Friday, August 15, 2008

Carbon offsets emerging as important tool to mitigate climate change…

Carbon offsets have emerged in recent years an important means of mitigating the effects of climate change. While there have been problems identified with offsets--from technical scientific issues to a lack of quality standards--the voluntary market has grown 240 percent since 2006 to US $331 million in 2007, and the compliance market has grown to US $66 billion.

Size of the Voluntary and Regulated Carbon Markets (2006-2007)

Source: Katherine Hamilton, Milo Sjardin, Thomas Marcello, and Gordon Xu, Forging a Frontier: State of the Voluntary Carbon Markets 2008, Ecosystem Marketplace and New Carbon Finance

I wrote a study on this rapidly emerging field for an environmental management course on climate change taught this summer by William Moomaw and Timothy Weiskel at Harvard University. The following is a summary of the key points that address some of the controversy and benefits of carbon offsets:
  • Mechanisms to fund emission reductions in other countries are enabling developing countries to transition to a low carbon economy
  • Voluntary offsets create an opportunity to sequester carbon emissions that are unavoidable
  • Voluntary offsets are driving project innovation and quality standards which are expected to have an influence on changes in the compliance market
  • Voluntary offsets are sometimes being purchased in the compliance market to exceed reductions required by law
  • The lack of US participation in Kyoto has stimulated the emergence of voluntary actions on the part of US cities and states to legislate emission reductions
  • A forestry offset may bring a company into compliance until a more cost effective emission reduction technology advances
  • Forestry projects contribute to a “triple bottom line” by creating environmental, economic, and social benefits in addition to climate mitigation