Select Committee on Environmental Audit Sixth Report


Defining and communicating the role of the voluntary offset market

21. The evidence we received revealed a plethora of strong views as to the purpose and significance of the voluntary carbon offset market in reducing carbon emissions. At one end of the spectrum were organisations such as The Corner House and FERN who told us that: "carbon 'offset' schemes are a dangerous distraction from generating public support for policies that will help avoid climate crisis and lead the way into a swift and just switch to low-carbon economies."[16] Similarly, the World Development Movement told us that:

    It is nonsensical to suggest that climate change can be tackled by cutting emissions from poor people, whilst allowing activities of the rich, such as flying, to continue unabated. Yet this is the basis on which offsetting projects in developing countries are supposed to work.[17]

Those opposed to offsetting stress that the concept of offsetting itself is incoherent, that the claim of equivalence between emissions and offsets is "[…] rooted in the technical requirements of the market rather than science […] Making a chemical plant more efficient is not the same as supplying efficient light bulbs to Jamaica."[18] They also argue that there are unsolvable measuring and accounting problems and that the technicalities and jargon of carbon offsetting present an obstacle to public debate.

22. At the opposite end of the spectrum, rather unsurprisingly, are the offset providers themselves such as Climate Care and The Carbon Neutral Company, who told us that offsets:

    [make] a significant contribution to the fight against dangerous environmental change driven by global warming […] [they] deliver real reductions in carbon emissions in a cost effective way and that, by taking a market driven approach, […] [and] foster the implementation of innovative solutions to the problem of reducing carbon.[19]

23. The views of the majority of organisations from whom we received evidence fall somewhere in-between these positions. The Co-operative Group told us that they: "see offsetting as an important part of the solution to climate change, rather than a panacea."[20] The Energy Saving Trust told us that offsetting has a role to play after UK citizens and businesses have worked to reduce their own carbon footprint first.[21] The Carbon Trust has a three stage carbon management strategy whereby offsetting comes at the bottom of a hierarchy of actions, below reducing direct emissions and then indirect emissions.[22] We support the view that it is primarily individuals who have to take steps to avoid and then reduce their own carbon emissions. In parallel to this, however, we believe that the voluntary carbon offset market does have a role to play both in reducing carbon emissions and raising awareness of climate change issues to the general public. Moreover it can provide a much-needed source of funding for the development of low carbon technologies and innovations in developing countries.

24. The Government position on the role of offsetting is currently rather understated. The DEFRA consultation asserts rather wanly: "when it is not possible or easy to avoid and reduce emissions consumers can consider offsetting."[23] The position set out in its memorandum is more energetically expressed, but reads more as a promotion for the CDM than as a useful source of guidance.[24] There are many divergent and often loud opinions about the role of the voluntary offset market. Both individuals and businesses are very likely to be confused by the mixed messages available. They need clear guidance about the extent to which offsetting can help meet their responsibilities to reduce carbon emissions. We recommend strongly that the Government grasps the opportunity to show leadership here. It must set out its own view on the role that the voluntary offset market can play in reducing emissions and why offsetting is a positive thing. The view should be unambiguous, well-publicised and prominent in all Government communications concerning offsetting and climate change.

Encouraging and understanding emission reducing behaviour


25. Carbon Clear told us that the number of individuals who choose to offset is very small: only 1-2% of individual consumers.[25] In their oral evidence to us, the Co-operative group told us that growth in the personal sector of this market is "tiny" and that the market here is worth only £2-£3 million.[26] The Energy Saving Trust suggested that these people are likely to be either those already concerned with "green" issues, or the more affluent.[27] If the voluntary offset market is going to fulfil its potential as part of the drive to reduce carbon emissions and raise awareness about climate change then there needs to be a considerable increase in the numbers of individuals choosing to participate. In its oral evidence, Climate Care told us that industry has an important role to play here with its huge marketing outreach potential.[28] It went on to suggest that a small incentive from Government to industry to encourage its customers to offset would be an effective way to achieve this.[29] DEFRA told us that a way to achieve this would be to "empower" people to make informed decisions, making them more responsible for their actions[30]. It suggested that when procuring goods and services linked to offset schemes people could be made automatically choose to offset unless they choose to opt-out. We urge the Government to explore measures which would incentivise businesses to encourage their individual customers to offset. We recommend that Government make it compulsory, for more carbon-intensive activities, for associated businesses to offer offset services either themselves or through a provider. In connection with this it should be mandatory for individuals to be given a compulsory-choice option for offsetting when procuring such goods and services.

26. Many of the submissions we received highlighted a lack of authoritative research concerning the nature of the link, if any, between an individual's decision to offset and any consequential behavioural change either more detrimental or beneficial to the environment. Energy for Sustainable Development (ESD) told us that it is also difficult to tell whether people who have made carbon reductions are also the same people who offset.[31] In its submission, the RSPB raises the problem that offsetting could be seen as a way for the rich simply to salve their guilty consciences about emitting carbon.[32] The Environment Agency took a more optimistic view when it said: "We are unaware of any evidence that voluntary offsetting reduces the individual's effort to reduce emissions. It may well have the opposite effect—sensitising and educating the user about climate change and allowing them to take a positive action."[33]

27. It is often argued that offsetting might be seen as validating polluting behaviour. The Co-operative Group made the point that no substantial evidence is offered to support this thesis.[34] Indeed out the of the 45 submissions we received, we found little substantial evidence to support the view that offsetting encourages ethical carelessness. What we did find, however, was evidence that offsetting does not necessarily have any effect on further changing carbon behaviour. The World Development Movement cited the example of HSBC who in 2005 claimed to be 'carbon neutral' having offset its emissions but that whilst doing this, its monthly emissions actually rose from 585,000 tonnes of CO2 in 2004 to 663,000 tonnes of CO2 in 2005.[35] They also cite a similar example from Barclays Bank: "Whilst encouraging their customers to offset CO2 emissions, the latest figures for Barclay's CO2 emissions show a rise from 200,145 tonnes in 2004 to 207,650 in 2005."[36]

28. There is clearly a need for more research to be done in understanding what exactly encourages people to reduce their emissions; on the extent to which the practice of offsetting has an effect on such behaviour; and on how much it can play a role in educating people about climate change. Many of those involved with the voluntary offset market stressed how useful they would find such research: ESD said: "[] publicly funded research in this area would be invaluable."[37] We recommend that the Government commission independent research to evaluate and understand the behaviour of individual consumers in the voluntary offset market and publish it as soon as possible.


29. The biggest-spending consumers in the voluntary offset market are businesses. As with individuals, the motivation for offsetting varies: some companies argue that they recognise the threat of climate change and try to act responsibly; but also some of the motivations for offsetting here will be strategic—they might be to meet Corporate Social Responsibility (CSR) obligations, to generate goodwill, or to attract the growing number of customers attracted by environmental action. It is important that the Government seeks to understand better the reasons why businesses use the voluntary carbon offset market and what motivates them. We recommend that the Government commission independent research in this area and publish it as soon as is practicable.

30. One of the ways that companies advertise themselves as being environmentally responsible to their customers is by claiming to be 'carbon neutral'.[38] The voluntary offset market often has a big role to play here as it is used to offset any remaining carbon emissions that a company cannot eliminate in its quest for 'neutrality'. One of the problems is that there is no formal definition or standard as to what carbon neutrality means. There are no standards as to how robustly a company claiming to be 'carbon neutral' has quantified its emissions, whether these are direct emissions only or whether they include indirect emissions, or how far along its supply chain it takes responsibility for emissions. Nor does the term 'carbon neutrality' take any account of whether a company has made any attempt actually to reduce its emissions, or whether it simply quantifies its emissions and decides to offset them.

31. Claiming 'carbon neutrality' is clearly a growing draw for businesses and will consequently change the behaviour of some companies and bring them into the voluntary carbon offset market. The Government recognises the need to keep legitimacy and credibility in the voluntary carbon offset market. It is important that the term 'carbon neutral' is also seen to be credible. As with other advertising claims, consumers need assurance that these claims are genuine and mean something. We recommend that Government engage in a dialogue with business to develop a consensus definition of what 'carbon neutral' means. It is essential that standards should be developed to allow for audit and verification of this status to bring legitimacy to any claim to be 'carbon neutral'.

16   Ev57  Back

17   Ev227 Back

18   Ev21 Back

19   Ev70 Back

20   Ev89 Back

21   Ev1 Back

22   Ev189 Back

23   Department for Environment, Food and Rural Affairs, Consultation on establishing a voluntary Code of Best Practice for the provision of carbon offsetting to UK customers, January 2007, p 2 Back

24   Ev161 Back

25   Ev181 Back

26   Q 125 Mr Monaghan Back

27   Ev1 Back

28   Q 107 Mike Mason Back

29   Ibid Back

30   Ev164 Back

31   Ev87 Back

32   Ev4 Back

33   Ev204 Back

34   Q 125  Back

35   Ev226 Back

36   Ibid Back

37   Ev87 Back

38   Companies announce regularly in the media their intentions to become 'carbon neutral'. See Marks & Spencer launches "Plan A"- £200m 'eco-plan' 15 January 2007 and RAC to go carbon neutral 6 March 2007 for examples. Back

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