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Cabinet Committee on Climate Change and the Environment Meeting to be held on 24 May 2010 Part I - Item No. 9 Electoral Divisions affected: All An Introduction to Carbon Offsetting and the Lancashire Gulu Carbon Compensation Scheme (Appendix 'A' refers) Contact for further information: Fiona Cruchley, (01772) 533906, Environment Directorate, [email protected] Executive Summary Carbon offsetting means paying another party to reduce carbon emissions somewhere else on your behalf. This report outlines the complexities of carbon offsetting and identifies a local scheme which seeks to minimise these and maximise opportunities. Recommendation The Cabinet Committee on Climate Change and the Environment is requested to: (a) Note the report, especially the complexities associated with carbon offsetting, and; (b) Note the work of the Lancashire-Gulu link charity to promote the 'carbon compensation scheme' in Lancashire as an alternative to complex national offset schemes and to schemes that fund projects often seen as 'impersonal'. Background and Advice What is carbon offsetting? Carbon offsetting means paying another party to reduce CO2 emissions somewhere else on your behalf. Emissions from an activity such as a holiday flight or energy use in the home are calculated, and then a contribution made to a project that will either reduce emissions (e.g. through energy efficiency or renewable energy generation) or would capture an equivalent amount of carbon (e.g. by tree-planting or peat bog rewetting). There are practical complications associated with carbon offsetting, from how emissions are calculated (particularly those associated with air travel), the time delay -2between emissions and the reductions, and how it can be proved that emissions reductions are additional to those which would have happened anyway. Offsetting can be seen as controversial as it can sometimes be viewed as a substitute to making real reductions in emissions. For this reason the Department of Energy and Climate Change (DECC) urges all of the public sector to only use offsetting where emissions are currently unavoidable. Government Quality Assurance Scheme Following consultation, the Government has recently introduced a new Quality Assurance Scheme for Carbon Offsetting. This requires the offset provider to; Calculate emissions accurately Sell good quality carbon credits that comply with the Kyoto Protocol and have been verified by the United Nations (UN) or the European Union's (EU's) emissions trading scheme Cancel the credits within a year of sale and ensure that the same credit isn’t bought twice Have transparent prices for their credits – e.g. how much they cost per tonne of CO2 Provide information about the role of offsetting in tackling climate change and advice on how to reduce your carbon footprint. There are currently 9 providers accredited under this scheme. The requirement for verified carbon credits means that offset projects to reduce emissions in the UK are not eligible (as the UK already has a duty to reduce emissions under the Kyoto protocol). Proving emissions reductions would not have happened anyway. One of the key requirements of carbon offsetting is that the emission reductions should not have happened anyway. The reduction must be unique. But proving or verifying this is onerous and costly. It means that it is not cost effective to verify small scale projects even though they may have significant wider environmental and social benefits. Several major and well established carbon offsetting firms are therefore ineligible under the quality assurance scheme. So, verifying that a carbon reduction project would not have happened anyway (i.e., it is additional) is a very important part of carbon offsetting. But proving this can lead to costly administration. Where does carbon offset money go? The Department for Environment, Food and Rural Affairs (DEFRA) has estimated the UK carbon offset market was worth £250 million in 2009. Some offsets are traded as commodities, so some of the money goes to those who buy and sell them, brokers. Offsets may have been traded several times before being purchased by organisations that are required to, or chose to, make carbon reductions. -3- Much of the money paid for an offset goes to the firms who invest in the project that reduces emissions. So far, three-quarters of all UN certified emissions reductions have come from projects that stopped the release of industrial gases such as Hydrofluorocarbons (HFCs), for example installing chimney abatement technology in a factory in China. Such UN certified projects are often seen as expensive and impersonal. Avoiding double counting and proving additionality is complex and, to underline this, several leading greenhouse gas emissions exchanges have suspended trading in international offset project credits under the Kyoto Protocol’s Clean Development Mechanism. The move is intended to limit the spread of fraud in international offset credits. Government Carbon Offsetting Facility (GCOF) The first Government Carbon Offsetting Facility was launched by DEFRA in November 2007 after a culmination of two years' development work in response to the Prime Ministerial commitment to offset Government air travel emission. The DECC has since developed a successor contract with Buying Solutions, which is available to all public sector organisations. This scheme uses high quality UN accredited offsets, but these fund projects that many see as 'impersonal' (e.g. improvements to a factory in China). Can carbon offsetting be used to fund projects in Lancashire? Carbon offsetting cannot be used to fund projects in Lancashire. Carbon offset projects must be additional to emission reduction projects that are already required. The UK has a duty to reduce emissions under the Kyoto protocol and funding projects to reduce carbon emissions simply replicates what the UK should already be doing. Lancashire Carbon Compensation Scheme The Lancashire-Gulu Carbon Compensation scheme is a simple, voluntary contribution scheme that consists of projects that provide Lancashire with a ‘carbon advantage’. The project is now in its third year, and it was established with the support of the County Council. Support is now limited to a modest amount of officer time. The scheme acknowledges the impact of emissions and then compensates for them. Carbon Compensation is not the same as offsetting. By focussing on helping people adapt to the impacts of climate change, carbon compensation does not “wipe the slate clean”, but acknowledges that emissions have an impact and then compensates for them by trying to lessen the damage caused. The health impact of climate change is unjustly distributed. The impact is over 500 times greater in Africa than in England, according to the Chief Medical Officer. -4The UN Inter-Governmental Panel on Climate Change has stated that developed countries are having a substantial impact on developing countries because of our emissions, contributing to poverty, drought and flooding. The recent devastating floods across Africa (including Uganda) are an example of this. This is forecast to worsen considerably. Changes in climate caused by carbon emissions have a disproportionate impact on developing countries where per capita emissions are extremely low. By assisting the people of developing countries to adapt to changes in climate, which will also enhance their resilience to other challenges, the impact of our emissions can be acknowledged and reduced. The development of the project has been undertaken as a partnership between the County Council and the Lancashire Gulu Link charity here in Lancashire, working with Gulu Municipal Council and the Gulu Lancashire Link charity in Uganda. The project builds on a relationship between the 2 communities that was established in the early 1990s. The small scale of the scheme emphasises its community-to-community nature (Lancashire to Gulu), unlike larger scale offsetting programmes where it is difficult for individual donations to have a visible impact. The County Council supported the initial phase of the scheme in 2008 and projects underway in Gulu include wetland conservation, smallholder timber plantations, bio-diesel demonstration, agro forestry and organic farming, beekeeping and integrated solid waste management. Further details are given at Appendix 'A' attached. Monitoring of the Lancashire-Gulu Carbon Compensation Scheme Progress of the individual projects in the Lancashire Carbon Compensation Scheme is monitored through quarterly monitoring reports received from the project coordinator and environment officer at Gulu Municipal Council. Progress is good, and the scheme is bringing benefits to the local community and participation in the projects is increasing. A response to each monitoring report is made by the Lancashire –Gulu Link charity, with the County Council's comments added. Promoting the Lancashire-Gulu Carbon Compensation Scheme The Lancashire – Gulu Link charity takes the lead on managing the UK end of the project. The charity is promoting the scheme in Lancashire and is seeking contributions where organisations and private companies wish to compensate for their carbon emissions or make 'social responsibility' contributions. The scheme therefore provides an alternative to complex national offset schemes, which have been criticised for funding impersonal projects. It can provide Lancashire companies with a more visible and relevant project against which to make contributions. -5- A very small amount of officer time is involved in assisting the charity in the carbon compensation scheme this year. Consultations N/A. Implications: This item has no financial or legal implications. Risk management This report provides general information on the principle of carbon offsetting, and does not have any direct risks linked to it. Local Government (Access to Information) Act 1985 List of Background Papers Paper Date Nil. Reason for inclusion in Part II, if appropriate N/A. Contact/Directorate/Tel