UK to standardise consumer offsets

The UK Department of Energy and Climate Change (DECC) has opened up its offsetting accreditation scheme for applications. Their aim is to help consumers buy with confidence, and despite being a voluntary opt-in scheme it will hopefully help to dispel some of the criticisms that have been levelled at the industry over the years.

UK Government offsetting mark

Sellers of offsets wishing to add the ‘Government approved’ logo (shown here) next to their products will need to meet certain criteria.

First, the way in which the offset is calculated must be ‘accurate’.

This means that the conversion factors and methodologies used to assess the carbon footprint of an activity should be standardised.

The Government provides a list of approved data sources and methodologies – all of which are supported by AMEE.

It is worth noting that these official sources are subject to change over time: they will be updated annually in the spring. Meanwhile, consultations are being held on how precisely electricity related emissions should be calculated. It goes without saying that we will be updating AMEE in line with all future changes so users of the AMEE API can be confident that their calculators are both accurate and fully up-to-date.

Non-standard methodologies can be used but the Approval Body will charge £1,000 for the privilege.

The scheme also requires a range of other activities to meet set criteria – most controversially perhaps is that in order to qualify, the emissions permits/credits sold in the offset product must be UN backed ie. the Clean Development Mechanism’s certified emission reduction credits (CERs) ; European allowances under the EU Emission Trading Scheme (EUAs); or national assigned amount units under the Kyoto Protocol (AAUs). Credits outside this list are known as Voluntary Emissions Reductions (VERs) and have made up the bulk of offset products to-date.

The Government hasn’t ruled out including them in the future once there is a process in place that allows them to be properly verified and tracked.

All permits must be bought and cancelled within a year of the customer purchasing the offset and the product must be transparently priced. There is also a requirement that consumers are provided with information about how to reduce their emissions prior to offsetting.

Given these restrictions some of the major offsetters in the market today may decide to turn their back on the scheme altogether – the rules, combined with the accreditation fee, will push up the price of their products and they may decide it is not worth it. Smaller offsetters with products that already qualify may also be put off since the fee schedule is oddly priced – the first payment level, encompassing all companies with less than £1.6m pa in turnover, comprises an initial annual fee of £3,600 and a further £2,000 to renew – this represents a full third of the costs for ‘large’ companies that have a turnover in excess of £40m pa.

There are only a few companies who will fall into this upper category; many will fall well below the first threshold – only time will reveal whether they have found a pricing model capable of attracting a significant take-up.

For more information about the scheme visit:

http://offsetting.defra.gov.uk/

To contact AMEE to find out how we can help you meet the criteria, email us at help [at] amee.com

Bryony Worthington, Head of Policy, AMEE, February 2009

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