Half of Centrica's carbon offsets banned by EU in 2013

Half of Centrica's carbon offsets banned by EU in 2013
Half of Centrica's carbon offsets banned by EU in 2013

Arabnews24.ca:Friday 30 September 2022 10:29 AM: Nearly half of the carbon offsets held by energy company Centrica on behalf of its UK business and residential customers have such a poor reputation that the EU banned them from its own emissions trading scheme in 2013.

Centrica, which owns British Gas, says it is committed to a cleaner and greener future.

Like lots of companies involved in fossil fuels, Centrica compensates for its own pollution and boosts its climate credentials by purchasing credits from projects around the world that reduce or avoid greenhouse gas emissions.

This is called offsetting, and typically involves things like tree planting or nature restoration projects.

But it is an industry that has long been criticized for a lack of transparency and consistent standards.

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Now records provided by Centrica to the Open Democracy news website and shared exclusively with Sky News, reveal that 44% of Centrica's credits purchased between July 2020 and June 2022 come from a Chinese chemical company called Shandong Dongyue Chemical Company.

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This company has sold carbon offsets in return for the safe disposal of a dangerous greenhouse gas called HFC-23.

HFC-23 is a by-product of a chemical commonly used in refrigerators and air-conditioners and it is thousands of times more potent than carbon dioxide.

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Over a decade ago, EU and UN officials became concerned that HFC-23 credits weren't actually benefiting the environment at all, and that companies like Shandong Dongyue were producing extra gas simply to sell more offsets and maximize profits.

Shandong Dongyue and other manufacturers denied this, but the offsets were widely discredited and eventually banned by a number of tightly regulated Emissions Trading Schemes in the EU and elsewhere.

There is no suggestion that Centrica has done anything illegal.

Shandong Dongyue, which has not responded to Sky's request for comment, was able to continue to sell old credits to those who would accept them, in what's known as the voluntary carbon market.

Still, to some, it is surprising that Centrica bought them in the first place.

Policy director at Carbon Market Watch Sam Van den plas told Sky News: "This is not a small company. "We're talking about a large company which should do their due diligence.

"I believe they take their corporate image and their environmental objectives seriously, therefore, you don't need to look very far in order to find out that those types of credits are highly unreliable and they have been widely critiqued in the past.

"We're not doing anything meaningful to solve the climate crisis if you rely on these credits.

"On the contrary, you give your consumers the impression they do something good for the environment, whereas in reality it just contributes to increasing greenhouse gas emissions."

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Centrica would not explain why it purchased the credits in November 2021, or disclose the price it paid for them.

But in a statement, a company spokesperson told Sky News: "These carbon offsets were initially brought to back a tariff which has not been sold since 2019.

"We subsequently made the decision not to use them again as they were not aligned with our high environmental standards.

"The current Green Future tariff has achieved Gold Standard accreditation from USwitch since the scheme was launched two years ago.

"Any future offset purchases for British Gas will be of the same high standard associated with the Green Future tariff."

But this is about much more than Centrica and one particular type of carbon offset.

The voluntary carbon market is essentially unregulated and it is growing at an extraordinary pace.

In fact, one estimate suggests that if demand continues to grow, by 2030 it could be worth nearly £50bn.

As more and more companies make serious net zero commitments and turn to the voluntary carbon market to help deliver on those promises, experts are calling for better transparency and consistency.

Rob Macqaurie, policy analyst and researcher and the London School of Economics' Grantham Research Institute on Climate Change, told Sky News: "There are quite a lot of dodgy claims being made.

"Policymakers should be looking at potential rules and even watchdogs to govern the kind of information that companies are putting out about their use of carbon credits.

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"There are rules emerging to help us understand what high quality looks like, the trick now is to take those rules and ensure that they're really widely adhered to."

One of the organisations working to put an agreed set of global standards in place for businesses purchasing carbon credits is the UN-backed Voluntary Carbon Markets Integrity Initiative (VCMI).

The group's executive director Mark Kenber told Sky News: "Carbon credits can be a powerful tool for decarbonisation - but only if we can make sure they're used correctly, above and beyond action companies are taking to cut their own emissions.

"Equally, companies must be clear with consumers about the action they're taking to reach net zero, which is why we're spearheading a more transparent and accountable way to make this the norm.

"VCMI's Code of Practice - which is currently being trialed by leading climate-conscious businesses - will create a commonly agreed set of standards to allow companies who are genuinely making progress to demonstrate this."

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William McDonnell, Chief Operating Officer of the Integrity Council for Voluntary Carbon Markets, which is attempting to build a globally accepted standard for the quality of carbon credits, told Sky News: "You need an independent body to clearly mark which credits are high quality, which is what we're doing with the Core Carbon Principles.

"Once this is in place, it will be completely transparent which companies are choosing to buy junk credits, and that transparency will disincentivise companies from doing so."

He continued: "The principles will underpin confidence, reduce confusion and fragmentation, and pave the way for scaled finance and investment so high-quality carbon credits can unlock additional urgently-needed private capital and channel it efficiently towards the most impactful, cost-effective climate mitigation activities globally, particularly in developing economies."

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