Credit Report: Carbon-Offset Demand Increases

Demand for carbon offsets reached new highs over the past year, and these days it's not uncommon to find everything from supermarkets to the Super Bowl touting their carbon-reduction plans. There are some, like the Fiji bottled water company, that claim to be carbon-negative, meaning the company's various ecological projects actually contain more carbon than the company puts out. Such unique transactions

Demand for carbon offsets reached new highs over the past year, and these days it's not uncommon to find everything from supermarkets to the Super Bowl touting their carbon-reduction plans. There are some, like the Fiji bottled water company, that claim to be carbon-negative, meaning the company's various ecological projects actually contain more carbon than the company puts out.

Such unique transactions have helped build carbon-offsetting into a $54 million industry. But it's an unregulated one with a history of misuse, and the potential for more as it continues to grow. One problem is that it's often hard to tell where the money ends up. An investigation last year by London's Guardian newspaper determined that the carbon-offset “gift packs” being sold by the London Science Museum were padded with empty credits.

The math involved can also be dubious. A recent study by Tufts University surveyed various websites that offer plane-travel offsets, and found wildly different measurements of carbon output: anywhere from 1.43 tons to 4.14 tons for flights between Boston and Frankfurt, Germany, for example. Various reports have also criticized reforestation projects used in offset programs, since young saplings need years before they are mature enough to absorb the amount of carbon touted by firms.

All of this has drawn the attention of government regulators. Late last year, the Federal Trade Commission held the first in a series of green marketing hearings. The focus of the day was carbon offsetting, and members of the commission stated their intent to follow the growing industry.

“With this much uncertainty, there's a heightened potential for deception,” said FTC chairwoman Deborah Platt Majoras.

There are also attempts at oversight coming from nonprofits. In November, London's The Climate Group introduced the Voluntary Carbon Offset Standard, a rule book of sorts for the industry. Endorsed by various world organizations and politicians, the standards hold carbon-credit providers accountable and stress the need for transparency.

Certification organizations are doing their part as well. The San Francisco-based Center for Resource Solutions, which oversees the popular Green-e renewable energy assurance label, will introduce a certification this month requiring better documentation of the claims and the programs themselves.