Carbon Offsetting - Definition
Carbon offsetting is the process of reducing greenhouse gas emissions by purchasing credits from others through emissions reductions projects, or carbon trading schemes. The term often refers to voluntary acts, arranged by a commercial carbon offset provider.
Why Offset?
Carbon offsetting does not require an individual or organisation to reduce their own (direct) emissions and so can be used when there is an inability or unwillingness to tackle these direction emissions.
As greenhouse gases emitted from any country mix together within the global atmosphere, it is possible to offset by purchasing credits, or paying for emissions reductions projects, in any country – the effect should be the same.
As Defra points out, offsetting is a useful element of what we can all do to address climate change. There are a number of good reasons to offset:
- Offsetting is the ‘next best’ solution for mitigating remaining emissions from essential activities after all practical steps have been taken to reduce them.
- Offsetting is a means of raising awareness of travel climate change impacts and the choice of less carbon intensive alternatives.
- Offsetting provides the means to calculate emissions attributable to our activities and helps raise awareness of our own impact on climate change. Combined with reducing our emissions, offsetting can be used to address this impact.
- When done in a responsible manner, for example through the purchase and cancellation of Certified Emission Reductions (CERs), offsetting leads to a reduction in carbon dioxide emissions in the area local to the offsetting project, often in developing countries. On a global scale, offsetting seeks to maintain a balance between emissions creation and reduction.
- Offsetting projects, such as those approved by the United Nations, provide a mechanism for investment in clean technology in the areas which lack it the most. Such investment can lead to the spread of low-carbon development across entire regions, further reducing climate change impact.
Methods of offsetting
A wide variety of offset methods are in use but their potential for emissions savings are being assessed with an increasingly critical eye by NGOs and Governments.
While tree planting has been a mainstay of carbon offsetting in recent years, due to trees’ ability to capture and store carbon dioxide, serious questions are being asked about the delay in carbon capture given that trees must be given time to grow.
Renewable energy and energy conservation project offsets are becoming increasingly popular – for example replacing inefficient woodburning stoves for more efficient ones can have multiple benefits, including a reduced demand for firewood and so reduced deforestation, and lower levels of smoke induced illness.
The purchase and withdrawal of emissions trading credits is also a common strategy used by some carbon offset organisations.
What is the process?
There are a large number of organisations, many now on-line, which specialise in carbon off-setting. Taking a simple example – an individual wanting to offset emissions from a transatlantic flight logs into a carbon offset web-site, puts the number of miles to be offset into an on-line calculator and is given the monetary cost to offset the carbon equivalent (the monetary cost is based on the price of carbon at that point in time). This can be paid for immediately by credit card.
Issues around offsetting
Whilst there appear to be environmental benefits to offsetting there are also some real concerns about offsetting, both as an activity and the process of doing it.
Offsetting as an activity
While accepting that offsetting can help raise awareness and reduce the impact of our actions, the UK Government also acknowledges that carbon offsetting is not a cure for climate change. Many NGOs argue that it is wrong to export the problem of emissions, and that rather than offset, individuals and businesses should seek to reduce their emissions causing activities.
Process of offsetting
The way carbon offsetting works, and the way organisations have developed and engaged with the general public has caused real questions to be asked about competence and credibility.
It is difficult to audit the activities of web-sites claiming to be offset providers not least as the service they provide for the money they are paid may be a tree planted on the other side of the world. This has inevitably encouraged rogue traders to become involved and there is a danger that all offset sites may be tarnished if there is no simple way to determine a ‘good’ from a ‘bad’ offset provider.
Addressing the Issues
Code of Best Practice on offsetting
To ensure an acceptable level of competence Defra has established a 'Code of Best Practice' that the offset industry can choose to sign up to.
The Code aims to:
- Increase consumers’ knowledge regarding of offsetting and its role in addressing climate change
- Increase consumer confidence in the integrity and value for money of offsetting
- Provide guidance to the UK offset sector, on the quality and verification standards
- Encourage the provision of credit types which are consistent with the Government’s policies on meeting its Kyoto obligations and strategy for supporting the development of a robust and liquid global market infrastructure for carbon trading
(Source: Defra)
The Code will set standards in a number of areas:
- Ensure verifiable emission reduction credits from the compliance market (i.e. Certified Emission Reductions (CER’s), EU Allowances (EUA’s) and Emissions Reduction Units (ERUs))
- Accurate calculation of emissions to be offset. Using statistics and factors published for this purpose by the Government
- Clear information for consumers regarding the mechanism and/or projects supported
- Transparent pricing
- Timescales for cancelling credits
To meet the Code, suppliers will need to be using particular types of credits and provide certain information to consumers. Those operating in line with the Code will be able to use a quality mark on their website and other materials. The Government has appointed AEA to be the accreditation body to manage, monitor and ensure compliance with the Code.
The Gold Standard
The Gold Standard quality label is awarded to Clean Development Mechanism (CDM), Joint Implementation (JI) and voluntary offset projects which can demonstrate necessary sustainable development benefits. The Gold Standard is endorsed by over 50 non-governmental organizations worldwide.
The Gold Standard differs from the UK Government Code of Best Practice in that it is an additional screen for CDM projects which seek to have the highest possible sustainable development benefits.
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