Is carbon offsetting a valuable tool in the fight against climate change, or a cheap way for over-consuming Westerners to salve their conscience while failing to make the fundamental changes needed to save the planet? Dan Welch, researcher at Ethical Consumer and author of a buyer’s guide to offsets in the May/ June issue of the magazine, argues the case with Paul Monaghan, head of ethics at the Co-op Group.

Dan Welch:-

Dear Paul,

Sue Welland, founder of the CarbonNeutral Company, tells me that buying an offset “is not a donation, a customer is buying a reduction of one tonne (etc) of CO2.” How do offset providers calculate this?

First, providers guess what would have happened without the offset funding and estimate how much carbon would have been produced. They then deduct from that the amount of carbon that will be produced during the project lifetime. The resulting figure is sold to consumers as offsets. For example fuel-efficient stoves are given to a village. The offset provider works out how much extra wood the villagers would have burnt using their old inefficient fires. The saved emissions are the offset.

Accountancy is therefore the very basis of offsetting. However, in reality, accurate accountancy is impossible. Offsets are an imaginary commodity created by deducting what you hope happens from what you guess would have happened.

The issue is not whether planting trees or funding renewable energy or energy efficiency are good things. There are many good organisations promoting these causes. The issue is whether offsets providers can do what they claim. They claim that what they are selling is a quantifiable and verifiable reduction in carbon emissions.

The first offset projects involved tree planting, on the principle that trees absorb carbon as they grow. However, the science of how effectively planting trees reduces global warming is far from certain. Moreover, although offsets are marketed as if they take place instantaneously, providers account for decades of forest carbon absorption in the year saplings are planted. Given the brief window of a decade or two in which we have to significantly reduce carbon emissions, this form of accounting is a dangerous misrepresentation.

Furthermore, there is false equation made between fossil carbon and biological carbon. When fossil fuels are burned they release carbon that has been locked away for millions of years. If the total amount of carbon in the biological carbon cycle is increased, the stability of the climate is undermined. If the trees planted die they release their carbon back into the atmosphere. Is it credible that providers can protect offset carbon from forest fires or loggers for the next century?

The industry has shifted focus from forestry to funding energy efficiency and renewable energy projects in the developing world. But energy efficiency gains tend not to lead to overall emissions reductions – ever increasing efficiency of white goods in the developed world has not cut emissions, as savings have been lost to other power hungry devices. For example, a villager is provided with solar panels by an offset project, replacing kerosene lamps. What happens if the villager uses the money they have saved from the kerosene to run a moped instead? Has the project achieved emissions reductions? Similarly, renewable energy projects in the developing world are usually additional capacity rather than replacement capacity.

What is the social and political effect of the offset industry? The rationale of offsetting is to reduce emissions where they are cheapest, in the developing world. In practice this means utility companies burning fossil fuel will find it cheaper to reduce marginal levels of emissions in the developing world through offsets, rather than invest in low carbon technology. Offset providers claim to be increasing the public’s “carbon literacy.” Rather they mislead the public by suggesting that the low cost of a carbon offsets (typically £7 a tonne) accurately reflects the cost of emissions. The Stern Report costs the damage of each tonne of CO2 at around £50.

The industry claims to promote offsets as a last resort, only to be used after cutting emissions. But this is disingenuous. Clearly offsets are marketed to consumers to “neutralise” non-essential emissions – primarily holiday flights. When providers are profit making companies such claims are clearly spurious. Offsetting is used by businesses as “greenwash” – to promote an environmental image without serious attempts to cut emissions. Some of the most enthusiastic proponents of offsetting include British Airways and BP. Carbon offsetting privatises, commodifies and de-politicises what is a social and political task – restructuring the fossil fuel economy into a low carbon economy.

Paul Monaghan:-

Dear Dan,

There are two major strands to the criticism of carbon offsetting and both are fundamentally flawed.

The Co-operative Group has been pioneering high quality carbon offset schemes since 2000, and in various guises these are now connected with emissions arising from our operations, as well as with products such as Co-operative Bank mortgages and Cooperative Travel holidays.

The first strand of criticism is ‘methodological’ - it claims that all offsetting claims are fundamentally baseless as they cannot be proven outright. Offset providers are attacked for making assumptions and utilising projections. Well, the boring truth is that such assumptions and projections underpin all renewables and energy efficiency projects (whether they are connected with offsetting or not).

When we embarked upon the UK’s largest ever application of Solar PV we had to make a series of assumptions and projections regarding daylight and electricity output. Similarly, when we erected wind turbines on our farmland we were forced to speculate on the vagaries of wind speed and direction.

On the issue of carbon sequestration, given 20% of human-induced carbon dioxide emissions are a consequence of tropical deforestation, we think it appropriate that tropical reforestation should constitute 20% (but no more) of our offset programme. Scientifically, the global cooling effects of this type of project are indisputable (the doubts that commonly work their way through to the press relate to temperate and high altitude reforestation programmes).

The second strand of criticism is ‘philosophical’ - this usually takes the form of noting the seeming unfairness of relatively rich people in the UK paying for emissions reductions in poorer parts of the world and concludes that offsetting should only be considered after all other options have been exhausted.

At the Co-op, we have gone out of our way to make sure that our projects are in poorer parts of the world (despite the fact that many of customers would prefer for them to be in the UK), as we believe that such transfers of wealth and expertise will be crucial to helping developing countries emerge along a low carbon path. We have seen at first hand the broader social benefits that can arise from this investment flow: whether it’s the Ugandan farmer who can now afford to pay his children’s secondary school fees with the money earned working part-time on the reforestation project, or the Indian smallholder who can now afford to irrigate his land during the dry season via the treadle pumps we have facilitated.

We believe that offset projects should progress in parallel to other carbon reduction initiatives (such as with our plan to reduce energy consumption across our businesses by 25% by 2012, which is backed up with £7 million of capital investment). To say offset should only be progressed after all other options have been exhausted is daft - it’s like saying waste recycling activities should be discouraged as they encourage people to duck the higher imperative of waste minimisation.

Which isn’t to say that there aren’t some truly awful carbon offset schemes out there and that these deserve all the flak they get – although with standards such as the NGO Gold Standard emerging it is now possible for consumers to differentiate between good and bad. Or that carbon offset schemes wouldn’t be needed if politicians and electorates would wise up and quickly do what is necessary to realise a carbon efficient economy and the required 90% reduction in greenhouse gases by 2030. But, call me cynical, we just don’t see this as a given at the moment, although we, and others, are doing our damnedest to make it happen via support for initiatives such as the Friends of the Earth Big Ask Campaign, which is looking for short-term, legally binding carbon reduction targets.

Offset criticism has almost become a badge by which a certain type of environmentalist attempts to show that they a deeper shade of green (much of it has worrying analogies to the deep ecology, anti-development attitudes that pervaded much of 90s environmentalism). This is dangerous. Offsetting has the potential to lead to an enormous (potentially unprecedented) transfer of wealth and investment from the developed to the developing world. Carbon markets have resulted in capital flows from rich to poor countries of about $8 billion since 2002, and an estimated $14 billion of further gains have been realised in developing countries through investment in ‘clean’ energy technology.

Moreover, at the end of the day, whether a tonne of carbon dioxide is avoided in the UK or in India, a tonne of reduction is a tonne of reduction.