Offsetting in the UK? Well, not exactly...

Why can’t we offset in the UK? This is the number one question we’re asked at Forum about offsetting.

The reason why we’re asked this is clear – people tend to relate more to projects in the UK, and companies want projects that resonate with their customers. For a number of years now, Forum (and many others) have struggled to find a way to make offsetting in the UK work. But, try as we might, we haven’t been able to find a solution – at least not one that worked at scale, or which didn’t involve a significant change in UK Government policy.

And, funnily enough, the reason we’ve gotten stuck is because of the rigour that is now expected from high-quality offsets – with UK projects you just can’t get round the additionality [1] and double-counting [2] thresholds that are now demanded. (Yes, that’s right folks, despite offsetting continuing to provoke tired clichés about papal indulgences, there’s an awful lot more rigour applied to offsetting than there is to, say, green electricity tariffs. But that’s a discussion for another blog...)

Then a conversation with BRE unveiled a blindingly simple solution: UK projects don’t actually have to be forced into the world of offsetting. Although the offsetting model has dominated corporate investment in ‘external’ emissions reductions, it’s not the only mechanism through which a company might support an external carbon reduction project.
Given that the desire for companies to support projects in the UK is so strong, might an approach that focuses on providing clarity about the additionality and double-counting issues that surround any particular project in the UK encourage companies to invest? Even if the result is not a formal carbon offset?

We think that it can. Which is why we’re now working with BRE to develop a framework that can be used to highlight, in a standardised way, any additionality, double-counting (or indeed any other complicating factors) associated with investments in carbon reduction in the UK. It will be available for public comment shortly – and we’re also developing a website that will outline our thinking – and our plans – in more detail. Our hope is that this framework will enable communities across the UK to access funding for carbon reduction projects by providing increased confidence about what can – and cannot – be claimed as a result of any investment.

But where will this leave offsetting? Well, we hope that high-quality offsetting will remain an important option in the corporate carbon toolkit. Nevertheless, the reality is that many companies are looking to invest in UK projects as an alternative to their current offsetting strategy. While such a simple trade-off might work for certain companies in specific circumstances, this is not the outcome we hope to see.

We’d like to see companies integrate external reductions – in both the UK and internationally – into a climate strategy that tackles emissions, impacts and risks up and down their value chains. If your company sources agricultural inputs from East Africa, for example, then investments that help develop renewable energy infrastructure there – and which result in carbon savings by doing so – fit neatly within a compelling climate strategy that addresses your entire value chain. And if your company is selling products in the UK, and wishes to engage its customers there, then supporting a local tree-planting project, or a solar development on a local school, should also be part of the mix.

For too many companies, offsetting has been the end-point of a technical exercise in quantifying their operational emissions. As leadership is increasingly – and rightly – defined by tackling upstream and downstream emissions and risks, then offsetting risks being left behind as a strategy to tackle the emissions that often matter least.

It doesn’t have to be this way. Moving forwards, we hope that corporate action on climate change will involve investment in external reductions in both the UK and abroad – and, indeed, much, much more.

[1] Ensuring that the project would not have happened anyway (ie, that the investment made has actually made a difference!) Given the relatively high interest in the UK in developing low-carbon solutions, and the wide variety of incentives that exist to encourage actions that reduce emissions, it can be very hard to demonstrate that the project might not have happened regardless.

[2] Ensuring that the carbon savings associated with a project are not counted by more than one entity. The problem here arises from the fact that the UK Government has embraced a national carbon reduction target. If the carbon savings resulting from a project are also captured in the UK national carbon accounts (and it’s likely that they will be), then the offsetter has paid for a reduction that the Government would have been obliged to provoke/provide anyway...