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Corporate Carbon Dioxide Commitments: Separating Fact from Fiction

This document is meant to assist the media and public in analyzing proposals on corporate carbon dioxide emissions

The Problem
The burning of fossil fuels - oil, gas and coal - emits carbon dioxide which builds up in the atmosphere, blankets the earth and traps in heat, causing global warming.

Mandatory Solutions v. Voluntary Measures
WWF's work with companies to reduce CO2 emissions demonstrates that voluntary corporate commitments can be valuable in demonstrating innovative technologies and the business case for climate solutions. No matter how valuable they may be, a set of voluntary measures cannot replace the environmental protection and business certainty provided by government-led mandatory caps on CO2 emissions. With only voluntary measures in place, US CO2 emissions increased over the last decade and now our window of opportunity for reducing CO2 emissions is closing fast.

Based on years of experience working with businesses to reduce their CO2 emissions and developing the GHG Protocol, WWF offers the following guidelines and key questions to help distinguish significant commitments from "smoke and mirrors" commitments.

Significant Commitments

  • Reduce gases emitted into the atmosphere: If a company achieves an absolute reduction target you can ensure that emissions to the atmosphere from that entity will decline. With an intensity reduction target, there is always the possibility that while a company's intensity has declined, its actual emissions may have increased.
  • Drives a long-term change in company behavior: If the effort or reduction target or cap is not moving the entity beyond business-as-usual trajectories, then the effort should not be touted as a leadership effort.
  • Can be measured: If a company can achieve its target by purchasing credits from other entities that have not agreed to a cap, there may not be any benefit to the environment. The exchange of cash and paperwork gives the appearance of a climate benefit, but without a cap for all entities to use as a baseline, it is not possible to measure the actual results.

KEY QUESTIONS - Actual Reductions

  • Does the initiative, company target, or market scheme actually reduce heat-trapping gas emissions?
  • Is the target an absolute emission reduction target or is it an intensity reduction target? The US economy reduced its heat-trapping gas intensity by almost 17 percent in the 90's, while increasing emissions by 14.2 percent. Any intensity reduction effort should be examined very closely to see if it will truly result in a reduction of emissions.
    • An absolute reduction target is frequently phrased as a percent reduction, or a tonnage reduction, below a baseline year. For example, a company would commit to reduce its heat-trapping gases ten percent below 1990 levels by 2010. In contrast, an intensity reduction target would be phrased as a reduction of heat-trapping gas per production, per revenue, per GDP, per MWh, etc.
  • Can companies participating in the proposed plan play by the rules and still continue to increase emissions?
  • Is the commitment to reduce or simply avoid emissions? A target regarding avoided emissions begs the question of who has defined the business-as-usual trajectory that the company is comparing against and makes it difficult for external stakeholders to weigh if the actions are truly going beyond business-as-usual.
  • Does it reduce emissions from source, or simply try to sequester them once emitted? If sequestration is allowed, what accounting rules are in place to ensure tons are actually sequestered permanently? What criteria are in place to prevent environmental harm?
  • Is there a clause that states entities are not bound by a reduction target if they grow by a certain amount? For example, a company may be willing to say that it will reduce emissions ten percent below 2000 levels by 2005, as long as its sales remain flat. This type of "growth" clause undermines the benefit and leadership value of any reduction target or emissions cap.

KEY QUESTIONS - Emissions Trading

  • If it is an emissions trading scheme, what portion of the target does the company actually have to fulfill through its own emissions reductions?
  • Can the company accomplish the bulk of/all of the target through investments and purchases in credits and offsets?
  • Are companies participating in the effort allowed to exchange credits with entities that are not in the same capped system, and/or not in a capped system at all? If so, is the system potentially a simple shell game - shifting emissions instead of reducing them?
  • Does the trading system ensure no double-counting occurs? If company A sells its emissions to someone else in the scheme, what mechanisms are in place to ensure that company A is not using those reductions to meet its own commitment?
  • How is the system ensuring that reductions are not being double counted by both generators and consumers of electricity?
  • Is there a clause that states entities are not bound by a reduction target if they grow by a certain amount? For example, a company may be willing to say that it will reduce emissions ten percent below 2000 levels by 2005, as long as its sales remain flat. This type of "growth" clause undermines the benefit and leadership value of any reduction target or emissions cap.

KEY QUESTIONS - Quality Control

  • What are the penalties for missing the target?
  • Will participating entities undergo independent verification?
  • Will participants be reporting progress publicly at a facility-level?
  • Are the accounting guidelines consistent with the GHG Protocol? This is a series of accounting guidelines and principles for corporate measurement and reporting of heat-trapping gases, designed by an international coalition of businesses, NGOs, and government representatives. The initiative was convened by World Resources Institute and the World Business Council for Sustainable Development in early 1999.
    • If not using the GHG Protocol, what heat-trapping gas accounting guidelines are being used and what environmental stakeholders were involved in establishing the target, reporting, and compliance guidelines?

KEY QUESTIONS - Long-term Solution

  • Does it drive the company to implement long-term climate solutions?
    • Does this effort help drive investments in energy efficiency, foster independence from carbon-intensive fossil fuels, and promote development of new renewable energy?