Carbon Offsets from Wind and Clean Cookstoves Increased in 2011

The debate around the ethics and effectiveness of individuals and businesses purchasing carbon credits as a means to lower their carbon footprint has been going on for some time. Critics say that allowing carbon emitters to pay others to make reductions on their behalf reduces personal responsibility for controlling emissions. They also argue that the use of a voluntary carbon credit system gives large companies a license to conduct carbon-producing business and using the resulting profits to purchase offsets free of guilt. There are also concerns about the validity of the carbon credits that are being sold by some offset providers as well as challenges with ensuring that a given project is providing carbon benefits that would not have been realized anyway (in carbon speak this is called "additionality").

On the other hand, there are plenty of credible organizations out there - like The Climate Action Reserve, The Gold Standard and Verified Carbon Standard - that are applying rigorous standards to the carbon offsets they certify. And, in many cases, the revenue from offset purchases is going towards projects that yield benefits which go far beyond reducing carbon. Forest projects, forest regeneration, avoided deforestation, improved ecosystem health, and increased biodiversity are just a few of the positive side effects. Other projects - like the promotion of cleaner, more efficient cookstoves in rural African communities - can also have positive social benefits such as improved local air quality.

Regardless of what side you come down on in this debate, a new global report shows that the voluntary carbon market is booming. It also appears to be driving new innovation in sustainable development initiatives.

The study, conducted by Forest Trends' Ecosystem Marketplace Initiative and Bloomberg New Energy Finance, found that in 2011, voluntary carbon offsetting hit a three-year high of $576 million with 65 percent coming from corporate buyers. The report includes some surprising findings:

• The U.S. is #1: The Unites States emerged as the world's largest buyer of voluntary offsets even without the threat of impending regulations that previously increased demand from companies trying to comply ahead of the law being passed. According to Ecosystem Marketplace Carbon Program Manager Molly Peters-Stanley, "U.S. buying is coming from corporate commitments to grow the marketplace based on their desire to make a domestic impact. This more than compensated for the loss of federal pre-compliance positioning.

• More purchases coming from wind: There was an increase in the purchase of offsets from wind farms which had previously lagged behind investments being made in forest projects. Developers rushed to bring wind projects to market in 2011, sparking purchases from more frugal buyers who might otherwise have chosen more expensive forest carbon offset investments. "Price sensitivities drew some buyers away from the more expensive forestry sector - which nonetheless contributed the highest value to the marketplace because their projects held their own in terms of price," said Peters-Stanley.

• Africa is coming on strong: Africa came in as the third largest supplier of carbon credits. The number of offsets from projects that promote the use of clean cookstoves among the rural poor increased by at least 40 percent and probably much more. This type of project - along with others like the LifeStraw Carbon for Water program (which reduces the need to burn wood to purify water) - also have significant social side benefits such as improved health and increased local employment.

These programs are relevant not only for direct emissions reductions, but also as tools for learning. Innovation in the sustainable development sector is being driven by the demand for carbon offsets. "Trends in the voluntary markets continue to influence not only the much larger compliance markets but also broader conservation finance initiatives. We continue to focus on this space because of its role in incubating continued innovation," said Michael Jenkins, President and CEO of Forest Trends.

[Image credit: Timothy Tolle, Flickr]

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Kara Scharwath is a corporate social responsibility professional and marketing consultant. She recently received her MBA in Sustainable Management from Presidio Graduate School and is currently working as a Graduate Associate in Corporate Citizenship at the Walt Disney Company. Follow her on Twitter @karameredith.