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BUSINESS TRAVELLER

Is Carbon Offsetting Legitimate, Worth the Money; Traveling with a Conscience; Taking Measures to Combat Climate Change; How We can make a Difference on the Road.

Aired July 12, 2008 - 09:30:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


ADRIAN FINIGHAN, CNN HOST: Over 35,000 megawatt hours of electricity produced by Anaco's Harto (ph) Wind Farm. That's enough to power over 10,000 homes here in the Netherlands.
Hello, and welcome to the show. I'm Adrian Finighan. This month, we're all about the environment and traveling with a conscience.

Now, we've all heard about ways in which we can reduce our carbon footprint, about how environmental projects like this can, in theory, offset our emissions. But does it work? And how does this turn into that?

So on this month's CNN BUSINESS TRAVELLER, we're asking is carbon offsetting off kilter.

Coming up, we're traveling with a conscience on this month's CNN BUSINESS TRAVELLER. Can we really be carbon neutral?

KEVIN SMITH, AUTHOR, "THE CARBON NEUTRAL MYTH": Don't pretend that you're neutralizing your emissions. Once they're there, they're out there.

FINIGHAN: We look at the measures being taken to combat climate change and how we can make a difference on the road.

Now the easiest way to cut emissions and keep our carbon footprint down is to take the train instead of flying. But the reality is with gruesome schedules that's not always possible. It would have taken us seven hours to get to Amsterdam by train instead of an hour by plane.

So because we have to fly for our business, a guilty conscience can be absolved with a quick offset.

It's easy to calculate and surprisingly cheap. Choose an environmental project for your money to be invested into. And with its energy-saving carbon dioxide-busting ways, it'll cancel out your emissions. Literally thousands of companies are doing it.

Welcome to the volatile market of carbon trading. It's grown from virtually nothing a few years ago to $100 million today and is expected to top $4 billion by 2010.

MARTYN SAVILLE, SENIOR RESERARCHER, WHICH?: We asked Which? members if they'd ever offset their own carbon and only 7 percent have actually offset their carbon up to now. But 90 percent have heard of carbon offsetting and 68 percent said they would consider it. So the potential for the expansion market is absolutely huge.

But speaking to the individual readers of the magazine, we found people just didn't know where to start. They didn't trust a lot of the information that was out there. So that 7 percent could grow, but they need proof and they need a reason to go out and buy in confidence.

FINIGHAN: For a start, calculating the amount of carbon dioxide emitted on any given flight there is depending on which web site you choose.

Right, I'm trying to work out the CO2 emitted for the BUSINESS TRAVELLER team flying London City Airport to Amsterdam.

With the CarbonNeutral Company, a return flight, 732 kilometers, will produce 0.3 tons of carbon and would cost $5.50 to offset.

CarbonClear says 0.3 tons of CO2 is emitted one way, costing $2. A return, just under $5.

Similarly, with ClimateCare, that would cost $2 to offset. A return flight, almost $5, emitting 0.3 tons of CO2.

Now it's hard to imagine that these relatively small amounts of money of no more than $4 or $5 actually reduces emissions other than by giving extra cash to these projects.

There's no real way of knowing if projects like hydro-powered plants, wind farms or methane capture projects already existed. Not only that, calculating an offset and seeing immediate results are problematic. Planting trees, for instance. Apparently, one tree could offset a ton of CO2, but over the course of the trees lifespan, which is 99 years.

SMITH: The thing is it's impossible, it's fundamentally impossible to quantify how much of an offset have been generated. In order to do that you need to calculate a baseline that depends on imagining a world that would have happened if that carbon financing hadn't existed. And there's so much guess work involved in that, and also there's so much incentive for the companies to portray this baseline as being worse than it actually would have been, so that they can then generate more credits as a result.

FINIGHAN: Standards have been introduced to ensure additional benefits to the environment with the Voluntary Carbon Standard and the Gold Standard. But even standards for projects under the Kyoto Protocol's Clean Development Mechanisms, of CDMs, and the E.U.'s emission trading scheme has been criticized.

SMITH: Regardless of whether a carbon offset project is grouped under a particular standard, all carbon offset projects are justifying an increase in fossil fuel consumption somewhere else in the world. And the magnitude of climate change is such that we need to be reducing emissions at point A as well as point B rather than using one to justify the other. So it's a very dangerous game to be playing to be selling people a peace of mind that shouldn't exist in the context of climate change.

FINIGHAN: London-based offset provider the CarbonNeutral Company however believes that standards are essential.

JONATHAN SHOPLEY, CEO, CARBONNEUTRAL COMPANY: Over the last two or three years, some very well-founded standards have evolved. The Gold Standard is one. The Voluntary Carbon Standard is another. And certainly ICROA, the alliance of all leading offsetters, have committed themselves to only using carbon offsets that come from Voluntary Carbon Standard, Gold Standard or Kyoto Standard, the Clean Development Mechanism standards. And any other projects which are not certified to those standards are excluded.

We basically subject everything that we do to independent audit and verification. And we do that against the carbon protocol which is of the standard to which we operate. So people working with us know how we claim to run our business, how we select our projects, how we purchase and retire carbon codes (ph) in their name and remove them from circulation.

FINIGHAN: You talked about the Voluntary Code, but should there be more regulation, do you think? Would that help or hinder?

SHOPLEY: I think that so long as the code represents best practice and covers all the key principles that people need to be concerned about -- are these projects really making a difference, are these companies really doing what they say their doing -- then self regulation is fine. There are many sectors of the financial services industry that are covered by forms of self regulation.

And remember, this is the voluntary market. And what we don't want to do in the voluntary market is to tie it down with red tape and make it unmanageable.

FINIGHAN: It's hard to make sense of all this. Looking through their web site, we found only 36 projects that had a recognized standard. But all of its 150 projects are running.

A crisis in confidence in the voluntary market has not been felt by just consumers. Airlines are also wary.

ROB FYTE, CEO, AIR NEW ZEALAND: The responsibility is on us to ensure that if we deliver our carbon offsets (ph) to our customers that we ensure that it has the integrity and that we're confident that they are what it purports to be. And so -- and there are some ways to solve it and say, well, we'll run the whole thing ourselves. We'll pitch the credits ourselves. We'll establish the authenticity and the projects ourselves. We're not going to rely on a third party to do that because we have the same skepticism that some of the customers have.

FINIGHAN: So much so, Air New Zealand has set up its own project for its passengers.

FYTE: We have a project in New Zealand, for example, that the trust is funded which is creating a carbon neutral sustainable farming environment on a sheep and beef farm in the north island (ph). Passengers have an alternative of making a donation into the trust to support that activity. They can go and visit the farm if they want when they're traveling around New Zealand and so on. So we try to make it more tangible for the passenger.

FINIGHAN: Carbon offsetting companies are clearly supplying a demand, whether it be to help the environment or to offset guilt.

ED HANRAHAN, EXECUTIVE DIRECTOR, CLIMATECARE: We founded ICROA, which is a trade alliance, which is basically intended to ensure that no one is out there promoting offsetting alone and that it has to be done as part of a responsible avoid, reduce and offset strategy.

In terms of actually people feeling guilty, well, actually we should all be feeling guilty if that's what it takes. There is an issue out there, a problem that we all have to work together and solve. There is no single solution.

FINIGHAN: Kevin Smith believes that we're all missing the bigger picture.

SMITH: We need to be talking about things like a big switch in public subsidies away from fossil fuels towards renewables. We need to be talking about massive amounts of government spending towards things like public transport infrastructure and other climate-friendly social policies. And communities need to come together and start talking about how they make the relevant solutions work in their area. We can't wait for the government and Kyoto to sort this out for us.

So I think, on a very fundamental level, in countries like the U.K., we really need to get our house in order and make some serious emission cuts before we then have a leg to stand on to turn around to countries like India and China and say now we expect you to do the same.

FINIGHAN: So the total amount of carbon dioxide emitted for our return flight, London City Airport to Amsterdam, is 0.03 tons. That's 0.01 for me, the cameraman and the producer. Now, we've gone with the CarbonNeutral Company. We've chosen a methane capture project in the Netherlands. And we'll be taking a look around a little later in the program.

But first, after the break, the biofuel boom. Can it help aviation reduce its emissions or are pollution credits the answer?

GIOVANNI BIAIGNANI, DIRECTOR GENERAL, IATA: It's time to say basta (ph) because Europe needs to focus on results.

(COMMERCIAL BREAK)

FINIGHAN: Welcome back to CNN BUSINESS TRAVELLER.

I'm at Lelystad Airport in the central Netherlands where they're growing their own rapeseed, a crop that can be used to produce biofuels.

Now just as quickly as biofuels were hailed as the way forward, environmentalists claimed that they produced more carbon dioxide emissions than they saved. The E.U. has revised its biofuel target down from 10 percent by 2020 to 4 percent, an indication perhaps that it's still early days to find a viable alternative, good news for aviation, an industry that's still trying to find its biofuel feet.

Virgin's gone for coconuts and babassu nuts. And New Zealand is trying oil from jatropha plants. Both airlines, along with Continental, is working with Boeing to develop algae. AirBus has gone the other way and is testing liquefied natural gas with Qata Airways. And B.A. has teamed up with Rolls Royce to investigate up to four different sources.

The biofuel bandwagon is being overloaded, so it seems, with no concrete results so far. Experts remain adamant that biofuels are not the answer.

HUGO ROBINSON, ONE EUROPE: The question is why are we doing this, why are we actually shifting to the use of these biofuels when there's very shaky evidence as to whether they actually save carbon or not. And then, of course, you've got the whole debate about the rise in food prices that they produce. So I think there's no doubt that you can use a biofuel as an aviation fuel if you want, but the question is do we really want to be doing that.

FINIGHAN: The Algal Biomass Organization, or ABO, set up with Boeing, is confident that algae is the most auspicious source for sustainable biofuels.

BILLY GLOVER, ALGAL BIOMASS ORGANIZATION: It could make a huge difference, perhaps as much as a 50 percent improvement in life cycle CO2. And so that's certainly nothing to sneeze at. It's going to take time to get the capacity up, of course. But they'll provide better local air quality and better carbon dioxide signature globally.

FINIGHAN: And New Zealand's part of the algae alliance is excited by jatropha. It could be 20 to 30 percent cheaper than conventional jet fuel. And cheap is good, especially in today's economic climate.

FYTE: Number one, the primary driver is the environmental benefits. It's cheaper than jet fuel, petroleum jet fuel today. If you told me at six months it wasn't cheaper, what situation would we be in, in another six months or 12 months, who knows. So what it does do is we can identify alternative fuel sources and it takes some pressure out of the petroleum fuel market.

FINIGHAN: The aviation industry recognizes that biofuels are only part of the solution that includes working on fuel efficient aircrafts and better management of air traffic control systems.

But that's not enough for the E.U. With its 2 percent contribution to global emissions, aviation will now be included in the E.U.'s emission trading scheme.

WOLFGANG MAYTRUBER, CEO, LUFTHANSA: There's speculation in their there and I'd rather it have a clean environment and a rich environment rather than risk traders. So I'm not opposing it but it has to meet at least priority because of this effect.

FINIGHAN: Even so, come 2012, any airline flying in or out of European airports will have to buy pollution credits, a verdict that will not only affect airline's budgets, but passengers as well. JAMES KANTER, INTERNATIONAL HERLAD TRIBUNE: It's very hard to know at this point exactly how much passengers will pay. What's certainly true is that with the rising fuel costs, any extra costs are certainly going to be very painful for the general public who has become used to paying very little for air travel.

A lot of parts of the world have tried carbon taxes. But they have found it very, very hard to impose them. What seems to be the most politically palatable option for governments, for entities like the European Union, is to introduce carbon trading. The hard side of it is that you have to get industry on board.

FINIGHAN: Aviation is standing firm that carbon trading is not the solution.

BIAIGNANI: Using just economic measures, it does not solve the problem. We are fixated on this emission trading scheme. It is not the answer because the answer is technology. And we have to try to help invent (ph) or help manufacturers to invest more in more efficient products, more efficient machines.

It's time to say basta (ph) because Europe needs to focus on results. What are effective measures? A single European sky. It's 25 years of talk with no results. Show them the route, produce a (inaudible). These are areas in which Europe will have to face and not just thinking green and thinking cash.

FINIGHAN: Lufthansa has long been a supporter of a single European sky.

MAYTRUBER: We believe that there are airways, which I think is outdated. As one example, a single European sky. we still believe in Europe that we should have numerous air traffic control management systems if we'd just do what all the (inaudible) would do, perceive this as one continent, we would save 12 percent of our carbon footprint overnight.

FINIGHAN: Airlines are working to keep costs and their carbon footprints down.

WENDEL TRIO, GREENPEACE INTERNATIONAL: The real impact of aviation is bigger than the 2 percent. And the potential impact in the future is going way beyond that, 15 to 20 percent that are the projections. So it is an issue that we need to tackle. But we need to tackle all of the other issues too. That's clear. There's no reason to single out aviation as the main culprit or whatever. On that front, we fully agree. But we believe aviation, just like the energy sector, just like deforestation, it's all issues that need to be tackled.

FINIGHAN: Coming up after the break, from plane to pig. I'm following my offsets to a methane capture project in the Netherlands.

(COMMERCIAL BREAK)

FINIGHAN: Welcome back to CNN BUSINESS TRAVELLER.

This month we're looking at the murky world of carbon offsetting. Now even though there are standards in place to certify projects, transparency remains an issue. Some carbon offset providers don't make their data publically available. It's often hard to know exactly where your money is going.

Well, why not cut out the middleman and offset your carbon directly with a not-for-profit organization like Wetlands International?

Wetlands and peatlands, anything where land meets water are a natural storage place for carbon.

Wetlands International is setting up a global fund next year to protect peatlands in Southeast Asia from being drained to grow crops for biofuel production.

JANE MADGWICK, CEO, WETLANDS INTERNATIONAL: The peatlands have been left out of the climate debate up until now. There's been a much stronger focus on forests. But in fact, most of the carbon is stored in the peatlands and this carbon is only maintained there if the water levels remain high. And once drainage occurs, the peat is exposed to the air and it immediately gets the carbon dioxide released.

It's estimated that in just .2 percent of the land surface, and that's the tropical peatlands of Southeast Asia, it's equivalent to 8 percent of the global fossil fuel emissions. And this is a problem that's even accelerating. It's really being driven by palm oil production and pulp production in Southeast Asia.

Our only intention is to make sure that the investments hit the ground for diversity in the community and reduced CO2 emissions are the results. Any profits made through this fund, through the sale of these emission reduction credits, will actually be plowed straight back into the peatland restoration project.

FINIGHAN: Depending on where you read it or which calculator you use, one ton of carbon dioxide is emitted when you fly 2,000 miles or drive an SUV for 1,300 miles. One ton of carbon dioxide is also released by a computer that's left on for 10,000 hours.

So if you think that carbon offsetting isn't the way to go, there are a few small things you can do that make a big difference. After all, your carbon footprint begins at home.

When making coffee or tea, don't boil more water than you need. Heating a full kettle uses enough electricity to keep a frig-freezer going for 18 hours.

Switch off your office computer when you go home. Leaving it on standby will waste enough energy to print 800 A4 sheets of paper.

Take public transport. Or if you prefer to use natural energy, walk or cycle to work.

If one family member uses public transport instead of the car, the household CO2 contribution goes down by 30 percent.

Save your plastic bags and take them with you when you shop. Londoners alone use around 1.25 billion bags a year. And they each take 500 years to decay.

And finally, get into recycling. The population of London already discards 3.4 million tons of rubbish a year, enough to fill Canary Wharf Tower every 10 days.

And there you have it, easy eco tips that are better for the world and your wallet too.

From plane to pigs, I've made it to the methane capture project funded by the CarbonNeutral Company in the south of the Netherlands. Time to find out how all that carbon currency is being invested.

Farmer John Horrevorts is showing me how here they're turning excrements into electricity.

Unfortunately, methane really is as bad as it smells. In fact, it's 21 times more harmful to the environment than CO2.

In order to extract it from the manure, the slurry is mixed with a concoction of soil, bacteria and food stuffs. And with a little heat at the right ph, bubbles of methane are released.

And then you, what, you burn it and then you make electricity?

JOHN HORREVORTS, STERKSEL BIOGAS PRJECT: Yeah, we burn it. We have an engine that runs a generator. And it runs on biogas. We produce enough for 700 households.

FINIGHAN: And is this a project that perhaps would have been too expensive to undertake had it now been for carbon offsets?

HORREVORTS: Yes. Because of -- well, we sell the energy. Only the selling of the energy is not enough. With the CO2 credits, we have a higher income and we can make an installation like this profitable.

FINIGHAN: 5,000 tons of slurry are produced here every year, in addition to the tens of thousands of tons of slurry produced across the country. At least here, the slurry is methane free.

So far, so good. The carbon offsetting project is serving its purpose. But whether or not it's necessary to produce so much slurry is a wider question for policymakers.

For now though, standards like the Voluntary Carbon Standard and Gold Standard are the only way of knowing whether our carbon offset is doing any good.

I've ended programs in some funny places before but never standing on top of a pool of slurry. But never mind. The bad stuff has all gone. This is now ready to go back onto the fields. I followed my carbon emission right the way through, and I'm a little bit clearer I think about the murky world of carbon offsetting.

If you want to offset your emissions, make sure you do your research. Choose a project that is certified or verified.

And that's CNN BUSINESS TRAVELLER. I'm Adrian Finighan. We'll see you again next month.

END

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