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Navigating the Carbon Offset

Markets

The North American Ecotourism Conference: 2007

Katherine HamiltonEcosystem Marketplace

September 27, 2007

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About the Ecosystem Marketplace“Bloomberg” for Emerging Markets f or Ecosystem Services:

Carbon Markets , Water markets, Biodiversity Markets, Easements and Other Conservation TransactionsConsistent, accurate information is critical for building these ecosystem service markets

Daily news updates, feature articles, regular e-mail newsletters, and market watch

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Carbon Markets: Tool for reducing greenhouse emissions by providing economic incentives for reductions

Project based credits:emissions credits are the result of a specific carbon offset project.

Ex. Kyoto’s CDM & JI, Voluntary Offset Markets

Allowance based credits:are created and allocated under a cap-and- trade regime.

Ex. EU- ETS Trading Scheme; Chicago Climate Exchange

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A greenhouse gas offset (or carbon credit) is:• generated by the reduction, avoidance, or sequestration of

GHG emissions from a specific project

• financed by an organization paying to compensate for their own emissions by enabling equivalent GHG emissions elsewhere

• effective because greenhouse gases circulate evenly around the earth

Source: Climate Trust

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EU ETSVol: 1,101 Mt (CO2e)

Value: $24,357 MCCX

Vol: 10 MTValue: $38 M

CDM/JIVol: 450 MtCO2eValue: $ 4,813 M

Voluntary Offset

13.4- 30 MT$54.8- 100 M

NSW GGAS20MT

$225 M

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Source: New Forests/Ecosystem Marketplace, World Bank

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How Can Carbon Offsets be Utilized?

• REALIZE: Calculate personal or corporate wide emissions

• REDUCE: Reduce greenhouse gas emissions directly

• RETIRE: To reach more aggressive targets purchase offset credits (contribute to “lower hanging fruit” emission reduction projects elsewhere)

REDUCE

RETIRE

REALIZE

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What are the benefits of using offsets?

• Finance more efficient global emissions reductions– often with other co-benefits & create incentives for emissions reductions

• Enable institutions to reach more aggressive mitigation targets

• Puts a price on greenhouse gas emissions

• A tool for education

• Can drive institutions to measure their greenhouse gas emissions

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What are the Risks of entering the voluntary carbon markets?

• Lots of “junk” offsets available to purchase

• Market maturing

• Prices vary hugely

• Market in early stages of utilizing standards

• Considerable misinformation & misunderstanding

• Open to criticism about direct emissions reductions

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How Can Ecotourism Providers Navigate this “Buyer Beware” marketplace?

• Do your homework to understand the basics

• “What Gets Measured Gets Managed”: Calculate emissions

• Repeatedly review if the money spent on offsets can finance equal or greater internal emissions reductions

• Consider purchasing offset credits certified to a specific standard (Gold Standard, Climate Community & Biodiversity Standards, Voluntary Carbon Standard, Clean Development Mechanism etc.)

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Resources:• Offsetting Emissions: A Business Brief on the Voluntary

Carbon Markets by Ecosystem Marketplace and Business for Social Responsibility

• The Carbon Trust Three Stage Approach to Developing a Robust Offset Policy By Carbon Trust

• Voluntary Carbon Markets: An Guide to What They Are and How They Work by Ecosystem Marketplace

• State of the Voluntary Carbon Markets:2007 by Ecosystem Marketplace and New Carbon Finance

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Carbon Market Terms• Mitigation: attempt to prevent hazards from developing into

disasters altogether, or to reduce the effects of disasters when they occur

• Sequestration: The absorption and storage of carbon by “sinks”such as trees or soil

• GHG Abatement: Reducing emissions

• Kytoto Protocol: An international agreement assigning mandatory emission limitations for the reduction of greenhouse gas emissions to the signatory nations.

• Clean Development Mechanism: allows industrialized countries with a GHG reduction commitment to invest in projects that reduce emissions in developing countries as an alternative to more expensive emission reductions in their own countries.

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Questions?:

Katherine Hamilton

Email: [email protected]

Tel: 1 (202) 298- 3007

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