How does the financing of climate projects actually work?
The main purpose of a climate project is to avoid the emission of greenhouse gas emissions into the atmosphere. There are different ways to do this, and the carbon market is constantly evolving with new projects and better methods for measuring emissions reductions.
One way that is easy to measure and easy to understand is therefore projects that produce renewable energy. By creating the kind of energy that does not cause emissions, we give people the opportunity to stop using fossil fuels. For example, when we build wind power in India and connect more people to the electricity grid, they no longer need to use diesel generators or burn charcoal, which is often the case before the project is implemented.
Some examples of projects that GoClimate have supported which produce renewable energy:
- Thermal Solar Power in India
- Small Scale Hydropower in Vietnam
- Solar Energy in Thailand
- Wind energy in India
The reason we want to contribute to this in countries like India and Indonesia is that wind power is still too expensive to be built without the income from carbon credits – this is what is meant by additionality. Wind power can produce the same energy in Sweden, but the marginal utility will be higher elsewhere as we avoid combustion of coal and diesel and contribute to raising the standard of living on site.
Another type of climate project is the capture of greenhouse gas emissions that occur in different processes, and converting them into energy instead – so-called biogas projects. The projects often involve installing improved technology so that greenhouse gases from biodegradation of organic matter, for example in landfills or in wastewater, are not released into the atmosphere but are contained and converted into energy. Here we immediately avoid the emissions, and do something useful with the energy instead! This is often a bit more expensive than, for example, building wind power, which rank among the cheapest projects.
Landfill Gas to Energy Project in Chile
Some examples of biogas projects which GoClimate have supported:
- Landfill Gas to Energy in Chile
- Methane Digesters for households in China
- Wastewater Treatment in Thailand
Another type of project aims to improve methods of cooking. A large proportion of the world’s population cook their food over open fire, which leads to deforestation when more and more people need firewood. By offering better equipment, the people responsible for cooking, usually women, do not need to collect as much wood. This saves both trees and time for them, and with the improved equipment it also reduces air pollution and air born particles, which has a positive impact on their health. These projects thus have great potential benefits, but are more difficult to implement because it implies changing behaviors, and then it is more difficult to measure the results. The risk is thus higher, but the benefits can be very significant.
GoClimate has financed several projects of this kind:
Another type of climate project has to do with trees. This can be reforestation of areas that have been deforested, the planting of trees in areas that have not been covered by forest before, or protection of existing forests. Projects of this kind are incredibly important because the trees bind carbon dioxide from the air, and there are many potential benefits such as increased biodiversity, improved microclimate, etc. Nevertheless, we at GoClimate have chosen not to invest in forestry-related climate projects. The main reason is that even though projects of this kind are necessary for above mentioned reasons, the complexity of handling these projects is vast, and we believe we can achieve the most positive impact by financing other types of avoidance projects.
This is a brief summary of some different types of climate projects, but there are more on the market, and more are being developed at the time of writing. Of course, since the projects are so different, the prices of the projects vary, and there is thus no fixed price for a ton of carbon dioxide. In addition, all projects have administrative costs – if no one designs, administers and supervises the project, there will be no projects and we also could not guarantee the quality of them. But that’s why we exist – to do part of the job for you who want to save the climate by offsetting emissions. Part of the cost also goes to the certification, to ensure the quality of the project. In this way we avoid projects that don’t make positive impacts, and protect ourselves from corruption and inefficiency.Does this sound like something you want to be a part of and contribute to? Sign up here to start your climate friendly life!