Carbon Market / Fundamentals of Carbon Offsetting

Fundamentals of Carbon Offsetting

Greenhouse Gas (GHG) emissions have become a major cause of global warming, which is causing widespread changes in the earth’s climate and consequent environmental degradation. Increasing consumption of energy, agricultural development, expansion of industries, deforestation and the destruction of natural resources have led to an excess of emissions and a reduction in carbon sinks. Global warming and climate change are becoming serious global problems day by day, affecting the natural functioning of human wellbeing. In order to reduce the effects of global warming, GHG mitigation has been a potential option. Within the arena of GHG mitigation, carbon markets have had strong capabilities to incentivize and take forward GHG mitigation actions on the country level. With the presence of carbon markets, a number of Government and private sector organizations have been encouraged to incorporate low carbon development within their business operations. Part of this development has been the manufacture of products with low carbon footprints, and the provision of low emission services. Another feasible option that organizations have chosen for GHG mitigation has been the offsetting of greenhouse gas emissions through the purchase of carbon credits. Carbon offsetting is a way for organizations to take full account of their GHG emissions and become carbon neutral. Figure 1 below illustrates the Carbon Offset and Carbon Neutral concept -

Figure 1 – The Carbon Offset and Carbon Neutral Concept

Carbon offsetting can be considered as an act of social responsibility, as it provides organizations with the opportunity to take full account of GHG emissions from its operations and activities. The offsetting of GHG emissions also supports existing emissions reduction projects and the development of new emissions reduction projects. The demand for carbon credits stimulates the need for an adequate supply, which therefore encourages the development of low carbon projects that are eligible to sell carbon credits to potential buyers. In this way, carbon offsetting is a viable approach that can significantly contribute towards reducing GHG emissions in Thailand.

Objectives of Thailand’s Carbon Offsetting Program

The Thailand Greenhouse Gas Management Organization (TGO) has introduced the Thailand Carbon Offsetting Program (TCOP) with the objective to encourage the private sector and industrial sector of Thailand to demonstrate social responsibility by offsetting their organizational emissions. The aim of the program is also to generate demand for carbon credits from voluntary GHG reduction projects in Thailand and from international markets such as the UN backed Clean Development Mechanism (CDM). TCOP is also expected to contribute towards stimulating demand in Thailand’s voluntary carbon market, and to raise general awareness about carbon offset activities to individuals and organizations in all sectors. There are 4 categories of participants that can take part in TCOP -

Type of Certification provided in TCOP

There are four types of activities that can qualify under TCOP as carbon offsetting activities. TGO provides certification for the following activities –

1. Products & Services – The purchase of carbon credits to offset GHG emissions emitted during a products life cycle (raw material extraction, production, use, and end disposal), and the offset of GHG emissions generated during the provision or use of a service.

2. Meetings & Events - The purchase of carbon credits to offset GHG emissions emitted from the organization of meetings, conferences and events.

3. Organizations - The purchase of carbon credits to offset GHG emissions emitted from an organization’s operations and activities.

4. Individuals - The purchase of carbon credits to offset GHG emissions emitted from an individual’s daily activities (e.g. daily electricity consumption, commuting).