Monday 27 July 2009

Buying CO2 credits doesn't make IT CO2 neutral

More and more IT companies try to become CO2 neutral by buying the CO2 credits that match the amount of power they use for the IT equipment. The argument is, that if they use 1 ton CO2 to run their servers, then they buy 1 ton CO2 credit from the market, removing 1 ton of CO2 emission elsewhere.

Nice thought but that's not how it works. Buying CO2 credits like that just means that you need 2 ton CO2 credits produce 1 ton CO2, basically increasing the price for emitting CO2. If everybody did this, CO2 emissions would be cut by 50%, but not 100%. The good thing is, that the increased price of emitting CO2 generates additional incentives for developing new energy technologies. However, the IT company still emits CO2.

What makes matters even worse, is that market economy ensures, that if you can spend your money on energy during operating equipment, or energy during manufacturing of equipment, you will spend your money where you get most value. And if the equipment is produced in one of the countries outside the CO2 market (like USA or China), you will basically just push the problem out of the market, but not away from planet Earth.

It is good that companies try to use the CO2 emissions topic for profiling themselves, but nobody gets CO2 neutral by burning coal.


Yogi Yang said...

I think you are right.

We have come across a few European companies which are buying Carbon Credits (CC) like crazy from a few of our clients but are not taking or are not ready to take any concrete steps to lower CO2 emission at their end.

Just buying CC will not do. Every company that buys CC should also take steps to lower CO2 emission as much as possible in the shortest possible time.

Eric said...

This is all about bringing good old fashionned market forces to Carbon emissions: buying CC may still be cheaper nowadays than fixing your emissions, but that's mostly temporary. Costs will go up as demand grows, if production does not follow (here production = carbon emission cuts).

CC are cheap currently because of the crisis, production is still low (relatively). When things bounce back, and regulations kick in place, CC will rise, and companies will have to take measures.

Those that only rely on CC will be hit hard when the CC market will bubble (and bubble it will, just like any other market).

theRambler said...

In the US, the major exchange on which carbon credits may be bought doesn't have carbon credits from other companies reducing their output. Carbon credits must be bought from companies actually sequestering carbon dioxide (for instance, in pine forests). There are further regulations put in place by the exchange as to how long the pine trees must remain standing and alive, to prevent immediate logging. This results in a 100% reduction for each carbon credit purchased.

Lars D said...

Andrew, how does a company get its credits in the first place, then?