Watching out for Carbon Credit Scams

     Along with positive ideas come those scammers who are out to make a buck. Even though trading in carbon credits is still in its infancy, there are those who are already taking advantage of what may be a very beneficial environmental program. To first understand how to avoid being taken advantage of, it is important to understand exactly what carbon credits are.

     Carbon credits are part of national and international attempts to stop the increase in greenhouse gases in the atmosphere. One carbon credit is equal to one ton of carbon. Many individuals are now taking an interest in their carbon footprints, trying to lower their usage, as well as trying different ways to offset their usage. Carbon credits are part of an approach to emissions trading. With a certain amount of greenhouse gas allotted to markets, each individual group is given the opportunity to decide how much of a limited amount can be designated to each area. This allows for industries to control the amount of greenhouse gases they are using. This also allows industrial and commercial processes to market in the direction of lower emissions, or utilize approaches that are designed to not emit carbon dioxide and other greenhouse gases into the atmosphere. This helps to finance carbon reduction schemes.

     Many companies sell carbon credits. These carbon credits are sold to companies who voluntarily desire to lower their carbon footprint. Carbon credits are purchased from investment funds or carbon development companies. Many of these companies have saved these credits from other individual products and offset themselves and the buyers by selling them. The quality of the credits is based on the validation process, the type of fund, and the development company. The price is also affected by these things. Voluntary units typically have less value than the units sold through the rigorously-validated Clean Development Mechanism.

     There are two distinct types of Carbon Credits: Carbon Offset Credits (COCs) and Carbon Reduction Credits (CRCs). Carbon Offset Credits consist of clean forms of energy production, wind, solar, hydro and biofuels. Carbon Reduction Credits consists of the collection and storage of Carbon from the earth’s atmosphere through reforestation, forestation, ocean and soil collection and storage efforts. Both ways are valid and positively recognized, each used in different situations.

     Whether or not you decide that the use of carbon credits are for you, it is important to know how to avoid being scammed.

     • First and foremost, do your research on the company you are thinking of buying credit from. It is necessary to see if the industrial companies are actually implementing reductions in carbon use and greenhouse emissions or if they are really doing very little.

     • They need to have verification. A shortage of verification makes it difficult for buyers to assess the true value of carbon credits. Reliable third party verification is critical.

     • Be careful of companies or individuals that are over-pricing their carbon credits. Why are their credits more expensive? What is their value? Have their prices increased or decreased due to changes in their emissions reductions?

     Do the research before purchasing carbon credits. It is important to find if the organization has any history of selling worthless credits which do not yield reductions. There is no point in purchasing carbon credits if they do not benefit you or the environment.