Can we buy our way out of CO2 chaos?

It seems a great way of maintaining your lifestyle while easing your environmental conscience, and with almost 60 per cent of us believing that we are already feeling the effects of climate change, carbon offsetting is becoming an increasingly big business.

But almost every element of this new industry – from the science involved to the varying charging policies – have come under fire, and offsetting companies have frequently been accused of misleading consumers who are trying to do the right thing.

Confusion abounds, but the theory is simple. For every activity we do, from making a sandwich to flying around the world, we use a certain amount of energy. The production of that energy causes the emission of carbon dioxide, otherwise known as a carbon footprint. This and other gases are to blame for the climate change we are beginning to witness around the world, including the destruction of the rainforests, the melting of the polar permafrost, and even, some have suggested, the recent flooding here in the UK.

With climate change firmly on the agenda, consumers are being encouraged to consider ways to reduce their carbon footprint, either by limiting those activities that produce the most harmful greenhouse gases, or working out ways to compensate for it – which is where carbon offsetting comes in.

But if you live in the middle of a city, your orchard planting options are limited, so an array of companies have sprung up offering to do the offsetting for you. You simply have to foot the bill. And that is were the trouble starts. The latest research by Which? has found that a typical household could pay anything between £23 and £160 to counter their carbon dioxide emissions for a year, depending on where they take their offsetting business.

How big is your footprint?

Which? tested carbon calculators across 13 UK carbon offsetting organisations using a hypothetical "test house", which didn't vary in its annual energy usage or the activities of its occupants. But estimates of the carbon dioxide used over a year varied dramatically, from 1.15 tonnes with Carbon Footprint ( http://www. carbonfootprint.co.uk/) to 7.1 tonnes with The Carbon Neutral Company ( www. carbon neutral.com). The Government's independent carbon calculator, at www.direct. gov.uk\actonCO2, which was introduced recently in an attempt to reduce the confusion surrounding carbon footprint calculations, came in with an emissions figure of 4.31 tonnes.

But according to the Stockholm Environment Institute (SEI), there is no universal consensus about what a carbon footprint actually means, or how it is measured. Many carbon offsetting calculators simply add up your energy use over an annual period and tell you how much carbon dioxide producing that energy would be released into the atmosphere.

But what about the carbon cost of producing your new LCD TV, as well as leaving it on standby all night, every night? Or the cost of producing a car, as well as driving it half a mile to the local post office – if you still have one?

The SEI calculates the average UK household CO2 as 20 tonnes a year because its figures include an estimate of the individual proportion of the greenhouse gases produced in, for example, making the fridge and getting it to the kitchen as well as running it.

What price pollution?

Once you have decided what you are measuring, the problems are not over. Which? found that offsetting a tonne of carbon dioxide could cost anything between £7 and £23 depending on the company used. This is usually due to the offsetting projects involved, and the best ways to offset are changing all the time. The Carbon Neutral Company, along with many others, has recently shifted its focus away from planting trees, the most well-known offsetting option, because it takes around 100 years for a tree to absorb the amount of carbon dioxide produced by the average driver over just two months.

So the methods involved in carbon offsetting now include renewable energy projects, and many offsetting companies have also shifted much more towards energy efficiency ideas, such as supplying energy-efficient stoves to developing countries.

"But it is not the nature of the project or the location that causes the main difference in the price of offsetting per tonne, it is the standard to which those projects adhere," says Bill Sneyd of the Carbon Neutral Company. "Some projects are in line with the standards set out by the Kyoto agreement on climate change, for example. But this doesn't mean that the more you pay to offset your tonne of carbon the more reputable the project will be. Be clear that what the company is selling is exactly what you want to buy, rather than relying on the price.

"Cost is no indicator of quality," he adds.

Transparency

Few carbon offsetting companies are clear about exactly what they do and what it costs them or us. But with nothing tangible to show for it, how can you tell whether some companies actually do what they say they do at all? The short answer is that you can't.

Of the 13 UK-based sites, only one, Climate Care ( www.climatecare.org), publishes its accounts. In the year to September 2007, Climate Care's income totalled just under £7.6m. Of that, £5.58m went to funding the projects themselves. After costs, the company made a total net profit of £288,000.

"There are a number of reasons that [carbon offsetting businesses] may not be transparent," says Mike Mason of Climate Care. "And one of them could be that they are cheating their customers. I don't think this is common, but there is always that problem when your business is all about taking something out rather than providing a final product." He adds that organisations also fear coming under fire over the proportion of income that goes towards paying administration costs rather than going directly into paying for projects.

In response to the issue, the Department for Environment, Food and Rural Affairs (Defra) has plans to create a voluntary business standard for carbon offsetting companies. "The aim is to reduce the confusion and scepticism surrounding carbon offsetting by providing consumers with the complete story," says Jonathon Farr, a spokesman from Defra. The draft code includes principles on accounting for methodologies and procedures, and deals with "additionality" issues, when a company claims that offsetting that would occur anyway counts towards their additional offsetting rule – if an existing woodland is preserved and offsetting claimed, rather than new trees planted, for example.

"It is a voluntary agreement of good faith," Farr admits, "but this business is about credibility and the rubber stamp from the Government will be crucial for carbon offsetting organisations. Our main message, however, is that carbon offsetting should be secondary to reducing your effect on the environment in the first place."

If your focus is indeed the cost as well as the environmental impact of your everyday life, most that agree prevention is better than cure. By cutting down on your energy usage or reconsidering the necessity of that long-haul flight, not only will you reduce some increasingly expensive energy bills, you will also not fork out as much to carbon offsetting companies. By reducing carbon footprints, the damage done to the environment is minimised in the first place, rather than leaving it to piecemeal clean-up operations.

Offsetting companies: what to look for

Seek out in-depth information about how your carbon footprint is calculated, and what it actually covers. Does the offsetting company concerned use its own carbon calculator or the calculator used by the Department for Environment, Food and Rural Affairs (Defra)?

Bear in mind that submitting kilowatt hours of energy usage rather than how much that power costs you is the most accurate way of calculating your personal carbon dioxide emissions.

Look out for clear, quantitative information on what your offsetting cash will go towards. For example, how many trees, energy-efficient stoves, or hydroelectricity plants will your £10, £20 or £30 actually be used to plant, produce or support?

Ask whether the offsetting projects be independently verified. Going further, who, for example, audits the offsetting projects locally?

Make sure that you obtain a breakdown of the division of income received by the organisation. What percentage of your money will go to the projects themselves, and how much will go towards administration costs, employee salaries and so on? Is the organisation a commercial business or a not-for-profit venture?

Once the Government's Code of Best Practice on carbon offsetting goes live later this year, look out for the kitemark that indicates the company abides by the scheme – which is voluntary. The code, announced by Defra last month, initially covers only Certified Emission Reductions – otherwise known as carbon credits – that are compliant with the Kyoto Protocol.