How does the CRC interact with carbon offsets?

Whilst many organisations are using and investigating the plethora of carbon offset schemes, they will be unable to use offsets towards meeting their CRC targets. The CRC scheme is a cap-and-trade scheme and will allow successful companies to sell excess carbon credits and less successful ones to purchase them in an open market. Initially the price will be set by the government at £12 per tonne, with the aim of the market finding and setting its own level.

Offsets will not be interchangeable with the CRC scheme even if companies have a carbon neutral status.

Of course the knowledge gained through offsetting will be invaluable in reducing an organisation’s carbon footprint and making them more energy efficient. This will help in the mandatory carbon reduction commitment and make them more efficient. The flip side is that because the CRC is mandatory and offsets have no impact, it may discourage companies form also investing in carbon offsets.

The US, typically will have a different model under the Boxer-Kerry climate bill. The utilities industry is expecting their own version of a cap-and-trade scheme where they will be likely to be allowed to use offsets to meet some of their targets.