British Airways to replace passenger carbon offset scheme with new fund to aid UK carbon reduction projects
Wed 31 Aug 2011 – British Airways (BA), one of the first airlines to introduce a voluntary carbon offset scheme for its passengers, is to scrap the programme from next month and replace it with another scheme called the One Destination Carbon Fund. Instead of customers paying to offset their emissions based on a distance calculation when booking, the new fund will present them with a three-tier flat cost based on whether the journey is domestic or short- or long-haul. Contributions to the present offset scheme went towards a range of UN Clean Development Mechanism (CDM) projects in developing countries, narrowed down in 2010 to just two – in China and Outer Mongolia. With around 70 per cent of contributions coming from UK passengers and having listened to customer feedback, BA will now invest the funds into a newly-created UK Carbon Reporting Framework programme. The airline also cites the upcoming EU ETS as a reason for the switch.
Airline voluntary carbon offset schemes, although growing in number, have had a patchy record, with many carriers unwilling to own up to poor take-up rates. The BA scheme was one of the better-run programmes but last year just 103,816 passengers opted to offset carbon emissions totalling 40,398 tonnes, according to the airline’s latest Corporate Responsibility Report. BA carried around 32 million passengers in all and carbon emissions from flight operations amounted to over 15 million tonnes.
With steep increases in UK Air Passenger Duty (APD), a debatable environmental tax, together with a further carbon charge to the passenger likely to result from entry into the EU Emissions Trading Scheme from January 2012, airlines like BA are having to review their voluntary offset schemes.
According to Jonathon Counsell, BA’s Head of Environment, after a tipping point of around £5 per flight is reached, passenger uptake for offsets falls off considerably. In addition, he says, investing in projects overseas was “a bit of a problem” for UK customers, which make up the bulk of those who contribute to the existing scheme, who felt more comfortable in helping fund home-based projects.
Counsell says the new One Destination Carbon Fund, which launches on September 20 (monies collected up till then under the old scheme will still go to the CDM projects), will decouple the link from actual emissions and present a simplified three-tier pricing structure of £3 ($5), £10 ($16) and £20 per flight, with the passenger free to choose the level. “That’s what customers are telling us they would prefer,” he adds. “The new fund is definitely an upgrade from the existing offering – customers will have a much clearer idea of where their money is going. This is an opportunity for a much closer engagement with them.”
Although the projects to support will focus on the UK to start with, particularly those that have a connection with the London Olympics in 2012, the fund may help projects further afield in the future.
The funds will be channelled into supporting a new initiative launched yesterday called the UK Carbon Reporting Framework (CRF), which aims to help companies achieve their environmental goals in local schemes that help the UK meets its carbon reduction targets and green the economy. The CRF has been developed in a partnership between BA, environmental research, consulting and testing services company BRE, the NGO Forum for the Future and financial and business services firm Deloitte.
The initiative will act as a ‘matchmaker’ between carbon reduction projects, for example community-owned renewable energy installations and the energy efficient refurbishment of social housing, and organisations looking to support such projects.
The partners say a major barrier to greater UK corporate support for local projects has been an uncertainty about the carbon reduction and other benefits that funding organisations can claim to have been achieved as a result of their support. The Framework will enable companies to understand the impacts of their investment so they can make the appropriate claims on the carbon savings associated with their projects.
A database will match projects with funders through a new website (link below) with project developers required to use standardised carbon accounting methods to calculate the reductions associated with their projects.
“The reasons why companies want to support UK-based projects are many and varied,” says Jon d’Este-Hoare of BRE. “For some it may be the opportunity to support projects which have a direct impact on the lives of their staff and customers, for others it may be about communication – solar panels on the local school are easier to understand than a carbon offset project overseas.”
BA is the only CRF participant at present from industry but Counsell says there has been considerable corporate interest and new additions will be announced shortly.
Given the increase in APD, the potential impact of the EU ETS on passengers and the prevailing difficult economic climate, Counsell says no financial targets have been set for its new Carbon Fund, and therefore what will be available for the Framework, but reveals that the present scheme raises around £1 million ($1.6m) annually.
Counsell adds BA has not yet decided on how its customers will be affected by the EU ETS and whether the airline will pass on some or all of the costs to passengers. This is partly due, he says, to concerns by the airline over the current political uncertainties surrounding the scope of the scheme.