Recently our clients and customers have been asking us for information on European-based carbon offset projects, particularly those that support forest protection and reforestation projects. Whilst there are verified European projects, they are few and far between and individual carbon credits are often more costly than those projects based elsewhere in the world.
Offsetra have been considering this, and ran some back of the envelope calculations to help clients understand the state of the European offsetting market. We used the UK as an example given it has the largest share of European-based offsets today, as follows:
Coniferous wood in the UK can today fetch around £30 per cubic metre according to the latest Forest Research statistics (1). The conversion from metres of wood to tonnes of wood is less than straightforward, but for argument’s sake we will assume one tonne of coniferous wood can fetch around £60. The equivalent revenue for selling four trees could therefore be up to £240. Consider that these 4 trees could sequester 1 tonne of carbon and therefore receive a market price of roughly £15 for a Verified Carbon Unit (VCU) and we see the significant downside of roughly £225 (per VCU).
The lost revenue for an organisation using its timber resource to provide carbon offsets instead of selling wood to the timber market could feasibly run into the thousands.
Of course, this is a quite simplistic analysis of the marketplace, and there are a variety of other factors influencing the returns on providing offsets versus timber. On one hand the ongoing costs of running a successful lumber operation are high, on the other hand the trees can be felled, regrown and sold to continuously generate revenue year-on-year. However, this exercise does serve to indicate that there is some way to go before European landowners will see offsetting as an economically viable business model, particularly as European lumberers currently sit within the highest consuming region of wood globally and have a thriving market to exploit right on their doorstep (2).
Is this a bad thing?
No, not necessarily. Climate change is a global challenge, and whilst individual regions may contribute more or less to increased carbon emissions the impacts of increasing temperatures and rising sea levels do not discriminate based on region. Offsetting via verified projects in the Amazon Rainforest contribute to the same net reduction of atmospheric CO2 within the global carbon cycle as offsetting in Europe does.
Additionally, many of the critical co-benefits that carbon offsetting delivers to localities may be more impactful in Central and South America and Africa. These co-benefits can give individuals meaningful employment to support the regeneration of degraded rainforest, or help to ensure that pristine habitats remain undisturbed by human interference and can maintain their unique biodiversity.
Will this change?
It could. The demand for carbon offsetting is rising quickly, and if the supply of carbon credits doesn’t catch-up the price of individual offsets will rise. These market conditions could encourage more organisations in Europe to consider getting accredited to deliver verified emissions reductions in the future.
So what should I do?
Don’t forget that reducing your consumption of wood by purchasing reused and refurbished products is one way that you can immediately reduce your carbon footprint and reduce the demand of freshly cut European wood!
Offsetting is one of many ways to compensate for those emissions that you simply can’t avoid. If you choose to offset using VCUs from outside of Europe or the USA, you can be confident that you’re still having a measurable impact.
Find out more by visiting www.offsetra.com