Cents and Sensibility: The new economic development

June 17, 2008 11:00 pm

By Kelley Atherton

Climate change has become a harsh reality that most people recognize as a threat to our Earth.

As a result, more and more businesses are tuning to carbon trading.

The global carbon market reached $64 billion in 2007 and is expected to continue to boom this year.

What are carbon credits and how the heck do you trade them? And can this really help to bring the United States out of the bowels of a recession?

Carbon is stored in fossil fuels such as oil and coal. When burned, it releases carbon dioxide into the atmosphere, becoming greenhouse gases.

To trade carbon, or rather the right to burn carbon, it is given an economic value and then bought and sold on a market, similar to securities and commodities.

This idea came about after 180 countries signed the Kyoto Protocol in 1997. From 2008 to 2012, 37 developed countries are required to reduce their greenhouse emissions to 5 percent below their 1990 emissions levels. The U.S. has not signed this agreement.

Starting in 2008, countries that signed the agreement have to stay within their limits. The incentive is to have carbon burning rights to sell rather than have to buy it, so countries stay under their limits.

This also goes for businesses who need to stay within certain (it differs for each country) emission levels. The more carbon burning rights they have to sell the more money they can make, but it also reduces their impact on the planet.

Carbon trading is big in Europe. However, America decided it was time to get on Europe's new market. The Chicago Climate Exchange launched in 2003 and then the Green Exchange in New York opened in March.

During its first week, Green Exchange traded almost 1.6 million tons of carbon. CCE has already been trading for such companies as American Electric Power and the Ford Motor Company.

This is not entirely about pollution. It's also pure capitalism. Money can be made from selling carbon-burning rights. Until we figure out a way to generate energy without releasing greenhouse gases into the atmosphere and everyone uses that method, there will be pollution.

Carbon credits are another way of offsetting one's carbon footprint. Individuals and businesses can buy these credits, which go toward reforestation or investing in renewable or efficient energy.

Almost everything we do or use from cars to planes to clothes to food use energy made from non-renewable sources like coal and oil. There is a lot we can do to cut down on that use, but it's hard for most people in our day and age to be carbon-neutral.

Carbonfund.com is a non-profit that can calculate carbon emissions to figure out how much you can purchase to offset that pollution. The organization allows you to chose what carbon-reducing projects you'd like to put your money toward. Projects include investing in wind farms in California to retiring companies' rights to emit carbon dioxide on the Chicago Climate Exchange.

For example, if I were to put 10,000 miles on my compact car this year at an average of 28 miles per gallon, that's just over 3 tons of carbon dioxide. In addition, there's the 7,000 miles I flew this year, plus the electricity and gas I use at home.

My bill comes to 9 tons of carbon dioxide and about $90 to offset my contribution to climate change. For individuals it's a small contribution and more about doing one's part. It's really up to the billion-dollar companies to get on the bandwagon to make an impact to the economy.