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Climate protection: Compensators buy away the pollution rights from the industry

Flying, heating, driving, shopping. In almost everything we do, we produce greenhouse gases. These fuel global warming. Anyone who wants to counteract this can “offset” their greenhouse gas emissions with a donation to supposed or actual climate protection projects. But many of these so-called compensations do not keep their promises. For example, no one knows how long forests generated from donations to the CO2-Compensation to be financed. The impact of other projects somewhere in the "Global South" can hardly be controlled. That is why some providers prefer to use the donations to buy pollution rights from the EU emissions trading system and withdraw them from the market. 

Industrial companies, power plant operators, airlines and other companies in Europe have to buy pollution rights before they blow climate-damaging greenhouse gases into the air. Gradually, this obligation applies to more and more industries. From 2027 at the latest, according to EU plans, companies in the building industry, shipping and road transport, such as freight forwarders, must also acquire such emission rights. Gradually, this European Emissions Trading System (ETS) covers up to 70 percent of all greenhouse gas emissions.

The emission allowance for one tonne of CO₂ currently costs a little more than 90 euros. At the beginning of the year there were still 80. So far, companies have received a large proportion of these certificates free of charge. From year to year, the EU Commission is now granting fewer of these pollution rights. From 2034 there will be no more free ones. 

Emissions trading: market for pollution rights

Those who do not use the allowances because they emit fewer greenhouse gases can resell them. Thus a market for pollution rights has formed. The more expensive these certificates become, the more profitable are investments in climate protection.

organizations like that compensators criticize that the EU has issued too many of these pollution rights. The price is far too low to promote the switch to climate-friendly technologies. "We Europeans will never achieve our climate goals like this," write the Compensators on their website. 

That's why they give climate protection a helping hand: they collect donations and use the money to buy pollution rights, which industry can then no longer use. Compensators board member Hendrik Schuldt promises that these emission rights will “never come back onto the market”. By the end of February, his organization had received donations of 835.000 euros, certificates for around 12.400 tons of CO2. This quantity is still too small to noticeably influence the price.

Raising the price of climate pollution

The more pollution rights the compensators withdraw from the market, the faster the price increases. This works as long as the EU does not throw new certificates onto the market cheaply or free of charge. However, Schuldt considers this to be very unlikely. After all, the EU takes its climate goals seriously. In fact, even now, in the current energy crisis, it has only stopped the price increases for certificates, but has not issued any additional free or reduced-price emission allowances.

Michael Pahle works on emissions trading at the Potsdam Institute for Climate Impact Research PIK. He too is convinced by the idea of ​​the compensators. However, numerous financial investors would have bought pollution rights in 2021 in order to benefit from rising prices. They would have driven prices up so much that politicians wanted to bring additional certificates onto the market to slow down the price increase. Pahle also sees this danger when "many idealistically motivated people buy too many certificates and the prices rise sharply as a result".

Show politicians that we voluntarily pay for climate protection

Pahle also praises the Compensators' approach for another reason: the donations showed politicians that people are willing to pay for more climate protection - and that despite rising prices for emission rights.

In addition to the compensators, other organizations also buy emission rights from the donations they collect: However, Cap2 is not aimed at end users, but at the large investors in the financial markets. These can use Cap2 to "balance" the emissions that their securities accounts cause directly or indirectly.  

Different to Cap2 or For tomorrow the compensators work on a voluntary basis in their non-profit association. They promise that they will use 98 percent of the donations to buy the pollution rights and only about XNUMX percent for administration costs.

Note: The author of this article was won over by the concept of the compensators. He joined the club.

Lets go on we can do it better?

Anyone who wants to do something for climate protection beyond avoiding, reducing and compensating can get involved in numerous projects. Donations are welcome, for example at ZNU goes Zero from the University of Witten-Herdecke or the Klimaschutz Plus Foundation. Instead of CO₂ compensation, its offshoot Climate Fair offers the opportunity to pay money into community funds that promote energy saving projects and the expansion of "renewables" in Germany. The income from this then flows back into new climate protection projects. The donors decide how the funds are used.

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Written by Robert B Fishman

Freelance author, journalist, reporter (radio and print media), photographer, workshop trainer, moderator and tour guide

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