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Establishing a Carbon Offset Policy – key considerations and steps to take

It is unlikely that housing associations will be able to reduce their greenhouse gas emissions to true zero in the foreseeable future. David March, Head of Environmental Sustainability at Orbit, examines the role of carbon offsets in closing this gap and achieving Net Zero Carbon.

For some time, social housing providers have understandably been focused on decarbonising their housing stock to align with Government national net zero carbon and EPC targets, and to increase energy affordability for their customers. However, David points out that over two-thirds of a housing association’s greenhouse gas (GHG) emissions will result from their own business operations and supply chain.

David, therefore, issued a call at the Chartered Institute of Housing’s conference, Housing 2021, for social housing providers to issue clear, dated Net Zero Carbon commitments and supporting strategies. Orbit will be publishing its own this November.

By targeting a clear date to achieve Net Zero Carbon, social housing providers will need to consider the following question: What do I do when I get to the commitment year? Regardless of whether this is 2025, 2030 or 2040, an organisation is unlikely to be able to reduce its GHG emissions to true zero. This is where carbon offsets come in.

Carbon offsets are used by organisations and individuals to balance out their emissions by either preventing emissions from occurring elsewhere (e.g. renewable energy projects), or by absorbing GHGs from the atmosphere (e.g. through tree planting). Offsetting projects are usually based in less developed countries where costs of implementing these are lower and it is easier to demonstrate additionality (that a project would not have proceeded without the offset funding).

Carbon offsets have faced criticism over the years. There are those that argue carbon offsetting simply encourages individuals and organisations to carry on ‘business as usual’. They compare this to the historic ‘indulgences’ within the Catholic Church, where individuals could pay money to have their sins forgiven. However, whilst sin is highly intangible and individual, tonnes of carbon are very real and it does not matter where they are emitted or absorbed around the world.

The second argument does not rule out carbon offsetting but asks about quality. How can we be certain a tonne of carbon has genuinely been offset? How can we know that it will remain so indefinitely? Tree planting has suffered much criticism due to the ability of disease, wildfire and human activity to undermine long-term carbon offset projects.

To manage these concerns, David recommends that all housing associations set a carbon offset policy prior to reaching their Net Zero Carbon commitment date. This should reiterate from the very outset that carbon offsetting is the last resort option after all practicable reductions have been made. It should state clearly that the remaining ‘unavoidable’ GHG emissions will be offset through the purchase of credible, additional and sustainable carbon offsets.

Scope

Greenhouse gas emissions are categorised into three groups or 'Scopes'. When setting a Carbon Offset Policy, it is therefore important to detail what GHG emission categories or ‘Scopes’ are to be included. David’s recommendation is that social housing providers set a commitment that goes beyond their housing, to include their operations and that of the supply chain as well.

Providers should include their direct emissions from owned or controlled sources, and indirect emissions from purchased electricity, heat and steam – classified as Scope 1 and 2, regardless of where they originate. This may include communal spaces and heat networks where the provider has operational control. Providers with a construction arm should also include emissions of build programmes if self-delivered.

The real question then is whether to include Scope 3 emissions - indirect emissions from housing or the supply chain - within the offset policy. This is ultimately a choice that needs to be weighed by each social housing provider. The GHG emissions originating from these sources will make up the majority of an organisations carbon footprint and are likely to be more expensive to offset than those of the operations alone.

David advises that social housing providers should consider the degree of influence they have over Scope 3 emissions and the likelihood that housing residents or suppliers will offset their own emissions. He suggests that providers should seriously consider offsetting unavoidable emissions from the heating and powering of housing, whilst influencing the supply chain to set their own net zero carbon commitments.

Roles and Responsibilities

The carbon offset policy should also detail who is responsible both for the measurement of GHG emissions and the purchasing of carbon offsets.

Ownership at a senior management or executive level should also be highlighted. This may all be one person such as an Environment Manager or equivalent. However, it could also be more complicated with different business units or teams having control over their own carbon accounting and offsetting approaches.

Accounting Methodology

The policy should detail which accounting standard(s) have been followed in measuring the GHG emissions. The main ones available are the GHG Protocol or ISO14064. However, there is no reason why a sector-specific methodology or even a bespoke organisational one could not be used. Indeed, when it comes to the housing emissions there is not currently one clear approach, with many still using SAP 2012 emissions factors despite the fact these are now much higher for electricity than those published for the national grid.

It is also important to outline any internal validation or external verification steps taken to ensure the carbon footprint is as accurate as possible. Certifications like the Carbon Trust and Planet Mark are available to provide a greater degree of assurance.

Project Selection Criteria

There are also key criteria to consider when selecting which carbon offset project to choose:

  • Credibility – what third party verification supports a project’s claims?
  • Additionality – would the project have gone ahead even without the offset funding?
  • Permanence – will the GHG emissions be locked up forever or be released back into the atmosphere later?
  • Leakage – will a project simply push carbon emitting activities elsewhere?
  • Sustainability – are projects economically viable, socially equitable and environmentally friendly?

 

The easiest way to ensure these criteria are met is to make a clear commitment to only purchase offsets certified by international schemes, such as the Voluntary Gold Standard or the Voluntary Carbon Standard. Of course, some social housing providers may want to opt for carbon offset projects closer to home. If this is the case, then providers should consider how they will ensure these criteria are met – possibly through internal expertise or the support of a reputable third party.

 

Transparency

Finally, organisations should begin publishing annual reports once their carbon offset policy becomes active. This annual report should detail the GHG emissions for the relevant scope, the carbon offset projects funded and a carbon balance demonstrating that a position of Net Zero Carbon has been achieved.