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.
If the U.S. adopts a carbon "cap and trade" system similar to the system used to regulate sulfate emissions, carbon emissions will already be limited according to governmental standards. What future role could carbon offsets serve in this system?
Caitlin Sparks responds:
If the U.S. caps emissions then it will also trade carbon offset credits according to government regulations. The federal government will limit (cap) overall emissions at a certain level and allocate credits to entities that emit greenhouse gases, like utilities or big manufacturers.
The credits represent the right to pollute a specific amount, and if you add them all up, they will constitute the total overall amount of greenhouse gas emissions allowed under the cap. If one company didn't appropriately reduce its own emission levels to comply with the cap, it would have to purchase credits from a company that did. The potential profit from the sale of allocated credit would create an incentive for everyone to reduce their emissions.
Dan Kammen responds:
The structure of a national Cap and Trade system would determine how this worked out.
In Europe, carbon accounting applies only to plants generating energy, even though there are carbon emissions associated with many (most) aspects of our economy. California has set up a more inclusive approach that is economy-wide.
If we develop a federal system like the one in Europe then the carbon offset market would likely focus on the large remaining parts of the economy that are not covered but do still emit carbon. If we take a more inclusive, 'all economy' approach here, carbon offsets would likely become part of the larger federal system. I hope we take the more inclusive approach.