Carbon Offsets and Trading

In the U.S., proposed federal climate legislation is designed around a cap-and-trade framework. This involves governments placing a cap or ceiling on the amount of greenhouse gas (GHG) emissions certain companies are allowed to emit each year – and subsequently lowering that cap in future years.

As a means to comply with the cap, entities can purchase carbon credits (e.g., carbon offsets, certified emissions reductions or CER’s), which are developed by industries and businesses that are not regulated or capped. Such a system is currently being vetted by the U.S. Congress, and legislation is likely to be passed very soon.

As a result of the cap-and -trade system, carbon credits have become a tradable commodity complete with futures contracts and underlying derivatives.

Businesses that are likely to be regulated by the U.S. government (emitting 25,000 metric tons of carbon dioxide equivalents at a single location) should already be developing strategies to reduce their carbon emissions, as well as considering participation in the carbon credit commodity trading market.

Businesses that are not likely to be capped but could be a source of carbon offsets -- such as agricultural businesses – may wish to create a new source of revenue by developing and selling carbon offsets.

ClearCarbon has the knowledge and experience to assist our customers in determining their risk of regulation and opportunities for project development, and can help design a sophisticated and successful strategy for your organization to buy, sell, and trade carbon offsets.