Carbon Credit and Greenhouse Gases Abatement: What Is Wrong?

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Greenhouse effect

Greenhose gases trap the heat inside the atmopshere. Image by OpenClipartVectors

The abatement of waste greenhouse gases is a mitigation process which can give companies carbon credits. Researchers from Stockholm Environment Institute (Sweden), however, reported that, if no safeguards are applied in calculating the emission reductions, companies have incentives to generate more waste gases, just to receive extra credits. This perverse effect is not good for the environment and may undermine the integrity of the whole carbon credit scheme.

Greenhouse Gases and Greenhouse Effect

Greenhouse gases (GHGs) are gaseous compounds which, if present in the atmosphere, can absorb part of the heat released by the Earth. In this way, the heat gets trapped in the atmosphere.

The most common GHGs are water (H2O), carbon dioxide (CO2), nitrous oxide (N2O) methane (CH4) and fluorine-containing gases. Water concentration in the atmosphere did not show any change in recent years. For all the other gases, on the contrary, researchers observed a substantial increase due to human activities, such as burning of fossil fuels or industrial processes.

Some people believe that these higher GHG concentrations could be a cause of global warming.

Mitigation Measurements

Because of the threat these gases may pose to the environment, many countries subscribed the Kyoto Protocol agreement, which sets some specific targets in GHG emission reductions.

One way to achieve these targets is through the crediting emission reductions through an instrument called “Joint Implementation.” With this scheme, countries and/or private companies can earn credits for emission reductions if they perform some mitigation processes.

Abating GHG emissions with high Global Warming Potential (GWP) is an example for such mitigation measures that can be credited.

Carbon Market Controversy

Although the carbon market scheme is considered very important to reach the Kyoto Protocol targets, crediting mechanisms have been subject to criticism, in particular with regard to whether they actually contribute to reducing GHG emissions.

Indeed, scientists performed several investigations to assess the effectiveness of such schemes, and the possible unwanted side effects.

Researchers from the Stockholm Environmental Institute (Sweden) published a study on this topic in Nature Climate Change in August 2015. They investigated the effect of the abatement projects of two GHGs, hydroflurocarbon 23 (HFC23) and sulfur hexafluoride (SF6), both GHGs with high Global Warming Potential. The first gas is produced as a by-product in the synthesis of hydrochlorofluorocarbon 22 (HCFC-22), a gas used as a refrigerant. SF6, on the other hand, is a gas used in electronics, and a waste stream of SF6 is generated during its production.

Greenhouse Gas Abatement

Decoded Science spoke to Lambert Schneider, who explains the meaning of their study.

“In principle, abating GHGs emissions generated as by-products in industrial processes is good and necessary. Usually, plants have economic incentives to maintain waste generation at low levels. However, revenues from carbon credits can in some instances be significant and create perverse incentives to produce more waste gases, for the purpose of generating more credits.”

Gaseous emissions.

With greenhouse waste gas abatement companies can earn carbon credits. Image by U.S. Fish and Wildlife Service.

Monitoring of Three Plants

To understand if this really happens, Mr Schneider and his co-authors evaluated data on production and waste generation of plants in Russian plants which all abated waste gases as Joint Implementation (JI) projects.

“We observed that at HaloPolymer Perm, for instance the generation of SF6 waste gas increased significantly after the plant could earn carbon credits. The data showed that the increase in SF6 generation was not due to higher production levels.”

Capping the Abatements

Is it possible to avoid such perverse incentives? One possible way is to introduce a cap on the amount of GHGs which are eligible for crediting.

Three other plants investigated in this study (two plants of KCKK Polymer and one of HaloPolymer Perm) initially introduced such caps, for the period 2008-2010; after that, the limit was removed. According to Mr Schneider:

“We observed that waste gas generation increased once the caps on the amount of credits were removed. This was true for both SF6 and HFC-23.

This led to an excess issuance of credits that do not represent actual emission reductions.”

Better Carbon Market Management

The results of this study show that, for carbon trading to be effective and good for the environment, rules need to be in place to ensure integrity. As Mr Schneider highlights:

“It is important that appropriate regulatory oversight is provided on carbon markets. This is particularly important for the new climate treaty which is currently under negotiation by Parties and which should be adopted in December this year in Paris.”

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