Not-for-profit organization works to establish market for retail carbon offset buyers.
Carbon trading: What it is and how it works
Carbon trading: Notes from the European Union
Carbon trading: U.S. offset projects and aggregators
Carbon trading: The REDDs are coming
Carbon trading: Happy Earth Day, here come the regulators
In part five of this on-going series, from April 22, I said the following: “If I can purchase carbon offsets on the CCX for roughly $6 per metric ton and then sell them to PlanetAir for three or more times that, then there is money to be made.” While the idea of trading carbon credits across different markets under an arbitrage scheme may be appealing, at this point anyway, it’s a ridiculous notion – at least for retail investors.
I spent some time researching the PlanetAir process, and I began to get an understanding of how carbon offset purchase (not trading) works for the retail buyer. On the PlanetAir website, individuals can purchase carbon offsets. Those offsets are “managed” by a company called myclimate, which identifies itself as a “partner for the development and transaction of emission reduction certificates under the Kyoto mechanisms.”
Also from the myclimate website:
We assess the emission reduction value of projects, facilitate the implementation of the CDM project cycle (including Gold Standard validation), and transact emission reduction certificates to carbon buyers. We are a team experienced with the technical, financial, political and social aspects of carbon offset projects and currently develop projects in four continents of the world.
Consider a parallel between myclimate and an investment bank that undertakes to underwrite a share issue. An underwriter will work with a client company to structure a deal for issuing securities and then sell the securities to interested buyers. myclimate works with a client company to set up an offset project (offering expertise, services, etc.) and then to issue emissions certificates (verified by a third party) and then to broker the transaction with offset buyers.
myclimate does not purchase certificates directly from the client (as would happen in a primary distribution of securities during the underwriting process); the company’s website does say, however, that part of its services are “to market your certificates and structure the transaction of carbon credits to the buyer. In certain cases, myclimate can offer to buy credits directly.” [Italics mine]
Whatever those certain cases are, there is an indication that myclimate could act as a primary dealer for emissions certificates, thus purchasing them outright from the offset project owner and re-selling them to retail buyers. A note of additional support for the primary dealer parallel says that myclimate offers offset “project financing through the contractually guaranteed purchase of the emission reductions.” [Italics mine]
None of this really has anything to do with carbon trading per say – but it all points to the larger market that’s growing up around global efforts to put a price on environmental destruction and protection. You can slap a penalty on a polluter if they don’t work to reduce their emissions, but that doesn’t seem to work nearly as well as paying a protector to do the reduction on their behalf.
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