A market approach to natural resource management

Jochen Gassner is a Board Member at First Climate Markets AG. His responsibilities encompass the development of international and national VER markets, the design of climate neutral products and services, and the consulting of private and public sector clients.

Before joining First Climate, he worked as Group Environmental Manager at Borealis and as Environmental Consultant for a number of industry sectors. He studied environmental engineering at the Leoben University of Mining and Metallurgy, Austria, and holds a PhD in sustainability research from Graz University of Technology, Austria.

Ethical Corporation: Tell us briefly what it is you do?

Jochen Gassner: At First Climate, we help companies measure, manage and compensate or offset their carbon and water footprints. We are one of the most experienced carbon offset providers in the market. We are now piloting a similar programme to help companies invest in water stewardship projects.

Ethical Corporation: What do you see as the big issues to look out for in 2013?

Jochen Gassner: As a company, we are always looking at the carbon space. The very interesting question right now is where to go after Doha [Climate Change Conference, November 2012]. We don’t see any real commitments yet to reduce greenhouse gas emissions after 2012.

As a German company, we are also watching the energy market as Germany is spearheading a change in its energy system. At the same time, Germany faces an an election year in 2013, so it will be interesting to see how politics influences developments in the energy system.

Ethical Corporation: What are your personal priorities in the year ahead?

Jochen Gassner: The key thing for us is to strengthen our role in the global carbon market. Historically we’ve been very active in the compliance carbon markets and we still are, but that marketplace now plays a smaller role than it did a few years ago.

Our focus is therefore moving more towards the voluntary carbon market. Then we’re also piloting other initiatives in the water and renewable energy space. To elevate those to a stage where they are profitable would be a change for 2013 as well.

Ethical Corporation: Do you anticipate any advances on international carbon policy in the future?

Jochen Gassner: The negotiation process certainly needs to be simplified if we are to take this forward. In the near future, we have to see what China is developing in terms of its regional schemes and where the US is heading after the re-election of [President] Obama.

But the big solution is for carbon markets to become like commodity markets of this world, which is off the table right now.

Ethical Corporation: What role do you feel collaboration will play in making a transition towards a more sustainable, low-carbon future?

Jochen Gassner: Companies won’t be in a position to do it alone. The order of magnitude of the challenge means that it needs industry collaboration, as well as governments. The role of government is key because someone needs to take the risk. So look at the German renewable energy system and the role that feed-in tariffs played in that. Without that, we wouldn’t have seen the same growth.

That said, with technological progress, we are moving to a point where some renewables in some parts of the world can be competitive without subsidies, which is when governments need to step out. I think citizen participation is important too. We’re always talking about consumers and what they can do, but I’m convinced that we need input from wider society because without that we can’t make the necessary transition.

Ethical Corporation: Do you think that companies are taking future resource scarcity issues seriously enough at present?

Jochen Gassner: Generally, the corporate sector has been focused on capital costs and labour costs, and not so much on resources because they seem readily available. When it comes to strategic management of scarcity risks, however, we’re only now beginning to see companies getting their heads around the issue.

Resource scarcity will bring with it a redistribution of risks and opportunities. For example, companies in the extractive industry will have to go to places where exploration and production is more risky and expensive.

It’s important to be mindful that there are certain resources that are already scarce. Think about water, fossil fuels, and minerals and metals, for example.

Then consider the rise of the global population by a couple of billion [over the next four decades], which will demand more consumption of these resources all the time. While we’ve seen some decoupling between GDP and resource use over the last decades, we are still in a situation where GDP growth is coupled to the use of resources.

Ethical Corporation: Water is a particular focus of your resource conservation attentions at this time, is that correct?

Jochen Gassner: Yes. It’s obvious, but water is one of the most important resources. It’s almost impossible to replace. We’ve set up a public-private partnership that brings together financiers with corporations with technical expertise and organisations such as the Gold Standard.

The idea is to develop an innovative financing mechanism for water saving, water purification and water supply projects – much like the carbon projects we are financing already. As it is, there are a number of projects in the carbon markets that have a focus on water element, such as irrigation projects.

But there’s no currency to fund these projects, so we’ve been financing them through the carbon. We’re now working on establishing Water Benefit Certificates to fund these projects.

Ethical Corporation: How exactly do you envision these Water Benefit Certificates working?

Jochen Gassner: We see them working very much like the voluntary carbon markets. So, on the one side, you’ve got someone who is willing to invest in a project, and on the other hand you have projects like drip irrigation and water purification that require financing.

We’ll establish a mechanism that allows us to quantify, monitor and verify the water savings of those projects, and will establish a currency that helps us to link financing to the water savings. So just as a Carbon Credit is issued for a tonne of carbon dioxide reduced, a Water Benefit Certificate is issued for each thousand cubic meters of water saved, supplied or purified.

Then, with the market, we’ll attach a value to those cubic metres, and then we’ll sell that saving as a financing opportunity for the corporate community.

Ethical Corporation: Where are you at today with the Water Benefits Certificates?

Jochen Gassner: At present, we’re focused primarily on methodology and concept development. The way forward is to get supply and demand to a scale where we can create the market. We need to build a larger portfolio of projects and identify potential [financing] bodies for the Water Benefit Certificates.

Then we might see something that is similar to what we see today in the voluntary carbon market, with an established market of buyers and projects which are financed by them.

Ethical Corporation: Climate change – mitigation or adaptation?

Jochen Gassner: I can’t say both? Where we stand today, I would hope for mitigation but I think we will need more adaptation.

Ethical Corporation: Name a government to watch on sustainability.

Jochen Gassner: The United States. We’ve had great hopes in Obama to move the green agenda forward. Perhaps he’s got some more freedom in his second term to do that.

Ethical Corporation: Corporation tax: higher or lower?

Jochen Gassner: That all depends on where we’re talking about.

Ethical Corporation: Corporate responsibility impact: Obama or Xi Jinping?

Jochen Gassner: I guess the answer again would be both. If I had to choose, maybe Xi Jinping just because of the magnitude of China and what it now means for the global economy. It’s imperative that they embark on the agenda as well.

Ethical Corporation: Shared value or sustainability?

Jochen Gassner: Shared value to achieve sustainability.

Jochen Gassner will be speaking at the Responsible Business Summit, 7/8th May 2013, where he we be discussing how to create and implement a business model to reflect water, food and energy shortages.

Environment  First Climate  resources  spotlight  Steven Wilding 

The Responsible Business Summit 2013

May 2013, London

Europe's largest and most acclaimed CSR summit. Featuring 500+ attendees 50+ speakers including; CEO of BUPA, Executive Editor of Greenpeace and Executive Editor of the Economist

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