cab3386

cabinet

REPORT Title: winchester city council carbon offsetting policy 25 january 2023 REPORT OF CABINET MEMBER: Cllr Kelsie Learney, Cabinet Member for Climate Emergency Contact Officer: Anna Wyse Tel No: 01962 848 403 Email: awyse@winchester.gov.uk WARD(S): All

PURPOSE
This paper presents the approach to be adopted by Winchester City Council to help meet its carbon neutrality target by 2024 in the form of an offsetting policy for the council’s own carbon emissions. A range of options and approaches were presented to the Health and Environment Policy Committee in March 2022 and this proposed policy draws on that work. A clear policy direction was given that offsetting should be considered as the last option and that carbon elimination, reduction and removal actions should be taken first. It also references the recently produced Winchester District Carbon Neutrality Roadmap. Although the prime focus of that work is the wider district carbon emissions and this policy is for the council’s operation carbon emission it does have an important relationship in particular regard to nature based solutions. Determining the route and approach that will help the council to be carbon neutral demonstrates the enhanced focus on going greener faster to address the climate change challenges the district and its residents and businesses are facing.

RECOMMENDATIONS:
That Cabinet: Approves the Winchester City Council Offsetting Policy with regard to a hierarchy approach of: Carbon emission reduction Carbon credits creation Carbon removal Buying carbon credits from accredited UK schemes. Supports the inclusion of the Offsetting Policy into the Annual Carbon Neutrality Action Plan 2023.

IMPLICATIONS:

COUNCIL PLAN OUTCOME

Tackling the Climate Emergency and Creating a Greener District

The 2023 edition of the Council Plan recognises the top main challenge facing the district is “the climate emergency and the pressing need to reduce the Winchester district’s carbon footprint.” In response an enhanced focus will be given to going greener faster. The four main areas of activity are:

Reducing carbon emissions

Ensuring environmental resilience

Reducing energy demand, increasing renewable energy

Offsetting

In addition the offsetting was identified in the Carbon Neutrality Action Plan (CNAP) 2019 as one of the approaches by which the council could achieve its aim of becoming carbon neutral by 2024. This proposed Council Carbon Offsetting Policy sets out how the council will offset any residual carbon emissions resulting from its operations, once all efforts have been made to reduce emissions.

FINANCIAL IMPLICATIONS

There is a high likelihood that there will be a need to offset remaining emissions in order to achieve our target of being a carbon neutral council by 2024. Based on the current carbon footprint report for the council (2020/21) it is estimated that the residual carbon at the end of 2024 be 1,500 tCO2e which will be the responsibility of the council to offset. Based on the options set out in table 1 this would cost between £15,000 - £112,500 p.a. to purchase offsetting credits, or require a significant capital investment in solar farm development (or similar).

Table 1. Council offsetting policy options

Option	Scheme	Estimated cost	Potential annual CO2 saving
Energy generation – build / invest in solar farm development	Sell energy generated to the national grid for OFGEM to provide a Renewable Energy Guarantees of Origin (REGO) certificate - megawatt hours that can be to off-set	Estimated capital investment – to be determined Potential for surplus income generation.	2,152 tCO2e (based on 10 MWp array)
Green (Gas) Energy purchase	Gas purchase as certificated renewable from plant in UK. (to align with decarbonised electricity purchase)	£55 / tCO2e	335.8 tCO2e
Purchase of credits from local (nature based solution) schemes	Working with South Downs National Park Authority – developing a scheme “Net Zero with Nature - National Park UK” Net Zero With Nature - National Parks	£75,000 available from Shared Prosperity Fund for 2023-5.	To be confirmed.
Purchase of credits from UK based schemes	Wilder Carbon Fight the crises and invest in nature today (wildercarbon.com) Hampshire & Isle of Wight Wildlife Trust local project Solent Seagrass (wildercarbon.com)	£75 / tCO2e Plus one-off fee of £150 and annual fee of £795	Dependent on number of units purchased.
UK Woodland Carbon Code – a purchase scheme Home - UK Woodland Carbon Code	£10 - £20 / tCO2e	Dependent on number of units purchased.

The council’s UK Share Prosperity Fund investment plan has included a project proposal from South Downs National Park Authority. An indicative budget of £75,000 has been allocated to work with landowners and farmers on landscape reviews, restoration plans, business plans and help with starting to implement plans.

The council allocated a budget reserve of £750,000 in 2019 to support its climate emergency declaration and to help deliver the actions set out in the Carbon Neutrality Action Plan. Much of this budget is therefore already allocated to projects currently being implemented or planned for in the next two years.

The Medium Term Financial Strategy approved by Cabinet in November (CAB3374) includes an annual revenue budget of £200,000 for delivery of climate emergency work from 2023/24, from which some of the costs associated with offsetting would be met. Larger projects to deliver infrastructure such as renewable energy schemes or woodland creation would be assessed for suitability to be added to the future capital programme on a case by case basis. The potential for external funding and grants will also be explored and bid for where appropriate. There be opportunity to partner with the private sector to share financial risks.

LEGAL AND PROCUREMENT IMPLICATIONS

There are no legal and procurement implications arising directly from this policy. The projects identified within the offsetting policy will be subject to input and review, at their time of implementation, by Legal Services and Procurement. Compliance with the council’s Financial Procedure Rules, Contract Procedure Rules and Public Contracts Regulations 2015 (PCR2015) will be adhered to where applicable.

WORKFORCE IMPLICATIONS

There are no workforce implications immediately resulting from this Offsetting Policy, as its implementation will be managed by the staff resources in the Sustainability Team.

PROPERTY AND ASSET IMPLICATIONS

The proposed offsetting policy does recommend that the council build or invest in a new solar farm within the district. This would become a council asset and as such will have implications for ongoing management and maintenance and end of life disposal costs. These will have to considered and factored into of the detailed business case for project approval in order to cover any future resource or financial liabilities for the council.

CONSULTATION AND COMMUNICATION

The Health and Environment Policy Committee considered an evidence base review for an approach to carbon offsetting for the district at its March 2022 meeting. The questions covered the following topics:

Community Energy Projects

Mapping of available council land for tree planting and renewable energy

Nitrate offsetting

Full assessment of costs for trees (including planting, resources and management costs)

Development and scale of solar farms

Lead in times for offsetting and estimated costs

Carbon Offset Fund (provision to set offsetting limits for developers)

The need to educate to raise understanding and awareness

The committee’s debate concluded that offsetting should be considered as the last resort to achieving carbon neutrality.

ENVIRONMENTAL CONSIDERATIONS

The two primary approaches to offsetting proposed will have environmental implications. In the case of a solar farm development, as with any development consideration will have to be given to the impact on the landscape, bio-diversity and its own carbon emissions. There is also the potential to generate positive environmental impact by increasing bio-diversity. These will be subject to detailed review as part of the feasibility work and any future planning application.

The use of only accredited local or UK schemes for nature based solutions to carbon offsetting will ensure projects do achieve the carbon and environmental outcomes required.

PUBLIC SECTOR EQUALITY DUTY

A PSED Impact Assessment has been completed and has identified no negative impacts. The assessment is given in Appendix 1.

DATA PROTECTION IMPACT ASSESSMENT

NONE

RISK MANAGEMENT

The council’s current overall risk appetite is moderate, meaning it is open to innovative ways of working and to pursue options that offer potentially substantial rewards, despite also having greater level of risks.

Risk	Mitigation	Opportunities
Financial Exposure Cost of investment in carbon reduction, elimination and removal schemes escalates and is unpredictable. Increase in assets increases ongoing operational and maintenance costs	Projects are subject to business case review including financial viability before investment decisions are made. Sources of external funding are sought and applied for to support delivery of projects.	Potential of partnerships and private investment to share risk.
Exposure to challenge The council is challenged over carbon offsetting as greenwashing or buying itself out of achieving carbon neutrality.	The policy supports a reduction first approach with local nature based solutions to sequester carbon, lastly followed by purchasing carbon credits from only verified offsetting schemes if required.
Innovation Development of new nature based solutions do not generate the carbon credits required to support offsetting.	Reviews of national accredited scheme have been undertaken and projects will use the Woodland Carbon Code as a guide.	Working with reputable and knowledgeable partners such as the Hants & Isle of Wight Woodland Trust and South Downs National Park will ensure schemes are correctly designed and implemented to enable then to be accredited.
Reputation The council is criticised for not achieving carbon neutrality.	The council has committed to an enhanced focus to going greener faster in its 2023 Council Plan. The adoption of an offsetting policy with a clear commitment to carbon reduction first demonstrates the intension to achieve the carbon neutrality target.	The council in adopting new approaches and solutions can be seen as a leader and build its reputation.
Achievement of outcome The interventions in the CNAP are not implemented in the next two years, the carbon reduction proposed is not realised requiring a far larger residual carbon emission to be offset.	Annual carbon monitoring and reporting will track progress over the next two year period – January 2023 to December 2024. The Carbon Board will drive delivery of specific business cases / projects that have a carbon reduction or carbon removal benefit to be deployed by the end of 2024. To support this key Performance Indicators will be reported Quarterly for number of houses which have received retrofit adjustments. Monthly for recycling rates; energy usage (kWh) at corporate buildings; renewable energy generated (kWh) from solar panels installed on council operational buildings.
Property By increasing the council’s assets (energy generation scheme or land with nature based solutions) it increases the council’s liabilities and maintenance responsibilities (and costs)	Projects are subject to business case review including financial viability before investment decisions are made, including how the cost of any going liabilities will be funded.
Community Support Communities are not in favour of changes to land use in their local areas to accommodate energy reduction or removal measures.	During the design and planning of any projects in local communities the council will engage and listen to the views of residents and businesses. Information and evidence will be given that explain and support any decisions made.	Polling by Survation in 2022 suggested that communities are in favour of renewable energy generation within Winchester district.
Timescales Not allowing enough time to design, develop and implement offsetting policy action risks achievement of council operations being carbon neutral by the end of 2024.	The offsetting policy has been proposed to enable the necessary actions to commence now for delivery over the next 24 months.	Early adoption means the council has an opportunity to develop the relationships required to secure UK offsetting well in advance of other local authorities with later targets. Costs are managed as demand for offsets rises in the future.
Project capacity Lack or unavailability of council staff resources reduces capacity to deliver.	An organisation wide approach to delivering CNAP and meeting carbon reduction targets has been adopted. This provides resilience in the event of reduced capacity in any one area. A Carbon Board of senior officers and Cabinet Members oversees programme delivery including allocation of resources.	Income generated from renewable energy projects could be used to support CNAP delivery in the future.

SUPPORTING INFORMATION:

Context for the Offsetting Policy

Carbon offsetting is practiced by many businesses, public sector organisations and government, but there is no unifying definition which explains what it means. For the purpose of this report, carbon offsetting is defined as ‘the practice of reducing or removing greenhouse gas emissions to balance ongoing greenhouse gas emissions, in order to achieve claims such as climate neutrality or net zero’ (Environment Agency, 2021).

Environment Agency

The Environment Agency publish its report “Achieving Net Zero: A review of the evidence behind potential carbon offsetting approaches” in October 2021. It was a comprehensive review of 17 offsetting approaches scored against the following criteria:

Readiness for implementation Speed and scale Permanence (impact is not reversed) Leakage (reduction in emissions in one area leads to increase in another) Additionality (reductions that would not have happened otherwise)	Co-benefits Confidence in the science Measuring impact Risks and barriers Costs

Using a red, amber and green rating system, the approaches were then ranked from high to low based on how extensively they met each of the above criteria. The ranked approaches are:

Woodland creation Upland peat restoration Biochar Hedges and trees outside of woodlands Household insulation Household low carbon heating Soils management: pasture Soils management: arable Enhanced weathering Lowland peat restoration	Floodplain restoration Saltmarsh restoration Grassland Seagrass restoration Kelp restoration Constructed wetland Other built environment measures (such as renewable electricity consumption, reducing water consumption, building with timber and low carbon transport)

The review also concluded that to achieve true net zero, only carbon offsetting projects that remove greenhouses gasses (GHGs) can be used. There are currently only two accredited carbon offsetting standards in the UK – the Woodland Carbon Code and the Peatland Code, with another three codes currently under consideration: saltmarsh, hedgerow, and soil carbon codes.

Oxford University

In September 2020 Oxford University published its report ‘Oxford Principles for Net Zero Aligned Carbon Offsetting’ as a guide to help ensure offsetting actually helps to achieve a net zero society. The first of these principle has direct reliance to the approach to be adopted by the council and the prosed off-setting policy “Prioritise reducing your own emissions first, ensure the environmental integrity of any offsets used, and disclose how offsets are used”.

The Oxford Principles report recommends that organisations:

Cut emissions, as much as possible through energy efficiency measures

Use verifiable, and correctly accounted for, high quality offsets

Maintain transparency in recording and reporting carbon emissions, targets and the type of offsets used.

Regularly revise / review offsetting approach as best practice evolves.

The Winchester District Carbon Roadmap

The council commissioned Carbon Roadmap was completed in October 2022. It includes sections on carbon in habitats assessment and nature-based interventions to provide an evidence base of approaches to offsetting. It provides carbon sequestration estimates and approaches to future nature based solutions.

The consultation WSP used its Habitat Carbon Tool to quantitatively assess and estimate the total carbon stock stored within habitats and the current rate of carbon sequestration / emissions (the carbon flux). A high-level summary of the results of the assessment are given in Table 2, and shows the estimated baseline carbon stock and carbon flux of woodland currently within the district, and how this will have changed by 2030

Table 2. Summary of Carbon Storage Habitat Assessment.

Total Stored Carbon (ktCO2)	Total Carbon Flux (ktCO2 ha-1 yr-1)	Change in Total Stored Carbon from Baseline (ktCO2)
Woodland	Baseline	8,103.80	-44	-
2030	8,661.50	-50.7	557.7
Broad Habitats	Baseline	11,484.10	-31.7	-

The results show that the current amount of carbon stored across all of the district’s habitats (which include, for example, woodlands, grasslands, and hedgerows) is 11,484.0 ktCO2, and that specifically for woodland the total storage is 8,103.8 ktCO2. The current projection for carbon stored in the district’s woodland shows that an extra 557.7 ktCO2 will be stored through carbon sequestration by 2030. It should be noted that this carbon storage contributes to the districts carbon emission targets, but shows quantity and potential of nature based solutions for offsetting.

Further, despite the future predictions for carbon the council cannot claim carbon credits towards a carbon neutrality strategy from areas of existing woodland. The permanent transfer from non-woodland to new woodland habitat is required to claim carbon credits. In line with the Woodland Carbon Code, any carbon credits generated a set target of carbon credits officially registered prior to planting new woodland areas, which will then be monitored and reported upon to ensure the carbon sequestration targets are delivered.

As part of the work to develop the Local Plan, the 2021 Call for Sites invited the submission of “green sites”. The nine sites that came forward and could be used for carbon offsetting, biodiversity net gain and offsetting, green infrastructure, nitrogen offsetting, renewable energy, and brownfield land are included in a green sites register.

The Carbon Roadmap recommends the council considers carbon sequestration through nature-based approaches. Specific examples include, the restoration of forests, the restoration of grasslands and wetlands and sustainable land management activities through changes in agriculture.

Winchester City Council Off-setting Policy Proposal

The council has only two more years in which to take action to become a carbon neutral organisation - January 2023 to December 2024. Based on a forward trajectory of carbon reductions, using the annual Carbon Footprint report, the council is likely to need to offset an estimated 1,500 tCO2e in residual carbon emissions at the end of 2024 in order to meet the target set in its 2019 Climate Emergency Declaration.

The clear direction of this policy is that offsetting should be considered as the last option and that carbon elimination, reduction and removal actions should be taken first. Only when the impossible to reduce emissions remain should the purchase of carbon offset credits be considered and then only from verified local or UK schemes.

1.	Carbon emission reduction –

i. Continue to deliver and invest in energy efficiency measures as identified in the council’s Carbon Neutrality Action Plan. Carbon reduction in the region of 2,152 tCO2e.

ii. Switch to purchasing green gas – generated in UK based plants. Carbon reduction of 335.8 tCO2e based on 2021/22 carbon footprint.

The recommended offsetting policy to achieve carbon neutrality for the council follows a hierarchy of approaches.

2.	Carbon credit creation

i. build / invest in a local solar farm energy generation project. Complete by October 2023 the site identification, feasibility and viability work to enable construction of utility scale solar farm. This could produce a projected carbon offset of up to 2,455 tCO2e in the form of a REGO Certificate based on an 11.36MWp solar PV facility. This should be sufficient to match the council’s carbon footprint when the CNAP actions are fully implemented and leave some headroom.

ii. continue to install small scale / roof top solar PV on the council estate. Carbon offset of 30tCO2e.

iii. secure credits from existing council solar PV installations

3.	Carbon removal

i. creating local nature based projects, within the district, by working with the South Down Nation Park Authority on its Net Zero with Nature and supported by the council’s UK Shared Prosperity Fund investment plan. Carbon removal figures cannot yet be estimated as this project is in the early stages, however developing opportunities for local offsetting projects that build skills and support economic development in the district is a promising opportunity.

4. Buying carbon credits

ii. using accredited national nature based projects under the Woodland Carbon Code or HIWWT’s Wilder Carbon Scheme. Carbon offset will depend on number of credits purchased.

It is recommended that this policy is included in the next revision of the CNAP setting out the priorities for 2023/24 delivery. Embedding the council’s offsetting policy within this plan will ensure it is delivered as part of the carbon elimination, reduction and removal first approach and not as a separate and unconnected action. Adopting a basket of offsetting approaches as outlined above provides a balanced approach that will minimise the risk of looking outside of this hierarchy to achieve the council’s offsetting requirements.

In addition the annual review of the CNAP provides the place to publicly record and report carbon emissions, targets and the type of offsets used. Providing the necessary transparency and opportunity to review and revise review offsetting approach as best practice evolves.

The council may seek to externally verify that it has met its target. The British Standards Institution (BSI) has an assessment standard, PAS 2060, which provides a recognised method of substantiating that claims of carbon neutrality are genuine. PAS 2060 is an option for the council, however advice will be sought and consideration given on how best to verify the council’s status as a carbon neutral organisation in due course.

Conclusion

In order for an organisation to be considered carbon neutral it needs to have a method by which it will offset any ongoing or impossible to eliminate residual carbon emission. An Offsetting Policy is therefore an important element of any carbon neutrality plan.

The council has been delivering projects to stop or reduce its carbon emissions since it declared a climate emergency in 2019. This has included switching to the purchase of green electricity, investing in energy efficiency measures in council buildings and funded the installation of five solar PV arrays on its buildings – Winchester Sport and Leisure Park, Cipher House, Bishops Waltham Depot, City Offices and the Barfield 2 Park and Ride Extension. Implementation of projects will continue over the next two years, however even with this there will be carbon emission that will require offsetting.

This proposed Winchester City Council Offsetting Policy, based on evidence and current best practice, provides a clear, accountable and measurable approach to undertake any offsetting actions. It is consistent with the members and public desire that offsetting should be a last report and used only if necessary. By having an approved policy now enables the required design, development and implementation to be planned over the coming two years, rather than wait until it is too late to take action.

OTHER OPTIONS CONSIDERED AND REJECTED

Do not set out a policy approach to offsetting council residual carbon emissions. This option was rejected. In order to verifiable carbon offsetting that supports the approach that offsetting is a last resort it is necessary to have a clear and accountable framework to guide carbon reduction and removal project work.

Purchase carbon credits from international offset projects. This option was rejected. Debate on the report at the Health & Environment Committee on the approaches to carbon offsetting in March and in the workshops held when the Carbon Neutrality Action Plan was being developed in late 2019, strongly voiced the desire retain the co-benefits of energy generation and nature based offsetting solutions within the district, region or lastly the UK.

BACKGROUND DOCUMENTS:-

Winchester District Carbon Roadmap, October 2022

Previous Committee Reports:-

HEP021: Carbon Neutrality Programme – Carbon Offsetting, 2 March 2022

Other Background Documents:-

Environment Agency (2021). Achieving net zero: A review of the evidence behind potential carbon offsetting approaches – https://www.gov.uk/flood-and-coastal-erosion-risk-management-research-reports/achieving-net-zero-carbon-emissions-a-review-of-the-evidence-behind-carbon-offsetting

University of Oxford (2020). The Oxford Principles for Net Zero Aligned Carbon Offsetting – https://www.smithschool.ox.ac.uk/publications/reports/Oxford-Offsetting-Principles-2020.pdf

APPENDICES:

Appendix 1. Public Sector Equality Duty Impact Assessment.