Greenhouse Gas Neutrality: Compensation
As illustrated in the table below, compensation is for the time being the precondition for Credit Suisse to achieve greenhouse gas neutrality.
The other three strategies can lead to substantial reductions of greenhouse gas emissions. However, for the time being, Credit Suisse will depend on purchasing greenhouse gas reduction certificates in order to achieve greenhouse gas neutrality.
The idea is to compensate the remaining emissions by purchasing certified emission reductions (CERs) and/or verified emission reductions (VERs) of third party projects. The buyer of such reduction rights thereby finances the costs of additional emission reductions achieved and securitized by the project owner.
Such emission reduction certificates are derived from different types of projects:
- renewable energies: these are projects to finance renewable energy production from photovoltaic, wind, biomass, hydro, geothermal or tidal energy sources
- increase in energy efficiency: through technical or organizational measures, these projects increase energy efficiency with consumers (energetic redevelopments) or with producers (e.g. energy cycle efficiency by combined heat and power plants)
- carbon sinks: the idea is to capture greenhouse gases from the atmosphere and store the carbon in natural or artificial reservoirs. Examples are reforestation projects or through the technical binding and encapsulation in carbon deposits.
Credit Suisse has defined the following quality criteria for emission reduction certificates:
- The additionality of the reduction is compulsory.
- All projects must be validated, certified and monitored through an accredited third party.
- The WWF Gold Standard should be strived for as an option.
- Carbon sink projects are initially to be considered as lower priority.
- An adequately high matching maturity of compensation year and vintage is to be aimed for [maximum time span in years: (n +/- 2)].
- Exclusiveness is not to be strived for, i.e. third parties or competitors can purchase certificates from projects.
Environmental organisations are skeptical about natural carbon sinks due to the incertitude concerning capturing carbon over long periods. Due to these uncertainties Credit Suisse will for the time being not accept reduction rights from carbon sinks. The term vintage describes the period during which the greenhouse gas reduction is effectively achieved.
In the context of development of the Kyoto protocol, a global market for greenhouse gas emissions certificates evolved with standards for securitization, specialized consultancies and brokers and even carbon trading schemes at various stock exchanges. Credit Suisse could also directly invest in such projects that lead to securitized emission reduction certificates.