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 FinanceI 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
