Experts Discuss Carbon Offsets

There are different options for selling credits in the voluntary market. If you are, say, a small farmer generating credits from captured methane on your dairy farm, you might consider selling your credits to a project aggregator or reseller -- these entities buy lots of small projects and bundle them into larger packages for companies that want to purchase big volumes. Or perhaps the revenue stream from the sale of anticipated credits could help you set up shop to sell directly to a larger company. You could also contact a broker who can help negotiate specific transactions.

Whatever the case, anyone who is generating credits must employ an approved methodology that helps them calculate the number of credits they will produce. First, they need to calculate a baseline. The baseline is the amount of gases that would have occurred in the absence of a carbon project, according to business as usual. It is compared to the amount that will actually be produced with the carbon project.

For example, say a farmer installs a biodigester that turns his methane into electricity that is then sold to the grid. He will calculate how much methane would have been released into the atmosphere without the biodigester (the baseline) and compare it to how much is released with the biodigester -- the difference between those two is his number of credits.

To build a credible project that will withstand market scrutiny, a project developer must have all these numbers and his entire project design audited by a neutral-third party, called a validator. And to ensure that his credits have value in the market, his project and credits should be designed in accordance with and certified to a well-regarded standard.

This question involves two aspects: a) determining how many credits you may have and b) how do companies go about selling credits. Both parts are interesting, and can be tricky.

First, credits you could generate to sell need to be determined by a carbon assessment. The state of California, for example, has adopted a 'Carbon Calculator' that my research group, the Renewable and Appropriate Energy Laboratory (http://rael.berkeley.edu), developed.

We built a first version that is online at http://bie.berkeley.edu/calculator.html and a California-specific version on the state-supported website http://www.coolcalifornia.org. This one includes goods and services, energy, and vehicle purchases. Later commercial-sector versions will show the greenhouse gas inputs to energy systems, including wind, natural gas, coal, and a range of other technologies.

The issue in having credits to sell is that they must be not just things you might do anyway (e.g. buying a hybrid car to save on gas), but actions that would not have taken place in the absence of the incentive that the market provided. A typical U. S. resident, as you can see in the calculator (http://bie.berkeley.edu/calculator.html), produces about 40 tons of carbon dioxide per year (tCO₂/yr).

Businesses often determine their 'baseline', or 'business as usual,' emissions, and then reductions from that count as emissions that could be allocated or sold.

Large companies often need tens to hundreds of thousands of tons of emissions credits, so buying from individuals is logistically cumbersome. A more likely approach is that individuals and small businesses would aggregate their credits (possibly through a company or community group that specifically does that task), and then those bundled baskets of credits are sold to the large company.

For those wanting to explore much further, a directory and a comparison of many different calculators is available online at:

http://hes.lbl.gov/hes/carbon-calculators.html