Heathrow Strategic Planning Group, Local Carbon Insetting & Offsetting

City Science (as part of a wider partnership) were commissioned by the Heathrow Strategic Planning Group, who work closely with London-based local authorities and Heathrow Airport, to assess the feasibility of developing a local carbon offset market. This project consisted of:

• Creating a database of potential local authority carbon offset projects
• Offset standard analysis to establish the most feasible approach to UK offset creation
• Assessment of offset project feasibility from local authority decarbonisation projects, including an additionality assessment
• Engagement with the local aviation sector to establish market demand and requirements
• Development of a roadmap for local authorities to activate local offset markets

The development of a local carbon offset market is a win for the Heathrow region as projects will reduce local authority emissions in the area such as through reduced energy demand by retrofitting, whereas traditional offsets purchased by the aviation sector bring no local benefits.

Scope

Client Brief: The HSPG, a voluntary partnership of 10 local authorities and Local Enterprise Partnerships in the surrounding area of Heathrow Airport, is actively exploring the opportunity to sell carbon credits to Heathrow Airport and other businesses to fund carbon offsetting measures, such as tree planting and retrofitting, within the local area. They want to establish the feasibility of this, including its economic viability through an evidence-led study and through undertaking extensive stakeholder engagement.

Our Response

We actively supported HSPG to assess the feasibility of this venture. Activities included technical advice in relation to offsetting as well as the current carbon credit market. We also facilitated workshops with partner authorities to explore the opportunities and risks and identify next steps and a presentation to local businesses to share the findings of the workshop for future engagement.

Since additionality is the fundamental element of an offset project’s integrity, we integrated this into our assessment. This involved establishing if each potential local authority offsetting project (such as retrofitting) passed various additionality tests, including:

• Investment additionality: Is the project financially attractive without offset finance?

• Barrier analysis: Are there barriers not faced by alternative activities (such as skills shortages)?

• Legal additionality: Is the specific project activity legally required at a national or regional level?

• Common practice analysis: Is the technology used by a project already widely adopted at a regional level?

Our feasibility assessment concluded that whilst the woodland creation offset market is already well-established in the UK through the Woodland Carbon Code, there is a strong case to develop Verified Carbon Standard (VCS) offsets through domestic retrofitting, EV charging infrastructure, and fleet electrification. Our roadmap highlighted key opportunities for local authorities to engage with such as HACT’s ‘Retrofit Credit’ scheme and other financing opportunities such as London Stock Exchange’s Voluntary Carbon Market scheme and the Green Finance Institute’s Local Climate Bonds scheme.

Promisingly, we found a strong demand for local carbon offsets from Heathrow Airport and a projected increase in airline demand due to incoming government legislation requiring airlines to offset international flight emissions.

Outcomes

Our feasibility assessment report for HSPG detailed a roadmap for developing and kickstarting the local offset market. The key actions and opportunities were defined in our roadmap, as were key additional funding opportunities for HSPG local authorities to use alongside offsetting finance.