UK carbon offset schemes 'failing to reduce emissions'

Expansion of carbon offsetting and clean development mechanism is locking developing nations into a high-carbon path, report warns

• John Vidal, environment editor
• guardian.co.uk, Tuesday 2 June 2009 17.59 BST

Britain is the world centre of a multibillion dollar "carbon offset" industry which is failing to lower global greenhouse gas emissions, a major report from Friends of the Earth claimed today.

The authors urged governments meeting this week in Bonn for UN climate change talks to drop plans to expand offsetting schemes, which allow rich countries to invest in projects that reduce emissions in poor countries as an alternative to more expensive emission reductions in their own countries.

Offsetting is set to expand enormously if the 192 governments meeting in Bonn allow forests, nuclear power and other sources of "clean energy" to count towards emissions reductions as part of a UN climate treaty expected to be agreed in Copenhagen this December..

The problem, said the report, is that offset schemes are delivering much lower greenhouse gas cuts than the science says are needed to avoid catstrophic climate change. Offsetting supports the idea that the cuts can be made in either rich or in poor countries " ... when it is clear that action is needed in both," said the report. "Offsets are a dangerous distraction ... It is almost impossible to prove that offsetting projects would not have happened without the offset finance. Nor is it possible to calculate accurately how much carbon a project is saving," it added.

Offsetting has been promoted heavily by the UK government in Europe and the UN as a painless way of reducing global emissions. The idea has mushroomed in the last five years with the rapid growth of the UN's clean development mechanism (CDM) which attracts investment money to poorer countries in new projects. These are expected to deliver more than half of the EU's planned carbon reductions to 2020.

"The clean development mechanism is supposed to be a way of making the same level of carbon cuts as would otherwise happen, but more cost effectively. At best it shifts a cut in a developed country to one in a developing one. In practice, it does not even do this," said Andy Atkins, executive director of Friends of the Earth UK.

Moreover, said the report, the CDM is locking in poor countries to a high-carbon path, with some big CDM projects approved for even major fossil fuel power stations. "A large part of CDM revenues are subsidising carbon intensive industries or projects building fossil fuel power stations."

Two previous analyses of the CDM suggested that companies routinely abuse the UN-backed offsetting scheme, wasting billions of pounds.

The UK government has already used offsetting as a way to justify high carbon investments in major projects like the expansion of Heathrow, it said. "Offsetting makes it far more likely that developed countries will continue on a high-carbon path, choosing to buy cheap permits rather than invest in low-carbon infrastructure," said the report's authors.

Nearly 30% of the world's 2,500 CDM projects originate in London, although not all the projects offset UK emissions.