Aladdin and the green genie

You have to go back to the days of Aladdin to find a business that offers the free exchange of old for new.

In the fictional Aladdin case the business model worked on the basis that the old lamp contained a genie that had the power to grant you three wishes.

Now an Australian company has come up with a version of this free exchange, offering to replace your old lightbulbs with energy-efficient CFLs.

It will also retrofit your business with energy-efficient devices conduct a free energy audit on your company to see where you can save power or develop an energy-saving programme to curb demand.

And how does it do this all for, well, fresh air? Through the wily trade of not-so-fresh air, more specifically the carbon trade.

Low Energy Supplies and Services (Less), with headquarters in Sydney, creates carbon credits through programmes it offers businesses to assist them to be more energy efficient. Less can then trade these credits with companies that want to mitigate their carbon emissions.

Programmes include installing devices such as energy-efficient light bulbs or energy-saving showerheads, says Peta Cooper, communications manger for Less.

The company also develops demand side management programmes for customers and creates employee participation schemes that encourage employees to take steps to save energy, such as walking to work.

This works because Australia, a member of the Kyoto Protocol, has a regulated, local carbon credit market. Less has become an accredited issuer of carbon credits under various state schemes.

“For us to create the credits we need to apply to an accreditation scheme,” says Cooper. Across Australia there are a number of state-based carbon abatement programmes. Companies must comply with the guidelines of these programmes to qualify to create credits.

“We don’t charge the customer,” says Cooper, “and 90% of our business is funded by the sale of carbon credits.”

Companies in the developing world have cottoned on to the carbon trading market as a source of income. Businesses can adapt their operations to save energy and qualify to earn carbon credits that they can sell to industrialised nations.

This is done through the Clean Development Mechanism (CDM), an instrument of the Kyoto Protocol.

The CDM allows emission-reduction projects in developing countries to earn carbon credits or certified emission reduction (CER) credits. Each credit or CER is the equivalent of a ton of CO2.

The credits can be traded and sold and used by industrialised countries to meet part of their emission reduction targets under Kyoto.

But, as yet, businesses that run entirely on credits are rare.

Peet du Plooy, trade and investment adviser to the WWF in South Africa, says that a similar concept could work in South Africa but there is no local, regulated carbon trading market.

The country has not set the emissions targets that drive a regulated carbon market as it has no obligations under an international agreement such as Kyoto to reduce emissions. However, in June Cabinet endorsed the position that South Africa would have to stabilise its emissions between 2020 and 2025.

Countries with carbon emissions targets need to develop carbon trading systems to allow companies to buy carbon credits and so offset their emissions to comply with regulations.

“In South Africa we don’t have these kinds of obligations,” says Du Plooy, “but we can still tap into the global regulated market via the CDM.”

Last year the CDM allowed ongoing emissions reduction programmes to qualify for carbon credits, rather than just developments that work on a project-to-project basis.

As such, says Du Plooy, Eskom’s energy-efficient light bulb exchange scheme could qualify to earn carbon credits, though the project is probably merited on the avoided cost of building more power stations alone.

Du Plooy argues that South Africa should move towards voluntary trading in the carbon credit market as it is likely that it will move towards regulating carbon emissions in the future.

A business like Less takes advantage of the “low hanging fruit” by tapping into energy savings that are relatively easy to achieve through things such as demand side management plans and energy-efficient equipment, says Du Plooy.

“The cheapest energy-savings measures are the best instruments in terms of a return on investment,” he says.

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