World Energy Creates “Virtual Mall” for Carbon Offsets

April 15, 2009

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World Energy Solutions has created a “virtual shopping mall” to put buyers of carbon offsets in control of their trading by allowing them to browse for the offset or compliance unit of their choice.

The Worcester, Mass.-based company’s flagship trading platform, the World Green Exchange, now combines new technology with industry partnerships to create a “virtual mall” for carbon shopping that addresses the need for more transparency in carbon commodities procurement, said the company.

World Energy says buyers have been limited by broker and “black box” procurement models. While brokers offer consultative selling, they have limited inventory and are not compensated to provide customers the best price, and black box systems simplify transactions but blur individual carbon project distinctions, which has led to the current “rip-offsets” phenomenon, where buyers invest in projects that don’t provide added environmental benefit, said the energy exchange.

Most recently, carbon trading programs have come under fire. Excessive profits are a big problem with carbon commodities. Industry watchers say European steel companies are being awarded more carbon credits than they need, with a surplus of credits worth about $1.2 billion, and critics of a cap-and-trade system in the United States say it will create excessive profits by awarding free credits at the onset of a program.

Pricing is another issue. A recent UK government-sponsored study indicates that the price of European carbon permits should be at least 85 GBP (pounds), about eight times the present price, if they are to meet their goal of getting polluters to cut emissions. Greenpeace says awarding tradable credits to countries to reduce deforestation could result in falling carbon prices worldwide and worsen global warming by pulling investors away from renewable energy.

The good news is that market participants and analysts say the carbon trading market is surviving with buyers focusing more on quality of the offsets instead of the quantity.

Point Carbon forecasts that 5.9 gigatons (Gt) of carbon dioxide equivalent (CO2e) will trade this year, compared to 4.9 Gt in 2008, according to its recent report.

To deliver an open-system for buying carbon offsets, World Energy has established relationships with leading registries, certification standards, settlement banks and project developers including the Gold Standard and TZ1 Registry. It also recently announced a collaboration agreement with the Canadian Standards Association (CSA) that enables World Energy to offer its exchange services to owners of verified emissions reductions and removals (VERRs) registered on CSA’s GHG CleanProjects Registry.

Companies can buy carbon commodities, including Verified Emissions Reductions (VERs), Certified Emissions Reductions (CERs), Renewable Energy Certificates (RECs), and other global carbon products, by registering online. Membership is free.

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