Monday, March 21, 2011

Carbon Offsets

As climate change dialogue enters the mainstream, many of the world's nations, corporations, and individuals have set the goal to become carbon neutral. In the short term, directly reducing carbon emissions to zero is an impossible task. Thus, a key mechanism to achieve carbon neutrality is the use of carbon dioxide offsets. In this post, I want to briefly examine carbon offsets, their applicability to urban carbon neutrality, and the role they may play in Taiwan's low carbon city plans.

What is a Carbon Offset?

In theory, carbon offsets are a wonderfully simple concept.* Any emitter of carbon dioxide (a state, corporation, or individual) can "offset" his CO2 emissions by investing in a project that will reduce an equal amount of carbon dioxide. Thus the carbon emitter mitigates his CO2 emissions indirectly through a financial investment. Measured in tons of carbon dioxide equivalent (CO2e), carbon offsets include investments in afforestation, renewable energy, and energy efficiency. Carbon offsets require accurate estimations of carbon emissions and often take place under cap-and-trade programs (such as the European Union's Emissions Trading System). Another key aspect of carbon offsets is the notion of "additionality." In order to effectively reduce CO2, carbon offsets must direct investment towards projects that would not have otherwise been carried out, thus it must be "additional."

While the idea of carbon offsets is straightforward, its implementation is complicated. There are several different standards of carbon offsets operating under a porous regulatory framework. Ensuring that a theoretical amount of carbon will not be emitted is an inherently difficult task. Planting 100 trees may reduce a designated amount CO2 when extrapolated over 20 years, but what happens if they are destroyed or harvested after 15? It is also difficult to prove additionality; there have been cases where carbon offsets are diverted towards projects already supported by other investment mechanisms.

Carbon offsets are playing an increasing role in the global climate change dialogue

At best, critics charge carbon offsets with being inefficient and misguided attempts to reduce global CO2 emissions. At worst, offsets represent fraudulent manipulation of customers good intentions. In 2007, The New York Times reported on the Vatican's ambitious carbon offset scheme, "The Vatican Climate Forest." By planting trees in a 37 acre tract of land in Hungary's Bukk National Park, The Vatican would become the world's first carbon neutral state. However, as revealed by The Christian Science Monitor, the project has been marred by scandal and presents a cautionary tale for those relying on carbon offsets as the lynchpin of a carbon neutrality strategy. Nearly four years after the Vatican's announcement, the future of the project remains in doubt, no trees have been planted, and no CO2 has been offset.

Carbon offset industry leaders refute these charges and distance themselves from those who would defraud or mislead customers. Increasing familiarity with the pros and cons of offsets will serve to strengthen consumer confidence over time. Standards are in regulatory oversight are also improving. The British Standards Institute (BSi) has released PAS 2060, a leading carbon neutrality benchmark system. PAS 2060 clearly delineates the appropriate role of carbon offsets in carbon neutrality plans and identifies standards for certification.

*For a more detailed explanation of carbon offsets, please refer to the World Resources Institute's "Bottom Line on Offsets"

Urban Carbon Neutrality

Despite their controversial nature, it is evident that the carbon offsets are growing at a rapid pace. Carbon offsets have been utilized by airlines, banks, and even media conglomerates as individuals and organizations seek to reduce their carbon footprints.

Carbon offsets are also being employed by municipal governments to foster low carbon or carbon neutral city development. Cities can achieve a carbon neutral status by improving energy efficiency, developing higher amounts of renewable energy, and investing in carbon offsets. San Francisco and Salt Lake Cityhave developed offset projects to mitigate emissions from municipal air travel. To leverage support for its offset initiative, San Francisco also inaugurated the Climate Passport program. Passengers at San Francisco Airport can offset their CO2 emissions by directing money toward forest conservation in Mendicino and the San Francisco Carbon Fund. While air travel has been a popular venue for carbon offsets, other cities have implemented a more tangible approach. In 2009, the city of Philadelphia created Erase Your Trace. The initiative allows Philadelphians to calculate their personal CO2 emissions and make a corresponding donation to a local non-profit conservancy. The money is then invested in planting trees across Philly's neighborhoods, keeping the offset local.

Masdar: The world's first carbon neutral city? (photo by Simon)

In many urban low carbon strategies, offsets serve a supplementary role. While other direct avenues of carbon reduction undergo planning, offsets can immediately reduce a city's carbon footprint. In Sydney, the city has shifted resources from carbon offsets to local renewable energy deployment. Once Sydney formulated its own low carbon investment plan, carbon offsets were rebalanced and reduced to reflect its changing priorities. Moreover, carbon offsets can be utilized to promote future low carbon city development. Construction costs for the Masdar Ecocity project in Abu Dhabi are partly funded by the sale of carbon offsets through the Kyoto Protocol.

Here in Taiwan

In Taiwan, recent years have witnessed some progress in the carbon offset market. As a precursor to Taiwan's cap-and trade policy, 266 companies responsible for the bulk of Taiwan's national CO2 emissions submitted their emissions data to the EPA in 2010. Taiwan's industries can now make carbon trades and isolated actors, such as National University of Kaohsiung, have utilized offsets to make events carbon neutral.

However, widespread adoption of carbon offsets has been slow. The EPA has yet to enact a carbon trading scheme or formally endorse any particular carbon offset standard. Jules Chuang, East Asia Principal for South Pole Carbon Management, is optimistic about prospects for carbon offsets in Taiwan but recognizes current barriers. As Mr. Chuang relates, "With both supply and demand unclear, what is needed is a clearer game plan." Ambiguous signals have precluded offsets from becoming a key strategy of Taiwan's low carbon city development. There also exists a general distrust amongst Taiwanese regarding the prudence of investing in CO2 reduction projects overseas.

Taiwan's carbon offset market is growing slowly (photo by David Reid)

Despite its slow start, the carbon offset market in Taiwan is poised to take off. Taiwan has stated a vague goal of becoming a low carbon country by 2020. Achieving a significant reduction in Taiwan's carbon footprint in less than ten years will necessitate the use of carbon offsets. In the near term, Taiwan's carbon offset market needs explicit direction from the government. As Taiwan waits for cap-and-trade legislation to clear its legislative hurdles, the EPA could formally adopt one or several existing carbon offset standards.

EPA support for the carbon offset market would catalyze local and regional initiatives. As a part of Taiwan's low carbon communities plan, several municipal governments are in the process of applying for EPA funding for low-carbon projects. As in Sydney, Taiwanese cities could use offsets as a bridge to carbon neutrality. Moreover, Taiwanese cities should explore strategies to keep offsets reinvested in local communities. Local carbon offsets projects would familiarize Taiwan's public with the concept of offsetting and slowly build acceptance for overseas investment.

Tuesday, March 15, 2011

News Roundup: Nuclear Fears and more

After a break, Taiwan Sustainable Cities is back with a roundup of Taiwan's recent energy and environment news.


In the wake of Japan's nuclear crisis, fears about disaster mitigation and nuclear power have been renewed in Taiwan. Nuclear energy plays an important role in Taiwan's energy production and environmental discourse. Taiwan currently has three nuclear power plants that provide roughly 20% of the nation's electricity, but a recent survey indicated that only 35.4% of respondents supported nuclear power. Authorities from Taiwan's Atomic Energy Council (AEC) have attempted to alleviate public concern regarding the safety of Taiwan's reactors. However, the Taiwanese legislature has suspended construction of Taiwan's Lungmen nuclear power plant. Subject to several delays, Taiwan's controversial 4th nuclear plant had been recently rescheduled for a 2012 opening. Opposition members have demanded that the new plant be able to withstand a 9.0 magnitude quake (Taiwan's current nuclear facilities are estimated to be able to endure 6.0-7.0 seismic activity). Responding to the crisis, Taiwan Power Company has issued a statement that it will seek to reduce power supplied from nuclear sources in favor of alternative energy.

Renewed concern over nuclear energy

Taiwan's energy demand continues to soar on the back of the economic recovery. Encouragingly, Taiwan's energy efficiency has also experienced significant gains. The Bureau of Energy reported that Taiwan's energy efficiency increased by 4% in 2010, doubling the government's annual goal of 2% from 2008-2015. The Taiwanese government recently upset solar investors by reducing the solar feed-in tariff by 30%. The government cited falling solar PV equipment costs for the reduction but subsequently announced increases for feed-in tariffs on off-shore and on-shore wind energy by 30% and 10% respectively. And for those who missed it, Renewable Energy World offers an excellent article on Taiwan's transition to sustainable energy.


The Hushan Reservoir in Yunlin County is scheduled for a 2014 opening. As an article in Taiwan Today notes, Hushan has reignited the debate over systematic issues with Taiwan's water usage and policy. The buildout of Hushan and other large reservoirs in Taiwan have been criticized by environmental groups for damaging the ecosystem in order to serve the water needs of large industry. Reservoirs in Taiwan have been plagued by high silt levels, reducing their efficiency. The construction of dams and reservoirs have also done little to improve issues such as water leakage and high rates of water consumption.

The central government is maintaining caution about increased cross-strait water dependency. Jinmen County officials have suggested the notion of importing water from China to meet the island's needs. Ironically, it is an anticipated influx of Chinese tourists that would precipitate the demand for imported water. Although a Jinmen-Mainland water connection would represent a very small exchange, the issue highlights the sensitivity of cross-strait energy-water cooperation.

Carbon Emissions

As the legislature continues debate on a cap and trade policy, Taiwan witnessed its first carbon trading transaction in February 2011. The government is also considering other ways to reduce Taiwan's carbon footprint. The EPA announced its plans to implement a framework to promote carbon neutrality. A "carbon neutrality management platform" will create a public registry of carbon neutral actions and layout guidelines for corporations and private citizens to reduce their CO2 emissions. On Arbor Day, President Ma led a symbolic afforestation effort as 30,000 trees were planted around the island. Taiwan is over 1/3 of the way towards achieving its goal of planting 60,000 hectares of forest by 2018, sequestering 300,000 tons of CO2 each year. Despite recent government action, a January 2011 survey conducted by the Taiwan Institute for Sustainable Energy revealed that the majority of respondents believed the Taiwanese leadership was not doing enough to prevent climate change. 61% of those surveyed supported a national carbon tax and 52.7% approved of electricity rate hikes to increase the amount of renewable energy.


The Taipei MRT completed its latest extension connecting the Bannan and Wenhu lines. By 2015, four main MRT lines will undergo additional expansion, accompanied by a new circular line and Taoyuan Airport extension. Owners of real estate near new MRT stations can rejoice: values surged in 2010 for apartments above or close to MRT stations in New Taipei City.

Taipei MRT continues to expand

The Ministry of Transportation and Communications (MOTC) reaffirmed its green transportation goals for Green Island and Xiaoliuqiu Island. As a part of its effort to promote ecotourism and low carbon development on Taiwan's outlying islands, MOTC aims to replace all gasoline-powered motorcycles on both islands with electric models over the next four years. Furthering the push for electric vehicles, two Taiwanese government-funded institutes recently announced their formal collaboration with U.S.-based Underwriter Laboratories (UL). UL will help establish national standards for Taiwan's burgeoning electric vehicle market.

Green Buildings

The new Hsiangshan visitor center at Sun Moon Lake opened in February 2011. The winner of the Landform Series competition, the structure utilizes a large green-roof to blend in with its natural surroundings. On the heels of its "Asian Green Cities Index," Siemens Taiwan announced the launch of a new smart building model. The initiative plans to unite smart grid technology, renewable energy, and supply-side energy management to integrate green buildings and smart cities.

International Engagement

Despite Taiwan's murky political status, there are still 23 countries with which Taiwan maintains formal diplomatic relations. President Fernando Lugo of Paraguay recently made a state visit and encouraged Taiwanese investment in energy-intensive industries. Tuvalu, a Polynesian island nation of less than 11,000 residents, has also remained a Taiwanese ally since 1979. On a recent visit, President Ma announced a program to deploy Taiwanese solar energy and LED technology to improve the island's rural electrification. In the past, Taiwan implemented a similar program with fellow ally Burkina Faso.