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Big Banks Buy into Carbon Offset Industry
by
findingDulcinea Staff
JPMorgan and Merrill Lynch have invested in the $60 billion carbon offsets sector. Skeptics ask whether offsets really help reduce global carbon emissions.
30-Second Summary
On Wednesday, JPMorgan announced its acquisition of ClimateCare, a small British carbon offsetting company that invests in projects such as wind power, hydro power, biomass, human energy and cooking-stove projects in five developing nations.
Carbon offsets allow a consumer to pay a third party in exchange for certification that the company will remove an amount of carbon equal to the individual’s emissions, in order to cancel out the damage to the environment that carbon would cause.
Merrill Lynch has also entered the carbon trade sector, launching a new carbon-index market in response to growing demand from its clients.
While interest in the $60 billion carbon offsets market takes off, critics have raised concerns about fraud and a lack of regulation, and point out that it is unclear how well carbon offsets actually work.
“Done carefully, offsets can have a positive effect and raise ecological awareness. But a close look at several transactions … reveals that some deals amount to little more than feel-good hype,” says Business Week.
Marc Gunther at The Huffington Post advises careful consumers to look for credible third-party endorsements and to understand that offsets are never as effective as simply reducing consumption in the first place. Some companies follow voluntary standards such as the Code of Best Practice for Carbon Offsetting recently proposed by Britain. However, offset traders vary in how stringently they follow such guidelines, according to a recent consumer guide by the advocacy group Clean Air Cool Planet.
Offsets can help finance renewable energy projects that otherwise would not get built, said Chris Berendt, director of clean energy and environmental markets for Pace Global Energy Services, a global energy consulting firm.
“When done right, there’s real value and a real difference made,” Berendt said.
Carbon offsets allow a consumer to pay a third party in exchange for certification that the company will remove an amount of carbon equal to the individual’s emissions, in order to cancel out the damage to the environment that carbon would cause.
Merrill Lynch has also entered the carbon trade sector, launching a new carbon-index market in response to growing demand from its clients.
While interest in the $60 billion carbon offsets market takes off, critics have raised concerns about fraud and a lack of regulation, and point out that it is unclear how well carbon offsets actually work.
“Done carefully, offsets can have a positive effect and raise ecological awareness. But a close look at several transactions … reveals that some deals amount to little more than feel-good hype,” says Business Week.
Marc Gunther at The Huffington Post advises careful consumers to look for credible third-party endorsements and to understand that offsets are never as effective as simply reducing consumption in the first place. Some companies follow voluntary standards such as the Code of Best Practice for Carbon Offsetting recently proposed by Britain. However, offset traders vary in how stringently they follow such guidelines, according to a recent consumer guide by the advocacy group Clean Air Cool Planet.
Offsets can help finance renewable energy projects that otherwise would not get built, said Chris Berendt, director of clean energy and environmental markets for Pace Global Energy Services, a global energy consulting firm.
“When done right, there’s real value and a real difference made,” Berendt said.
Headline links: ‘JPMorgan Acquires Carbon Offset Firm ClimateCare’
JPMorgan announced that it had acquired the British carbon offsetting company ClimateCare, which will be integrated into its existing Environmental Markets Group. The Kyoto Protocol on global warming lets companies and countries buy carbon offsets from developing nations, rather than reducing their own emissions, in order to meet domestic greenhouse gas emissions limits.
Source: Reuters
ClimateCare pioneered the idea of individuals and companies offsetting their climate emissions. The small British company started 11 years ago as a one-man enterprise and now has almost 40 employees in five countries. It invests in projects such as wind power, hydro power, biomass, human energy and cooking-stove projects in developing nations and is expected to grow as JPMorgan expands its carbon credit business.
Source: The Guardian
Big banks are increasingly getting into the growing market for trading carbon emissions, with JPMorgan’s acquisition of ClimateCare and Merrill Lynch’s recent launch of a new carbon-market index aimed at giving a variety of investors access to the carbon markets. For banks, the $60 billion carbon market, formerly the province of only small specialists, is a way to make money and to respond to growing interest from clients. Merrill Lynch’s global carbon markets head Abyd Karmali said in a statement that their new index comes “in response to strong demand from our institutional, asset management, and wealth management clients who seek exposure to the rapidly growing global carbon market.”
Source: The Wall Street Journal
Related Topics: Airline offsets and the U.K. code of practice
Airlines such as Continental, Delta Air Lines, Virgin Atlantic, Lufthansa and Qantas are now giving passengers the option of buying carbon offsets to cancel out the environmental damage of flying. Continental Airlines allows ecologically conscious passengers pay as little as $2 per flight, or up to $50 or more toward a renewable-energy project such as solar and wind power.
Source: Business Week
On Feb.19, 2008, the United Kingdom proposed a Code of Best Practice for Carbon Offsetting. The code is voluntary and offset providers can choose whether to seek accreditation for all, or some, of their offsetting products. The code initially covers only Certified Emissions Reductions (CERs) that are compliant with the Kyoto Protocol.
Source: U.K. Department for Environment Food and Rural Affairs
Opinion & Analysis: Is offsetting effective?
Experts have pointed out that it is unclear how voluntary carbon offsets actually work. Some have raised concerns about fraud and a lack of regulation, pointing out that there is no way to ensure that companies are actually removing the amounts of carbon that they promise. Some organizations are calling for the creation of standards to streamline a fragmented market that delivers a product of uneven quality.
Source: The Christian Science Monitor
Organizations, corporations, cities and individuals are increasingly looking to protect the climate with carbon offsets. “Done carefully, offsets can have a positive effect and raise ecological awareness. But a close look at several transactions … reveals that some deals amount to little more than feel-good hype,” says Business Week magazine. “When traced to their source these dubious offsets often encourage climate protection that would have happened regardless of the buying and selling of paper certificates.”
Source: Business Week
The backlash against voluntary carbon emissions is based on many people’s “gut reaction” that paying other people to reduce their emissions, rather than reducing one’s own pollution levels, is a moral “cop-out,” says David Roberts, a writer for environmental magazine Grist. “Ditch the guilt,” says Roberts. “You aren’t a sinner for buying offsets, regardless of what you do about your own emissions. CO2 is fungible, like money, not personal, like sin.”
Source: Fast Company
Marc Gunther at The Huffington Post advises consumers skeptical of offsets to look for credible third-party endorsements, and to understand that offsets are never as effective as simply reducing individual consumption. “When done right, there’s real value and a real difference made,” says Chris Berendt, director of clean energy and environmental markets for Pace Global Energy Services, a global energy consulting firm. Berendt says that offsets can finance renewable energy projects that otherwise would not get built.
Source: The Huffington Post
Reference: Understanding offsets and measuring your carbon footprint
The New York Daily News explains that a carbon offset certificate represents the reduction of 1 metric ton, or 2,205 pounds, of carbon dioxide emission. Carbon dioxide is a greenhouse gas found in the atmosphere, one which most scientists believe contributes to global warming.
Source: New York Daily News
The Consumers’ Guide to Retail Carbon Offset Providers evaluates the verification measures in place, and the costs of offsets, for a variety of leading carbon offset traders. (The guide is in PDF format.) Clean Air Cool Planet, a nonprofit global climate change organization, also explains on its Web site a variety of voluntary accountability standards that are followed by many carbon offset companies. There are also tips on reducing carbon emissions and a calculator for measuring your individual carbon footprint. The term “carbon footprint” refers to the impact human activities have on the environment in terms of the amount of greenhouse gases produced, measured in units of carbon dioxide.
Source: Clean Air Cool Planet
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