Cicero Policy Briefer

Issue 9, February 2007

Passing the buck: Is offsetting a responsible option?

By Stephanie Fraser

The subject of carbon offsetting has received much attention in the wake of the frenzy of environmental actions announced following last year’s Stern Review. Politicians in particular have been keen to demonstrate the extent of their green credentials and show that their lifestyles, at least, aren’t harming the environment, by announcing that they offset their costs.

In fact, severe media censure awaits any public figure who appears to be traveling wantonly without offsetting, to the extent that Prince Charles was last week accused of ‘green hypocrisy’ when he flew to New York to accept the 10th Global Environmental Citizen Award from Harvard Medical School’s Centre for Health and the Global Environment. HRH was forced to resort to irony in his defence: “I have only made a virtual flight across the Atlantic, and am virtually half dead and only virtually royal.”

There are many points to be said in favour of carbon offsetting. Firstly, it gives a precise consideration of the cost of carbon emissions. This leads to raised awareness within businesses and society of the level of their contributions and gives an economic impetus to reform. Furthermore, it provides resources for environmentally beneficial projects. Most offsetting projects work in one of two ways: through contributions to tree planting offset schemes, or through Verified Emission Reduction schemes (VERs), which invest in small-scale carbon dioxide reduction projects in developing countries. Of course, such projects are attached with risks, as the precise amount of carbon that a scheme will reduce cannot be measured with anything like the degree of accuracy or certainty which accompanies present emission rates. Offsetting is, in essence, an extended climate credit system, which allows carbon spending now, to be paid off once offset schemes come into fruition in years to come.

The hitherto arbitrary regulation of such schemes is being reduced after the Government announced voluntary standards for carbon offsetting last month. This will attempt to guarantee that money is being spent on schemes that genuinely reduce carbon emissions. However, as environment minister David Miliband admits, “Offsetting isn’t the answer to climate change.”

Carbon offsetting is simply an easy, short-term solution to a problem that is not only complex but certain to be enduring. It arguably lets companies off the environmental hook when they should be investing in substantial internal reform of business practice. Such reform is not only possible; it is also practical, and already being undertaken by market leaders. In January, Stuart Rose committed to making M&S carbon neutral without any resort to purchasing carbon offsets. Other companies will soon be following this example, and consequently offsetting schemes will diminish in importance compared to environmental best practice expectations in the future.

Ultimately, carbon offsetting is a handy interim measure, but one that should not be built into the CSR programme of any company looking to reduce its overall carbon footprint in a meaningful and sustainable manner.

Stephanie Fraser can be contacted on +44 (0)20 7665 9531 or click here to email.