Carbon offset market shifts away from forestry

Future Forests, the UK's leading provider of voluntary carbon offsets, has rebranded itself as the CarbonNeutral Company - reflecting a strong market shift away from forestry projects. Meanwhile, business interest in the voluntary carbon market continues to grow, with major bank HSBC in the vanguard.

Future Forests was founded in 1997 - and rapidly gained a high profile thanks to effective marketing and celebrity endorsements. Its business was built on single tree dedications to individual consumers, but has shifted increasingly to provision of offsets and carbon management advice to business clients (ENDS Report 356, pp 21-24 ).

Chief executive Jonathan Shopley says the rebranding of the business "signals a realignment of our name with what we actually do". Consultation with stakeholders found a perception that it worked mostly in forestry - and that NGOs and some businesses "had a high sensitivity" arising from debates over the effectiveness and permanence of forestry as a carbon sink.

The CarbonNeutral Company's turnover is expected to have increased by 80% to £2.5 million this year - with 85% or more coming from work with business clients. The company has offset some 185,000 tonnes of CO2 in the past 12 months.

However, tree-planting now accounts for a small part of the company's portfolio. It is currently purchasing 70% of its credits from technology-related projects such as renewables and energy efficiency and only 30% from forestry - a reversal of the position just one year ago.

Mr Shopley insists that "we're not retreating from trees", and that "most clients are sanguine or positive about the sequestration route".

However, the rebranding follows years of sniping from environmental groups. Future Forest's main competitor Climate Care moved away from forestry six years ago (ENDS Report 296, p 32 ).

HSBC - which galvanised the offset market with a plan to become carbon neutral from the start of 2006 (ENDS Report 359, p 15 ) - has also ruled out offsets from forestry. "We've made clear we don't see it as a credible way of dealing with climate change, both in terms of number of trees needed and in the ability to manage forests in perpetuity," says the bank's environmental advisor Francis Sullivan.

In August, HSBC went out to tender for some 170,000 tonnes of offsets to cover the last quarter of 2005. It is prioritising renewables and energy efficiency projects, particularly in China, India, Brazil and Mexico. It received bids from 17 offset providers covering 85 projects, and is expected to announce the portfolio in October.

Mr Sullivan says the tender is a "dry run" to try out procedures, and establish key principles for full-blown carbon neutrality next year. "It's easy to get your head around offsetting a flight to Geneva - but when you're the ninth largest company in the world, things get complicated," he says.

Mr Sullivan also sees a growing need for standardisation and regulation of the offset market. "It's not clear what the market rules are. What are you actually buying? What are the guarantees? Who verifies it? Is our word good enough?" he says.

The CarbonNeutral Company has set up a new advisory board chaired by the Environment Agency's former chief scientist John Murliss. Mr Shopley says the group will focus on developing the company's existing protocols - with the hope that "we can evolve a standard, and then seek out potential partners to take on ownership and make it available to anyone in the market to use."

Mike Mason of Climate Care describes the initiative as "a bit Johnny come lately". "We put our standards in the public domain years ago, set up an environmental steering committee and backed the idea of a regulated market," he says. "There was no response from other offset providers."

  • Climate Care is providing offsets for two consumer-focused schemes launched in September.

    British Airways is asking passengers to make a donation when booking tickets online. The cost of offsetting return flights from London to Madrid and to Johannesburg is put at £5 and £13.30, respectively. The move was backed by Environment Minister Elliot Morley, who recently urged holidaymakers to offset the impact of their flights (ENDS Report 367, pp 30-31 ).

    British Gas has also become the first major energy supplier in the UK to offer its customers the ability to offset emissions from their gas and electricity use. n

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