Thursday, October 21, 2010

The Basics Of Carbon Offsetting

In order to reduce global emissions we all must reduce as many carbon producing activities as possible, and offset the emissions we cannot eliminate by purchasing carbon credits. There are many motives attracting companies and individuals to the carbon market. Many participants are attracted solely by their corporate and private contribution to the impact of global climate change, although public perception of corporate environmental responsibility has become increasingly important. Additionally, a noticeable trend is developing for speculation in the future value of carbon at both corporate and private levels through carbon offset holdings in various registries.
Both the compliance and voluntary markets have seen substantial growth in recent years with recent downward pressure perceived as a direct correlation between carbon prices and reduced industrial output during the recent global economic downturn. As many economies are now coming out of the recession and with ever stringent UN emissions targets coming into force, most experts expect the emissions markets to experience significant growth. Businesses are now more aware of their public perception and social responsibility and are extremely motivated to announce their green credentials.
Many investment banks such as JP Morgan Chase, Morgan Stanley, Barclays and Goldman Sachs have all entered the market place. Nearly every investment bank has set up an environmental markets division and there are now a host of funds that are dedicated to the sector. There are also a number of exchanges where carbon credits are traded and this part of the industry is expected to show huge growth as is the outright sale of credits.
Expectations are high, and estimates of the potential size of a U.S. cap and trade market range from $300 billion to $2 trillion. SBI Energy claimed in their 2009 report that the value of the carbon market has grown from $727 million in 2004 to $118 billion in 2008 globally. One thing is certain and that is that the overall size of the market will continue to grow, especially if the three major countries that are now not part of the Kyoto Protocol – America, India and China – eventually sign on the agreement.
The carbon markets offer a number of enticing factors. If you would like to offset emissions personally or professionally, you can use a carbon calculator to anticipate the amount of CO2e offsets you would require to reach carbon neutral status. Many carbon websites have these on their home page so it is easy to figure out what your carbon footprint actually is.
Alternatively, you may be searching for an ethical investment that may provide potential profits yet ultimately offers many positive effects to our environment. Although U.S. cap and trade may become the catalyst that drives the future of carbon, one should be aware that investment in the carbon markets is highly speculative, and that the prime motivation should always be the environmental benefits.
Whatever your interest, there is one thing that you shouldn’t ignore and that is the opportunity to make a substantial profit from this burgeoning market while at the same time doing something to help the planet.

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