Offsetting: emissions, technologies & social equity – an interview with Dr. Martin Baitz

“Developed countries must share their knowledge and technology with developing countries, helping them to set up green technologies,” says Dr. Martin Baitz, director of content at thinkstep, a Sphera company, as we speak about carbon offseting, disseminating clean technologies and evolving social equity.

If key aspects for sustainability are to reduce waste and emissions and use less virgin energy, which measures can ensure that efficiency gains achieved in these areas are utilized as actual reduction and not exploited as growth span for just all the more production, sales and commerce (rebound effect)?

The simple, blunt answer is that either we have a dictatorship that forces a change in behavior toward greater sustainability with the additional energy, or we educate society in a way that people expend the saved energy toward greater sustainability.

But let me take a step back to clarify. Reducing energy demand by abstinence (no cars, no flights, no meat) is trivial if the abstinence is only abstinence from “needless” or “luxury” items. However, sometimes it’s not easy to define what is “needless” or “luxury,” and the border between the two is influenced by geographical region, culture and level of technological development. Who of us can claim to be in the know, to be “god” or “dictator,” and decide what we should or shouldn’t produce and consume? And how would we even determine how such a top-down approach would work? Would it be done in general for everyone or only specifically according to each special and personal need? So there is an ethical dimension to this that makes such approaches problematic and unrealistic.

But to clarify, it’s not necessarily only the amount of energy that we need to reduce—it’s the type of energy that we use that is decisive. If the energy is truly green energy derived from renewables, then we can use more energy in our transition to a sustainable economy. Growth is not harmful if it is sustainable. We don’t have to live under dictatorial conditions. You won’t have to quit your holidays or your other fun activities if we direct growth to happen in another, sustainable way.

remaining carbon budget - source:

There are people who believe that the only way to fix the situation is to drop out of society, to consume less and do less. They believe we should all go back to farming on our own. Sure, do that, go back in time. I am not making fun of that either—such behavioral shifts will in fact help make the
world more sustainability. But most people won’t do this or simply can’t do this.

Creating a sustainable society is not so much about not using something, but about using something without wasting it or without losing its benefit. It’s about providing for human needs in the least impactful way. If you want to give the user freedom to choose, then you cannot have an authority forbidding behavior or consumption outright. Let’s say you purchase new appliances that sharply reduce your energy consumption in your household. You will free up capital in your personal budget and use that elsewhere, causing other environmental impacts. So it’s a matter of education. People and companies that save money need to understand the issue holistically. With a certain degree of freedom, individuals and companies and governments will need to use systems thinking.

The rebound effect is only avoidable if everyone acts responsibly. In the end, it’s your responsibility not to waste that energy elsewhere. But we can do things to educate and encourage people to think systemically about their business and consumer behaviors.

Which national and international laws and regulations force us, both as citizens and entrepreneurs, to effectively reduce anthropogenic emissions?

The Montreal Protocol (1987), the Paris Agreement (2016), the EU WEEE directive for waste, Europe 2020 (also the EU), upcoming Product Environmental Footprint (PEF) labeling scheme—there are many of them. I’m sure there are laws in the United States and elsewhere that have had a positive impact… if and when they are enforced.

Why may the future costs of inaction on climate change probably outweigh the costs of decisive, early action today?

Because once we reach the tipping point—a certain level of emissions in the atmosphere that speeds us toward a drastic transformation of the environment—we will experience a sudden and dramatic shift into a new climate equilibrium. Right now, we are only experiencing relatively mild changes. We have more frequent and larger severe weather conditions: floods, storms, droughts, flooding of coast lines and so on and today the insurance companies are already complaining about the huge damage increases. These may seem terrible, but you can’t compare them to what will happen once we reach the tipping point. Once the emissions reach a certain level, there will be a dramatic and complete transformation of our climate’s equilibrium. If we get to that point, we will have to completely transform, and potentially rebuild, our systems of agriculture, our coastlines and our infrastructure. Just look at how much money Japan, Bangladesh, the Netherlands and others are spending on securing their shorelines. If Pacific island countries disappear, such changes will be seen as “collateral damage” in comparison to what will happen and the amount of money and time and other resources we will have to expend to adjust.

To get a real picture of what I am talking about, just watch the Hollywood movie, The Day After Tomorrow. We are facing that kind of dramatic transformation if we don’t take steps within a very hort period of time to stop global warming. Our complete economic system will tumble. So, if we would like to continue to use infrastructure that we have built up within the last 200 years, we should avoid that tipping point. Nobody knows exactly what level of emissions that will be, but if we don’t drastically shift our priorities now, it may be too late.

Dr. Martin Baitz on the ISO-standardised procedure of Life Cycle Assessments (LCA).

How can climate protection be transformed into an economic opportunity for companies? How does the ROI in climate finance work?

The answer depends on many factors—the conditions, the product, the region, etc. There is always a way for business to achieve both greater profits and become more sustainable. Most large companies are already marketing and working toward more sustainable solutions.

There is a giant market demand out there for greater sustainability. And we have all the technological capabilities to do it. As a business, you need to find out what your customer base expects and then you need a plan for how to get there. If you are looking for evidence about the advantages of sustainability, look at the STOXX and the Carbon Disclosure Index. In both cases, you’ll find that sustainability indices always rank higher in value than the global fortune 500. Even back during the financial crisis in 2008, those companies outperformed the others.

Sustainable companies are worth economically more. This information is well documented and now common knowledge within the larger business community.

image: CC BY-NC-ND _ text: Arab Hoballah, foreword to ‘Bridging the climate gap’ (2019, pp.3-4) thinkstep, a Sphera company

Emissions trading schemes transform emissions into commodities. How can carbon footprint messages be used as a competitive advantage in the market place? How can there both money be saved and potentially be made through CO2 compensation?

The problem here is that emissions schemes often only look at CO2. They don’t include other impacts. We need to see how activities impact land, water, toxicity and so on, not only CO2. Be careful with this one—assessments need to be more comprehensive than just CO2. However, acting on CO2 is often a good first step into “life cycle sustainability,” because it’s relatively simple to apply. But using the right software and data for quantifying all (or more) impacts is not that difficult.

At the recent “BAU” trade fair, thinkstep enabled visitors to both calculate and offset their CO2 emissions footprint created by their individual trade fair visit. Next to questions on the type of transportation and overnight stays, did you also ask for the visitor’s nutrition habits to calculate their individual CO2 footprints? If not, why not?

No, we don’t include nutritional habits in our equation, because the attendees are not necessarily eating any more at an event than they would at home. They still eat at home. In fact, they may eat less during an event, for numerous reasons: access to a salad bar, social pressure not to pig out, or whatever. I haven’t seen a comprehensive analysis of nutritional consumption habits at events versus similar habits domestically. Without such science-based data, it becomes very difficult to make an accurate assessment.

And here I have to put pressure on the organizers of such events. They need to assess the options and provide more sustainable food and beverages. The organizers of such events can have a lot of influence. Of course, the person attending the event can always choose to not eat a steak knowing that that choice will reduce their impact. But they need to know which is better and they can’t know that—it’s still too complicated for many individuals to know all details in any case.

image: CC BY-NC-ND _ text: ‘Drawdown’, edited by Paul Hawken, Penguin Books 2017, pp.38-39

On the side of climate protection measures, like CO2 offsetting, it may be much more effective to invest in clean technologies in developing economies rather than to yield only small efficiency improvements in already relatively clean economies. Can you elaborate on this effect? In this context, what was the decisive factor for thinkstep to select South Pole and its specific portfolio of climate protection projects (comprised of a “Reforestation in Colombia”, a “Landfill Gas Capture in China” and a “SCG Biomass to Energy Project in Thailand”) in order to neutralize visitor CO2 emissions at the recent “BAU” trade fair?

Developing clean technologies in emerging economies is not the right approach. We can’t expect developing countries to be the first movers of new technologies. They don’t have the capital.

Industrialized countries have the capital to develop the technologies. Then we need to deliver those technologies to emerging economies through various international entities and developmental aid.

Keeping the patents in the industrialized countries and “deliver technologies to emerging countries through development aid”: Does this not reinforce the predominant disparity and dependency of developing countries on developed economies? Ever more so, since stabilizing CO2 emissions in developed or “rich” countries since the signing of the Kyoto agreement, have been neutralized by the increase in CO2 emissions from developing nations as they produce goods for trade, primarily to developed countries. Thus, how can we rethink distribution mechanisms for knowledge and technology transfer to enable clean technology and a fair future for all?

True, keeping patents does not solve issues, but developed countries have to do their homework and invest. All major companies that take emissions reductions seriously, are reducing their emissions as much as possible, and those emissions that are out of their reach or responsibility, they try to offset in the right way. These frontrunner companies influence other companies in the supply chain, and the sum essentially makes up the developed economies. 

In the European context, CO2 pricing is increasing the pressure on politicians and is helping companies to sell their CO2-optimized products on the market, because now cleaner products (with less emissions attached to them), have an economic advantage over, say, products produced by companies (or in regions) that release greater emissions in their production and transportation. This direction leads companies toward greater green innovation, because their management sees this trend only increasing in the future.  

Investors too are not only stopping to invest in CO2-intensive companies, but their insurers are no longer insuring CO2-intensive technologies. This trend is not going to slow anytime soon. 

Developed countries must share their knowledge and technology with developing countries, helping them to set up green technologies. Today few foreign investors will invest in green technology in developing countries. The reason is because there are a lot of major socio-economic hurdles to overcome in developing countries in order for safe investment to occur, corruption being one example. And some of the hurdles need to be removed by the developing countries themselves, surely with adequate support from the developed countries. Although we at thinkstep can assist governments and investors to make the right decisions, tackling such topics requires multiple organizations, governments and other stakeholders to cooperate holistically. There is no single, one-size-fits-all solution, but only a single goal: survival of companies, states and humanity.

image: CC BY-NC-ND _ text: Jeffrey Sachs “The End of Poverty”, 2005, p.62

In this respect, have thinkstep’s CO2 compensation investments in South Pole been in support of Clean Development Mechanisms? If so, could you elaborate on the advantages of this mechanism?

We choose organizations that are transparent and reliable, with projects that have proven themselves effective in terms of measure and impact. That’s what it comes down to.

I have just conducted my personal ecological footprint, applying the, finding that my personal footprint requires 1.4 Earths and my personal Earth Overshoot Day is already in September 20th. Following examples like a blockchain powered Global Carbon Credit APP” (VeChain, BYD, DNV GL), what promising applications do you see for reducing CO2 emissions at the consumer level in our everyday?

Accurate tools do not yet exist. The tools that do exist are more like compasses pointing in a certain direction. They are not detailed maps that tell you exactly what is more sustainable. That has to do with the complexity of products that we use and consume. Driving one car is very different from driving another car in terms of its impacts. You cannot lump them all together. The range of factors involved in making a comparative analysis is enormous.

So such tools are inherently crude in their accuracy. They are not exacting enough. The devil is in the detail when it comes to sustainability. You can have totally unsustainable cheese or you can have cheese that is produced in a highly sustainable way. There is no tool that a consumer can handle and use to make comparative decisions in a short timeframe, because it would require entering millions of data points. So the solution won’t come from that direction. It will be handled the other way around. Governments will create—are already creating (as with PEF)—requirements for specific environmental impact information for products and companies. The companies will provide more sustainable products and if they don’t reach certain minimum sustainability requirements, they won’t be allowed to produce such products. So the product is assessed with tools, such as our GaBi Software—and in the case of corporate sustainability our SoFi software—and then that information will appear on the product or disclosed on the company’s website in a transparent, regulated way. That is the direction it will go.

If consumers were to try to make accurate decisions, they would quickly be overwhelmed from the sheer volume of data required and the factors they would need to consider. There is no way such a device or app could help you make a quick decision in a store. The kind of comparative assessment between products that thinkstep does requires an enormous amount of people and data and resources to carry out.

Government, science and companies are currently working to create sustainability schemes, as I already mentioned with PEF. No individual will need to (or want to) use such a device or app in the near future. This is already broadly understood.

What companies are doing is using gaming to help identify hotspots. They are coming up with apps for their customers or even their own procurement departments to get a feeling for what they can improve if they choose one product over another. That’s more of an educational tool, making it fun, so people can play around and explore facts in a soft and fun way. But even such tools are only compasses—they are not reliable as tools for accurate comparisons between specific products.

Observing and tracking user behavior to derive and predict effective decisions, how might companies use products like thinkstep’s SoFi Software to implement building-specific climate protection roadmaps?

To monitor or get information on user behavior is key. Even the best product, if not properly used by the user, can lead to a product having a bad sustainability footprint. So it’s good that you are touching on this point. The user must learn what the sustainability dangers are for misusing a product.

A simple example. If you buy triple-paned windows to save energy in your house, but you leave the window cracked open during winter, you can forget about being more sustainable. An educated user, in combination with such window, however, can make a positive difference. Gaming apps or online webinars released by manufacturers can make it easier for consumers. In the end, the companies that produce sustainable high-tech products should either set up or maintain or intensify communication with their users. Then the products can really gain the desired improvements. We at thinkstep help companies do precisely that—identify in which phases of operations and production and use and end-of-life the greatest hotspots occur—using our GaBi Software, SoFi Software and our consulting expertise.

The by Global Footprint Network as well as several projects of thinkstep, like “My Virtual Farm” for BASF, use aspects of gamification to spread knowledge. What relevance does gamification have in making profound knowledge tangible, comprehensible and applicable?

It’s still in an innovation stage. We at thinkstep would like to find out more about how we can attract users of various products to learn about potential hotspots. We don’t yet know the potential for gamification. But we know that we should do it differently than in the past. In German we say, “I don’t know how to make it optimal, but I know we have to do it differently to get better.” So we know there is potential there. There is, of course, a much higher interest from the younger generations. So we see a large potential for giving people compass-like direction (as I mentioned before) with
gamification. If gamification is based on specific products, then of course it can be very accurate. Some try to do it in a more generic way, so it is less specific and less accurate.

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