While the US’ federal government has dragged its feet on instituting any kind of regulation on carbon dioxide, a number of large corporations and smaller businesses are creating voluntary mechanisms for quantifying, valuing and trading carbon credits. Found a couple of interesting stories in the news today:
From the UK’s CarbonFree via the Carbon Planet blog, dairy farmers in Indiana have entered into an agreement with the Environmental Credit Corp. to create “more than one million carbon credits from greenhouse gas-reducing projects,” including the use of anaerobic digesters to create methane for heating and electricity:
The farms’ greenhouse gas reductions are comparable to planting four million deciduous trees or offsetting the emissions of 20,000 cars.
The Bos, Herrema, Hidden View, and Windy Ridge dairies located in Fair Oaks, IN, house upwards of 17,000 cows and produce more than 100,000 gallons of milk each day. These modern dairies provide milk to southeast states for fluid consumption and locally for the production of high-quality cheese.
17,000 cows means a whole lot of poop, and a whole lot of methane. I don’t know if it’s enough to power these farms totally, but it ought to put a sizeable dent in their electric and gas bills, in addition to create tradeable credits.
On the urban front, the Bank of New York has created a carbon credit registry, according to CNN Money:
The Bank of New York Co. has created a registry it hopes will ease and increase trade in the growing global market for voluntary greenhouse gas credits, sources at the company said Friday.
“We saw an opportunity coming out of the Kyoto Protocol where companies … can buy varieties of gas emission reductions to offset their direct emissions or offset carbon products and services to customers,” a Bank of New York source based in London told Reuters in a phone interview.
The global voluntary carbon market has grown from 3 million to 5 million tons of CO2 credits traded in 2004 to 20 million to 50 million tons in 2006, and is expected to reach 100 million tons or more next year, according to The Climate Group, a London-based nonprofit organization.
The registry will seek to reduce the reams of certificates and legal contracts normally associated with voluntary emissions trading by homogenizing all such credits with a standard called Voluntary Carbon Units.
Clients may include car and airline companies whose emissions are unregulated in the first phase of the Kyoto pact, said another Bank of New York source.
Creating a standard unit ought to help the market for voluntary credits immensely, and also increase the credibility of the concept. The bank is also including third-party verification of its credits — again, more credibility in a market mechanism that has its share of detractors.
Here’s what I’m wondering: while voluntary reductions are a great thing, isn’t there also the need for a threshold to make these credits really valuable? I know many will say that a market will emerge and create thresholds as many companies see the value in reducing CO2 emissions, but wouldn’t a government-mandated cap really break this market wide open? Wouldn’t that further represent the best of both worlds: the government sets a limit of CO2 pollution that meets goals related to climate change, and businesses engage their creativity to find ways to bring levels below the threshold, thus creating these valuable commodities for other companies that simply can’t meet the threshold?