Memorandum from British Energy

Key Points

· All carbon reduction options will be needed if we are to successfully address climate change. Carbon offsets if implemented well can be a valuable option in these efforts, as they have the potential to engage with developing countries.

· Carbon offsetting needs to be looked at as an option along with reductions in use and increases in efficiency.

· Voluntary carbon offset schemes require accreditation if they are to achieve a consistent and reliable reduction of carbon dioxide.

· Offset schemes must demonstrate clear cost benefit attributes and have the ability to be compared to other offset schemes.

· Offsetting may potentially have a negative impact on customers' behaviour resulting with no change to the frequency of carbon intensive activities.

· Voluntary carbon offsetting schemes may impact the price of carbon. This may in turn impact on the mandatory schemes.

Some Inquiry Issues

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

1) There should be a compulsory UK accreditation scheme for carbon offset projects if the carbon savings achieved are to have the same credibility as other carbon reduction projects.

2) Carbon reduction claims made by companies need to be verifiable. The establishment of carbon offset projects must be developed in accordance with an approved standard. There will need to be a set of rules and guidelines for large and small projects. Companies and organisations that develop the projects will need to be audited by an accredited external body to ensure that the data used in the offset process is accurate.

3) The accreditation scheme can be modelled off existing voluntary accreditation based programs, such as Environmental Management System ISO14001.

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

4) Carbon offsetting should not yet become mandatory for carbon intensive activities, such as flying. The first option for carbon intensive activities should be reduction and efficiency.

5) A distinction is required between mandatory carbon offsetting by companies and by individuals. Compliance by individuals to mandatory carbon offsetting for activities such as driving is a complicated process and needs to be considered carefully.

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?

6) There is not enough clarity within the offset market at this time. A suggestion to improve clarity is to set up a register of carbon offset providers, detailing their products and the methodology and the data source used for their calculations. Once on this register they need to be audited by an approved third party.

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?

7) The science behind forestry offset projects is not sufficiently sound to assess the long term GHG's gains and losses. Also, see 8) and 9) below.

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

8) There is a large body of evidence to generate assumptions of carbon sequestration as the science of forestry is well established, but it is insufficient to guarantee the long-term results. As with all assumptions it is based on certain variables. If these variables change at a non-predicated rate this would alter the results. For example, future temperature and rainfall data is used to predict the growth rate of trees in forestry schemes, the predictions have been made on future climatic conditions but these could change dramatically if we delay action on climate change.

9) Overall, the degree of certainty is decreased in forestry and agricultural offset projects as it involves natural systems, which are dynamic. Certainty of results is increased in reductions of energy use and mechanical efficiency as it is a more simple process of input vs. output.

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?

10) Voluntary market offset schemes may have implications for the compliance market by driving the price of carbon down. Mandatory schemes have a minimum operating cost that must cover the infrastructure of the system and a more complex approach to carbon reduction.

11) Voluntary projects may lessen the credibility of mandatory schemes if there is a high degree of failure in the projects. Voluntary projects may not deliver as great a carbon reduction as mandatory projects as there is currently not the same rigor in the voluntary schemes.

12) As the cost of voluntary schemes is lower then mandatory schemes this may lead to a reduction of available land for successful projects.

13) On the other hand, voluntary schemes may have a positive impact on the mandatory schemes as they may be able to offer a more pragmatic approach to offsets with similar results.

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

14) Offsetting could have positive and negative effects on people's behaviour.

15) On the positive side it could have a double effect of reducing carbon dioxide emissions with an offset and also as it costs money to offset consumers hopefully will reduce the carbon intensive activity as it is costing too much.

16) On the negative side it could lead to inequality, as some people may be able to undertake in certain activities as they have the money to offset. For some it might be easier and cheaper to offset then to change behaviour.

17) Evidence of these trends is shown in the existing schemes, when the price of carbon is low is not a driver to implement change.

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

18) Offset schemes that are funded by voluntary payments must ensure that the price of the offset covers the establishment and the long term management of the project. As the cost of carbon increases and thus the price of the offset, emitters may opt out of carbon intensive activities, not requiring the services of offset providers.

19) The social and environmental sustainability merits of current offset schemes need to be broken into two groups:

a. Afforestation or reforestation - Reforestation projects implemented correctly are environmentally and socially sustainable. Afforestation projects have the potential to impact on the environment and the local community, if the land the trees are being planted on is not meant to be covered by trees and if it displaces people who had lived off the land previously.

b. Renewables - The concept of renewable energy is environmentally sustainable, but some methods of delivery can have social, environmental and economic impacts. The impacts on the local environment need to be first assessed to determine the sustainability of the renewable project. The financial sustainability of the projects must also be evaluated.

 

January 2007