Carbon credits provide carbon producing companies with a way in which they can offset the carbon they emit by investing in carbon reduction projects elsewhere, such as tree planting schemes or renewable energy generation projects. The concept was developed by students at Zurich Technical University and spun off into a dedicated company in 2006.
“The idea came about when the students flew to a climate conference in Central America,” says Marketing & Communications Director Dr. Thomas Schröder. “They thought that they should be doing something to compensate for the carbon being emitted on their flight but there was no mechanism for doing so. Instead, they decided to set one up themselves.”
Initially, South Pole commenced its activity developing both CER (compliance emission reduction) and VER (voluntary emission reduction) projects and selling the respective certificates. With the advent of the financial crisis, the market for CERs slowed down considerably. This has led to South Pole focusing on VER sales, since this market is a lot more dynamic.
Making environmental protection financially viable and therefore commercially attractive lies at the heart of South Pole’s philosophy. It operates as a project developer, putting financing in the hands of CO2 reduction projects so that they can get off the ground. The system is self-sustaining and effective.
“Our ultimate goal is reducing overall carbon emissions and combatting climate change,” insists Mr. Schröder. “When we first started, there were no real established standards for emission reduction projects that could provide any sort of guidance or orientation to the buyer. Over time, trusted standards, verified and accredited by external auditors were developed. We ensure that any third-party certificates we offer also conform to these.”
South Pole was one of the first movers in the field of carbon credits and today has over 300 projects operating worldwide. Projects are chosenon the basis of their ability to reduce CO2 or other greenhouse gases such as methane. Most of these projects are located in South East Asia, Latin America and Africa.
Examples include the construction of methane collection plants for landfill sites in Vietnam and small hydroelectric plants in China. “From an economic point of view, these reductions can be most efficiently made where CO2 reductions can be made most cost effectively,” says Mr. Schröder. “In developed countries like Germany and Switzerland, emissions reducing technology has already been installed and further optimisation is very expensive. It therefore makes sense to develop projects locally and in developing countries where greater reductions can be achieved with less effort.”
However, it is not a case of the west seeking to offload responsibility for climate change onto emerging economies. South Pole’s projects are about helping them avoid the mistakes of the past by supporting growth in an environmentally friendly way.
Carbon credits are now one of the key pillars of emissions reduction policies. South Pole is at the forefront of this effort and ranks among the top three companies in this field. For four years straight, the company has been named “Best Project Developer” by Environmental Finance magazine. It has 16 offices worldwide including its headquarters in Zurich.
“We are focused on growth,” says Mr. Schröder. “The major issues are energy, water and forest conservation. That means investing in projects such as reforestation and sustainable palm oil production, as well as assuring water and energy supplies for future generations.”
South Pole Carbon Asset Management Ltd.
8005 Zurich, Switzerland
Phone: +41 43 5013550
Fax: +41 43 5013599
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