By using the city of London as a collective ‘insetting**’ scheme, a local carbon offset fund would enable businesses in that area to offset emissions within their own ‘supply chain’ – in this instance their local Borough.
Local carbon offset funds, an alternative to the traditional voluntary carbon offset market?
16 Jul 24
Voluntary carbon offset* markets (VCOM) are not working. Estimated to be worth over £1.5bn a year globally in 2022, a newly published report from nonprofit Ecosystem Marketplace suggested VCOMs’ value had more than halved by the end of 2023 to under £600m. Last year, a joint investigation by the Guardian, Die Zeit and Source Material found that a range of forest carbon offsets approved by the world’s leading certifier were largely worthless, a key attributor to VCOM’s dramatic deflation.
Whilst some companies are legally mandated to offset their carbon emissions, most are not required to do so by law and act voluntarily. Companies generally spend from £20 to upwards of £100 per tonne to offset their emissions in the form of carbon avoidance schemes, such as investment in renewable energy projects from India to Mexico, or carbon removal schemes, including reforestation or peatland restoration. For example, at Iceni, our ESG Strategy includes a commitment to carbon neutrality through the use of VCOM, investing in carbon avoidance via a global renewable energy portfolio.
Whilst certified international offsetting will clearly be necessary and will continue to be the major market player, there could be an opportunity to drive greater benefit for our communities.
How can we use carbon offsetting to maximise positive social benefits for London?
By using the city of London as a collective ‘insetting**’ scheme, a local carbon offset fund would enable businesses in that area to offset emissions within their own ‘supply chain’ – in this instance their local Borough.
London’s housing stock is responsible for a third of all carbon emissions in the city, and 80% of all homes expected to exist in 2050 have already been built, making retrofitting an essential task. Taking the London Borough of Southwark as an example, approximately 15% of households are in fuel poverty with average annual gas and electricity bills around £2,500. Conversely, London is the fifth wealthiest city in the world[1].
Could voluntary offsetting and charitable funds available within London businesses be used to promote home retrofitting interventions?
This is especially relevant given the demand by residents to enhance their home energy efficiency.
The Camden Climate Fund already uses a similar model, providing up to 50% of funding for homes, businesses and community spaces through local carbon offset payments. These payments, which are collected through the planning system when new developments fall short of the Mayor of London’s Net Zero carbon target, could also be used to support voluntary commercial offsets within a wider local fund.
In part instigated by the pandemic, there seems to be growing appreciation of the importance of ‘local’ once again. A local carbon offset fund could continue to support this sentiment, reducing emissions and truly improving living standards at a local level while benefiting all stakeholders.
At Iceni Futures, we make sustainability an integral part of our projects on a daily basis, driving carbon reduction through an integrated range of services. To see how we could support your sustainability aspirations, get in touch with Luke Bajic.
*Carbon offsetting – “financially compensating for greenhouse gas emissions arising from polluting human activity, often in schemes designed to make equivalent greenhouse gas reductions in the atmosphere.”
**Carbon insetting – “using equivalent market compensation rates for greenhouse gases to bring the carbon reduction process ‘in-house’, investing in related processes that seek to make improvements within an organisation’s own value or supply chain.”
[1] https://www.henleyglobal.com/publications/wealthiest-cities-2024