In the last year, the value of carbon credits and volume of trading has decreased.  This has mostly been due to the internationally-felt recession; as profits drop, most corporations would rather spend on traditional investments than become carbon neutral. European-based companies, such as CantorCO2e and Carbon Capital Markets, have had to lay off carbon brokers or shut down their carbon trading entirely because of low demand in the voluntary market.
However, the World Bank reports that despite these setbacks, the carbon market is maturing.  With the Kyoto Protocol expiring in 2012, many have said that carbon credit markets could dissolve then unless governments implement new trading systems.  But increases in corporate interest in the environment internationally, coupled with the popularity of Clean Development mechanisms, have experts saying that the markets will exist and even expand in the coming years. Many companies, faced with European laws limiting GHG emissions, have found offsetting to be a cheaper alternative than curbing emissions in-house. And with the price of carbon remaining consistent, the cost of offsetting will remain a clear and viable option. Hopefully the US, China and India – three of the largest CO2e emitters – will soon be able to set up limits on emissions through a mandatory and economically feasible system like carbon trading.

A recent report from Sandbag, a non-profit climate change organization, uncovered misconceptions among industry leaders in the EU, particularly in the cement, steel and iron industries.
Companies have argued against stricter caps on CO2e emissions because these regulations would act as a tax, forcing businesses to operate in cheaper developing countries. However, the current structure of the EU carbon market allows companies that buy extra certified emissions reductions (CERs) from abroad and stockpile assigned credits to make a profit.  This strategy in effect subsidizes the EU company’s competitors; the majority of CERs are created by emissions-reducing technology used by steel, iron and cement corporations in China and India. In reality, EU companies are avoiding emissions reductions strategies that are “low-hanging fruit” in favor of short-term profits that sacrifice long-term competitiveness.
So what is the solution? Sandbag reports that if the government implements stricter Carbon emissions standards on these industries, companies will make necessary reductions in-house, which allows domestic operations to be a long-term option. Also, these changes would prevent “carbon leakage,” or the possibility of CO2e emissions rising in one country because of reduced emissions in another.

People are looking more and more at planting trees to help offset CO2 emissions.  A recent report by EcoSecurities shows that a majority of businesses view forestry as a desirable offset category.  In voluntary carbon markets, the driving concern is the legitimacy of any project’s certification.  While it takes years for a forestry project to grow enough to capture all the carbon it promises, the potential benefits to native communities and surrounding ecology are factors that increase forestry popularity and should not be overlooked.  Up to 16% of total greenhouse gas emissions are due to deforestation of tropical areas, so forestry projects that cover rainforest protection and improved forest management are just as environmentally useful as reforestation.
Others are looking for ways to make reforestation easier.  Pieter Hoff of Holland has engineered a rainwater collection box that goes around saplings.  The device has the potential to be manufactured worldwide, and there are both reusable and compostable models.  By collecting condensation and rainwater, along with a two-gallon start, these boxes can help reforestation projects in arid climates and reduces draws on water supply for irrigation. Hundreds have been installed in national parks and vineyards to help guarantee new plant growth, and their incorporation into forestry projects in developing countries could reduce costs and increase carbon sequestration rates.
Even though the voluntary carbon market has lagged this past year with the poor economy, innovative technology and positive consumer attitudes show that forestation projects are far from disappearing.

Although it emits over 20% of the world’s greenhouse gases, the United States has no formal legal controls on GHG emissions. However, in the wake of climate change science, state legislation, and expectations of federal regulation in the future, many individuals and businesses participate in voluntary carbon markets. These markets can be in the form of “over-the-counter” trades or a legally-binding cap-and-trade system under the Chicago Climate Exchange.
Both markets have been experiencing drops in prices and participation.  The over the counter market fell from $7.30 to $6.50 per metric ton in the last year, while the CCX – which deals with almost half of US carbon trading – reported volume of carbon trades dropped 27%. These losses have been attributed to the poor economy; as profit margins narrow, companies often find little left over for investment in non-essential (a.k.a. not legally required or immediately producing a return) items.  Fortunately, even though the Kyoto Protocol expires in 2012, most businesses in the US expect there to be legislation concerning climate change and GHG emissions in the near future and have started to plan for it, either by using the CCX or reporting emissions in sustainability reports.
Even with this dip, the voluntary carbon market was a $387 million industry in 2009. Even though businesses are not necessarily making the monetary commitment to the environment now, carbon trading will most probably be a promising and growing industry in the future.

From issues with the validity of the verification processes for credits to criticism over the theory of carbon offsetting itself, carbon neutrality has started a lot of controversy. Offsetting can just be a “feel-good” act if not accompanied by emissions reductions and proper funding for alternative energy projects.

BSI, a standards body in the UK, recently released PAS 2060 to help carbon neutralization gain more credence among the business and environmentalist communities. By specifically outlining standards for carbon offset certification and the steps a participating group must take to be labeled “carbon neutral,” these guidelines will help reduce “greenwashing,” or advertising certain business decisions as more environmentally friendly than in actuality.

These standards will help consumers, businesses and the environment.  By having specifications for becoming carbon neutral, consumers know exactly what environmental initiatives their money is in part supporting, and how different a carbon neutral company is from a traditional business.  Also, these standards incorporate long-term energy use reductions, which mean increased profits for companies through lower business costs and green publicity. Lastly, specifications for carbon neutrality will guarantee that offset projects and carbon markets will achieve the emissions reductions they promise, hopefully leading to no more than 450 ppm carbon dioxide in the atmosphere – the scientific community’s limit to keep global warming at only 2 degrees.

In December, the price of a carbon credit for one metric ton CO2e on London’s European Climate Exchange fell to $18.67.   The market was set up to help utility and manufacturing companies in the EU comply with climate laws, but credits have missed the $36.49 target price for years.  The supply of carbon allowances has increased 24% this year, and anyone who has taken Economics 101 can tell you that this increase in supplied quantity has led to the decrease in price.
Other markets are facing similar issues.  In the northeast, the Regional Greenhouse Gas Initiative (RGGI) participant states are allotted permits annually and are able to auction often up to 97% of them, leading to lower-than-projected prices.  And the Clean Development Mechanism, a carbon offset project generator and supporter resulting from the Kyoto Protocol, has an unsure future after 2012.  Luckily, the America Power Act, introduced into Congress by Senators Lieberman and Kerry, supports a cap and trade system for CO2e emissions.  Legislation like this will help bolster carbon trading, which are one of the more economically feasible approaches to limiting air pollution.
China also hopes to create a carbon market by 2014 for its larger domestic industries, which will be based on profits instead of absolute reduction goals.

With CAFE standards mandating MPG minimums in car fleets and new regulations for renewable fuel standards, it’s not surprising that other transportation providers are investing in becoming “green.”
Airports have made attempts at reducing CO2e emissions.  Dallas-Fort Worth encourages carpooling and has supported the use of taxis that run on compressed natural gas, a cleaner alternative to regular fuel.  Fort Lauderdale Hollywood uses a biodiesel petroleum fuel mix for their airport shuttles and trams, while airports in the UK have started composting yard waste and recycling runway concrete as pavement. Last September, San Francisco International Airport opened kiosks that allow individual travelers to purchase carbon credits to offset the emissions from their travels.
Airlines have started to become greener, too.  Delta Airlines features a recycling program on its planes which saves over 1,000 tons of waste from landfills annually, as well as an airplane carpet recycling program and a partnership with the Nature Conservancy to offset some of its consumers’ carbon emissions.  JetBlue offers organic food options in-flight and Southwest has a LEED certified terminal in Oakland, while the majority of airlines allow consumers to buy carbon offsets for their flights.  A fair number of airlines also have experimented with bio-fuels to reduce fossil fuel use.
While flying is often the least environmentally-friendly way to travel (besides driving alone in an SUV across the country), there are some options for how to compensate for the air pollution that may result from your next overseas vacation.

On April 30th, the Intercontinental Exchange (ICE) announced via press release that “it has agreed on terms to acquire Climate Exchange plc (Climate Exchange or CLE), a leader in the development of traded emissions markets. Climate Exchange operates the European Climate Exchange (ECX), the Chicago Climate Exchange (CCX) and the Chicago Climate Futures Exchange (CCFE).”
Richard Sandor, the Chairman of CLE, said, “a combination with ICE makes strategic sense,” and the current contracts in place that allow ICE to provide electronic trading platforms to some of CLE’s markets demonstrates the opportunity for an easy business transition.  The acquisition helps to confirm that carbon – like oil, milk, or steel – is a commodity, to be traded at a universal world price determined by interactions between supply and demand. This reinforcement of the carbon market’s legitimacy also helps to increase carbon’s liquidity, or price stability despite large market transactions.

“The combination of Climate Exchange’s emissions markets and ICE’s futures and OTC energy markets is an important and logical strategic combination for our customers and shareholders, and clearly an exciting opportunity for ICE to grow and further diversify our revenues,” said ICE Chairman and CEO Jeffrey C. Sprecher. “ICE has been a partner with Climate Exchange and Dr. Sandor since 2003, and we have worked together toward the development and expansion of the emissions markets. The leadership that Climate Exchange has shown in establishing market standards in Europe, and increasingly the U.S. and Asia, has driven its success, and we see continued growth opportunities within these nascent markets globally.”

Dr. Richard Sandor was integral in the founding of Verus Carbon Neutral and will remain on our Board of Advisors. Verus looks forward to working with ICE, especially since they are headquartered in Atlanta.

Georgia’s 2007 Boienergy Partnership Fact Sheet states that Georgia is a leader in renewable energy and home to “The Bioenergy Corridor”. Georgia’s Bioenergy Partnership (formed by the Georgia Environmental Facilities Authority, Georgia Forestry Commission and Georgia Department of Economic Development) seeks to grow the Georgia bioenergy market.

Georgia made bio-energy an economic-development priority in 2006, however, most projects have gotten off to a rough start. Advances have faltered somewhat over the past few years due to high tariffs waged by the European Union on imported biodiesel, as well as wavering US biofuel mandates and public demand.

Currently, a German utility is spending about $150 million and working with a Swedish company to develop a facility in Southeast Georgia that will produce about 750,000 tons of wood pellets per year from forest industry by-products. They are expected to begin operating in early 2011. The pellets will not be used locally, but will be shipped to the Netherlands for burning in a Dutch power plant.

Locally, Georgia Power is working to convert a coal-burning plant near Albany into a biomass factory. Southeast Renewable Energy of Roswell wants to build a plant to convert trees to enough energy to continuously power about 6,000 homes, and is negotiating to sell that electricity to a Georgia utility. The plant would use plentiful wood residue that would usually otherwise go to landfills.

Though Georgia is currently heavily reliant on Europe to spark the local bioenergy market, hopefully, as demand changes and the infrastructure develops, it will be more feasible to use our renewable resources in more sustainable ways.

Many Sports-and-Leisure industries have adopted actions to reduce impact. They are doing things like providing consumers with options of environmentally improved products, or offering the opportunity to fund green energy projects through offsets. This is important in a time when we are daily becoming more aware of the cumulative impact of our actions. We don’t want to feel bad about having fun, and these industries are all about good-feelings and satisfaction.

A Spanish company Albus Golf has achieved a lot if interest recently for their Ecobioball, a golf ball made of fish food and a non-toxic, biodegradable plastic coating. Though performance is not exactly matched with that of a traditional golf ball, the purpose of ECOBIOBALL is not all about achieving distance, but rather providing the opportunity to practice close to marine environments without polluting them. Albus’ website states that short irons will achieve the same distance with an Ecobioball as a normal ball. Long irons will get up 80%, and woods up to 70% of the usual distance. Considering that it takes between 100 to 1,000 years for a golf ball to decompose naturally and about 300 million balls are lost or discarded in the US alone, it sure would feel better to be feeding fish rather than polluting them.

The world of Soccer is also responding. The 2010 World Cup, to be held in South Africa is working to handle the massive impact it will have. According to the Feasibility Study for a Carbon Neutral 2010 FIFA World Cup in South Africa, conducted by the South African Department of Environmental Affairs and Tourism, the carbon footprint is estimated to come to 8 times that of the 2006 World cup in Germany. This huge increase is due mainly (nearly 70%) to the long distances attendees will have to travel to get there in the first place, but the long distances between host cities and the existing transportation infrastructure are also significant (nearly 20%). They estimate of the cost to offset the event at between 5 and $9 million. This would send a lot of money to projects that are leading us toward a more sustainable future.

To meet some impact challenges, the local organizing committee has outlined a “green goal” initiative. They have used thousands of tons of rubble from the demolition of parts of the old FNB stadium in the construction of Soccer City stadium, where they will also use waterless urinals and irrigating exclusively with non-drinkable water. Other ideas for waste reduction are reusable cups and limited use of food containers. South Africa’s environmental affairs minister, Buyelwa Sonjica, told parliament this week “…the footprint on its own is huge in comparison to the 2006 FIFA World Cup footprint. At least three of the nine host cities have considered the implementation of bicycle lanes.”

Fun is much more fun if you are not doing harm to have it and going the extra distance for sustainability pays off for industries that are built around enjoyment. Through responsible innovation, combined with thoughtful planning, we are beginning to tie up loose ends into a loop.