Carbon offsetting industry growth and future expectations

Global warming is becoming more serious due to the emission of greenhouse gases worldwide. Countries have been discussing this issue at international conferences with the aim of sharing a common understanding of this issue. In terms of reducing CO2 emissions, it means compensating for the amount that cannot be reduced by purchasing greenhouse gas emissions reductions, planting trees, and donating to environmental protection. In other words, it does not actually reduce CO2, but it is a way to offset it by doing activities equivalent to it. Carbon offsetting efforts consist of "emission reduction" activities that reduce CO2 emissions themselves through the development and use of renewable energy, and "forest absorption" activities that promote CO2 absorption through forest protection and afforestation [1]. The amount of CO2 reduced or absorbed by activities is quantified, and it is common to buy and sell it as "credits" that make it possible to trade in the market.

It is also considered essential in the ‘Green Growth Strategy Accompanying Carbon Neutrality in 2050’. The aforementioned ‘Green Growth Strategy Accompanied by Carbon Neutrality in 2050’ also states that carbon offset efforts are essential. Furthermore, there is a carbon credit trading system as an applied type of ETS. Projects that reduce or control greenhouse gas (GHG) emissions, such as the introduction of renewable energy (renewable energy) and forest management, are certified as credits, and the credits are bought and sold. Especially in recent years, the voluntary credit market by private businesses has expanded.

Industrial policy towards carbon neutrality

The Ministry of Economy, Trade and Industry is promoting a policy called "Green Growth Strategy" to achieve carbon neutrality by 2050. Rather than viewing environmental efforts as a constraint or a cost to economic growth, we should see them as opportunities for growth. The idea is to lead to greater growth [2]. The Green Growth Strategy sets out 14 fields that are expected to grow as industries in the future, and where measures are essential from the perspective of reducing greenhouse gas emissions.

1. Energy related industry

Offshore wind industry, fuel ammonia industry, hydrogen industry, nuclear power industry

2. Transportation and manufacturing related industries

Automobile/storage battery industry/semiconductor/information communication industry/ship industry/logistics/people flow/civil engineering infrastructure industry/food/agriculture, forestry and fisheries industry, aircraft industry, carbon recycling industry

3. Home/office industry

Housing and building industry/next-generation solar industry/resource recycling-related industry/lifestyle-related industry

Corporate Efforts for Carbon Offsets

Carbon offsetting is the idea of ​​compensating for the greenhouse gases emitted by economic activities by investing in reduction activities that match the emissions [3]. In 2008, the Ministry of the Environment announced the concept of carbon offsets in Middle East, and established the Carbon Offset Forum. Integrating the Carbon Offset Certification System into a single system, they created the Carbon Offset System. Since 2017, the "carbon offset system" has been led by the private sector while complying with the public documents of the Ministry of the Environment. Carbon offset activities are broadly classified into five categories.

1. Self-activity offset

Offsetting greenhouse gas emissions from own activities

2. Conference/event holding offset

Offsetting greenhouse gas emissions from international conferences, concerts, sports competitions, etc.

3. Product Use/Service Use Offset

Products that offset greenhouse gas emissions when manufacturing, using, or disposing of products, or when providing or using services

4. Self-activity offset support

Supporting the offsetting of emissions associated with the daily lives of an unspecified number of individual consumers who purchase and use the products and services through the products and services.

5. Specific person-to-person offset

Efforts without credit. Each company will work to reduce greenhouse gas emissions while using the credit system within this content.

Trading Volume of Greenhouse Gas Emissions Credits Doubles Every Year

The carbon offset market is on a growth trend as new trading systems are established globally and regional trading demand increases. Companies and governments are strategically working on carbon offsets as part of their CSR activities. The individual-based market is also growing, although it is smaller than the enterprise-based market. According to Ecosystem Marketplace, a non-profit organization that provides information on ecosystem services, the trading volume of greenhouse gas emission allowances has grown rapidly in 2019 to about three times the size of 2016.

Carbon Offset industry growth in Africa

Africa is the second largest and most populous continent on earth. From the perspective of the climate crisis, although Africa's share of the world's carbon emissions is low, climate change caused by economic activities centered on developed countries is placing a heavy burden on Africa's economy and livelihoods. Under such circumstances, circular economy initiatives are being promoted in Africa as well. Including the World Circular Economy Forum to be held in Kigali, Rwanda in 2022, attention is focused on Africa's transition to a circular economy. Organizations promoting the circular economy are also active, and the African Circular Business Alliance is one of them.

CO2 emission reduction project platform "CHOOOSE"

CHOOOSE, headquartered in Oslo, Norway, promotes the use and introduction of offset activities for companies and individuals as an all-in platform that interacts with climate change countermeasure projects around the world and collects information on highly reliable projects.

"Olyns" creates a new cycle with collection boxes

Olyns is a startup that develops a mechanism to collect plastic resources such as PET bottles. 100 billion pieces of plastic are thrown away without being recycled every year. The amount of collection for recycling needs is overwhelmingly small. Thus, Philip launched Olyns and developed an unmanned collection box. For users, it is possible to receive CRV (California Redemption Value) refunds as PayPal points simply by putting recycled resources into the collection box. In addition, since the user can receive the refund themselves, it reduces the work of store clerks and leads to an improvement in the collection rate.

Conclusion

"Carbon offsetting" is often heard when global warming and environmental issues are discussed. It is attracting attention as one of the ways to stop global warming, and is being implemented in countries around the world. There is also a voice of criticism that Certainly, carbon offsetting also has the aspect of affirming the attitude of buying carbon credits from others with money to offset greenhouse gas emissions. On the other hand, reducing greenhouse gas emissions in any way is undoubtedly important in the current dire situation. In order to correctly reduce greenhouse gases in the future especially in middle east or African states, carbon offsets do not exist as a justification for not actively reducing emissions, but rather as a “last resort” after making maximum efforts to reduce emissions.

References

[1] W. e. forum, "Carbon offsets - how do they work, and who sets the rules?," Sep 02,2022.

[2] a. bp, "Industry leading carbon trading and offsetting programmers".

[3] B. Lutkevich, "Carbon offset".