquired at lower costs for the same project quality. However, at present VERs can not be used in the mandatory market.
The voluntary market in North America is divided between members of the Chicago Climate Exchange and the Over The Counter (OTC) market. The Chicago Climate Exchange is a voluntary yet legally binding cap-and-trade emission scheme whereby members commit to the capped emission reductions and must purchase allowances from other members or offset excess emissions. The OTC market does not involve a legally binding scheme and a wide array of buyers from the public and private spheres, as well as special events that want to go carbon neutral.
There are project developers, wholesalers, brokers, and retailers, as well as carbon funds, in the voluntary market. Some businesses and nonprofits in the voluntary market encompass more than just one of the activities listed above. A report by Ecosystem Marketplace shows that carbon offset prices increase as it moves along the supply chain——from project developer to retailer.
While some mandatory emission reduction schemes exclude forest projects, these projects flourish in the voluntary markets. A major criticism concerns the imprecise nature of GHG sequestration quantification methodologies for forestry projects. However, others note the community co-benefits that forestry projects foster. Project types in the voluntary market range from avoided deforestation, afforestation/ reforestation, industrial gas sequestration, increased energy efficiency, fuel switching, methane capture from coal plants and livestock, and even renewable energy. Renewable Energy Certificates (RECs) sold on the voluntary market are quite controversial due to additional concerns. Industrial Gas projects receive criticism because such projects only apply to large industrial plants that already have high fixed costs. Siphoning off industrial gas for sequestration is considered picking the low hanging fruit; which is why credits generated from industrial gas projects are the cheapest in the voluntary market.
The size and activity of the voluntary carbon market is difficult to measure. The most comprehensive report on the voluntary carbon markets to date was released by Ecosystem Marketplace and New Carbon Finance in July of 2007.
Other activities
A carbon label, which shows the carbon footprint embodied in a product in bringing it to the shelf, was introduced in the UK in March 2007 by the Carbon Trust. Examples of products featuring their carbon footprint are Walkers Crisps, Innocent Drinks, and Boots shampoos.
The Climate Conservancy, is a U.S. non-profit founded by Stanford University scientists that is working with companies to assess the GHGs emitted across the full life cycle of consumer packaged goods. The organization plans to label products with a Climate Conscious metric based on GHG intensity (CO2e per $) in order to provide a meaningful standard for comparing different products.
CarbonCounted, which launched in early 2007, is a Canadian based GHG carbon label system that allows companies to link with and leverage their supply chain. By displaying the CarbonCounted footprint on a product, a supplier is publishing their footprint and committing to emissions reduction.
Carbon Reduction Institute, NoCO2 & LowCO certification labels were launched in Australia to allow consumers to determine the reductions of GHG emissions that companies have made. The Carbon Reduction Institute uses a combination of direct life cycle studies and life cycle analysis based on a financial control rational to determine the carbon footprint of companies.
