The Carbon Trade

While some NGOs and “green” businesses favor the carbon trade and view it as a win-win solution that reconciles environmental protection with economic prosperity, some environmentalists and grassroots organizations claim that it is no answer to environmental problems and that it does not address the causes of global warming. By Carmelo Ruiz

Global warming has spawned a new form of commerce: the carbon trade. This new economic activity involves the buying and selling of “environmental services.” Such “services,” which include the removal of greenhouse gases from the atmosphere, are identified and purchased by eco-consulting firms and then sold to individual or corporate clients to “offset” their polluting emissions. While some NGOs and “green” businesses favor the carbon trade and view it as a win-win solution that reconciles environmental protection with economic prosperity, some environmentalists and grassroots organizations claim that it is no answer to environmental problems and that it does not address the causes of global warming.

The carbon trade works like this: an eco-consultancy that brokers environmental services conducts an eco-audit of a client and comes up with a presumably accurate estimate of how much carbon the client’s activities release to the atmosphere. Carbon is the common denominator in all polluting gases that cause global warming.

At the other end of the operation, the firm scours the world in search of environmental services that could offset its client’s emissions. These services are usually forests and tree-planting projects and are known in the business as carbon assets or carbon sinks, because trees remove carbon from the atmosphere and sequester it in their wood. The activity of these sinks is often called carbon sequestration.

Using a variety of methodologies, the environmental services broker arrives at an estimate of how much carbon a particular sink sequesters, and then assigns it a monetary value and sells it to a client. The client then subtracts from its carbon account the carbon sequestered by its newly purchased carbon sink. The client is said to be carbon-neutral or climate-neutral when its carbon assets equal its carbon emissions.

Link GreenBiz News | The Carbon Trade

Carmelo Ruiz is author of a bilingual blog on biotechnology, globalization, free trade, and the environment.

A version of this article appeared in the July/August issue of Z Magazine.