Today I heard a presentation by Michael Molitor from Climate Wedge. He is an expert on environmental issues and his company has created a fund that buys and sells "Voluntary Carbon Units" (VCUs).

Carbon credits or Carbon Units are basically a unit that represents one metric ton of CO2 emissions. The EU has a market called a Compliance market where companies can buy credits to offset their EU Allowances. For example if company X only has an allowance of 100 tons of CO2 emissions, they have the choice of either buying carbon credits on the market or lowering their emissions by that much. Emission allowances will continue to go down driving prices of credits up and/or causing companies to innovate instead of paying for these credits. It is any interesting and now exceedingly common practice that makes it easier for companies to become "carbon neutral" while providing incentives for companies to innovate.

In addition to the formal compliance market which is mostly for EU regulated companies to buy and sell their credits to meet their allowances, there is a voluntary market which involves "softer" carbon credits and allows companies that are not yet regulated to play in this market. HSBC, for instance has announced that it is now "carbon neutral". It is not required by law to do this, but as people become more sensitive to the issues of global warming, carbon neutrality will have an increasing impact on customer and investor relations.

There are a number of individual level carbon neutral initiatives. Airlines, automobile companies, oil companies are beginning to provide carbon neutral products where a portion of the cost or the payment of an addition expense go toward making the use of that product or service carbon neutral. The interesting thing is that in most cases the costs are quite small. To make your whole life carbon neutral it costs roughly 1% of your income.

I think this is a great idea and the notion of being carbon neutral is very appealing. I am going to try to do this immediately.

However, a few things concern me.

I've googled around for companies and non-profits that offer carbon units and some look rather sketchy and/or expensive. There is also the issue of the quality of the carbon unit. Some little city threatening to build a coal power plant, then not doing it in exchange for carbon units seems less sincere than someone rolling out a photovoltaic power generator. "Good" carbon units like those on the Compliance Market trade at a premium because they are more closely audited and provided from reputable organizations. I think that these markets will grow quickly and hope the scam artists don't steal money from too many good intentioned people.

The other thing that scares me a bit is that although I like markets, I worry that a lot of money will flow to companies trying to innovate in this space. I see a VC bubble in energy technology right now too. When I see lots of money pouring into an industry like this, I worry that a bubble will form causing inefficiencies, reduction in quality of investors, noise level increases drowning out experts and other things that I saw during the dot com bubble.

Finally, this is not enough. This is all a huge step in the right directly, but we need to be doing everything we can, and even that may not be enough. It will sure feel good to be carbon neutral, but we definitely can't stop there.

17 Comments

carbonfund.org provides a carbon calculator that lets you estimate your footprint.

You might recall the guy behind it made Brainstorm a carbon neutral event.

[[[
The Bank has publicly set itself the task of ‘selling’ carbon sinks. The Bank’s literature on carbon sinks focuses on small community based projects with an emphasis on poverty alleviation and sustainable development. The BioCarbon Fund slogan is, unblushingly, “bringing carbon finance to the world’s poor”. Yet behind the rhetoric the Bank is focused on using carbon financing for the same industrial tree plantation projects it has long championed. The first carbon sinks project developed by a World Bank carbon fund – the PCF in this case – is the Plantar project in Minas Gerais, Brazil; the project will establish 23,000 ha of eucalyptus plantations which temporarily sequester carbon before being converted to charcoal for use in pig iron production. For small farmers nearby, the consequences of this plantation are devastating: streams and swamps have dried up, chemicals contaminate the air and water, and the diverse species that once inhabited the land have all but vanished.
]]] - http://www.wrm.org.uy/bulletin/93/Carbon.html

[[[
The carbon market creates transferable rights to dump carbon in the air, oceans, soil and vegetation far in excess of the capacity of these systems to hold it. Billions of dollars worth of these rights are to be awarded free of charge to the biggest corporate emitters of greenhouse gases in the electric power, iron and steel, cement, pulp and paper, and other sectors in industrialised nations who have caused the climate crisis and already exploit these systems the most. Costs of future reductions in fossil fuel use are likely to fall disproportionately on the public sector, communities, indigenous peoples and individual taxpayers.
]]] - http://www.carbontradewatch.org/durban/durbandec.html


There are two sides to this - the demand side and the supply side. I think it makes sense to use the fund to shore up supply of CO2 absorbers rather than trying to quell demand for CO2 gennerators.

What if there were a way to use a fund to buy freeholds on tropical and temperate rainforest in South America? The fund would basically be a benevolent landlord, which would forbid conversion of land to lower carbon-absorbing purposes.

I still am eager to hear about oxygen markets materialized. Every country has uneven input in oxygen production, and, say, Brazil should be getting carbon credits for the oxygen they produce. Without that, carbon credits make no sense.

Same with water/sewage - we pay for both. In this case of resources trading, we pay just for sewage. I don't have personal affiliations of any kind with Brazil though :-)

Well, said; about the dangers of the bubble. It's nice to see a profit motive linked to such initiatives, though. Money makes the world go round, whilst the rules of the energy game must be changed. Etc., etc.

The carbon credit concept is new and interesting. Can someone tell me, in plain English, about the money chain here? who receives the money, how they are policed to do good with the money, and how they are incented to be smart and efficient with the money?

Carbon credits are an interesting idea and in one aspect much more practical than most of the Kyoto rules, however there is some speculation that this will be little more than green wash.

"carbon neutrality will have an increasing impact on customer and investor relations."

Will? How about "may"? To be sure, I think that reducing carbon output is a "good thing" but I'm not yet persuaded that it is a valid CR/IR factor. The whole CSR thing still smells more like a PR exercise than anything "real".

"It will sure feel good to be carbon neutral"

Lets hope this produces more than just a feelgood effect.

I recomend carbonfund.org you can see your footprint very easy.

In the arena of businesses which combat global warming,as in all sectors of endeavor, there are good and bad organizations.It is important to ally oneself with those whose values,practices, and attitudes are most reflective of your own highest ideals. This doesn't necessarily mean a non-profit. For- profit endeavors can do great things not only to combat global warming using carbon credits, but researching many new technologies,goods and services that create jobs and provide superior outcomes.For-profits are often more able to achieve lofty goals because they are not so busy arguing ideology to confront practical solutions.They do not dismiss good ideas because they come from quarters which may lack pure motives.Challenges of global warming demand exploring every avenue toward mitigation,accepting what works wherever it comes from.ACES is searching out the best,most actionable and most likely to be accepted/practiced approaches, among them carbon credits, and developing plans for action that will be embraced,so that individuals can take part in greenhouse gas mitigation at whatever levels their own vision & conscience dictate. www.acesprogram.com is a good place to visit to start your own responsible and thoughtful effort to be part of the solution.We are a business,accountable to our constituents, and skilled in doing an excellent job to fulfill our mission. And, in the face of climate crises, our mission is to provide the tools of empowerment for true environmental stewardship.

One thing, good or bad, about markets for pollution reduction is that it puts a very real dollar figure on the cost of polluting. It becomes a financial argument for companies to consider upgrading or continue polluting. As time goes by, and standards tighten, the cost of continuing to pollute goes up in a way that can be planned for and budgeted against.

This versus say 'don't do this starting now' approach which leads to wholesale closures, layoffs, and other drastic measures.

Personally, I think it is all deck chairs. I'm moving more and more to the point that a radical technological change is required to 'save' the environment. Political posturing about conserving this or not doing that is minor compared to the changes that are really necessary. A new technology far beyond the 'extra few mpgs here' or the 'x% less emissions'--a wholescale realtering in energy.

But unfortunately, we don't seem to be looking that hard for that when there is still 100s of trillions in oil yet to be pumped...


I am from East Malaysia
How to sell our carbon Credits ?
Pls advice.

Hi Joi!

There's a Menlo Park-based company called TerraPass, www.terrapass.com, who also sell carbon credits for vehicles. We purchased a credit against our "efficient" car for $39/year which makes it a zero-carbon form of transportation. That seems to be quite a lot more than carbonfund ($19.91/year), both for "Efficient" cars @ 8,000 tons/year. Both appear to purchase their credits from the Chicago Climate Exchange (CCX) and to also fund renewable energy projects, so I'd be curious to know where the difference in cost comes from. We didn't know about carbonfund when we bought our TerraPass.

At any rate, although it's less appealing at $20 more, I thought I'd throw it out there as an option. Maybe someone who reads this can shed some light on the difference between the two?

Thanks!

Jay Goldman

Re:Jay Goldman post.
Even a quick search will find more than 40 groups selling carbon credits. TerraPass & carbonfund are just part of a growing list.And all of them are a little different.We think we at www.acesprogram.com are best in show for many reasons,not the least of which is our heavy research capability and lack of reliance on PC opinions.Our program uses carbon credits to offset CO2 from you vehicle on a buy and retire basis, so we are offsetting your emissions & removing credits from the market at the same time.This forces new credits to be created;and we invest $$$ in the creation of new programs including research. More,we align ourselves with conservation orgs. like Arbor Day Fndn. to educate and call to action through supporting their programs and using their materials in our newsletter.This ensures you're getting straight info,not hype or the latest nonsense to make the rounds.We researched over 350 environmental NFPs using Charity Navigator and found fewer than 30 that were worth support. We look at local initiatives and encourage ACES members to learn, think, take action and spread the word. We have a long history in making a difference from both business and environmental perspectives.We know how markets like CCX work and how the international mkts for environmental financialinstruments (that's what carbon credits are) fluctuate so we 1)address the mission of reducing GHGs through offsets 2)work within the larger context of emerging instruments to combat global warming and 3)pursue a comprehensive path to reversing climate change. Yes, we're different from any of the others because we have more experience and see a bigger picture ---& our price structure reflects the milti- dimensional effort while most others simply reflect the best rate at which they can buy credits in a unstable market

On one hand the oil producers greed is growing and on the other jhand people who pay for high energy cost also pay for the carbon credits. The mass marketing also leads to numerous scams about credits - like one in Brazil where eucalyptus is commercially planted on large scale for carbon credits - at enormous cost to previously rich ecosystem. Poorly audited carbon credit programs might even damage the concept by degrading the efforts of honest people.

It is better to tax carbon credit to producer of oil and give credit to producer of solar/ wind power at source. This will keep scams out and clean up the environment far better.

HI,

We are in Small Hydro Power Generation field, kindly send us a details how to avail the carbon credit facility.

Regards

Kala

how can i apply the carbon credit facility to used engine oil recycling

Leave a comment

About this Archive

This page is an archive of recent entries in the Business and the Economy category.

Books is the previous category.

Computer and Network Risks is the next category.

Find recent content on the main index.

Monthly Archives