On this episode of Net-Zero Carbon, Danny Gomez, managing director of financial and emerging markets at FreightWaves, is joined by Peter Fusaro, founder of the Wall Street Green Summit, to discuss the voluntary carbon credit market.
The two discuss why companies should be preparing to buy offsets to negate the environmental impacts of their business and how carbon credits can help companies achieve carbon neutrality.
Carbon credits can be purchased to “offset” a company’s greenhouse gas emissions. Planting trees and installing wind turbines or solar panels are some common carbon offsetting techniques. The voluntary market for carbon credits is growing rapidly.
“What I see occurring now is the beginning of a carbon market. We had a false start in the last two decades, but now the lever has flipped over and we’re ready to rock,” Fusaro said. “We’re starting to see a real change in how folks are looking at carbon credits and offsets.”
Motivating carbon credit purchases
“People don’t really understand how it’s going to impact their business,” Gomez said. “It’s in the headlines everywhere: It feels like there’s social pressure, capital markets pressure and customer pressure for people to be looking into these things.”
Governments are also starting to get involved.
Fusaro said, “Within the next 18 months, the SEC is going to regulate ESG and most likely carbon climate risk on the balance sheet.” He focuses on the environmental component of environmental, social and governance issues, and he expects that policies on carbon climate risk could make a big impact on emissions in the U.S.
But no company will be able to achieve carbon neutrality by 2030 by relying solely on innovation or efficiency improvements, Fusaro said. “They’re going to have to buy carbon credits.” Switching to greener fuels and operations is aspirational, but he said the transportation industry needs to be more involved in the carbon market.
Verra and Gold Standard are some of the well-known organizations that measure carbon and provide certified carbon credits. Carbon credits typically have to be validated and verified by these organizations before they can be purchased, although some pre-selling of credits also occurs.
Carbon market opportunities
“The reality is there’s not enough supply right now,” Fusaro said.
Many new carbon credit and offset providers are joining the scene to meet growing demand, but the tricky part is vetting those companies. Validating and verifying carbon credits through carbon developers helps avoid misleading customers about a company’s environmental practices, often called greenwashing, Fusaro said.
“The ecosystem for carbon offsets already exists,” Fusaro said. There is a major opportunity for all parties involved in the carbon market. “I think we’re looking at the beginning of the largest commodity market we’ve ever seen. I can’t even size it.”