23 April 2009

UK Carbon Budget: more cynicism about offsets

The UK government has set "the world´s first carbon budget" which includes a worthy, if tautological, aim to meet its domestic emissions reductions obligations domestically.

We are told that it will "Aim to meet the carbon budgets announced today through domestic action alone, and consistent with this, setting a zero limit in the non-traded sector on offsetting through international credits for the first budget period."

The Department of Energy and Climate Change (DECC) had previously commissioned an "impact assessment" of the EU Climate and Energy Package. It is written in dull economese, and with lots of questionable assumptions. But on the use of these carbon offsets it makes an interesting point:

101. Analysis of the effort required in the non-traded sector presented in Section 3.3 shows that under the projected emissions scenario modelled there is sufficient negative-cost abatement potential available to meet the anticipated shortfall. This suggests that there would be no requirement to use project credits, as sufficient abatement at lower (negative) cost is available. Therefore, under this, there would be no need to use project credits, and subsequently no additional cost of constraining their use

(emphasis mine)

In other words, the UK government is spinning "a restriction on the use of offset credits in non-traded sectors" as something pro-active, but its own study finds that "there would be no requirement to use project credits" anyway.

Why? The impact assessment talks of cost-neutral efficiency savings or those that result in net gains - and it is certainly true that many such possibilities exist (which begs the question: why are business decision makers so sclerotic that they don´t even make climate change measures that would make them money?)

There are also a couple of more basic reasons. The "first budget period" for the UK carbon budget runs to 2012. The UK is well below this target - and European Environment Agency data shows that the main reason for this is basically that energy production saw a shift from coal to gas in the early 1990s as a result of coal mines closing.

Second, it is also worth noting that offsetting is still very much a practice within sectors that are included in the EU Emisions Trading Scheme. As the National Audit Office explains,
UK installations can buy allowances from participants in other EU Member
States and may also utilise up to 91 MtCO2 of project credits over the five year period, which represents 60 per cent of the emission reduction effort required in Phase II.
Project credits are offset credits. Loosely translated, more than half of the UK´s emissions reductions obligations can be met outside the EU, and the remainder could be met elsewhere within the EU (where surplus credits are plentiful thanks to post-1990 economic restructuring in Central and Eastern Europe, and the current recession). These figures also need to be viewed in a context of a changing industrial structure, where the tendency has been towards de-industrialisation (meaning that more of the UK´s emissions are "outsourced" to the global South), and in a context where international aviation (although this is finally changing, in part) and shipping are simply excluded altogether from the figures.

So while the UK talks of a "revised target to reduce emissions to at least 34% below 1990 emissions by 2018-22," the actual figure is far lower.

(A revised, article-length version of this post can be found here)

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