How Carbon Offsetting Fits into a Decarbonisation Strategy

10th July 2020

Alex Massie, Principal Consultant and George Beechener, Offsetting Specialist, explain why they think carbon offsets have an important role to play in the transition to a low carbon economy and why organisations should be mindful when buying them.

Hundreds of local authorities and companies have made declarations to reach net-zero within the next decade and Eunomia is helping some of them develop corresponding strategies and implementation plans. We recently made recommendations on waste management and recycling to Bristol City Council in line with their new One City Climate Strategy – a pledge to be carbon neutral by 2030; we’re helping develop London Borough of Redbridge’s carbon reduction action plan; and we’re carrying out a review of carbon reduction for the Environment Agency. Our Principal Consultant Alex Massie and offsetting specialist George Beechener both agree carbon offsets have a role to play in the transition to a low carbon economy. However, both are encouraging organisations to review and roadmap their own emissions before they buy offsets, and then think carefully about the offset projects that are supported – it’s a market that requires some navigation. We asked them why.

The True Cost of Convenience

Alex said: “Carbon offsetting is the action, or process, of compensating for carbon dioxide emissions by participating in schemes designed to make equivalent reductions of carbon dioxide in the atmosphere. When it looks like you can simply make a payment into these schemes instead of reviewing your own emissions and adapting your own business activity, it seems like the easy option – but there is a lot to consider.

“Many organisations have set targets to balance their carbon by 2030, but it is extremely difficult, if not impossible, to reduce your footprint to absolute zero, so all these organisations will be seeking to offset at the same time. The carbon offsetting market is relatively small in the UK so there is a limited range of projects to choose from. Everyone wanting the same thing at the same time means demand will exceed supply pretty quickly, which will push prices up. This market-based system means that the cheapest ways of reducing emissions will be snapped up first, leaving more expensive options in the longer term. Over the coming years, it’s likely the price of any emissions that need to be offset will rise.

“On top of this, carbon offsetting works on the basis that action is funded that wouldn’t have otherwise occurred. For many reduction opportunities this creates a challenge, as over time government policy and other drivers will – we hope – drive reductions in emissions without finance from carbon offsetting – certain projects will deliver progressively lower returns over time as policy drives decarbonisation. How these sorts of considerations will be built into the UK carbon market is not yet clear, which means quite a lot of development work is needed before the UK will have a large-scale market for offsetting.”

The Paris Agreement, the Next Chapter

George adds: “New guidance from the Paris Agreement, superseding the Kyoto Agreement, means each country now reports on their emissions, or nationally determined contributions (NDCs). Buying offsets from overseas may become more challenging as nations seek to maintain the benefit of national reductions to count against their Paris target.  The upshot of this change is Paris may also enable a more developed UK offsetting market, allowing UK organisations to compensate for emissions closer to their residents or customers.  A lot of UK local authorities are already trying to commit to projects in local areas but the cost of land and labour for ‘onshore offsets’ is more expensive.”

The Policy Vacuum

George continues: “For the reasons listed above, organisations need to think carefully about how offsetting fits into their decarbonisation plans, and we need to think now about how we make the offsetting market viable in the UK. This relies on careful consideration of how we measure carbon reductions and removals so we know claims are accurate – at the moment there are only formal offset methodologies in the UK for emissions removals from woodland and peatland. We need to develop a system where both public and private organisations can claim the benefit of offsetting – and this is currently a grey area. We also need to think about how we accredit projects, and what quality markers we want our offsetting actions to reach – there is an opportunity here to heighten aspirations when compared to historical offsetting practices. With these things in place, organisations will be able to have confidence in the carbon offsets they purchase and know that their offset programme is a valuable component of their Net Zero strategy.”

 

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