In the field of women’s clothing, fashions spectacularly come and shamefacedly go. As one of the presenters said towards the end of the Carbon Offsetting report launch this evening, she is fearful that perhaps offsetting could be just a trend, a fashion statement that will bow out after a short while, like legwarmers and chiapas :-
In the meantime, there’s stacks of money to be made in offsetting, as witnessed by the fact that ClimateCare was snaffled up by no less than J. P. Morgan, who hosted this evening’s meeting, on the baking Victoria Embankment in London, attended by people extremely well groomed, in very, very smart suits, with glow-in-the-dark white collars. Before you ask, the women wore lots of big jewellry or had fabulously glossy hair. To get noticed I suppose.
“I can buy any car I like,” J. P. Morgan’s Paul Kelly told me in the middle of our little tete-a-tete about Jevon’s Paradox. As if this would impress me. What matters most is a man’s mind, not his mint. And Paul Kelly didn’t even realise I was trying to sell him his own arguments and widen his field of view.
These Carbon Offsetting people really need to raise their game. It’s all very well selling offsets created by giving people smoke-free solar ovens in Madagascar or the villages around Mumbai or wherever. Yes, it’s a good project in itself, but it’s not really going to lower Carbon Emissions in the grand scheme of things where every good middle-class Indian wants to buy a Tata Nano.
As I was trying to explain to Paul Kelly, a Carbon Offset doesn’t create a real Carbon Reduction, it just stops an added Carbon Emission. It’s a Cap, not a Cut. It easily gets swamped by other people increasing their Emissions.
The real money to be made is in mass-selling people the cost-negative Carbon Cuts that are available through Energy Efficiency and Energy Conservation and the other measures on the left-hand end of the McKinsey Cost Abatement Curves :-
Currently the UK Government continues to skirt the cheap measures in favour of the high cost, high uncertainty-of-success, high technologies, like Carbon Capture and Storage and new Nuclear power.
J. P. Morgan could lead on their lack of vision, if their colleagues in the Voluntary Emissions Reductions (VERs) market didn’t have a lack of vision of their own. Guy Turner of New Carbon Finance, on overhearing me mention McKinsey said something to the effect of “McKinsey’s [rude word meaning useless]. I was working on it when McKinseys were in nappies [diapers].”
I spent some time talking with Paul Kelly about why the Non-Governmental Organisations (NGOs) reject Carbon Offsetting. He did admit that he thought that currently VERs make up a very small percentage of the potential Carbon Market, and I tried to explain to him that this was why NGOs scorn VERs.
You can never build a tranche of VERs that will compensate for coal-fired power generation. One of the key issues is that coal-fired power stations must be shut down, because the OECD countries have got to reduce their emissions by something in the region of 60% to 80% by 2050.
Therefore, J. P. Morgan ClimateCare should consider how to close coal-fired power plants. The only way to do it is to make real Carbon Cuts, in the OECD countries, which will then obviate the need for the coal-fired power stations. “Flicking the switch” to turn off coal plants is what we need to do, Paul Kelly. And flicking the switch is where you could make a packet more money, whilst saving the planet at the same time.
The “compliance” Carbon Markets, Cap and Carbon Trading, that are more than certain to be part of the post-Kyoto global deal, only offer punishment – charging for new investment in clean Energy infrastructure, and charging for Carbon Credits at the same time. You’re penalised even as you try to adapt.
By contrast, a voluntary system of certified grants to green street after street of domestic households could be a win-win-win scenario. J. P. Morgan ClimateCare could offer an application system – if you can get 20 people in your street to sign up to have their homes made over (a Carbon Extreme Makeover) then you get a grant, in exchange for five years of savings from your Energy bills. Householders win, J. P. Morgan ClimateCare wins. Planet wins.
As Edward Hanrahan (nice sky-blue shirt) of ClimateCare said, at this stage they need to unlock business motivation – we haven’t been so good at creating an environment where offsetting is a “hygiene factor” in anyone’s strategy – to put exponentially larger numbers up on the screen. Use of Voluntary Offsets is a critical part of a Carbon Reduction strategy – we need scale. Digging for a bigger pond.
As I was popping tiny, but tasty, canapes into my trap to soak up the orange juice, after the speaker panel, I was approached by an old activist pal, now sporting a J. P. Morgan name badge, who whispered “I’m on the other side now.” “There’s no such thing as “sides””, I said. And there isn’t. There really isn’t. Anything that helps, helps. It’s just we need to do it all on a much bigger scale, and actually Cut Carbon Emissions rather than paper them over.
I found I quite liked Paul Kelly, actually, even though he is from Texas. He admitted that they had to shave his fur off and pull his long canine teeth before being allowed from the back room to the grand hall for the evening. He may not have heard of the two-car family problem, but he is a strong advocate of Wind Power. And he does understand about Carbon Taxation reaching saturation impact after around 5% of Carbon Cuts, but he needs to go figure that the same thing applies to Carbon Trading, regulatory or voluntary.
“There’ll be so much Carbon leakage,” I explained. “Nobody can enforce a Carbon Cap by trading in Carbon.”
We need to stop using dollars to try to Cut Carbon. It’s going to fail. It can only penetrate so far in a global Economy that is highly dependent on Carbon for its wealth. We have to use Carbon to Cut Carbon. In other words, make real Carbon Cuts.
“He’s alright,” said my old pal conspiratorially, “he’s just a banker.” And so perhaps I should forgive him dropping the word “fungibility” into conversation.