Since the  Clean Air Act Extension of 1970, large manufacturing, energy and transportation firms have been forced to track and limit their emissions of Sulphur Dioxide and Nitrous Oxide to mitigate the effects of Acid Rain.   A set of maximum limits of emission was established, with companies ‘fined’ for exceeding thresholds of emissions.   Companies who emitted less than their allotment of pollutants could “sell” their credits to other firms who exceeded their quotas, creating a market for the buying and selling of pollution credits which has gained acceptance worldwide.

Momentum is gaining in Congress to establish new EPA controlled limits on Carbon Dioxide and other GHG’s that would incent companies to reduce their carbon footprint and invest in cleaner technologies.  The Chicago Climate Exchange was formed in 2003 to create a legally binding yet voluntary consortium to trade in emission offsets and credits for six GHG’s:  Carbon dioxide, methane, nitrous oxide, sulfur hexafluoride, perfluorocarbons and hydrofluorocarbons.     Industry standard metrics allow a business or household to calculate its total ‘carbon footprint’ by inputting energy and water consumption, trash generation, recycling efforts, travel, commute times and other factors.   A multi-national manufacturer may generate millions of metric tons of CO2 annually.   A US family of four with 2 cars averages 22 tons.    Thanks to the Climate Exchange, financial instruments are now in place for firms and individuals who want to MITIGATE or RETIRE their carbon output can do so as easily as paying a bill online.

To begin my journey toward a carbon neutrality, I spoke with Eric Taub and Andrew Keenan of Verus Carbon Neutral Partnership. Answering a few questions on their website about my utility bills, make, model of my car and miles driven, plus the number and distance of my airplane trips, I found my individual household CO2 contribution was @ 15 metric tons. The Chicago Climate Exchange commodity price for a ton of carbon offset on the day I purchased was $2.54 per ton. Adding a 20% markup for Verus administrative costs, I put the transaction on my credit card and chose the beneficiary for my largess - a large tree-farm conservancy in lower Georgia run by the Ware Foundation. So for the cost of a dinner out for two, and time investment of 7 minutes, I have done my part to mitigate my carbon footprint, even as I endeavor to reduce it to zero through new technologies and awareness.

For businesses and industries, the calculations are more complex, but the cost per ton of offset is the same.  Eric Taub states the value of an offset was a direct reflection of free market demand on the floor of the Exchange at that moment.   Offset pricing will rise and fall with demand, like any commodity.   Many traders believe offset pricing will rise when Federal EPA cap and trade mandates are enacted.  The net effect will be much needed funding for Certified Carbon Offset Projects, including wind farms, solar and biomass production, carbon sequestration projects and others.   In addition, the market will promote efficiency, as all CCX offset projects are monitored, rated and ranked according to their efficiency in retiring carbon per dollar invested.   Think of it as a Moody’s rating service for the ecologically conscious investor.

The BigGreenMonster was so impressed with Verus “offsets as a commodity” story, he became a carbon neutral business and can sport that chic on their website and stationary.   Look for more info shortly on these pages about an exciting partnership between BGM and Verus to make carbon offset purchases affordable and simple for everyone.