PROBLEMS WITH OFFSET PROVISION TO
CONSUMERS
41. The evidence we received revealed that there
was often very low availability and transparency of information
from offset providers about the nature and type of credits for
sale. RSPB told us that:
We have had an interest in this area for about
a decade yet we would find it very hard to make a fully informed
choice. For the non-expert it is a minefield, with some excellent
credits delivering climate change, biodiversity and social co-benefits
and others delivering little or no benefits. There are no reliable,
unbiased sources of information on the subject.[52]
Different providers produce varying levels of information
about the types of project a consumer is investing in (whether
it is one project or several), any certification scheme the project
has gone through, any standards that the credit meets, and how
emissions savings or reductions have been calculated. It can be
unclear what type of credit a consumer is purchasing: whether
a consumer is buying a compliance market based credit, or a voluntary
market credit. It can also be difficult to gain information about
how much money a consumer spends goes towards the project or how
much goes simply towards meeting the offset providers' overheads.
42. Another problem in the voluntary market is that
the price of an offset for a set amount of carbon can vary depending
on the provider used. The quantity of carbon that a consumer needs
to offset for the same activity can also be calculated in a variety
of ways. WWF-UK highlighted a study in Nature,[53]
where three different offset providers calculated three different
quantities of carbon to be offset for the exact same flight. This
issue was also focused on in the Tufts Report, Voluntary Offsets
for Air-Travel Carbon Emissions, April 2007. The difference
in prices occurs in the voluntary market as there is no standard
approach towards calculating quantities or pricing structures.
In calculating the emissions for a flight, for example, some calculations
take into account the emissions from the ground vehicles which
service the aircraft before take-off, other calculations are taken
only from the flight between A and B itself. In the compliance
market the United Nations Framework Convention on Climate Change
(UNFCCC) lays down standards for calculating emissions. In the
voluntary market however there is no such standard and consequently
a variety of calculations and prices for what is essentially the
same activity. This leads inevitably to confusion for the consumer.
43. Double counting is an issue which can arise when
several people try to take the credit for a carbon saving from
one project. This can occur unintentionally through bad management
of a project with a bad audit trail, or, it can occur intentionally
through somebody trying to commit the fraudulent act of selling
a credit more than once. To guard against this, compliance market
credits are recorded in a registry and are 'retired' once they
have been used to offset emissions. In the voluntary market there
is no formal requirement to register or retire credits although
some of the voluntary standards do have their own registries.
In addition to double counting at project level, it can also occur
where voluntary reductions are counted against national or international
mandatory targets.[54]
To guard against this national and international registries are
required to keep account of credits.
44. Another issue with offsets is future value accounting.
Future value accounting is where somebody is sold an offset today,
but due to the nature of the project from which the offset derives,
it will actually take several years before the emission saving
is made. This can lead to the situation where somebody buys an
offset thinking that they have thus offset their emissions, but
in reality their emissions would not be fully offset for a number
of years. Often the issue is that people do not realise that this
is the way some offset projects work. Also, the longer the project
takes to make the reduction, the more chance there is that something
might go wrong and that the already purchased offset may never
actually occur.[55] Some
people see future value accounting as a fundamental problem, while
others, however, see it as a necessary way to do business and
raise project finance. In their evidence to us London Climate
Change Services said that investors putting money into a project
which they expect will yield emission reductions in a number of
years is a valid risk, but that they see it as unacceptable when
this risk is passed on to the consumer.[56]
It is not always clear however in the voluntary market exactly
who is bearing the risk. The need for clarity and transparency
in the offset market is paramount. The Government must ensure
that, by means of its proposed code or quality mark, or by other
related measures, greater transparency is brought by offset providers
to what is anyway a complex and currently an opaque market. Without
transparency consumers will have little confidence in purchasing
or otherwise dealing in offsets, confidence that the market needs
in order to grow.
39 
