Energy

Wednesday, 23 January 2008 16:10

The concept of carbon credits may not be new, but it has certainly become more mainstream. My, how the world has changed! Gone are the days of “bigger is better” and the mind-set of the more it costs to run, the more economical it will be in the long term. Those days are condemned to where they should be ...the past. While we are inundated with a constant barrage of media and politicians informing us that modern science has reached its limits, we do have one thing to thank it for – the realisation that fossil fuels are not the only form of raw energy available for utilisation. We are currently at a junction within modern society, in that not only are the modernised first world countries deciding to play a part in the preservation of fossil fuels, but the developing countries are also indeed stepping up in order to play their role in the search for and utilisation of safer and renewable energy resources. The new millennium has introduced fresh ideas and terminologies to the world in trying to create a “greener” society, and for the first time in recorded history, the greater population is beginning to comprehend terms such as “carbon footprint” and “Co2 emissions”.

Much of all the fuss being made about creating a more environmentally friendly fuel source is centred on a concept known as “carbon credits”. While the theory is in fact not new, the practical implementation of it has only taken off in the past few years. A basic understanding of the term is centred around a tradable permit scheme. Carbon credits provide a way to reduce greenhouse gas emissions by giving them a monetary value. In many ways, the theory and practice of carbon credits sets off a domino effect that reaches even the smallest producers of environmentally unfriendly gases. International treaties such as the Kyoto Protocol set quotas on the amount of greenhouse gases countries can produce and countries, in turn, set quotas on the emissions of businesses within their borders. Businesses that are over their quotas must buy carbon credits for their excess emissions, while businesses that are below their quotas can sell their remaining credits. Credits can be exchanged between businesses or bought and sold in international markets at the prevailing market price. This step has opened up a world of opportunities within the global market in that trade has reached the point that material products are no longer the only commodities able to change hands. For example, assume a factory produces 100,000 tons of greenhouse emissions in a year. The government then enacts a law that limits the maximum emissions a business can have and say the factory is given a quota of say 80,000 tons. The factory must reduce its emissions to 80,000 tons or purchase carbon credits to offset the excess. By way of the Kyoto Protocol, these trades can now take place internationally as well as domestically. As emission levels are predicted to keep rising over time, it is envisioned that the number of companies wanting or needing to buy more credits will increase, which will push the market price up and encourage more groups to undertake environmentally friendly activities that create carbon credits for them to sell. Another model is that companies that use below their quota can sell their excess as carbon credits. The possibilities are endless, making it an open market. These days, many companies sell off their carbon credits to commercial and individual customers who are interested in lowering their carbon footprint. These offset marketers purchase the credits from an investment fund or a carbon development company that has aggregated the credits from individual projects.

So what is all the fuss about with regard to all of these terms now becoming part of our daily lives? The main point trying to be put across is the actual destruction caused by today’s community depleting a vital non-renewable resource, as well as the pace of it. These acts and terminologies ultimately point to the need for renewable biofuels that cause minimal damage to the environment. So one must ask - what exactly are biofuels? Biofuels are defined as liquid or gas transportation fuels derived from biomass and which can also be used directly for heating or power; this is commonly known as biomass fuel. Biofuels are considered an important means of reducing greenhouse gas emissions and increasing energy security by providing a viable alternative to fossil fuels. They are utilised globally and their industries are expanding phenomenally- most notably within Europe as well as Asia. Biofuel can be produced from any carbon source that can be replenished rapidly e.g. plants.

While the world has been aware of the imminent dangers of over-utilisation of fossil fuels for decades, it is only recently that legislation has in fact been passed in order to actively play a role in attempting to curb this downward spiral. This occurred in a landmark agreement known as the Kyoto Protocol. The Kyoto Protocol is an international treaty to reduce greenhouse gas emissions blamed for global warming. The Protocol provides the means to monetise the environmental benefits of reducing green house gases. It was at this agreement that the concept of carbon credits was put into practical use and the world awoke to an example of practical action in the attempt to reduce carbon emissions. The Protocol currently has 172 ratified member signatories on board and with increasing global pressure there are sure to be many more within the near future. South Africa quickly realised the benefits of such a project and signed as a member on 31 July 2002. Surprisingly African countries make up a significant proportion of the signatories and even reach as far as “lesser developed” nations such as Lesotho and the Democratic Republic of Congo. The European Union signed the protocol as long ago as 1998; however there are notable absences of global leaders in carbon production such as the USA as well as China. One individual currently causing waves within the global energy community in his quest to find alternative and more environmentally friendly means of creating energy is entrepreneur Richard Branson. The Virgin boss has stated that he will commit all profits from his travel firms, such as airline Virgin Atlantic and Virgin Trains, over the next 10 years to the researching and development of renewable energy resources. The funds will be invested in schemes to develop innovative and renewable energy technologies, through an investment unit called Virgin Fuels. Branson has openly stated that transport and energy companies must be at the forefront of developing environmentally friendly business strategies. Environmentalists broadly welcomed his announcement, but at the same time environmental pressure groups warned that the continued fast growth in air travel could not be maintained “without causing climatic disaster”.
While the concept of utilising and developing a renewable and natural energy resource seems noble, some argue against the use of such a method as the solution to the modern world’s energy problems. Essentially biofuels are fuels derived from crop plants, and include biomass directly burnt, and especially biodiesel from plant seed-oil, and bioethanol from fermenting grain, grass or wood. They have been promoted and mistakenly perceived to be ‘carbon neutral’, with the majority of the population under the impression that they do not add any greenhouse gas to the atmosphere and that burning them simply returns to the atmosphere the carbon dioxide that the plants take out when they were actively growing. However, what many fail to take into account is the effects in carbon emissions and energy of the fertiliser and pesticides used for growing the crops, as well as of farming implements, processing, refinery plants, transport, and infrastructure for transport and distribution. The extra costs in energy and carbon emissions can be quite substantial particularly if the biofuels are made in one country and exported to another. So the world today is left with a food vs. energy scenario whereby no matter how one looks at it, some harm is always going to be inflicted on the environment. Demand for biofuels has turned traditional food crops into bioenergy crops which now have food and energy competing for the same feedstock, with the result that food prices have been hiked up substantially, over and above the price of petroleum and natural gas that normally goes into producing food. While a controversial topic, one cannot deny the necessity of a renewable energy resource within a booming globalised world. No matter which way one looks at it, one thing is certain: unless a renewable resource is properly tapped and utilised, society will endeavour to use more and more of the planet’s depleting levels of fossil fuel energy. The food vs. energy debate is one that seems destined to recur over time; however, this is again a cause that either way is essential to a society in dire need of both commodities. While South Africa is indeed getting involved in agreements such as the Kyoto Protocol,, it still seems worlds away from the steps taken by other more modern and industrialised nations such as those of the European Union. However, over time, and with South Africa’s respect for and willingness to adapt to as well as embrace global trends, there is no doubt that the country will have an essential role to play in the future and once again lead Africa in its attempts to preserve and efficiently utilise renewable resources.

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