Big business moves early on carbon offsets

Herald Sun
Wednesday 20/2/2008 Page: 49

A NATIONAL emissions trading scheme is due to become mandatory next year, with about 1500 companies poised to be hit with liabilities for emissions. But big business isn't waiting for the carbon axe to fall - a large number of companies are already dipping their toes into the water, a carbon offset provider says. "The market for voluntary participation has been growing at a surprisingly rapid rate," CO2 Australia chief executive Andrew Grant said.

"Whether it's brand consciousness, consumer demand or initiated by companies to attract employees, involvement has taken off in the past 12 months." While some of these companies may not attract a liability next year under the Federal Government's proposed scheme, others certainly will and are engaging in pilot investments for the purpose of learning and discovery. "For us, the sky is the limit, really," Mr Grant said.

Set up in 2004, CO2 Australia focuses on carbon sequestration, scoring credits by establishing commercial-scale Mallee Eucalypt plantings that draw carbon from the air. While tree planting is the best known form of carbon offsetting, offsets such as renewable energy, energy efficiency and methane capture projects are growing in scale and popularity.

But tree planting is still typically the cheapest way to create a carbon credit, delivering businesses such as CO2 Australia a commercial advantage, Mr Grant said. "All roads lead to Rome and if we can deliver the offset more cheaply, the market will reward that." The company's clients include Origin Energy and Qantas. In November, CO2 Australia announced its biggest deal to date, to provide Woodside with up to $100 million of carbon offsets. Mr Grant says the deal confirms the scale of the business opportunities in the Australian carbon market.

While tree planting can easily be tailored to the scale of a client's needs, it is the offset category most heavily criticised by environmentalists. Critics such as Total Environment Centre executive director Jeff Angel say tree plantations are ultimately reversible, the trees take a long time to grow and might die prematurely. He prefers energy efficiency and renewable energy offsets, such as building wind farms, which provide new energy and prevent coal power stations being built.

Mr Angel is also concerned about the varying quality of offsets available. "You need to ask questions about accreditation, auditing, transparency and monitoring results," he said. Monitoring is important to ensure the offset purchased has done what it promised to do. TEC is evaluating carbon offsets provided by a host of providers and will prepare a report on its findings. Ultimately, said Mr Angel, reducing emissions is preferable to offsets. CO2 Australia, nevertheless, stands by its product, saying carbon sequestration is the only way to rid the atmosphere of carbon already existing in it.

Mr Grant said the company - through the administration arrangements of individual schemes- guaranteed the sinks were permanent, not temporary. The company has to prove carbon sequestration annually, taking account of tree loss, and the government carries out independent audits, he said. The Department of Sustainability and Environment is seeking offers for the supply of accredited and verified carbon offset products to account for Victorian Government fleet emissions for 2006-07 and 2007-08. The tender closes tomorrow.