There are two main markets for carbon offsets. In the larger compliance market, companies,
governments or other entities buy carbon offsets in order to comply with caps on the total
amount of carbon dioxide they are allowed to emit
$5.5bn
In 2006, about $5.5 billion of carbon offsets were purchased in the compliance market,
representing about 1.6 billion metric tons of CO2 reductions
In the voluntary market, individuals, companies, or governments purchase carbon offsets to
mitigate their own greenhouse gas emissions from transportation, electricity use, and other
sources
$91m
In 2006, about $91 million of carbon offsets were purchased in the voluntary market,
representing about 24 million metric tons of CO2e reductions
will also turn the effluent into water that is safe for irrigation. that the cool kids are offsetting, but paying attention to what
exactly the cool kids are buying. Most companies that have
The VERs from these projects are pre-registration VERs, which
gone about neutrality thoughtfully would be proud to think that
are emission reductions that have been generated from projects
others were buying what they bought and effectively multiplying
being developed under the Clean Development Mechanism
the effect of the good decisions they had made.
(CDM) of the Kyoto Protocol, during the time between the
beginning of operations and the point of project registration. To the common analogy that the purchase of offsets is analogous
CDM projects in the developing world generate Certified to the Roman Catholic Church’s granting of indulgences, it
Emission Reductions (CERs), which are the only carbon credits must be argued that they are very different in two key respects.
that can be used to meet Kyoto targets, and for this reason Despite the Vatican’s recent addition of ‘pollution’ to the list of
carry a price premium. CDM projects can only claim CERs after deadly modern sins, it is not constructive to view the size of
the point of project registration – often the projects have been one’s carbon footprint as an indication of sin. Given the currently
operational and reducing emissions for a number of months available electricity generation and transport technologies, it
beforehand, which can be claimed as VERs if verified by a would be very hard for any business of any size to be successful
third party auditor. The CDM is regulated by the UN, and is without some degree of emissions – moreover, companies using
widely recognised as one of the strictest emission reduction the best available technology should be allowed to offset the
standards in existence. Therefore pre-registration VERs from remaining component of their footprint and be recognised for
CDM projects are the closest that VERs come to ‘compliance’ these efforts. New businesses should be allowed to flourish by
quality. having a range of options which are flexible enough to address
the issue of their emissions whilst allowing for growth.
“We started out with the desire to make a real difference in the
world,” said Mark W. Booth, Chairman & CEO of NetJets Europe. Secondly, when a buyer purchases quality offsets, it can be
“We quickly learned that the offset marketplace was a bit of a confident that the purchase is actually contributing to an emission
jungle. But we didn’t want to just do transactions. So we literally reduction. Buying a VER isn’t merely a payment to relieve
sat down with 29 different providers and decided to work with one’s sense of guilt – it is a payment for a reduction, perhaps
one, EcoSecurities. We chose them because we are confident a reduction that has been underwritten by an intermediary
the projects they source, monitor and verify, provide additionality entity, but a reduction nonetheless. However, claims of carbon
and really reduce emissions.” neutrality should be as transparent as possible, for example,
stated with reference to the historic year or years that a company
Myth or reality?
has addressed.
There is a cartoon in wide circulation depicting a character behind
Carbon neutrality is not a myth so long as it is part of a long-
a stand where he has set up shop selling “carbon credits”. He
term carbon strategy with a commitment to reduce emissions, and
is telling a customer “I don’t know what they are, but all the cool
real and permanent offsets are used. To avoid the accusations of
kids are buying them”. This raises an important point – the cool
‘greenwashing’, companies must fully engage from CEO to humble
kids have the resources to think through the offsetting options
employee level, in order to create real change. Carbon neutrality is
and the rest of us should not only be paying attention to the fact
not just about offsets, it’s about changing a mindset and the way
we do business. Ultimately, all of these elements will help to define
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