What's up everybody? It's been a while. Man, I will be glad when I have this CPA test off of my back. It is taking a lot of my time. I am trying to get all the parts passed by mid-February. So far...2 down and passed, 2 to go. So, needless to say, my ability to research and posts entries to EquityGreen has been somewhat limited. But I got an interesting one today.
Buying and selling carbon credits...is it grethical (and yes, I just made that up but you know what I mean...is someone or something coming off "green" or being concerned about green issues because they are motivated by a responsibility for the environment or are they just trying to look good in the public eye and seek pats on the back)? Does it matter? Its an interesting concept.
Let me just take a second and catch everyone up to speed on the issue....
...consider a business that owns a factory putting out 100,000 tons of greenhouse gas emissions in a year. Its government enacts a law that limits the emissions that the business can produce. So the factory is given a quota of say 80,000 tons per year. The factory either reduces its emissions to 80,000 tons or is required to purchase carbon credits to offset the excess.
After looking at alternatives, the company may decide that it is not economical or feasible to invest in new machinery. Instead, they decide to buy carbon credits on the open market from other organizations that have been approved as being able to sell legitimate carbon credits.
Does this give cash cows (companies and organizations that have tons and tons of cash) the green light to pollute? I mean, if they run out of credits, all they have to do is buy more from a environmentally responsible party who has invested in more efficient property, plant and equipment...giving rise to lower emissions and excess credits with which to sell on the open market. But on the other side of the argument, proponents argue that emissions are being lowered in the aggregate. A lot of it depends on the government caps or quotas that are agreed upon for greenhouse gases in developed or developing countries but overall, they say the greater good is being promoted. Are they right?
Buying and selling carbon credits has given way to a whole new commodities market with many believing that managing emissions is one of the fastest-growing segments in the financial services arena. Louis Redshaw, head of environmental markets at Barclays Capital predicts that carbon will be the world's biggest commodity market, and it could become the world's biggest market overall. Story here.