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.
What incentive, other than image, do companies in the U.S. have for purchasing carbon offsets?
Caitlin Sparks responds:
Don't underestimate image -- public awareness of climate change is at an all-time high. Companies realize that consumers care about global warming and understand that there is a growing market for products or services that have a low-carbon impact or contribute to sustainable development.
In addition to capitalizing on the benefits of offering "green" services, many companies are participating in the voluntary market to ready themselves for future government regulation. Several cap and trade markets are already being developed in different regions of the United States.
In the Northeast, many states have joined the Regional Greenhouse Gas Initiative (RGGI) and Western states are participating in the Western Climate Initiative (WCI) -- both initiatives involve the regulated trading of carbon credits. In addition, the U.S. Congress is evaluating several climate change bills that propose a federal cap and trade system.
Dan Kammen responds:
Right now there is no binding carbon market in the U. S., so all actions are voluntary. There are, however, carbon exchanges, with the most prominent one the Chicago Climate Exchange. While it is voluntary to join, once you join you are bound into a market where carbon credits are bought and sold.
In the absence of federal action on climate legislation, however, these credits are selling at just $2 to $3 per ton of carbon dioxide. Carbon credits sell for over ten times that level in Europe where power companies are required to buy credits to offset emissions.