Select Committee on Environmental Audit Sixth Report


The challenge of man-made climate change requires speedy and significant action across all fronts. While the principal need is to reduce emissions directly through changes in behaviour or technological improvements, some emissions, at least in the short to medium term, continue to be unavoidable. Encouragement and assistance must be given to individuals, organisations and companies to offset because robust and credible offsetting can have a useful if limited role in mitigating current levels of, and projected short-term trends in, emissions.

There is at the moment very little evidence as to the effect of offsets upon the behaviour of those who purchase them. While it might be the case that offsetting beneficially exposes those who participate in it to a greater understanding of the challenge which climate change poses, it is clearly important that thorough and independent research be conducted into this area as a matter of priority.

The UK has the opportunity to lead the international field in developing robust and helpful guidance and codes of practice at a national government level which will endorse meaningful offsets and assist people in choosing the best way to offset their emissions. The UK's financial and carbon markets have much to gain from a rapid growth in what is increasingly seen as a vital component of commercial activity and corporate responsibility. The international offset industry, if managed responsibly, will only grow over the short to medium term as many governments, like the UK Government, develop their own guidance or best practice or perhaps themselves move towards offsetting their own emissions, for their official travel or for their activities, as is the case in the UK.

The recent DEFRA consultation is a well-intentioned attempt to help assist consumers and lend confidence to a market that has recently been assailed by critics for its lack of clarity and integrity. While elements of the market are no doubt less than robust, offsets as a whole currently risk this taint from a few failed projects. The suspicion that always dogs unregulated markets could affect its prospects for growth and curtail its benefits in reducing emissions globally.

The current consultation offers the opportunity for the Government to bring forward measures not just to encourage responsible and robust offsetting but also to set out clear criteria which offsets ought to meet. It must also work with the offset industry, with those businesses interested in offsetting, with those working in the international carbon market, and with NGOs, to establish an independent, authoritative body to vet and quality-mark those providing offsets, their credits and their projects. These criteria must also cover the provision of clear and accurate information by the offset industry to the public without which the act of offsetting will continue to lack the intelligibility the public require. The Government must act quickly, and the costs of this initiative must be borne principally by the offset industry itself which will only benefit from increased market confidence and increased sales.

The current restriction proposed within the DEFRA Code of Practice which limits the approval of credits to those from the compliance market unfortunately risks devaluing projects and credits which are not only as methodologically sound and verifiable as those within the Clean Development Mechanism but which also often carry greater sustainable development benefits outside their principal benefit to the climate. This unnecessary restriction could seriously affect the growth of the Verified Emissions Reduction market. This market will only prosper if the Government allows for the approval of both Certified Emission Reductions and Verified Emissions Reductions within its scheme as long as they all meet the correct criteria.

Although there is still uncertainty about the future of the Clean Development Mechanism post 2012, the Government must work as hard as possible to improve how it operates over the next few years. It needs to be less bureaucratic, less costly, and less restrictive in terms of the methodologies, and the scale and nature of the projects, which it approves and permits. The Government must also work to ensure that any successor to the Clean Development Mechanism embraces smaller projects, projects in the most poor and unstable countries, and also forestry and land-use projects founded upon preservation as well as planting. Avoided deforestation needs a much greater priority accorded to it both within and outside the Clean Development Mechanism.

In many people's eyes, offsets are connected principally with forestry projects of one sort or another, although there has in fact been a steady shift away from such projects by many offsetters over recent years, not least because of the reputational damage caused by media-reported project failures. However, some offset companies still retail only forestry credits; and it would be entirely wrong to consider this part of the market as either a cheap or a disreputable one. Some of the most rigorous and environmentally beneficial of all projects come from the stewardship of tropical forests and the well-judged re-forestation or afforestation of land in the tropics. Indeed, figures from the Stern and recent IPCC reports stress the significance of avoided deforestation, but also of reforestation, to avoiding dangerous climate change.

Recent scientific debate about the albedo effect and northern temperate forests and the related debased and largely inaccurate reports that have appeared in the general media have been a distraction from the undoubted good that forests provide for the climate. Well-managed forestry projects, while they can be expensive, not least on account of their lengthy timescale and the need to deal with the risks of impermanence and leakage, can be as robust as other projects and invariably carry with them many of the additional benefits and environmental extras that consumers want to buy into. The Government must commit itself to advance the cause of avoided deforestation in particular in international negotiations as a matter of the very greatest priority. It must also encourage and, where appropriate, assist those offsetters who wish to develop strong and worthwhile projects to preserve or increase the area and carbon intensity of our current biological carbon sinks.

The airline industry, in addition to its expected participation in the EU Emissions Trading Scheme from 2011 and its commitment to fuel efficiencies and to technological and 'procedural' developments and improvements, must consider itself duty-bound to develop robust and effective policies with regard to offsetting. Currently, the industry has a diverse and generally unsatisfactory attitude towards offsetting. British Airways' initiative in this area, for example, has been risible. The decision of the industry to back out of discussions with the Government over its proposed Code of Practice may well in part have been motivated by its understanding that the DEFRA proposal was too narrow, but was in greater part down to confected outrage at the Government's rise in Air Passenger Duty. It may also be because offsetting only draws attention to the malign effects of air travel on the environment. The industry must engage with the Government and accept that it needs to do more now to mitigate emissions from its planes and to encourage uptake of offsets amongst its customers as a matter of priority.

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Prepared 23 July 2007