Copenhagen is coming to a close with reports that a deal may not be reached. Aside from geopolitical arguments on who should shoulder more burden, there is the added confusion of what’s being done thus far. Carbon offsets is one method, though not widely understood. If you want to understand carbon offsets, talk to someone who’s used up their cell phone minutes and is now paying overage charges.
Copenhagen Dec. 2009
In response to growing governmental calls to reduce carbon emissions or face penalties, industry has had to come up with a variety of strategies to comply. In Europe, they use “cap & trade.” In the U.S. there is similar legislation being proposed on top of new calls for a carbon tax. Similar to a cap & trade, the carbon offset has become a way to get credit for the job, but give breathing room to improve compliance with new CO2 emission regulations.
What is a carbon offset? To quote Carbonfund.org, “a carbon offset represents a reduction in carbon dioxide (CO2) somewhere else…. to balance out the emissions you cannot reduce”.
A carbon offset is a financial tool a company or organization uses to comply with greenhouse gas reduction rules. For example, a governmental body decides that a Company should annually emit less than X-tons of CO2 into the air yearly. But that company produces greater than that amount. By itself, that company would have a very difficult time meeting that requirement.
So in order to meet these new regulations, industry has developed the carbon offset. The carbon offset allows CO2 emitters (companies, governments, citizens, organizations) to invest directly into projects which either are carbon-negative or create carbon-neutral or renewable energy, e.g. carbon reforestation, wind farms and Carbon Capture and Storage (CCS) projects.
By purchasing credits and giving money to organizations like the Carbon Fund and Terrapass, you can, in essence, reduce or eliminate your own carbon footprint.
The growing green shift has been a boon for carbon offset providers. According to the UN, 147m tons of the credits have been sold worldwide under the Kyoto Protocol. But this market could become very big business following the passage of any US climate bill. Climate legislation is currently stalled in the Senate, with Democratic leaders not expecting a vote on the bill until early spring
Given the multitude of CO2 mitigation proposals being debated, Swapsol looks forward to playing a fundamental role in helping companies benefit by converting CO2 and earning valuable carbon credits. Every possible action must be taken to reduce anthropogenic CO2 and avoid climate disaster.
But there is obviously another force at work that will likely impact the world markets outside he supply question – Congress is considering legislation to mandate lower emissions from industry either through European “cap and trade” schemes or an outright tax. Exxon CEO Rex Tillerson said in a speech at an APEC summit in Singapore that he advocates for a carbon tax rather than carbon trading.
