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FTSLA eNews Archive - 2008

Each month the FTSLA sends a Newsletter to interested parties. You don't need to be a member of the FTSLA to recieve this informative monthly update, but we hope you'll recognize the value of joining this growing community of businesses, as we learn from each other and create a sustainable food system.
(NOTE: April-Dec 2008 eNews are PDF archives to be downloaded; we're currently updating these to webpages for even easier access.)

arrow bullet December 08 | November 08 | October 08 | August 08 | July 08
June 08 | May 08 | April 08 | March 08 | February 08 | January 08

  March 2008
 

FTSL helps to organize Sustainability Practices Focused sessions at the All Things Organic Conference April 26-29, 2008

In Chicago April 26-28, 2008 business members of the Food Trade Sustainability Leadership group will be participating in and helping to organize four sustainability practices focused meetings at the All Things Organic Conference

 

On April 26 there will be a session on Documenting the Triple Bottom Line as part of the Organic Trade Association Member day. Session topics will include how to move beyond the soft marketing of your sustainability initiatives and on to the hard metrics of sustainability reporting.  Speakers will share how organic businesses have created Corporate Social Responsibility reports that include alternative measures, assessment, and information that expand upon the standard notion of a single bottom line.

On April 28 there will be a session on “Sustainability How-To for the Organic Industry: Creating your business plan”. This session will review the elements of a successful plan including clarifying sustainability values and vision, identifying high priority projects, coordinating efforts company-wide, and measuring progress.

On April 28 the Food Trade Sustainability Leadership Advisory Group will be meeting to discuss the launch of the Declaration of Sustainability annual benchmarking framework.  In addition there will be the first gathering of the OTA Sustainability Practices Forum, the Agenda is open so please send discussion topics to nwhite@uoregon.edu.


Global Warming and Food Choices: Setting a Low Carbon Table
by Natalie Reitman-White and Sarah Mazze

(March 2008) — Are you stumped by which has a lower carbon footprint: chemically grown Washington apples or organic New Zealand Fujis? Do you wonder which is worse for the climate: processed soy or pastured beef?

The abundance of our choices — including year-round availability of food from around the globe — depends entirely on a steady supply of fossil fuels. The concept of “food miles” has brought needed attention to the carbon footprint of the American meal. But food miles alone cannot provide the complete picture of the greenhouse gas emissions associated with what we eat.

Fossil fuel inputs, and therefore carbon dioxide (CO2) and other greenhouse gas (GHG) emissions, exist in all stages of food production and distribution — from plowing and fertilizing fields to processing and packaging the food — and every phase of transportation, from the field to the consumer’s home. To paraphrase author Michael Pollan, our food is marinated in crude oil by the time it reaches our table.

According to the EPA, agriculture accounts for a whopping 7 percent of total GHG emissions in the United States, primarily nitrous oxide from fertilizers and methane from livestock. This figure does not account for the CO2 emissions from food-related transportation, manufacturing, storage and cooking mentioned above.

The good news is that there are choices we can make to reduce our climate impact. One primary way to reduce our carbon footprint is to reduce the “oil” from our diet. Perhaps trickier is to limit the other diet-related greenhouse gases.

But how do we distinguish which food choices have a lower greenhouse gas impact? And how do we balance these considerations with convenience, cultural tastes, nutritional needs and the pleasure of eating? While the answers are not all straightforward, arming yourself with a framework to make decisions can alleviate some food shopping dilemmas.

Go organic
Organic farming is a powerful tool in the fight against global warming, according to findings of the Rodale Institute’s Farming Systems Trial (FST) that began in 1981. In collaboration with Dr. David Pimentel of Cornell University, the FST found that organic farming systems have the potential to use 30 to 50 percent less energy than non-organic farming systems.

Additionally, results from the long-term FST conclude that organic cover-crop agriculture is a better “carbon sink” than non-organic agriculture. It better absorbs and sequesters natural carbon emissions from decaying matter in the soil, holding more carbon deeper than non-organically managed farmland.

USDA researcher David Doubs, Ph.D., found that this difference is due to the fact that organic matter decays more slowly in organically managed soil, in part because organic soil has more microbial activity — key to carbon sequestration.

Finally, non-organic farms generally rely on synthetic fossil fuel-based pesticides, fertilizers and herbicides, which require additional energy to manufacture, ship and apply. Organic farms, on the other hand, rely more on beneficial insects to control pests and on manual labor for weeds.

Eating with the seasons
Typically, eating locally grown foods in season can trim your GHG emissions while also supporting local farmers and your community’s food security and offering flavor-packed meals.

Enjoy fresh asparagus in the spring and eggplants in summer to cut carbon. Tomatoes that appear in the dead of winter either traveled from outside our region or grew in a hothouse, both of which require additional fuel inputs. In the case of the hothouse, fossil fuels probably were used for plastic covering and heat.

During winter, many Pacific Northwest markets offer a variety of locally grown produce including winter greens, leeks, hard squashes, potatoes, onions, apples, pears and highly nutritious root vegetables.

Planes, trains and trucks
In 2001, the Leopold Center produced a seminal report showing that “food miles” — the average distance food traveled from where it’s grown to where it’s purchased — were increasing across America. The term “food miles” now is part of the national lexicon, reflecting concern about the pollution caused by flying, trucking and shipping food around the globe.

The challenge is that lower food miles don’t always translate into lower carbon emissions. Recent studies reveal that the difference in emissions between modes of transport can be staggering. A 2006 study by the Stockholm Consumer’s Association showed that transporting broccoli 12,000 kilometers from Ecuador to Sweden by boat produced only 40 percent of the GHG emissions of trucking broccoli 3,200 kilometers across Europe from Spain.

Air freight has the highest carbon emissions of any form of transport. It can generate up to 177 times the emissions of shipping, according to the U.K. Soil Association, which has launched a major campaign against airfreighted food products.

These studies reflect the importance of considering the mode of transport together with food miles in buying decisions.

Sustainable meat
Livestock production is responsible for 18 percent of the world’s human-caused GHG emissions, according to a report by the United Nations. The CO2 portion of these emissions derives from deforestation and other land-use changes for grazing and feed production, as well as from fossil fuels used to refrigerate, transport and fertilize crops for feed production.

There are plenty of ways to make our livestock production systems less GHG intensive through feeding, farming, transportation and processing practices. For example, pastured animals digest their food better and therefore produce fewer methane emissions.

Recent studies from Lincoln University found that, for the British, importing dairy products and pasture-raised lamb from New Zealand produces fewer CO2 emissions than consuming dairy and lamb raised on a concentrated diet in English feedlots.

Fertilizers for producing livestock feed crops also result in nitrous oxide emissions, while poor digestion from eating an unnatural diet causes even more gas (including burping), accounting for 35 to 40 percent of global emissions of methane — a greenhouse gas that’s 21 times more potent than CO2. Livestock overall add about 80 percent of agriculture’s total contribution to GHG and more than 50 percent of the emissions from land-use changes.

For the consumer, by simply decreasing the amount of meat in our diets from 35 percent of calories to 20 percent, we can have the same impact on personal GHG emissions as switching from driving a Camry to a Prius hybrid, according to researchers Eshel and Martin at the University of Chicago.

Nutritionists already advise that three ounces of meat is the recommended portion for health, far less than what is typical in the American diet. Adjusting our diets would be good for personal health as well as the planet!

The Chicago study showed also that a fish-based diet is second only to a red meat-based diet in creating GHG emissions. Diets that include chicken and diets that derive protein from dairy and eggs tie for third — but only when a non-meat diet includes the same number of calories from animal products, such as cheese, yogurt, milk, butter and eggs. (A vegetarian diet generally is more energy efficient and lower in GHG emissions since fewer calories come from animal products.)

The authors conclude that if the entire country switched to a plant-based diet, that alone could trim our national GHG emissions by 6 percent.

Whole nutrients
According to a life-cycle assessment of the food system by the Center for Sustainable Systems at the University of Michigan, 23 percent of the energy used in the U.S. food system is for processing and packaging. Foods in their whole, natural form embody less of the energy and emissions associated with manufacturing, packaging and transportation between farms, processing plants and retailers.

Moreover, processed foods often are high in sodium and sugars, so choosing fresh fruits, vegetables, whole grains and legumes offers health benefits along with trimming your GHG emissions.

Home energy and growing your own food
In the comfort of your own home, 30 percent of the energy in the U.S. food supply is used for refrigeration, cooking and dishwashing. Refrigerators tend to use more energy than any other household appliance. Find out how efficient your fridge is at www.homeenergy.org/consumerinfo/refrigeration2/refmods.php and consider unplugging that old, inefficient fridge in the garage.

Purchase renewable energy from your utility, or install solar hot water or electricity at home to eliminate emissions from all your home energy use.

Biking, walking, using public transportation, or combining trips to get your groceries trims your transportation emissions.

Finally, growing your own food can eliminate transportation, manufacturing and packaging emissions.

Waste vs. compost
About 4,000 calories of food are produced per U.S. resident per day, despite recommendations that we eat closer to 2,000 daily calories. That extra food ends up in landfills and on our ballooning waistlines. Reducing waste cuts out the life-cycle emissions embodied in those wilted greens that get tossed at the end of the week!

If the greens have to go, composting them will reduce their end-of-life emissions. The reason is that when organic matter decomposes aerobically in a compost pile, it releases CO2 rather than the methane released when organic matter decomposes in landfills without oxygen. Home composting also reduces emissions from transporting waste, frees up space in the landfill, and may save you money if you can decrease your trash services.

Finally, finished compost provides great fertilizer for garden beds instead of petroleum-based fertilizers. For apartment dwellers, indoor worm bins provide many of the same benefits.

Setting a low-carbon table
Growing concern about climate change has spurred greater awareness of how personal choice and consumption make a difference in lowering global carbon emissions. Every product we consume has a “carbon footprint” — the emissions resulting from a product’s life cycle, including production, distribution and consumption.

The supermarket is one place where conscientious consumers are taking on the challenge to make “low-carbon” buying decisions. There are many choices that can reduce the carbon footprint of our diets.

We don’t have to compromise taste, nutrition and, most of all, the pleasure of eating. Trading a little convenience now for an inconvenient truth later may be the equation to consider.
--------------
Sarah Mazze manages the media and community outreach programs at the University of Oregon Climate Leadership Initiative.

Natalie Reitman-White is the sustainability coordinator at Organically Grown Company, the Northwest’s largest distributor of organic produce. She also manages the Food Trade Sustainability Leadership Association.


Trends in the Organic Industry–Hiring Sustainability Managers

It seems that every week there are new job postings for sustainability directors, managers, coordinators, and related staff people in the organic industry. A common question for companies just starting down this path is--What should the job description be and in what department should a sustainability manger should be housed?

Each company sets up their sustainability initiative in their own way; some sustainability mangers work directly with the C.E.O., while others fall under a specific department such as marketing or operations. Oftentimes a sustainability manager position is created when existing staff show interest in taking on this additional responsibility and expanding their job description. Some companies choose to divide the environmental and the social responsibility focused initiatives between separate positions.  

Sustainability managers can do a variety of tasks, yet general components include:

  • Help the company to formulate sustainability as an institutional goal.
  • Find out what is already happening already.
  • Set up an information sharing system to assure institutional coordination.
  • Lead a “green team” or “social responsibility team”; agree on initial projects that focus on the "low-hanging fruit" to build momentum
  • Bring together existing people and departments to set and carry through short-term objectives.
  • Research and produce reports to make the case for why the Board and Shareholders should invest in sustainability related projects (i.e. a new or renovated green building)
  • Measure and monitor the company’s progress on sustainability efforts (i.e. develop and track monthly metrics like energy use)
  • Conduct a sustainability audit
  • Draft an Annual Sustainability Report
  • Participate in policy and community advocacy on sustainability related issues
  • Conduct Employee Trainings to educate staff on what sustainability means, why it is important to pursue, and how their actions can support broader sustainability goals.
  • Develop decision making frameworks and guidelines (i.e. a green office supplies materials list or green purchasing list)
Sustainability managers across the organic industry are increasingly tasked with measuring and reducing their operations’ greenhouse-gas emissions. This typically means looking for ways to reduce the use of fossil fuels throughout the operation from energy efficient equipment and supplies, installation of on-site green-energy generation capacity, buying green power from local utilities, LEED-certified green buildings and retrofits, switching to alternative fuel or hybrid vehicles, and so forth.


Frontier Natural Products Co-op: First Sustainability Report Available
In February 2008, Frontier Natural Products Co-op released their first sustainability report. The 45-page document measures the Co-op's environmental, social and ecomic impacts and provides a framework for goal setting and improvements.

You can find the complete report, a summary, or sections on sustainable sourcing, products, sites and facilities, operations, employees and community at their website:
      Frontier Natural Products 2007 Sustainability Report


Upcoming Events
Sustainability How-to for the Organic Industry: Creating Your Business Plan
April 27-29, 2008 All Things Organic, Chicago, IL

  • 4/27/2008 12:30pm-2:00pm Documenting the Triple Bottom Line, Room S102A
  • 4/28/2008 10:30am-12:00pm Sustainability How-To for the Organic Industry:                                                       Creating your business plan, Room S102A
  • 4/28/2008 12:15pm-1:00pm Sustainability Practices Forum Gathering, Room S104B
  • 4/28/2008 1:00pm-3:00pm Food Trade Sustainability Leadership Advisory Group Meeting, Room S104B

Responsible Packaging Forum
March 13, 2008 at Natural Products Expo West: Presentation slides will soon be available on our website

arrow bullet February 2008
Space is Filling Up Fast for Sustainable Packaging Forum - Reserve Your Seat Now March 13, 2008 at Natural Products Expo West

Due to demand the Responsible Packaging Forum at the 2008 Natural Products Expo-West in Anaheim, CA has been divided into 2 half-day sessions. In both Forums expert speakers will present resources for organic producers, manufactures, and retailers on ways to transition toward more sustainable packaging strategies that support environmental and human health while maintaining the standards of fresh, hygienic, and flavorful foods. The Forums will provide an overview of the design principles of sustainability, summarize the changing context of national/international packaging trends and regulation, examine the environmental and health impacts of particular materials, and present the latest packaging being developed.

  • Focus on Produce 8:30am-12:30pm The morning session topics will include: recyclable and reusable alternatives to waxed cardboard boxes; alternatives to fossil-plastic clamshells; compostable alternatives to fossil plastic produce bags (e.g. carrot or potato bags). The group collaboration will center on making the waxed cardboard box obsolete—What does and can replace it?
  • Focus on Grocery and HABA 1:15-5:00pmThe afternoon session topics will include: recyclable or compostable alternatives for cereals, grains, and snacks; recycled content packaging; compostable/recyclable alternatives to fossil-plastics both film and rigid applications; non-GMO sources of biopolymers. The group collaboration will center on the options for material pooling of biopolymers for both film applications (such as bags), and for rigid applications (such as jars and bottles).

Join Us for these special educational forums!: Space is limited so reserve your seat now.
Contact Natalie Reitman-White or phone 541-346-1609 to register.

Lighten Your Distribution Footprint Forum was a Great Success
Presentation Slides Now Available
January 24, 2008—Organic growers, processors, and distributors gathered for a special educational forum on ways to increase distribution efficiency, transition to renewable fuel sources and power systems, and establish alternative distribution networks. Presenters included Buddy Polovick from the Environmental Protection Agency's SmartWay Transport Partnership and Bill Van Amburg who directs the Hybrid Truck Users Forum and biofuels work at WestStart, a non-profit that works to develop advanced transportation technologies that help clean the air, lessen our dependence on foreign oil, reduce global warming, and create jobs.

The presentations were followed by interactive discussion around what innovative distribution strategies companies are currently employing. Clif Bar reported reducing the impact of inter-company shipping through three actions: moving the distribution center closer to the bakery; packing truckloads more efficiently (reducing shipments by 40%); and switching to B100 biodiesel fuel. As a result of these changes, Clif Bar has eliminated more than 800,000 shipping miles, reduced CO2 emissions by 97%, and saved $1million in shipping costs. Organic Valley reported that in 2007 they opened a new $17.5 million 80,000 square foot distribution center on a 40 acre green business park, where businesses will create and utilize renewable energy such as biomass conversion of manure and sawdust, biodiesel and wind energy. Organically Grown Company (OGC) spoke about using a 20% biodiesel blend, sourced mainly from used cooking oil in all trucks, displacing 87,962 gallons of petroleum diesel with pure biodiesel over the last 3 years. In addition OGC has recently leased a Kenworth T-300 Hybrid electric biodiesel truck that achieves 10-30% increased efficiency.

Despite these impressive gains many companies discussed continuing challenges. One such challenge is sourcing of a bio-diesel that is locally produced in an environmentally sensitive way, not using GMO crops. The group brainstormed around the possibility of materials-pooling to manufacture biodiesel for a cluster of organic distributors. The oil-seed crop camelina was discussed as one potential feedstock that may meet these criteria.

Presentations Now Available - (coming soon)

LifeSource's Electric Pick-up Truck
-by Alex Beamer, Owner, LifeSource Natural Foods

In March of 2007 my wife, Lori, and I attended a sustainability conference given by the University of Oregon. One of the speakers at this conference spoke about peak oil, which gets into the issue that pretty soon there will not be enough oil to meet world demand. There will be shortages and prices will skyrocket.

After the conference I found myself considering how to cut back on using oil products. Also, burning iess oil would be a good personal action in light of our global warming problem. Our store already uses wind generated electricity, what else could we do? I came up with the idea that I would like to get and use and electric car. I checked to see if plug-in hybrid cars are available yet, they are not. I checked what was available locally and did not find anything that suited my needs. I started hunting around on the Internet and I found this great electric vehicle to buy. A company in Mesa, Arizona that refurbished these vehicles was selling it.

It is a 1997 Chevrolet S-10 electric vehicle. it is 100% powered by electricity. It is factory made by Chevrolet. They made these pick-up trucks in 1997 and 1998. They were mostly leased to utility companies and sold to the US Government. A sister vehicle called the EV-1 was made by GM and leased to the general public. A very few of the S1OEVswere sold instead of leased. This fact allows me to own one.

At the time Chevrolet designed and built this electric vehicle other automobile manufacturers were also doing the same thing. They were complying with a law in California that a certain percentage of new vehicles sold had to be zero emissions. After a few years the California law got changed and the automobile manufacturers closed down their electric vehicle programs. When the leases on the electric vehicles expired, the leased vehicles were collected and crushed. There is a good video movie about this called ''Who Killed the Electric Car".

Our Chevrolet S-10EV looks just like a gasoline version of the S-10. Under the hood and the body it is quite different. It is powered by an 85kW, 114hp three phase electric motor. Under the bed there are 26 NIMH batteries that can provide 85 ampere-hour of electricity. There is a iota of sophisticated circuitry that looks like the insides of a heavy-duty computer. This vehicle has good acceleration and can go 70 mph on the freeway. It has a driving. , range per charge of 35 to 50 or more miles depending on driving conditions. I charge the vehicle everyone or two days from a big battery charger mounted in my garage. With an electric motor instead of a gasoline motor it can go long distances without servicing. The NiMH batteries are proving to be good for 100,000 miles or more in other vehicles that are using them. It is a great vehicle for commuting to work and running errands around town. If you want to learn more about our electric vehicle you can visit our web site about it: www.lifesourceev.com.

Organic Valley Cooperative Seeks Sustainability Program Manager
Seeking candidates to initiate, develop and manage coop wide sustainability programs. Ideal candidates will have a mission dedication/excitement for ecological, social, and economic stewardship. This person will lead and team with others to reduce our overall ecological footprint through a programmatic approach. They will assist in goal setting and long range planning for the continual improvement of all our ecological, social and economic activities. Must be able to coordinate, track and implement research around renewable energy, packaging, waste elimination, transportation and other areas with sustainability. Significant knowledge and understanding of renewable energy systems is very important. Seeking candidates with a degree in Sustainability or related field and at least 2 years of practical experience in implementing sustainability programs. Knowledge of Microsoft Office programs, the current measurement tools in sustainability, and the ability to work from office or travel is required. This is a full time position based in La Farge, WI. Wage will be based on experience.
Apply online

About Organic Valley Family of Farms
Organic Valley is a cooperative of organic farmers and is one of the nation's leading organic brands. Organized in 1988, it represents 1,170 farmers in 32 states and one Canadian province, and achieved $334 million in 2006 sales. Focused on its founding mission of saving family farms through organic farming, Organic Valley produces more than 200 organic foods, including organic milk, soy, cheese, butter, spreads, creams, eggs, produce and juice, which are sold in supermarkets, natural foods stores and food cooperatives nationwide. The same farmers who produce for Organic Valley also produce a full range of delicious organic meat under the Organic Prairie Family of Farms label. For further information, call 1-888-444-MILK or visit www.organicvalley.coop or www.organicprairie.com

Moscow Food Coop's Homegrown "Black Gold"
Moscow Food Co-op, Moscow, Idaho, has finally got their long awaited and much anticipated Earth Tub up and running! This oversized composter (it's 5 ft high and over 7 ft wide) should handle all their pre-consumer compostables, primarily from their produce and kitchen departments, and hopefully their post consumer waste too, turning everything into "black gold". In the spring of 2006 the co-op co-wrote a grant to the EPA to be part of a yearlong educational program on composting. They hope to have their first load of compost ready in February 2008.

arrow bullet January 2008

Solar Energy Opportunities Looking Bright
The ever-changing developments in our understanding of global climate change and the value of sustainable development are driving a renewed interest in the use of renewable energy technologies. Solar is a renewable energy source with a wide variety of different applications from space heating to electricity generation. Solar radiation, which is nearly constant outside the earth's atmosphere, varies with changing atmospheric conditions (clouds and dust) and the changing position of the earth relative to the sun. Yet most U.S. regions have useful solar resources that can be accessed.

Photovoltaic (PV) cells use semi-conducting materials to convert sunlight directly into electricity. The size of a solar PV array needed depends on the amount of sunlight available in a particular location, the area available to install the necessary panels, and the needs of the consumer. The modules of the array make up the major part of a PV system, which also includes electrical connections, mounting hardware, power-conditioning equipment, and, if desired, batteries that store solar energy for use when the sun isn't shining.[i] Unless the array is located in a remote setting, however, most arrays are connected to the electric grid so any available surplus power can then be sold to the local electric utility.

The major advantages of solar PV include:
      1. a modular design that allows it to be relatively easily scalable as power needs
           change;
      2. no moving parts to wear out;
      3. little required maintenance; and
      4. quick installation compared to other technologies.

The major drawback of solar PV is the large initial cost of installation. However even costs are decreasing as utility, non-profit, and government subsidies help defray these. Over time, solar PV has become a mature and stable technology. Its efficiency and reliability have increased and should continue to increase into the foreseeable future.

For more information, see:
U.S. Department of Energy, Solar Energy Technologies Program. Focuses on developing solar energy technologies through partnerships with industry participants, universities, and government and nongovernmental agencies.

American Solar Energy Society (ASES). A national membership organization with a mission to attain a sustainable U.S. energy economy

[i] Department of Energy. Solar Energy Technologies Program. PV Physics.

Taking on the Challenge of Measuring the Carbon Footprint of Your Products
As awareness about global warming grows, many businesses are beginning to consider becoming “carbon neutral” or achieving zero net carbon emissions. The first step toward this goal is to assess the carbon-footprint (the total CO2 emissions) of an operation. Typically, the majority of carbon emissions are generated from energy use. Therefore, the primary focus should be to conserve energy and transition to renewable energy in facilities wherever possible. A growing number of companies are looking to emissions trading and renewable energy credits as key parts of their strategies to achieve “carbon neutrality.”

The Greenhouse Gas Protocol (GHG Protocol) is the most widely used international accounting tool for business leaders to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol is well respected, created out a decade of work in a partnership between the World Resource Institute and the World Business Council for Sustainable Development. In 2005, a Corporate Accounting and Reporting Module was developed for businesses to inventory and report all of the GHG emissions they produce. The online-calculation tools provided are FREE to the public, providing spreadsheets that allow users to assess the emissions from multiple types of energy use.  The calculation tools are available at http://www.ghgprotocol.org/standards.

There are three generally accepted levels to measuring carbon footprint that come from the GHG Protocol. By adding all of these emissions sources together, you can calculate a total carbon footprint for your operation:

  1. Direct Emissions occur from sources that are directly controlled by the company onsite (generation of heat or electricity on site: boilers, furnaces, trucks company-owned vehicles carrying emplyees, products, and waste,etc)
  2. Indirect Emissions occur from the energy purchased through the grid from utilities (electricity, natural gas, propane, etc) 
  3. Other Indirect Emissions occur from the activities not directly controlled by the company (the activities of the food supply chain before the products we vend reach our facilities—like the energy used in growing food, trucking it to a packaging shed, the packaging itself, etc).

Carbon Credits as a Tool for Addressing Global Climate Change
Carbon markets are a mechanism for buying and selling greenhouse gas (GHG) emissions, which, when traded, are known as “carbon credits.” Six GHG are generally included in such markets: carbon dioxide (CO2), methane, nitrous oxide, sulfur hexifluoride, hydro fluorocarbons and perfluorocarbons. All carbon credits represent the reduction of GHG in metric tons of CO2, the most common GHG.

 “Environmental markets” have been created to set up market-like mechanisms for environmental protection. Environmental markets are the most innovative and cost-effective means that society has of creating market-pull for new environmentally benign technologies, and, at the same time, putting a price on pollution. Thereby, they provide financial incentives not to degrade environmental resources. In the 1980s, the United States launched the first large-scale market in an environmental commodity - sulfur dioxide (SO2) - which was successful in mitigating acid rain. Since then, multi-million dollar markets have emerged to trade environmental commodities such as pollution (GHGs and water pollution) and valuable “ecosystem services” (water and endangered species) in countries such as Costa Rica, Mexico, Australia, Colombia, Ecuador, and South Africa.

The Structure of Carbon Markets: Carbon markets can be separated into two major categories: voluntary markets and compliance (regulatory) markets.

Compliance Carbon Markets: Compliance carbon markets are cap-and-trade regimes that have been established by regulators. In a cap-and-trade regime, regulators cap the quantity of emissions that participants are allowed to emit; they then issue a set number of tradable allowance units. Participants who reduce their emissions internally beyond required levels have the ability to sell unused allowances in the marketplace. This type of trading is called “allowance-based transactions.” There are a number of cap-and-trade markets around the world; the Kyoto Protocol underpins most of these markets. Ratified by 163 countries, the Kyoto Protocol requires industrialized countries to reduce their collective GHG emissions by 5.4% below 1990 levels by 2012.

Voluntary Carbon Markets: Voluntary carbon markets do not rely on legally mandated reductions and therefore do not operate under a universal cap. All carbon credits purchased in the voluntary market are project-based transactions—emissions credits that are the result of a specific carbon offset project. (The exception is the Chicago Climate Exchange [CCX] whose members voluntarily commit to a mandatory reductions policy. Unlike most of the voluntary markets, the CCX involves allowance-based trading with other CCX members to meet voluntary targets.) Voluntary carbon markets predate the regulated carbon markets; more than a decade ago, leading corporations began purchasing offsets to reduce their “carbon footprints.”

Renewable Energy Credits (RECs): Renewable Energy Credits (RECs) - also know as “green tags” or “green power”- represent the environmental benefits of the creation of electricity derived from renewable energy sources. One REC is equivalent to the benefits associated with one megawatt of renewable power. The U.S. REC market features both compliance and voluntary segments. The compliance market has been initiated by emerging state standards that mandate that utilities maintain a minimum renewable portfolio standard. The U.S. voluntary REC market is fragmented and has begun to converge with the voluntary market for carbon offsets.

There is longstanding debate about whether RECs should be used as an equivalent to carbon offsets. The amount of carbon dioxide displaced by a REC is generally determined by calculating the amount of CO2 emitted by local fossil fuel-burning power plants per kWh. The main debate about RECs is whether they can satisfy the additional GHG offset requirements. Critics argue that many renewable energy projects would have come to fruition regardless of prospective REC sales because of the high price of fossil fuel energy, various tax breaks, the existing desire for more diversified energy, and the availability of renewable energy sources (e.g., hydropower in the Northwest). Advocates argue that RECs are an important offset tool because they change the energy mix by displacing use of fossil fuel energy and can be more reliable than some other offset projects such as reforestation.

The Retail Voluntary Carbon Market: Understanding Supply and Demand: There are no federal GHG emission regulations in the United States, but voluntary carbon markets are playing an increasingly significant role in both citizen and business efforts to show leadership in addressing global warming. Going “carbon neutral” refers to the idea of reducing GHG emissions and ultimately “neutralizing” one’s “carbon footprint” through purchasing offsets. Unlike the compliance-based market, the voluntary market does not rely on mandated reductions to generate demand. Since voluntary credits do not have to be registered with any central body, the market remains fragmented and unregulated. In the voluntary market, both for-profit and not-for-profit organizations sell a range of offset types that are certified to an array of standards. Because of this fragmentation, prices in the voluntary market vary widely from $1 to $35 per ton of CO2. Prices are affected by two main factors:
      1. the cost of the offset - technical reduction cost plus administrative fees, and
      2. the market price, which varies with supply and demand.

Today the voluntary carbon market is driven by several factors. These include rising consumer concern about climate change, institutional investors who consider a firm’s carbon footprint a business risk, and governments that are addressing their constituents’ desire for action on climate change.


Sources:
~ Ecosystem Marketplace. http://ecosystemmarketplace.com/
~
Deborah Stowell. 2005. Climate Trading: Development of Greenhouse Gas Market. Hampshire, N.Y. Palgrave Macmillan.
~ Richard Bayon et al. 2007. Voluntary Carbon Markets: An International Business Guide to What They Are and How They Work. Sterling, VA: Earthscan.
~ Katherine Hamilton et al. Offsetting Emissions: A Business Brief on the Voluntary Carbon Market. December 2006, Business for Social Responsibility http://www.bsr.org/
~Franck Lecocq. 2004. State and Trends of the Carbon Market 2004. Washington, D.C.: The World Bank.

Food Trade Sustainability Leadership Association | 626 NE Rosa Parks Way Portland, OR 97211
Phone: (503) 914.6562 | web: www.ftsla.org | email: info@ftsla.org
©2008-2011 Food Trade Sustainability Leadership Association. All Rights Reserved.