carbon credits & emissions allowances
At present some countries trade emissions allowances between themselves in order to offset the Greenhouse Gases they produce, mainly in order to meet European carbon reduction targets. The UK is the first country in the world to produce a legally binding climate change target in the Climate Change Act 2008. Using the EU Emissions Trading Scheme some of the largest Greenhouse Gas producers, of which there are approximately 1,000 in the UK, are able to offset their emissions by trading ‘emissions allowances’.
The prediction is that this system could be filtered down to smaller markets, meaning that eventually all ‘non-green’ businesses could have to meet an emissions target in order to offset the Greenhouse Gasses they produce.
Soil, amongst other natural features, acts as a carbon-sink, which absorbs carbon through a process called carbon sequestration. Scientists are beginning to develop new technologies able to measure the amount of carbon absorbed by soils. Although this technology is currently in the development stage it is possible that it could emerge into an exciting new market once farmers and landowners are able to quantify the levels of carbon their soils are retaining. To be able to offset, and eventually reduce, emissions production on a larger scale we will need to be able to measure the absorption rates of carbon-sinks in order to quantify this against the carbon produced by industry. Taking account of the quantity of soil available to absorb and store carbon, and the emergent ability to measure how much is being absorbed or stored, agriculture and forestry could become one of the largest producers of ‘emissions allowances’, which are then traded with carbon producers in order to offset their emissions.
There is still some way to go as it is unlikely that smaller Greenhouse Gas producers, who are not currently under any legal obligation to offset their emissions, will voluntarily opt to offset until the legislation is there to ensure that they do. However with the UK leading the global industry in this sector one would be advised to keep an eye on this emergent market in order to take advantage of the economic potential ‘locked in the soil’.