Developing an offsetting code for the IPPR

by Jenny Bird, IPPR

Jenny is a researcher in the climate change team at the Institute for Public Policy Research. She has previously worked for the Environment Agency and for an international NGO focusing on environmental health issues in rural areas of Nepal.

Offsetting was once considered the preserve of right–on environmentalists and synonymous with tree planting. Nowadays, companies vying to prove their green credentials and concerned individuals are much more likely to purchase carbon offsets. But with increased recognition comes increased scrutiny. Under the glare of the media spotlight, scandals involving dodgy project validators and cowboy credit salesmen have lent an air of controversy to offsetting. This has prompted the Institute for Public Policy Research (ippr) to review our own practices.

One of ippr’s underpinning values is the desire to build a more environmentally sustainable world. And we are keen that our values should apply not only to the research we carry out and policy recommendations we make but that we should live our values in the way we run our organisation. This means making our environmental footprint as small as possible.

While we take steps to reduce our emissions – for example through reducing flights, raising staff awareness and employing an energy consultant – there are some emissions that we are unable to avoid. That is where offsetting comes in.

But while the rationale might be clear, putting it into practice is somewhat more complex. Before even considering the various merits of the voluntary market versus the compliance market or planting trees versus scrubbing refrigerant–gases, the first barrier that all organisations wishing to offset their emissions will face is measuring their emissions. If premises are shared, there can be difficulties deciding what proportion of emissions from heating and electricity are attributable to which organisation. Another area of difficulty is accounting for emissions from work–related travel without imposing burdensome monitoring procedures on staff. At ippr, we have certainly faced hurdles in both of these areas.

Assuming that measurement issues can be resolved, the next decision is which offsetting company to use. In the past we have used a well known voluntary market company for our offsetting. However, our main concern is the fact that the voluntary market remains unregulated and is vulnerable to abuse. In addition, the price of offsets offered by these companies is too low to truly reflect the full cost of the damage caused by greenhouse gas emissions.

But is the compliance market any better? One does not have to look far to realise that the Clean Development Mechanism is also experiencing significant teething problems. Concerns abound about verifying and validating credits, the additionality of projects and the types of projects that are generating credits, in particular scrubbing potent gases from industrial processes. All of these uncertainties make us wary about using Certified Emission Reductions too.

Of course, one solution is to purchase gold standard credits, which should ensure that projects are energy–related, genuinely additional and engage local stakeholders. However, we are considering a radical alternative: instigating our own internal offsetting system.

Under this system, rather than paying a middleman to offset emissions, we would pay to ‘offset’ our emissions into a separate fund, which we would then use to make improvements to our office that would help us to reduce emissions. This way we can ensure that the money is being spent on genuine emission reduction projects and we can take actions which we would otherwise not have the budget to carry out. In addition, we can set the price of offsetting at a level that reflects the true cost of emitting carbon dioxide to the atmosphere – the social cost of carbon being a likely choice.

Clearly, setting up a system such as this is a great deal more complicated and time–consuming than going through an offsetting company, but we think it could be an effective tool in reducing our total emissions.

There is no perfect solution to dealing with unavoidable carbon dioxide emissions and there’s a lot more that could be done to make the process of offsetting easier. For us, the priority remains to reduce our total emissions but the process of investigating our offsetting options has helped us to better understand what these emissions actually are. Critics sometimes claim that offsetting can be a ‘get out of jail free’ card, but for us, it has acted as a catalyst for making absolute reductions to our carbon footprint.