Memorandum from the Royal Society for the Protection of Birds

Summary

1. Although carbon offsetting is increasingly popular, it is a highly contentious area of climate change mitigation policy. Not only are there many types of offset of highly varying quality but there is dispute over whether they are effective in promoting the types of behavioural change needed to limit climate change. The RSPB thus welcomes the recent Government initiative to define criteria to bring greater clarity to the offset market and we are generally supportive of the criteria proposed, i.e. to recognise only internationally agreed credits.

2. We are, however, concerned that although some offsets deliver social or biodiversity co-benefits together with carbon savings, there is currently no way of recognising these benefits. Clearly, it would not be possible to claim extra carbon credit for projects that have more general sustainability benefits but explicit identification of such benefits would be advantageous in promoting projects that are environmentally benign over ones that are adequate solely in carbon terms - but might be damaging in terms of the broader environment. Currently, for example, the forestry-related credits recognised by Kyoto do not adequately discriminate between projects that have both carbon and biodiversity value and those that may save carbon but could harm wildlife, such as plantations of fast growing monocultures.

Introduction and background: some pros and cons of offsets

3. The RSPB is Europe's largest wildlife charity with over one million members. We manage one of the largest conservation estates in the UK with 196 nature reserves, covering more than 131,000 hectares. The RSPB is part of the BirdLife International partnership, a global alliance of independent national conservation organisations working in more than 100 countries worldwide.

4. The role of offsets in mitigating climate change is the most hotly disputed area of climate change policy, giving rise to fierce, often acrimonious disputes amongst those involved in the climate change debate. The RSPB's situation is typical of many other environmental and nature conservation organisations. On the one hand, many of our nature conservation activities, both in the UK and abroad, either sequester carbon dioxide or prevent the degradation of natural land, such as the felling of forests, and thereby avoid the generation of emissions. We are thus in a strong position to mitigate climate change by our conservation activities and hence to generate carbon credits from them, the proceeds of which could be used both for further mitigation and for nature conservation.

5. On the other hand, we are concerned about the use of project-based carbon credits as a tool for the mitigation of climate change because of the effect that this might have on behavioural change. Whilst it clearly does not matter to the atmosphere where greenhouse gases are emitted or sequestered, it can matter in policy terms and begs a number of questions. If, for example, a core policy objective of an organisation such as the RSPB is for individuals and nations to reduce emissions at home - because this is ultimately the only solution to climate change - does it make sense to allow them to continue to emit, or even increase their personal emissions, and to purchase cheap offsets from abroad? If an individual offsets their emissions, will they also try to cut their own emissions, or lobby government to legislate for emission cuts? Is offsetting a cheap and easy way of salving the conscience of rich people and rich countries, but not an option for the poor?

6. Concerns about the use of offsets, both voluntary and officially sanctioned, also arise in national and international policy-making. For example, both the Kyoto Protocol cap and trade scheme and the EU Emissions Trading Scheme (EU ETS) allow the use of Certified Emission Reductions (CERs) from projects conducted under Kyoto's Clean Development Mechanism (CDM). Yet if the EU ETS is intended to reduce emissions in the EU, which was clearly the intention when it was conceived, then should it include emission reductions from outside the EU, from countries that have no international emission limitation commitments? Allowing project-based credits from uncapped countries into the EU ETS not only has the effect of inflating the EU cap - making the already weak targets even weaker - but it has implications for the development of the post-2012 climate regime. Under Kyoto and the Climate Convention, developed countries are obliged to take the lead in reducing emissions, and developing countries are only likely to take on commitments when the developed countries have manifestly reduced their own emissions. But, if the developed countries have reduced their emissions largely, or even partly, by buying emissions reductions from developing countries, it is debatable whether this constitutes 'taking a lead'.

7. Conversely, proponents of Kyoto-approved credits argue that CDM projects help developing countries on the path to sustainable development by providing much needed funding for low carbon projects that would not take place otherwise. Whilst most of the projects are in the most developed countries (respectively, India, Brazil, Mexico and China) rather than the most needy countries they are, on the other hand, being conducted where emission reductions are most needed. This is in contrast to many 'voluntary' projects which are often driven by social or environmental factors other than climate change and are conducted in countries that emit very little - and arguably need to take no action.

8. It is noteworthy that the volume of credits in the official and voluntary markets is on a quite different scale. Whilst voluntary markets are said to be booming, they are dwarfed by the officially sanctioned market where more than 26 million CERs have already been issued, 710 million will arise from existing projects and more 1.5 billion are expected to be issued by the end of 2012. In our opinion, this trend for the official market to dominate the voluntary one is likely to continue, if only because the officially recognised credits have a realisable value, as is outlined below

9. Prices and costs are markedly different for voluntary and official offsets and the differences are likely to become more marked when the Kyoto market starts full-scale operation in 2008 and the value of CDM and Joint Implementation (JI) credits is likely to rise. This price differential arises because official credits are required by developed countries to comply with legally binding emission reduction targets under Kyoto and thus have a value linked to the cost of meeting those targets - not simply the cost of the projects. The projects also have to bear costs associated with formal validation and approval processes. The sole purpose of a voluntary offset, however, is to provide a lowest cost emission reduction, often with minimal accreditation costs, and so their sale price is always likely to be lower. (It can be argued that all offsets should be priced so as to reflect the damage costs of climate change, rather than being as cheap as possible, but this seems unlikely because it would significantly raise the price of offsets. DEFRA's recommended social cost of carbon (damage cost) is Ł70/tonne carbon but other estimates range as high as Ł1,000 tonne C.)

10. On balance, the RSPB considers that only those offsets approved by the agreed international system, the Kyoto Protocol, should be employed in 'voluntary' markets. These obey rules which were agreed by experts from nearly all countries in the World and, although they are deficient in some respects, they are the best that there are. To use other credits, obeying other sets of rules, if any, would seem perverse.

11. We recognise, however, that there are certain types of emission saving activity that are not, at present, recognised by the international system - notably emissions avoided by not felling tropical forests (so-called avoided or reduced deforestation) but also emissions from other land-use change, such as peat extraction. Halting activities such as deforestation not only has huge value in terms of combating climate change (20% of global emissions arise from tropical deforestation) but has a similarly large value in terms of conserving biodiversity and protecting indigenous people. We consider that recognising such co-benefits is imperative and we will therefore strive to bring such activities within the remit of the international climate regime and participate in pilot projects in order to gain greater knowledge of the subjects.

In the remainder of this response, we answer the questions posed by the Committee in the order that they were set in the call for evidence.

Ought there to be a compulsory UK or European accreditation scheme for carbon offset projects or companies? If so, how should this operate?

12. Yes. It should be the same as that agreed under Kyoto, allowing only those projects approved by Kyoto, i.e. Certified Emission Reductions (CERs) from the Clean Development Mechanism (CDM) and Emission Reduction Units (ERUs) from Joint Implementation (JI) projects in developed countries.

13. There are already mechanisms in place for the approval of projects under Kyoto; in the case of CDM credits approval is by the CDM's Executive Board.

14. As avoided deforestation and other land use change activities are included in Kyoto, they too should be included eligible for accreditation under any UK or EU scheme.

Should offsetting become mandatory for some of the more carbon-intensive activities, such as flying?

15. No. The way to reduce emissions from aviation is to do just that, by managing demand and, making aircraft more efficient in terms of their greenhouse gas emissions.

16. The key to reducing emissions nationally and internationally is by means of constantly diminishing carbon budgets covering all emissions, linked, where possible, to trading schemes that allow personal or institutional choice over which emissions to cut, as long as overall emissions where reduced. Aviation emissions might then continue to increase, within limits, so long as commensurate cuts where made elsewhere within the capped system. A draft amendment to the EU ETS, issued by the Commission in December 2006, aims at this type of solution. Aviation emissions would be opted into the EU ETS, covering about 50% of all EU carbon dioxide emissions. Emissions from large combustion plant and aviation would then be capped but emission allowances could be traded, allowing aviation emissions to rise if aircraft operators purchased allowances from the operators of large combustion plant that had cut emissions by more than their target. In principle, we welcome this type of approach although we have reservations about the details of the Commission's proposal. (The key test of the effectiveness of any cap and trade scheme is that it will cut emissions in line with national and international targets yet, as it stands, the Commission proposal does not ensure that this occurs.)

17. Offsetting aviation emissions, or emissions from other sources, with credits from uncapped nations does not, ultimately, solve the problem of rising emissions in capped countries like the UK. Emissions in most developing countries, especially the rapidly industrialising ones continue to rise apace and unchecked. A few offset projects, even if they amount to many millions of tonnes of carbon will do almost nothing to slow this rise. If we are to tackle the problem of climate change much more stringent action is needed, perhaps in the form of commitments to limit the rate of increase of emissions in some sectors in the most rapidly industrialising developing countries.

Is there enough clarity within the offset market to allow customers to make informed choices based upon robust information about different schemes at different prices?

18. No. We have had an interest in this area for about 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.

Many offset projects involve afforestation or reforestation. Is the science sufficiently coherent in this area accurately to assess overall long-term carbon (or other GHG) gains and losses from such projects?

19. Whilst there is considerable uncertainty in estimates of the take up of carbon dioxide by forests and other land use change, this is not necessarily a severe problem as long as conservative estimates are used when claiming credit for carbon stored. This is a standard means of addressing uncertainty.

20. A more intractable problem is the fact that all biological sinks for carbon can reverse. That is, they can release the carbon that they have stored. Carbon sequestration projects are fundamentally dissimilar to emission avoidance projects, such as those involving energy. Once emissions are avoided, for example by replacing a diesel generating set with a hydroelectric one, then they are avoided forever, the emissions never reach the atmosphere and never cause any damage. Forests typically store carbon from the atmosphere but if it is later released then the initial storage is negated; the atmosphere is harmed as much as it would have been in the first place. To be effective as a mitigation measure, sequestration projects thus need to ensure that carbon is stored forever.

21. However, forest fires, pests and climate change can all cause forests to change from net sinks for carbon to net sources and it is obviously impossible to forestall all such occurrences indefinitely. The Kyoto Protocol's Clean Development Mechanism (CDM) circumvents this difficulty by introducing the concept of a temporary Certified Emission Reductions (tCER) which expires after five years but can be renewed it is demonstrated that the forest remains unchanged. This 'solution' works in accountancy terms but does not repair any damage done to the atmosphere if a carbon sink reverses.

Is there sufficient data available to guarantee accurate amounts of carbon or other GHG mitigation in the sorts of schemes which offset projects finance?

22. The voluntary market varies enormously with some offsets being rigorously scrutinised and others not, according to widely varying sets of voluntary rules.

23. In the CDM there are suitable provisions, except if a sequestration project reverses. CDM project developers have to prepare detailed plans and methodologies that are scrutinised by the CDM Executive Board of independent experts, and projects are regularly verified. All estimates of carbon saved are conservative so that, if anything, the emission savings are underestimated. Project details and CDM Executive Board proceedings are published, and Board meetings can be viewed live on the web.

What impact will the voluntary carbon offset market have on the compliance market if the former continues to grow as steadily as it has done over the last few years?

24. Very little or perhaps none. The market in compliance-related project credits will be increasingly driven by the need to generate credits that can be used to demonstrate compliance in the 2008-12 period of both the Kyoto Protocol and EU ETS, for which voluntary credits are useless.

25. The market in voluntary credits is driven by individuals and institutions that wish to green their lifestyles or modes of operations and, in the case of institutions, to publicly demonstrate that they are doing so. However, because of ongoing disputes about the value of voluntary credits, companies are increasingly using compliance credits (CERs) to protect their reputations and, because the corporate sector is potentially so valuable to them, offset companies are tending to do the same.

26. In the longer term, we consider that the market for voluntary credits will decline, being substituted largely by official compliance credits - largely to avoid reputational risk. This decline is likely to be accelerated by the UK Government proposals for an accreditation scheme that only recognises compliance-related credits (CERs, ERUs and EU ETS allowances).

What evidence is there to show that offsetting helps to change the carbon behaviour of the customer?

27. We are unaware of any definitive evidence. Individuals that employ offsets tend to be environmentally aware and keen to do something to mitigate their unsustainable lifestyles, especially flying. They are probably not, therefore, representative of society as a whole and it is hard to say whether they would alter their carbon behaviour anyway, because they are 'green', or because they choose to offset.

28. There is a concern that using offsets will tend to prevent individuals, or institutions, from taking practical action themselves because, if offsetting is truly effective, why should they alter their behaviour or encourage others to do so? If, for example, a company offsets the emissions from flights taken by its staff, would it also cut back on flying and lobby government to reduce demand for aviation? We think not.

To what extent are the schemes and projects funded by offset companies more broadly sustainable, in an environmental, social or economic sense?

29. Many projects in the voluntary market are specifically designed to be more broadly sustainable, certainly in the sense of being more generally environmentally friendly and more socially just. Indeed, voluntary offset projects were originally conceived as forest conservation projects or schemes to assist poor people in developing countries and also happen to save carbon.

30. Whilst projects that deliver multiple benefits are clearly highly desirable, it can be hard to marry the different benefits effectively. For example, one of the longest and most acrimonious debates in the detailed negotiations on the Kyoto forestry provisions was around the climate and biodiversity benefits that might accrue from afforestation and reforestation projects. On one hand, there was a desire to support projects that would lead to the regrowth of natural forests in developing countries, with considerable benefits for biodiversity and indigenous people but sequestering carbon at a low rate. On the other hand, there was a desire to maximise carbon sequestration rates, which would be best achieved by fast-growing monoculture plantations, delivering considerable carbon benefit but with potentially disastrous effects on biodiversity and indigenous people.

31. In the end, it was not possible to find a way of excluding monoculture plantations and encouraging the greater environmental and social good - because the Kyoto Protocol basically deals in carbon saving and not with more general sustainability as well. There are thus likely to be more bad than good forestry projects, in general environmental and social terms, in spite of the best intentions of many negotiators. This situation clearly needs to be rectified. Any accreditation scheme should identify and support projects that bring biodiversity or social co-benefits whilst ruling out those that have adverse effects upon sustainable development. It might, for example, be appropriate for international agreements such as the Convention on Biological Diversity (CBD) to provide biodiversity criteria for land use change-related projects conducted under the Kyoto Protocol.