1.0 Introduction

There’s no doubt that in the present business climate having a strategy to reduce carbon emissions is not just good for the environment but makes business sense. There are many varying reasons why organisations are trying to reduce their carbon emissions. These range from an attempt to prevent dangerous climate change, to securing the trust and loyalty of customers. Some leading businesses feel they have a moral responsibility to lead in environmental issues; while others just see carbon reduction as another tool to penetrate the market with; and yet others see it as a way to cut costs. Whatever the reasons are, carbon reduction is very much a topical issue these days.

Reduction techniques fall into three basic categories:

• Reduce: through conservation measures (e.g. good practices such as turning off a light bulb) and efficiency measures (e.g. using more efficient technology)
• Switch: changing the type of energy in use to low or zero carbon alternatives.
• Offset: funding a project that absorbs carbon or emits very low level of carbon into the atmosphere.

2.0 Carbon Offsetting

With this strategy an organisation or a person funds a project that prevents or reduces an amount of carbon entering the atmosphere, or absorbs CO₂ from the atmosphere. The project types suitable to generate carbon offset include renewable energy generation, methane abatement, energy efficiency, reforestation and land management which sequesters GHG, fuel switching etc. Often it is used for organisations to meet greenhouse targets when the cost of internal reduction is too high.

It is important to establish that the EU’s Emissions Trading Scheme is beyond the scope of this paper. It focuses on the voluntary carbon offset market. A commonly used approach at the moment is forestry[1]. Trees use up CO₂ during the process of photosynthesis in their food manufacture. The more trees there are, the more carbon will be absorbed from the atmosphere, and hence dangerous climate change can be prevented.

Toshiba’s carbon zero laptops[2] is a good example of the tree planting approach. The idea is that customers donate £1.28; the money goes towards new dedicated woodland in Devon. The native broad-leafed trees can apparently absorb up to a tonne of carbon in their lifetime. There are a few issues here: At an average life-span of 5 years over 20 laptops will be used during the life-span of one of the 13,000 trees. There are presumably far more than 13,000 Toshiba laptop users in the UK. Can the woodlands absorb all the emissions associated with the supply chain, production, transport, storage, use and disposal of all these laptops and their parts such as spare batteries? How is the carbon value calculated?

Here are some arguments which weaken the strategy of offsetting as a whole, namely,

• Project failures. The Coldplay mango plantation[3] in southern India is a classic example of a failed offset scheme. There are many reasons why projects fail. And due to lack of ownership and ineffective monitoring and implementation, offset projects have a high risk of failure.
• The concept of ‘Additionality’ is contentious and unclear. For a project to pass as an offset project it has to be proven that it yields additional carbon reduction compared to ‘business as usual’. It is not clear whether giving a high energy efficient stove to poorer communities in Africa (as done by CO2balance.uk.com) will lead to carbon reductions compared to when they didn’t have any stoves at all.
• The problem of calculating carbon saving or reduction. There is no standard approach of calculating quantities or pricing structures. Therefore it is not clear what carbon is being offset by a particular project.
• There is no standard verification body in the voluntary market. Some emissions reduction is verified by independent parties while others are not, this means that the emissions reduction claimed by some credits are uncertain.

Although the above arguments cast a lot of doubt over the extent to which offsetting actually reduces CO₂, this strategy has some positives:

• Raises public awareness about climate change through the publications and adverts of offset companies.
• Carbon offsetting can provide the much needed funds to develop low carbon technologies in the developing world.
• Offsetting supports projects in areas, such as Africa, where there are very few projects from the compliance offset market.
• It can act as a testing ground for new projects wanting to enter the compliance market
• It could reduce beyond the standard set by Kyoto, even though marginal

Although these may cut down carbon in the atmosphere, there are many parties involved that need to work together for any success to be achieved. If an organisation is serious about climate change and wants to take responsibility for their emissions, offsetting would not be the way to go. However offset projects could be useful when the organisation has reduced its total carbon footprint to a point where it is not sensible[4] (economically, socially or otherwise) to go any further but feel they want to do more.

The following statement from the World Development Movement sums it up adequately, “It is nonsensical to suggest that climate change can be tackled by cutting emissions from poor people, whilst allowing activities of the rich… to continue unabated. Yet this is the basis on which offsetting projects in developing countries are supposed to work.[5]”