CK examines the idea of offsetting the internet's carbon footprint.

Ever wondered how much carbon is emitted thanks to a tweet or a wall post? Or better yet, ever thought of offsetting it? New companies are popping up that are doing exactly that.

The internet’s size is growing at 10% per year. The number of global servers and data centers doubled between 2000 and 2005, requiring the equivalent of 14 power plants. The internet is even catching up to the aviation industry when it comes to greenhouse gas emissions (GHGs), contributing 1.2% of global GHGs versus almost 2% for the aviation industry. Personal computers account for 50% of emissions while data centers and servers account for the rest.

Net Impact: a problem

Canada is doing its part to fuel the carbon trading market: according to the David Suzuki Foundation (DSF)’s & Pembina Institute’s 2009 report Purchasing Carbon Offsets: A Guide for Canadian Consumers, Businesses and Organizations, 14 of the 140 global carbon offsetting companies are Canadian.

In June 2007, Google announced its pledge to become carbon neutral. The company neutralized its 2007 emissions and part of its 2008 emissions through carbon offsets. Google engineer Kevin Marks argues that the internet’s net carbon impact may be negative. He emphasizes that data centers are more efficient than personal computers because of economies of scale in power and cooling. Furthermore, the internet’s energy costs are lower than alternatives to using the internet. 
“The Internet eliminates a lot of non-value-adding resource-consuming activities,” says Nikolai Bratkovski from Greenscroll, a not-for-profit that launched in 2009 to reduce the carbon impact of the net. Since servers, networks, visitors’ workstations, and other electricity-powered devices are mostly powered by non-renewable, polluting electricity, Greenscroll helps to offset this “brown” electricity by investing in wind power, solar power, and reforestation projects. “By [decreasing] these activities,” continues Bratkovski, “[the internet] replaces its sizable footprint with a much smaller one.”  These small footprints add up though.

But is carbon offsetting just a trend? From Coldplay investing in reforestation to cover their airline travel, to Brad Pitt and Jake Gyllenhaal buying the carbon rights to tree plantations in Bhuttal and Mozambique, the rich and famous are endorsing carbon offsetting. It’s a booming market. In Europe alone, the voluntary offset market grew 300% from 2005 to 2006. UK-based paper The Guardian estimated in 2006 that the market would increase fivefold to 450 million EUR by 2012.

Greenscroll: offsetting the net

Initially, Greenscroll will invest money into Renewable Energy Certificates (RECs) and carbon offsets, but the founders hope that as the company grows, Greenscroll will be able to develop its own green projects. Greenscroll supports eco-hosting (web hosting that minimizes ecological impact), but offers RECs as an alternative. As Bratkovski points out, “By going with eco-hosting you only take care of the environmental impact caused by the servers. What about networking equipment holding the Internet together, cooling, and visitors' workstations?”

The advantage of investing in Greenscroll instead of a reputed carbon offsetting company, according to Bratkovski, is that Greenscroll specializes specifically in mitigating the footprint of the web, whereas other companies may specialize in offsetting things with bigger footprints, such as travel, events, or business operations. Greenscroll also strives to educate individuals and companies about the environmental impact of their web presence. Eventually, the founders of Greenscroll would like to bypass the offsetting mechanism and invest directly into renewable energy that will directly impact the Internet, by installing solar panels on data centers, for example.

Greenscroll has a partnership with CarbonFund.org, a not-for-profit carbon offsetting body. (Carbon Fund reps chose not to participate in the survey behind the DSF and Pembina’s offset guide.) According to Carbon Fund’s website, 92.3 cents of every dollar go to renewable energy projects or projects. Carbon Fund purchases and retires carbon offsets on behalf of its investors, meaning that the carbon offsets cannot be resold to another party. It also calculates your electricity generation emissions for you by using national averages. Its motto is, “Reduce what you can, offset what you can’t.”

The bad on offsets

But offsetting skeptics argue that buying carbon credits secures the future of “business as usual.” Among them is Kevin Anderson, a scientist with the Tyndall Centre for Climate Change Research. “[Offsetting] helps us sleep well at night when we shouldn’t,” he says, calling carbon offsetting an avoidance tactic because we have yet to make changes to our behaviour. Similarly, critics from Carbon Trade Watch call offsetting companies “modern-day pardoners” who absolve our environmental sins at the end of the fiscal year.

A small American think tank, the Breakthrough Institute, demonstrated in a May 2009 analysis that the American Clean Energy and Security Act of 2009, or Waxman-Markey bill, which provides for 2 to 2.5 billion tonnes of CO2 offsets, will allow for sustained growth in US greenhouse gas emissions until 2030. According to US Congressman Rick Boucher, instead of reducing emissions, “those offsets would enable electric utilities like AEP (American Electric Power) to invest in forestry, agriculture, and projects like tropical rain forest preservation in order to meet their CO2 reduction requirements under legislation. Therefore, they can comply with the law while continuing to burn coal.” Things are no different in Europe. Germany’s Environmental Minister Sigmar Gabriel remarks that with a carbon credit-reliant system, one can build 100 coal-fired power plants without legally having higher CO2 emissions.

Another common criticism of carbon offsetting is that energy efficiency is a better solution.  In June 2009, Yahoo! announced that it would cease purchasing carbon offsets in favour of implementing internal energy reductions, saying that highly efficient data centers would have a greater long-term and direct impact on the environment. By 2014, Yahoo! intends to reduce the carbon intensity of their data centers by 40%. The most efficient solution for firms like Yahoo!, according to Paul Kelly of financial services firm J.P. Morgan, is to make internal reductions until energy efficiency initiatives become more expensive than buying offsets.

The DSF and Pembina Institute favour renewable energy and energy-efficiency projects over reforestation projects, mainly due to the problem of leakage, or where a GHG reduction from an offset project in one region causes an increase in emissions elsewhere. The DSF and other critics have also brought attention to the problem of “additionality” in offsetting companies. According to the DSF, carbon offsets and their related emission reduction activities must be a result of the carbon market, and not of “business as usual” activities. “Additionality is the key for ensuring that an offset is of high quality,” explains Howie Chong, president and founder of Carbonzero, one of the top-ranking companies in the DSF and Pembina Institute guide (with a score of 82 out of 100). A prominent example of the additionality problem is Europe’s hefty use of the UN’s Clean Development Mechanism (CDM) offsets to meet its Kyoto target for emissions. Stanford law professor Michael Wara says it is hard to affirm whether additional carbon cuts were a result of offset-subsidized projects. He points out that polluters in Europe have purchased so many CDM offsets that they likely emitted 1% more GHGs in 2008 than they did in 1990.

The good on offsets

However, investing in renewable energy projects can have many benefits for hosting countries. Since the effects of GHGs are borderless, many offsetting companies outsource projects to developing countries. Offset investments can spark new infrastructure development projects and equipment exports. These projects can also be accompanied by the promotion of broader sustainable development initiatives. For example, J.P Morgan’s Gold Standard Improved Cook-Stove initiative – introduced to improve and educate the public about cook stoves in various developing countries – has been praised for its promotion of health benefits, sustainable development, and transfer of technology and capital. With the help of CDM financing, India has established a globally competitive turbine manufacturing company, Suzlon, and has increased its total wind power capacity to nearly 10,000 MW (the fifth largest in the world).  A third example is Bogota’s hugely successful TransMilenio bus system, which has reportedly reduced the city’s fuel consumption by close to 60%. However, some projects do not take into account the needs of local ecosystems. For example, the Plantar/World Bank monoculture plantation projects in Brazil have harmed indigenous communities by decreasing biodiversity and drying up local water sources.

But carbon credits are often the lowest-cost ways of reducing emissions in the short run while we invest the time, money, and research to uncover energy problems and solutions that are more systemic in nature.

To economists like Kelly, offset credits represent a crucial means to meet emissions targets for industries and governments that face carbon caps. Kelly believes that offsetting is the most practical solution to meet emission targets in the short term. In SEED Magazine’s August 2009 online debate with five experts on carbon offsets, Kelly notes, “The international community has to pick its way through a difficult and uncertain transition period, where different countries have differing obligations, or no obligations at all, and negotiations are fraught with political and economic sensitivities.”

Carbon offsets can be effective if the right monitoring mechanisms are in place. The DSF and Pembina Institute guide, for instance, provides a list of questions investors can ask offsetting companies to ensure their investments truly make a difference. Eric Carlson of Greenscroll’s partner firm CarbonFund.org explains, “Third-party standards, verification and auditing are the hallmarks of real and high-quality offsets.”

Howie Chong from Carbonzero reminds us that carbon offsetting is a tool and is just part of the solution to mitigating the impact of the Internet. While investing in offsetting means investing in projects that would not have occurred without investors’ resources, improving the energy efficiency of data servers and offices as well as using renewable energy sources are also important parts of the equation.

A Greener Future

Companies such as Greenscroll are taking the initiative to help reduce the impact the internet has on GHG emissions. They are also helping to educate the public about the environmental impacts of the web. Likewise, the Canadian firm PowerCon’s PowerKure system has helped drastically decrease energy consumption at data centers and universities across the country. Through open discussion, the founders of Greenscroll believe that their firm can grow, improve, and be a part of the solution to climate change.

Many in the carbon offset industry – including representatives from Greenscroll – agree that policies must be created to accompany the aggressive use of offsets. Governments and companies should prioritize investments in energy efficiency. If abused, offset credits have the potential to derail the decarbonization of the global economy. If used properly, though, they can help cut emissions at a price that businesses, economies, and industries can afford. As Paul Kelly from J.P. Morgan notes, they can help smooth the transition from a fossil-fuel dependent present, to a low-carbon future.

Q&A on Forestry Offsets

The DSF & Pembina Institute have criticized reforestation projects, since some forest-carbon vendors may set aside some of a forest’s carbon captures as an unsold buffer against future losses. In other cases, paying landlords to avoid deforestation simply shifts deforestation to an adjacent territory. The worst-ranked offsetting companies in the DSF & Pembina guide are generally ones that deal with reforestation, rather than renewable energy.

To further understand the controversy surrounding reforestation-based carbon offsets, Corporate Knights interviewed Jeff Calvert, Managing Director at Borealis Offsets, a Canadian company that delivers reforestation carbon offsets. Borealis scored 76 out of 100 in the DSF & Pembina guide – the highest score for a Canadian company centering on reforestation offsets.

CK:  What are the advantages of investing in reforestation offsets as opposed to in renewable energy offsets?

JC: From a climate change perspective, there's no difference. But they are different in what they do for society. Renewable energy reduces our dependence on fossil fuels, and their environmental impacts, which are significant all the way from the point of production to the point of consumption. Forestry projects deliver other – but different – secondary benefits, including restoration of wildlife habitat, watershed protection and protection of biodiversity. But neither project does more, or less, for climate change than the other.

CK:  Why do you think bodies like the David Suzuki Foundation have been less receptive of reforestation offsets than other types of offsets?

JC: To really understand the Suzuki Foundation's position on the ability of forests to reliably absorb and store carbon, it's important to understand that our human-caused GHG emissions come from a number of sources. About 25% of our global GHG emissions are caused by deforestation.
In the early days of the voluntary offset market, well over half of the market was based on forestry projects, even though only a quarter of our emissions are from deforestation. It's easier and cheaper to plant trees than build wind turbines, and we have dozens of generations of experience doing it. Environmental NGOs were quick to point out that the market needed to drive change in other areas where it wasn't, particularly renewable energy. This led to a significant, and understandable, backlash against forestry carbon among environmental NGOs.

(As an aside: most forestry projects are 100% financially additional, while many renewable energy projects receive less than 1% of their cash flow from carbon finance. Carbon finance is not generally the deciding factor in driving any renewable energy investment.)

However, with the development of rigorous forest carbon standards by the Voluntary Carbon Standard and Climate Action Reserve and mechanisms to address permanence risk, several leading environmental NGOs including WWF and Conservation International have spoken out for the important role forest restoration and avoided deforestation have to play in our fight against climate change. Other project types have gained traction in development, and it could now be argued that we aren't developing enough forestry projects, as forestry is now less than 15% of the market.

Because of Canada's "theoretical" status as a participant in the Kyoto Protocol, we are probably ten years behind Europe in awareness of the voluntary carbon markets. Unfortunately, many of our perceptions about forestry projects in Canada are also lagging the rest of the world.