Buying Carbon Credits

Buying Carbon Credits

Picture a greenhouse on a sunny day.  The sun’s rays pass through the panes of glass in the ceiling, flooding the greenhouse with light.  Those same panes of glass act as insulation, trapping the heated air within the greenhouse’s walls.  On a summer’s day, a greenhouse can quickly become hot, humid, and uncomfortable.

Emissions from cars, planes, and power plants are responsible for a phenomenon known as the greenhouse effect.  Carbon dioxide, nitrous oxide, methane, and other gases (commonly known as greenhouse gases, or GHG) combine in the atmosphere.  This mixture of gases acts like the panes of glass in a greenhouse.  Sunlight passes straight through, but the greenhouse gases trap the thermal energy released from the earth.  Heat continually builds, increasing the temperature on the earth’s surface and starting a chain reaction known as global warming.  On a warmer planet, ocean temperatures increase, sea levels rise, and storm systems intensify.

The only way to prevent global warming is to reduce the amount of greenhouse gases released into the atmosphere.  This is a hard task; almost every daily activity creates pollution.  For every 1,900 miles you drive, you release one ton of carbon emissions into the atmosphere.  You release half a ton of CO2 by running your household for one month.  According to Clean Air-Cool Planet, a leading nonprofit environmental group, the average US citizen releases 21 tons of carbon emissions into the atmosphere every year.  Unless you live as the pilgrims did, you are responsible for some of the GHG emissions floating around the earth’s atmosphere.  To lessen your burden on the planet, consider purchasing carbon offsets.

Carbon offsets are credits sold by companies actively reducing the amount of GHG emissions released into the atmosphere.  These companies build wind farms, geothermal plants, and carbon sequestration plants to both reduce GHG emissions in the atmosphere and prevent the release of GHG emissions into the atmosphere.  Consumers buy carbon offsets by the ton from online retailers or international brokers.  For every one ton credit they purchase, they offset their own carbon emissions by one ton.

The offset market is not regulated, so do your research before making any purchases.  To find out which carbon offset providers are concerned about the environment and which are concerned about dollar signs, ask the following questions.

- How does the company actively reduce carbon emissions?  Is it a wind farm, a methane capture program, or a geothermal plant?  A project should be permanent; be wary of any tree-planting projects, since a forest can one day succumb to logging or fires, releasing any stored carbon back into the atmosphere. 

- Are the provider’s offsets recognized by an official organization or an accredited group?  All carbon offset vendors should belong to the International Carbon Reduction and Offset Alliance (ICROA).  Look for projects that meet the Gold Standard, the highest standard for carbon offsets recognized by World Wildlife Federation International and Greenpeace International.  If a project is not Gold Standard, it should meet at least one of the industry-recognized standards - Green-e Climate Protocol for Renewable Energy, Climate Action Reserve, CDM, and VCS.

- Does the company guarantee that your one ton carbon offset represents a one ton reduction in carbon emissions?  How does the company monitor and verify the carbon offset?  A company should monitor a project not just in its initial stages, but throughout the project’s life span.  Ask how the company will verify the offsets five, ten, and twenty years from now. 

- Is the company forward crediting?  Forward crediting is selling carbon offsets for wind and solar farms that have yet to be built.  Some companies forward credit to ensure the necessary funds to build that wind farm today.  Yet, as with any building project, delays are common in the green sector.  Is the project insured in case construction never begins?  And can the company guarantee delivery of your offsets? 

- Does the carbon offset provider sell offsets to multiple buyers?  An offset should only be purchased once, otherwise it does not represent a true reduction in GHG emissions.  The provider should track offsets in a publicly accessible registry.  Ask the provider for the website, and check its authenticity. 

- Is the carbon offset additional?  If a project is set to go forward regardless of your financial contribution, it is not additional.  Say, for instance, you purchase an offset from a company that captures and destroys methane at a landfill site.  If that company always planned to destroy that methane anyway, with or without your purchasing the offset, it is not additional.  Only invest in projects that would not have happened if not for your purchase.

Before buying a carbon offset, make sure you are actively reducing your own GHG emissions.  Buying a carbon offset is not an excuse to purchase a gas-guzzling SUV and leave it idling in your driveway.  You should be searching for ways to reduce your own GHG emissions.  Try taking public transit, eating vegetarian meals a few times a week, and taking your vacations closer to home.  These measures, along with your carbon offsets, will make the earth feel a little less like a greenhouse.


About the Author:

JD Carr, CGB - is a serial entrepreneur and consultant with over 14 years experience building Internet and digital media businesses. JD is a Certified Green Broker® and specializes in commercial building sustainability and finance with A vocal advocate for environmental issues, JD writes and lectures frequently on the subject and is committed to helping entrepreneurs realize the positive goals their organizations can achieve through sustainable business practices.