Climate change reduction programs utilize a market for greenhouse gas emission permits that are allotted based on past emissions. Emission reduction goals are set and companies are required to reduce where possible or face penalties for noncompliance. Companies that reduce emissions below the value of their permits may sell unused permits to companies not meeting their emission goals. So these goals be met through incorporating renewable energy, investing in energy efficiency, or employing various offsets. Additionally, organizations that are not required to reduce their emissions, but do so anyways, are credited and able to sell those reductions as offsets to regulated entities.
Although carbon markets have existed internationally for quite some time, the United States has only had a limited voluntary market on the Chicago Climate Exchange. However, starting in 2012, California will have a mandatory cap-and-trade market pursuant to AB32. While the details of the setup of the market are still being deliberated, we suspect that the rules will be similar to those of European markets, and that the Climate Registry will play a large role in registering emissions and offsets.
We can help you understand your options, and assess your emissions through our ClimateShift process.
