UEA Bus v Plane Carbon Calc shows Misunderstanding of ETS
A discussion paper issued by the University of East Anglia Centre for Behavioural and Experimental Social Science,claiming flying rather than taking the bus can reduce your carbon footprint has been seized upon by the Telegraph.
The claim is that since the emissions from flying within the EU are covered by the emissions trading scheme (ETS) it is ‘carbon neutral’, along with using energy that has been produced by power stations that are within the scheme.
The analysis shows a deep misunderstanding of cap-and-trade. Worse still the terminology used is extremely misleading.
There is an offset embedded in emissions that are covered by cap-and-trade, but it is nowhere near 100%, and claims of ‘carbon neutrality’ are completely unfounded.
The principal confusion of the story is between a cap-and-trade scheme and offsetting. Offsetting forms part of the cap-and-trade but the scheme itself is not an offset mechanism.
I will attempt to explain.
Cap-and-trade schemes like the EU ETS are designed to help sectors bring down their emissions. Emissions from sectors within the EU ETS (eg. aviation) are capped. Companies within a capped sector are issued with, or buy from the EU, permits to pollute up to the cap. These are not offsets – they are permits issued by the EU.
The cap in each sector is split between each company and reduced every year to help each sector and the scheme collectively bring down emissions across the sectors.
If a company’s (let’s call it Smog Airways) cap is (eg) 1m tonnes of CO2, the EU will issue (and Smog Airways will buy from the EU) a total of 1m permits. There is no offset here, Smog Airways has simply been permitted to emit 1m tonnes of CO2.
The fact that Smog Airways has been permitted to emit 1m tonnes of CO2 and it does in fact emit 1m tonnes of CO2 does not mean it is ‘carbon neutral’. There is no offset here since the permits were created by the EU.
If the scheme works correctly, next year Smog Airways should have its cap reduced to (eg) 900,000 tonnes, and in 2015 it may be 800,000 tonnes….and so on, until it (theoretically) reaches 0 tonnes. At that point the decision to fly Smog Airways is ‘carbon neutral’
2. Offsets within Cap-and-Trade
Offsetting is embedded within cap-and-trade in two ways:
i) Smog Airways goes above the Cap
If a company within a covered sector has emitted more than its cap, it needs to buy permits from another company within the same sector or another sector to avoid a fine.
Therefore if Smog Airways emits 1.1m tonnes of CO2 in a year, it will buy 100,000 additional permits from another polluter who has done better. In a sense this 100,000 tonnes has been offset.
In a properly functioning ETS permits should be scarce, making the cost of such an offset high meaning Smog Airways would want to avoid such a scenario to keep costs and therefore prices down and remain competitive.
Regardless of the cost however, the proportion of the annual emissions of the airline that will need to be offset in this way should be small compared to the number of permits issued by the EU. This makes the amount of offset embedded within any individual’s flight through this mechanism negligible.
ii) Smog Airways uses International Credits
Companies within the EU ETS are allowed to use international credits (sometimes called ‘offsets’) to meet compliance up to certain limits (eg. 15% for aviation). Therefore 15% of the Smog Airways’ compliance obligation for 2012 may be met through ‘offsets’. These offsets come about as a result of emissions reductions in the developing world.
It is therefore an option open to Smog Airways to use international credits so that for every 1m tonnes of CO2 Smog Airways produces, 150,000 tonnes will have been offset by 150,000 of CO2 reduced by (eg) the building of a wind farm instead of a coal power station in India. In most sectors the offset limit is less than 15%, more like 8-11%.
It’s important to emphasise, the 15% number is optional. It is up to individual companies within a sector to decide whether they want to offset up to this maximum.
Back to our friends at the UEA…..
The claim made by the UEA is that a consumer’s decision to consume from a cap-and-trade covered sector is ‘carbon neutral’. Based on the above this is clearly not necessarily the case.
Using their example, if a flight from Glasgow emits 170kgs of CO2:
(i) if it is not a new route since 2010 (when benchmarks were set) compliance obligations for the majority of the emissions from the flight will be met by permits issued or bought from the EU – not offsets, just permits issued by the EU.
(ii) if, across the whole compliance year, taking all flights in the EU into account, the relevant airline has gone above its cap, a proportion the emissions may be offset by the airline buying from a different sector.
(iii) if the airline has decided to buy its full allowance of international credits for that year, it is possible that 15% of that 170kgs will be offset by the airline through international credits.
The bottom line is that there might be a small offset embedded in a consumer choice to fly, but it is by no means 100%, and is probably closer to 0-20% depending on the emissions profile of the particular airline.
To suggest that the offset is always 100% (such to make the flight ‘carbon neutral’) is extremely misleading.
I am no mathematician, but the suggestion that there is enough of an embedded offset in a flight to bring the ‘net carbon’ impact down to compare with the 17kgs quoted for the equivalent coach journey seems extremely unlikely.
My view is that UEA’s analysis is wrong. When it comes to low carbon transport, coach is still king.