One of the features of sustainable cost accounting that its critics are not to keen on is my suggestion that offsetting not be permitted within a company's plans to become net zero carbon unless it actually already has ownership of the assets that will be required for that offset to take place.
There was good reason for this suggestion, which is that I believe that the cost of offsetting will increase considerably as all those who say they are going to use it realise that there is a world shortage of assets to make that offset possible.
As if evidence of my belief was required take this from the FT this morning:
It is already the case that the financial services sector is piling in to make money out of offset. And since scarcity will pay them rich rewards you can be sure that they are going to restrict supply. In that case assuming the availability of offset opportunities when suggesting a route to net zero is naive at best, and profoundly misleading at worst.
We have to get to net zero by eliminating emissions - not by pretending we have, or worse still by trading them. The fictional markets in environmental assets that the financiers are dreaming up are not going to solve the climate crisis.
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Almost every manufacturing process generates some emissions and just the basic chemistry and physics of such makes it impossible to totally eliminate them.
So are you saying that SCA means we should stop essentially every process of production in modern life?
I’m saying no such thing
I am saying we must take the steps necessary for human life to continue
Now, you tell me what you want and how you are going to achieve it
The way I have read the article above and now SCA is that you are suggesting the following.
1. Emissions have to be eliminated at source within a company.
2. Emissions offsetting and trading should not be allowed.
1. is impossible unless you want to stop modern life as it is entirely. Even agriculture produces emissions. THere is NO way around this unless you think basic chemistry and physics is somehow changeable at the stroke of your pen.
By then banning 2. you leave literally no way anyone sensible could ever reduce emissions to zero.
What you are suggesting is that either we should go back to per-industrial times entirely or that you haven’t actually thought SCA out properly and it is totally unworkable.
Tell me how we can be net zero if businesses as a whole are not?
And why not look at the data that suggests meeting these goals is really not that hard?
The problem here is what any business selects, to define a “cost”. The business owner wishes to select those costs solely accrued to deliver the goods to the customer. Accounting has been developed in order to sanction this way of thinking. Thus the responsibility for the cost of packaging ends for the producer of the goods, with the delivery. The cost of disposal is passed, wholesale and free – without let or hindrance – to the consumer. In fact, there is no reason, save only the convenience, profits and interest of the producer, to justify the producer arbitrarily passing on the costs of disposal of his packaging, which are in form and content entirely the responsibility of, and within the control of the producer, to consumers or ‘society’, or government to dispose of at their expense. Notice here that this accounting decision process on packaging allows the business that does not carry the cost of disposal, to select the suitablility of packaging without taking into account any issues of disposal. We see this throughout history, with disastrous consequences, solely because of the weakness of ‘business accounting’; from the curse of plastic packaging – to asbestos.
THe problem Kim, is not about “elimination” (you have simply begged the question), but about properly addressing that for which a business should account.
Richard. A ‘fictitious market premium’ maybe should become a recognised component of the growing ‘rentier’ economy – ‘ structured around the control and exploitation of various forms of scarce assets’.
The recent increase in energy prices sanctioned by the CMA, explicitly in order to maintain ‘competing’ retail energy companies in existence , where no market actually exists is one example. The fictious carbon offset assets market is another – with all its terrifying implications (giving the false impression something is being done to get rid of carbon ).
Agreed
I am working on this issue
Just reading a book “The Code of Capital” describing how lawyers, accountants & spivs use the law to create assets out of anything intangible or mythical, but this must be one of the worst.
It’s not unreasonable to expect a polluter to own the asset it wishes to employ to offset its emissions but that asset should have a finite life, ending say 2030, after which it can no longer count as an offset. This will pretty much exclude tree plantations, besides, it’s ironic/sad that tree plantations relied upon by BP & Microsoft to offset their emissions, recently burned down.
The prime objective though, globally, nationally and individually, must be to get as close to zero emissions as quickly as possible and only then look to rely on offsets for the balance.
As a side issue, why on earth does a company like Microsoft need to employ offsets, did Bill drain it of cash to buy more PVs?
Net zero is unlikely to be attained by each individual business and individual becoming net zero. What is needed is that the parts of the ecosystem A that net absorbers of greenhouse gases (ocean, forests etc) are managed to work well at their role; while the parts B that are net polluters (businesses, individuals, etc) are persuaded, e.g. through carbon taxes, to minimise their emissions.
The offsetting industry, whereby parts of B are tied to specific parts of A, is probably not the best way to do it.
In the absence of any tone regulating the relationship between A and B that is not going to happen, and the offset market does not work and carbon taxes are deeply regressive
So, I ask, what are you actually suggesting should be done if not net zero carbon business?