Select Committee on Environmental Audit Sixth Report


1. In December 2006 we launched an inquiry into the voluntary carbon offset market. The voluntary carbon offset market allows companies, public bodies and individuals the opportunity to choose to purchase credits generated from projects that either prevent or reduce an amount of carbon entering the atmosphere, or that capture carbon from the atmosphere. In the voluntary market, consumers can offset against a particular one-off activity such as a flight, or for something more long-term, such as their annual electricity consumption. Consumers can purchase offsets through either an offset provider, a project directly, or through a company offering offsets as part of their package of goods or services. This inquiry comes at a time of growing concern about the legitimacy of this market and amidst reports in the media about "carbon cowboys".[1]

2. The issues we sought initially to address in this inquiry included: whether there ought to be a compulsory accreditation scheme for carbon offset projects and providers; whether there is enough clarity and transparency of information within the market for consumers; whether the science is sufficiently accurate to measure carbon reductions—particularly in forestry and land-use and land-use-change projects; and whether there is evidence to show that offsetting has an influence on other carbon-saving behaviours of customers. We also sought to examine the relationship between the voluntary carbon offset market and the compliance market.

3. Shortly after we announced our inquiry, the Department for Environment, Food and Rural Affairs (DEFRA) launched its own consultation on a Code of best practice for the provision of carbon offsetting to UK customers (the code) in January 2007. As a result of this announcement, we extended our own deadline for the submission of written evidence to allow interested parties chance to consider the implications of the proposed code in their submissions. We received 45 written memoranda and took oral evidence from: the Energy Saving Trust; RSPB; the Corner House; FERN; the CarbonNeutral Company; Climate Care; the Co-operative Group; Energy for Sustainable Development; the Edinburgh Centre for Carbon Management; Sustainable Forestry Management; Virgin Atlantic; Silverjet; the Climate Group; British Airways; Cheyne Capital Management; London Climate Change Services; and officials from the Department for Environment, Food and Rural Affairs. We are grateful to all those who gave evidence or who assisted otherwise with our inquiry.

4. One of the biggest challenges we faced in this inquiry was getting to grips with the complexities, technicalities, and acronyms of the different carbon markets and the resulting types of credits that they produce. The voluntary carbon offset market is not an island and is intrinsically linked to the compliance carbon market. To help to put this report into context, we will explain the different carbon markets and the credits they produce, as well as the role and current state of the voluntary offset market. One of the clearest messages we received in our evidence was that there is a lack of general understanding about the voluntary carbon offset market. We hope therefore that this report, in bringing together the background, context and issues in the voluntary carbon offset market, will serve beyond its primary purpose as a report to Parliament to which the Government needs to respond and will help to assist and promote understanding and debate in this area.

1   "Trading watchdogs put on the tail of carbon cowboys" The Times 19 January 2007 Back

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