Carbon market: many projects, many clouds

August 7, 2009

Amanda Sutton looks over a wheat field in northern Colorado and sees a potential project that could help curb greenhouse gas emissions linked to global warming.

“This is a patch of highly-cultivated land that could provide potential carbon offsets,” she said, standing by the field which is owned by the city of Fort Collins and the surrounding county.

“What we would do is take this wheat field and restore it to a native grassland which would sequester carbon from the atmosphere which we could potentially sell,” said Sutton, an environmental specialist with the city.

(See more Sutton comments in the video below)

Potential projects in the emerging carbon market are sprouting like wheat after a good rain across the United States in anticipation of “cap and trade” provisions in a climate bill that has narrowly passed the U.S. House of Representatives but could see significant revision in the Senate.

They could be part of a strategy to meet the bill’s current target to cut U.S. greenhouse gas emissions by 17 percent of 2005 levels by 2020. A cap and trade inspired market in Europe has been in place since 2005 and is the biggest by far.

Carbon trading and projects are already underway in various versions in the United States and contribute to a global voluntary market that last year saw turnover more than double to $705 million, according to Ecosystem Marketplace and New Carbon Finance, which track such trends.

Three regional U.S. groups are trading or in the process of creating regulated carbon trading markets.

To trade on such markets, a project must reduce greenhouse gas emissions or, in the case of converting a cultivated field to its natural state or reforesting a patch of land, act as a “carbon sink” to absorb emissions spewed elsewhere.

Once a project is certified and its “carbon offset” is measured in tons, it can sell them as “credits” to polluters unable to meet their emission targets, or even to groups that want to say they have cut their “carbon footprints.”

Some experts say carbon sinks are increasingly important because the world is failing to curb greenhouse gases from power plants, planes and cars fast enough, and so needs to buy more time to avoid dangerous climate change.


But some environmentalists feel trading in pollution is ultimately a ruse.

“By using offsets, industry will be able to sidestep emissions reductions. It is a get out of jail free card,” says Damon Moglen, the Global Warming Campaign Director for environment group Greenpeace.

Trees store carbon while they grow and release it back into the atmosphere when they rot. So in the vocabulary of carbon markets a healthy forest is a “carbon sink.” Tree growth in the United States currently sucks up about 12 percent of the country’s greenhouse gas emissions — a huge total.

The U.S. climate bill may provide an economic windfall to land owners including non-profit organizations, cities, farmers and forest owners who can turn farmland or cleared land back into forests. It may also reward “sustainable forestry” practices, though their carbon benefit will be tough to gauge.
“We see emerging carbon markets as a every exciting revenue source for small family forest owners,” said Bob Simpson, vice president for the Center for Family Forests.

But the cost to a small family landowner of having their offsets measured and certified remains unclear.


Groups like Woodlands Carbon in Oregon are forming around the country to reduce the costs of market entry by joining several forest owners into one portfolio.

Many investments currently being made are essentially “bets” on the bill that ultimately emerges from Congress, according to Mary Grady, a director at the American Carbon Registry.

“The current legislation is very favorable … It is a wonderful first step and it is sending the first signals to the market. But the general feeling is that the legislation is not going to pass in its current form,” she said.

Once the bill passes, a billion tons of carbon could accumulate in the market by 2012 or 2013, when the regulations are supposed to take effect The American Carbon Registry currently has 22 projects worth about 30 million tons.

Grady also said carbon traders worried that the legislation currently says that the “administrator”, which depending on the project could be the Environmental Protection Agency or the U.S. Department of Agriculture will approve programs — but it does not name the programs yet.

“If it was clear people would have lots of confidence in making their investments but people don’t know where to place their bets,” she said.

Getting a project verified has spawned a whole new industry that could create some of the “green jobs” President Barack Obama has said will go with the new green economy.

These include independent, third party project verifiers who apply financial accounting techniques while also using gadgets like gas analyzers to measure carbon tonnage.

The American National Standards Institute accredits firms as third party verifiers but it is all so new that there is no official university degree to train in the profession.

Back at the field in Colorado, Sutton says if this project were to become a reality — a big if — it would have to meet the stringent standards of the voluntary market and show it is removing more carbon from the atmosphere than would have happened naturally.

For now, the wheat will remain.

More coverage:

U.S. consumers spared big costs in climate bill

(Photo: Forest Service Rocky Mountain Research Station electronics engineer John Frank shows a carbon dioxide analyzer and a sonic anemometer in his laboratory in Ft. Collins, Colorado July 21, 2009. Such tools can be used for science and carbon markets)


We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see

Carbon Dioxide is oxygen for plants. Indeed (Jan-Baptise van Helmont in 1624) CO2 is THE bulk material which all plants use to make roots, stems, leaves, bark, wood, vegetables, fruits, berries, nuts, and whatnot. The increase of CO2 has increased world wide food production by 10-20%. How many people is it exacty you want to starve to death… how many children exactly???

If left-wing WHACKOs managed to get rid of CO2 everything now living on Earth would die; but at least we would all die being politically correct.

Posted by George Washington | Report as abusive

The EPA states that buildings and homes in the US contribute more Co2 than all of our cars and trucks combined. This due to all of the coal burning power plants that still spew black smoke to make @ 2/3 of our electricity.

Innovative companies like New Leaf America, Sustainable Spaces, and Efficiency First are helping homeowners and renters lower their utility bills and cut carbon at the same time.

Any good business person knows that profit is what’s left after you take expenses from your income. Lowering expenses (electricity, water, and fuel consumption) just makes good business sense.

Posted by Chris Prelitz | Report as abusive

First off, the reason for doing all of this – global warming – is a ruse. The real reason is left wing politics. More power and control by the federal government and more taxes taken away from businesses and people. If cap and tax was such good business, then why is it roundly rejected by all businesses that don’t profit from so-called “green” technologies? The government using taxes as a punishment is a liberal axiom. This ideology is short-sighted. The ultimate result of the government stealing money from U.S. industries is that the U.S. will fail to keep up with foreign competition and we will all suffer from the economic meltdown that ensues.

Posted by Mike Jacobson | Report as abusive

Grow less food so that the people in Africa,South America, and elsewhere need to cut down more trees to clear land to feed their citizens.

Posted by Dave Sangster | Report as abusive

The fact that you won’t accept a comments that is as reasonable or contrary as any of the others only convinces me that the article is a fraud. Contrary points of view should be accepted.

I Have been living so called green for over 20 years. I built a small well insulated house. I keep few lights burning as a rule – to the point that some people claim the place is too dark for them, and I don’t commute of drive more than I have to. I heat hot water with an ten gallon electric hot water tank. I do not own an powered lawn mower and I keep low maintenance garden. I do not fertilize but use compost. The small lawn area over my leaching field I am allowing to go to a naturally occurring ground cover. None of the things I am doing are designed to feed an industry or to make windfalls for people who seem to know who to milk every financial scheme or scam they can find. But if Green house warning is real I hedged my bets. I could not be accused of contributing to it.

Posted by Paul Rosa | Report as abusive

This is all warm and fuzzy, but forests just temporarily retain carbon. Forests are carbon neutral. As the article says, trees rot and release carbon dioxide, same as burning wood.

Carbon credits are also offered to coal plants which burn wood. How can this be reconciled?

Probably a better analysis is that photosynthetic plants increase the oxidation-reduction potential of organic chemicals during life and this potential is unwound after plant death. Carbon capture is not at all final.

It may be convenient to piggy-bag wildland restoration on carbon capute, but not scientificly consistent, even if politically correct.

Posted by Pierre McLopez | Report as abusive

Wheat is a variety of grass. Why is an acre of wheat less of a carbon sink than an acre of ‘native grassland’.

Posted by Cordell | Report as abusive

Very interesting article. Too bad that the comments are some times not at the same level. Taxing these initiatives of “left wing ruses” clearly shows the backward mentalities of some Americans. While you are destroying our planet with you obese way of life, we have been trying to answer this worldwide issue a long time ago in Europe as it is well explained in this article. Your help is needed, urgently. It’s also very for us to see the “green frenzy” that is taking over your country as if you had invented sustainable development and renewable energies making you the savior of the world…

Posted by Baguette | Report as abusive

I got to thinking about this more. Yes, rotting wood and wood stoves release CO2. I also recall that “the flow of energy through a system tends to give that system order”.

So then does composting cause global warming also? Yes, during composting, organic chemicals are oxidized with the release of CO2, methane too (methane is more potent global warmer yet). However, compost does help sequester carbon within topsoils. It also displaces carbon release from fertilizer production. So on the net, compost reduces global warming.

If trees and plants can increase the sequestration of carbon in topsoils as a permanent and improving process, then yeah, maybe we are on to something.

Here’s a good blog on carbon and compost…. eleases/can_compost_heaps_cure_global_wa rming

Posted by Pierre McLopez | Report as abusive

All the changing of freon did was allow some to make a ton of money. One pound for a dollar quickly changed to around twenty. If Goldman Sachs is already there on carbon tax credits that is a picture that speaks billions of words. A farmers grows things that make him the most money. This years it’s grass instead of wheat, corn, soybeans, oats, rice, and (hic) barley so their costs rise plus pork and chicken. An advantage here is there is no maintenance after planting since if he bales it, it won’t take on carbon for awhile. Beef goes up. If I know this Goldman knew it long ago. The question I have is how much are they pushing to get this multi-faceted bonanza to pass. The more things change, the more they stay the same.

Posted by Bob F. | Report as abusive

Just another bubble ready to create, making money this time of almost nothing – gas. How many more times we will take the bite? Go ahead Goldman-Sachs, make my day.

Posted by Tomas Hofman | Report as abusive

I am wondering which side is correct, the it’s a ruse side, or the it’s real side. Can someone please post a link showing the correlation of the amount of carbon in the atmosphere and the mean temperature of the planet.

Also, I am concerned about data filtering, so I do not want someone guessing for me about how much “heat island” effect there is. I would like to see temperature data for cities that have grown only modestly, or rural areas that have not become encapsulate in concrete. I would like to see the temperature changes over the last 100, 50, 10 & 5 year time frames. Also, the carbon levels for that same time frame.

Posted by Show me the data | Report as abusive

“If left-wing WHACKOs managed to get rid of CO2 everything now living on Earth would die” yeah.. i don’t think anybody is arguing that, nice try though. It’s all about balance. The world has enough food to feed everybody right now.. the problem is the lack of desire on behalf of the rich to get them that food and/or not exploit their land for our use.

Posted by Greg | Report as abusive

This just the tip of the iceberg. Australian company Carbon Planet has just completed a merger. CARBON Planet will merge with Melbourne-based telecommunications investor, m2m Corporation, in a deal expected to create a $117 million, stock market-listed carbon trading company.

In a presentation to m2m shareholders, Carbon Planet said it had 25 Reducing Emissions from Deforestation and Degradation (REDD) projects in Papua New Guinea expected to generate $1 billion annually, with another eight REDD MOUs in Indonesia.

“These are firm contracts on paper,” Mr Johnson said. The company said it had only two projects in PNG less than a month ago.

m2m, incorporating Carbon Planet, will be the first Australian-listed entity providing full services in carbon trading activities, the companies said yesterday.

25 REDD contracts Already signed in PNG with a value of $1 billion annually!!!

Someone is lying here – either Carbon Planet (unlikely as they have to answer to ASIC), or the PNG Government.

source: newscom australia.

Posted by Linda johansson | Report as abusive

One question, the next time a Volcano Blows its stack, California fires occur, central american rain forest are cut down, farmers burn cane feilds, trash is burned, etc, etc etc. who is going to pay the credits for that. China, India wont. Americas population has doubled in the last 25 yrs, I can say that water and air are better shape now than 25 yrs ago. There has been improvement.

Posted by Shutts | Report as abusive

Cap and Trade will force businesses to outsource jobs overseas. We shouldn’t let it get that far!

Posted by Miguel | Report as abusive