Carbon Offsetting

Reducing your carbon footprint.

With climate change emerging as an issue at the forefront of people’s minds, organisations are realising the risks involved in not taking steps to reduce their carbon footprint. Carbon offsetting allows organisations or individuals to indirectly reduce their carbon footprint through the purchase of carbon credits associated with emissions reduction projects (such as energy efficiency and renewable power) that have occurred elsewhere, typically in developing countries.However, a number of questions continue to be raised: How effective is carbon offsetting in reducing carbon emissions? Is it simply a way of easing a guilty conscience? How do buyers really know whether they are really getting what they paid for? One thing that seems certain is that carbon offsetting should be part of a wider emissions reduction strategy with reduction being considered as the first step.
 
What is carbon offsetting?

Carbon offsetting allows organisations or individuals to indirectly reduce their carbon footprint through the purchase of carbon credits associated with emissions reduction projects (such as energy efficiency and renewable power) that have occurred elsewhere, typically in developing countriesi. Organisations or individuals are able to calculate their total carbon emissions or those associated with a specific activity (e.g. flying).  What  they are not able to reduce they can offset, with the ultimate aim of becoming “carbon neutral”.

The regulatory markets are governed by mechanisms established by the Kyoto Protocol and the European Union, such as the Emissions Trading Scheme.These mechanisms mainly affect larger emitters such as utilities and heavy manufacturers and support only large scale projects due to the high transactional costs involved in the verification process.

The voluntary non-compliance market allows smaller organisations or individuals, who are not required by legislation, to reduce their carbon emissions voluntarily. Carbon credits bought on the voluntary market are used to support smaller scale projects, which can range from afforestation projects to the capture of methane for energy from landfill sites. Organisations have now been established which are responsible for setting up projects, primarily in the developing world.  These include climatecare, Atmosfair and The Carbon Neutral Company. These projects are funded by people in developed countries wishing to offset their carbon emissions. In theory this seems like a good idea. Even though there are no tangible advantages to buying carbon credits, companies see other benefits of offsetting their carbon, particularly enhancing their credibility and reputation. At the same time, projects are being implemented which aim to reduce the amount of global carbon dioxide emissions, whilst also promoting sustainable development in developing countries.

What has been the criticism surrounding offsetting and what is being done to eradicate this?

Unfortunately things are not as simple as this! The effectiveness of voluntary offsets is subject to much criticism and debate. Firstly, the voluntary market lacks any universal regulation governing it. Many offsetting companies work to their own proprietary standards, most of which are verified by a third party.  However, this means that when dealing with offsetting companies that are not verified, people are not always guaranteed to get what they had wanted for their money and in some cases, the same emissions reductions have been sold to different buyers; this is known as double counting. To create more confidence in the market, two standards have been established: the Voluntary Carbon Standard (initiated by the Climate Group, the International Emissions Trading Association and the World Economic Forum) and the Gold standard, which is promoted by a large number of prominent non-governmental organisations such as Greenpeace and WWF. These standards attempt to take into account issues such as additionality and sustainability in the same way as the regulatory market. The UK Government, led by the Department of the Environment, Food and Rural Affairs (DEFRA) has also established a voluntary code of best practice. The Code will enable offsetting providers, or companies selling offsets with other goods and services, to choose to seek accreditation for some or all of their offsetting products.[ii] All these efforts have been made in an attempt to lessen the risk associated with the voluntary carbon market.

Is tree planting a viable offsetting project?

Another issue that has caused considerable controversy concerns the types of projects, which qualify as offset projects. Offset providers such as climatecare do carry out forestry projects but state: “We believe that planting trees cannot be seen as a solution to climate change when taken in isolation. Nevertheless, approximately 20% of global greenhouse gas emissions each year come from deforestation and forest fires”[iii] Co2balance.com, on the other hand, do not plant trees at all as part of their offset programme. Forestry was very popular a few years ago due to its symbolic rather than environmental value, but it is now suffering significant criticism. One argument is that planting trees may take up land that has previously been used as farming land for local people and there may not be any provision for an alternative livelihood. This could result in local people simply migrating to another area and clearing the forest there to use for farmland. Another issue with the planting of trees or other vegetation is that it is hard to provide any guarantee of permanence.  Trees are ‘sinks’ as well as sources of carbon, and should a fire occur, all the carbon that has been sequestered in the tree would in fact be released to the atmosphere. One way in which this could be mitigated is by setting up an insurance policy whereby the project is monitored for some time and any damage occurred must be compensated for. Many offsetters are now moving away from forestry as their primary means of investing in carbon credits. The Carbon Neutral Company, the UK's largest offsetter (which began as Future Forests) typifies this switch, as forestry accounted for 100% of its portfolio two years ago. Now it makes up just 20%. In addition, the Gold Standard mentioned above does not accept forestry projects as part of its remit.

The primary argument against offsetting is that many believe that it only encourages ‘business as usual’ which leads us no closer to a low carbon economy. Keith Allott, head of WWF-UK's climate change programme, has described it as “doing little more than putting a sticking plaster on a severed limb”. Likewise, Mike Childs, head of campaigns at Friends of the Earth, suspects that carbon offsetting is allowing companies to appear green while providing little incentive to change their, or their consumers', behaviour.  Although there is significant opinion against carbon offsetting, the UK government has said; “We acknowledge that carbon offsetting is not a cure for climate change but it can help raise awareness and reduce the impact of our actions. The most appropriate action to take is to reduce emissions”.

Carbon trust website: www.carbontrust.co.uk

DEFRA, establishing a code for best practice for the provision of carbon offsetting to UK customers: www.defra.gov.uk

Climate care: www.climatecare.org

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