Public sector leadership on the global climate emergency: guidance

10. Dealing with Unavoidable Emissions

Public bodies are required to do all they can to reduce emissions as much as possible, and absolute carbon reduction must be achieved. However there will be some residual emissions remaining and therefore some organisations will need to invest in carbon removals or offsets to meet net zero, adapt to a changing climate and enhance the state of nature.

• Insets are activities within the organisations operational boundary, such as enhancing the carbon sequestration of their own land holdings, or by agreement, on public land.
• Offsets are externally verified and purchased/sold on a market.

For the purpose of this section insets/ offsets will be referred to as offsets.

There are 2 main types of offsetting mechanism:

• Emissions reduction – invest in reducing an existing emissions source e.g. some peatland restoration.
• Emissions removal – investing in projects that will removal carbon emissions from atmosphere e.g. tree planting.

Both should result in multiple benefits for mitigation, adaptation and state of nature.

In general, removal offsets are the type considered compatible with the 1.5 degree Paris ambition and Scotland’s net zero 2045 target, while reductions offsets may not be compatible with this as they still allow for emissions. However there can be a role for reduction type offsets for organisations own, earlier, net zero targets, to help increase the pace of decarbonisation and other societal challenges including adapting to a changing climate and reducing risks to removal projects

Any carbon offset must demonstrate consideration by public bodies of:

• Permanence – whether the GHG removal can be reversed, e.g. a forest fire, and what mitigation is in place for this.
• Leakage – any increased emissions that occur elsewhere from the offset e.g. construction emissions.
• Additionality – the project would not have been carried out if not to achieve the carbon offset.
• Verification – the carbon removed/ avoided must be quantifiable and be able to be verified.
• Co-benefits – the wider benefits of the project.

Public bodies should also consider if the purchase of offsets is the best use of public funds.

For any offsetting that is carried out on emissions that are within Scotland’s territorial boundary natural sequestration projects within Scotland should be prioritised.

Nature-based solutions to climate change can provide many co-benefits, from mitigation and adaption benefits to biodiversity and enhancement – addressing aspects of the dual crises of climate and biodiversity that the world is facing.

Any offsetting/natural sequestration should follow well established principles in the market, for example those outlined in The Oxford Principles for Net Zero Aligned Carbon Offsetting, which have been set to ensure that any offsetting is compatible with transitioning to a net zero society.

1. Prioritise reducing your own emissions first, ensure the environmental integrity of any offsets used, and disclose how offsets are used.

2. Shift offsetting towards carbon removal, where offsets directly remove carbon from the atmosphere.

3. Shift offsetting towards long-lived storage, which removes carbon from the atmosphere permanently or almost permanently.

4. Support for the development of a market for net zero aligned offsets.

Accounting for Offsets or Insets

The accounting for offsetting/insetting is likely to evolve over the coming years and as more international and national guidance is developed.

Offset Credits

For an organisation to show they have met a net zero target they must still complete their GHG report showing total emissions. They must be able to demonstrate that any direct emissions they are offsetting are unavoidable, and all direct emissions that can be reduced to absolute zero have been.

Offset credits can then be shown in the annual GHG accounts. It must be recorded separately to the organisation’s emissions. If using UK based credits then verified carbon units must be used. The offset credits that are being used within that years GHG accounting must be ‘retired’ so that they cannot be used again.

The net balance of emissions and offsets should then be shown to equal zero, allowing a net zero claim to be made.

Insetting

Carbon insets are treated as carbon sinks within the operational boundary of an organisation. These should be reported within the GHG reporting of the organisation under land use emissions reporting.

If carbon removals are reported then all land use emissions must be included within the organisations operational boundary and reported annually.

The GHG protocol is developing clear guidance on accounting for removals, due to be published by the end of 2022. Their current guidance is available online.

Policy/Scottish Government position on Offsetting and Natural Sequestration

Scottish Government position on offsetting and investment in natural assets (As of March 2020)

• Increasing investment in Scotland’s natural capital is vital to achieving Scotland’s ambitious climate change targets, and expanded natural carbon sinks (e.g. planted trees) play a significant role in the CCC’s pathway for Scotland to reach net-zero by 2045.
• The Scottish Government intends to meet its ambitious, legislated climate targets through domestic action alone, without needing to purchase climate effort from other countries, and this default position is legislated for in Scotland’s Climate Act.
• The Scottish Government sees offsetting as an important means of mobilising private investment into projects. However, offsetting is not a replacement for emissions reductions, and should always be purchased in addition to action to reduce emissions as close to zero as possible at the time of purchase, and as part of targets and transition plans aligned with the Paris Agreement.
• Scottish Government will continue to improve its policies and actions across the board, in order to leverage private investment into Scotland’s natural capital and into nature-based climate solutions.

Offsetting Projects on Scottish Government or Agencies’ Land

• The Scottish Government and its agencies will seek to increase the availability of verified offset available to purchase in Scotland, by responsible purchasers in order to deliver additional forestry and peatland restoration, that accelerates Scotland progress towards the net zero targets.
• Any offset projects on publicly owned land, available for sale in Scotland should continue to be verified to the highest available standard: currently the Woodland Carbon Code and Peatland Code, or any future standard of equivalent or higher environmental credibility.
• Scottish Government or agency offsetting agreements will be prioritised towards companies or organisations where there is clear evidence that they are already taking extensive and far-reaching action to reduce emissions, such as putting in place a transition plan aligned with the Paris Agreement, but wish to go beyond what is currently expected of them.

Natural Sequestration Projects on Public Sector Land

If public bodies own land that is suitable for investment to improve carbon sequestration rates, then they may wish to develop their own natural sequestration projects.

They may use the sequestration achieved to net off any residual emissions, or potentially use land to support Scotland’s wider decarbonisation goals.

The following key principles were framed by Connecting Nature – a project funded through EU Horizon 2020. They provide a useful introduction to identifying and developing natural sequestration solutions:

• Does it use nature/natural processes?
• Does it provide/improve social benefits?
• Does it provide/improve economic benefits?
• Does it provide/improve environmental benefits?
• Does it have a net-benefit on biodiversity?

Any natural sequestration projects developed on public sector land should consider the above questions.

Natural sequestration projects should use the best available quantification methods such as the Woodland Carbon Code. For habitat types that do not currently have a code then the most up to date and comprehensive data should be used. Further codes are in development for certain habitat types and once developed these should be used. In 2021 the Environment Agency published a detailed report in the offsetting opportunities in the UK that provides information on sequestration of a wide range of habitat types, beyond those currently covered by codes. If the organisation intends to create offset credits to trade then a formal code e.g. Woodland Carbon Code must be used.

This is a new and developing area that is being pioneered by leaders in the public sector with Scottish Government support. As this develops supporting information and guidance will be published. Scottish Government is currently leading partnership initiatives which aim to significantly increase the level of private investment in nature-based solutions, such as peatland restoration.

Any public body that is developing natural sequestration projects on their land should keep Scottish Government informed.

Voluntary/International Offsetting Markets

For any emissions within Scotland it is strongly recommended to offset with Scottish natural sequestration projects to support Scotland’s territorial 2045 net zero target. It is recommended that international offsets should only be considered for emissions that are not included within the net zero 2045 target e.g. international flights.

Public bodies are still required to reduce emissions as much as possible before considering offsets.

If the organisation chooses to offset emissions that are emitted outside of Scotland’s territorial boundary then they must ensure these are of high quality and are fully verified to a respected standard, such as the Gold Standard.

International offsets must also meet the following:

• Reducing emissions must always be the priority before considering offsetting as part of a net-zero strategy.
• Institutions should establish robust principles to justify which emissions can and cannot be offset.
• Offset schemes must be carefully assessed and should align with the Sustainable Development Goals and be fully verified e.g. Gold Standard.
• Prioritise carbon removal offsets over emission reduction offsets.
• Offsets must have wider benefits beyond carbon, such as social and biodiversity-related impacts.