The carbon offset market is growing, spurred by businesses and consumers who want to lessen their carbon footprint by investing in ventures like hydroelectric power or forest regeneration. Two experts on carbon credits took your questions.
When someone purchases a carbon credit from a company, does that money act as an investment with monetary return to the buyer? Can anyone create a carbon credit company or are there federal requirements like investment companies?
Dan Kammen responds:
Purchasing carbon credits does not generally come as an investment, where the seller retains a financial stake in what the funds ultimately produce. Some energy developers (often wind-farm developers) sell the electricity from their turbines and the carbon credits as a bundled package, to utilities -- for example 500,000 kilowatt hours (kWh) and the carbon credits associated with that much electricity generated without fossil fuel combustion.
Companies that purchase credits often do then re-invest the funds in additional energy projects.
Caitlin Sparks responds:
Generally, a purchase of a carbon credit by an individual end-user is not a financial investment that will yield a return, rather, the purchase helps fund a project -- a pig farm, a biomass plant -- that will reduce carbon.
The voluntary market is presently unregulated, so yes, anyone can create a carbon credit company.
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