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UK Report: Just 30% of Carbon Offset Dollars Spent on Emissions Reduction

offset costOverhead and profit-taking in the carbon offsets system eats up about 70 percent of what is spent on carbon offsets, according to a report from UK-based Carbon Retirement report.

About 30 percent of the funds go into actual projects that reduce emissions, such as a wind farm in a developing nation, reports BBC.

The rest of the money goes into the following channels:

30 percent – Investment banks often buy up carbon offsets before a project is up and running, and they take an average 30 percent of the total in profits and operations.

15 percent – Shareholders of the companies putting the offset project together tend to take 15 percent in profits.

15 percent – Taxes, bank interest and fees.

10 percent – The margin normally taken by the retailer of carbon offsets, who sells them to corporations, individuals and other entities.

The Carbon Retirement report was derived from industry research and United Nations data. See the methodology here (PDF).

Carbon Retirement itself is not entirely unbiased. The group promotes purchases of allowances from the EU Emission Trading Scheme, instead of carbon offsets that might be used to set up renewable energy in developing nations.

Renewable energy credits (RECs), which are offsets that go toward adding renewable energy projects, continue to be a popular choice for corporations that want to offset their emissions.

For instance, Kohl’s said it plans to become carbon-neutral, and about 71 percent of that effort will come through purchase of RECs.

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5 thoughts on “UK Report: Just 30% of Carbon Offset Dollars Spent on Emissions Reduction

  1. I am curious about why consumers are not seeing the benefits. Cost accounting rules state that all costs to create a product are included in the base costs. It seems that energy efficiencies aka cost savings are being retained in profit, not passed along as savings. It theory, this is against GAAP since the “new cost” should be reflected in the consumer price.

  2. Isn’t this the quintessential Government program – most of the money is taken off the top to pay for ‘administrative’ costs! This is precisely why ‘Carbon Trading’ is a foolish and stupid idea. It is a scheme dreamed-up by the ‘powers-that-be’ to skim a lot of money off of the economy because anybody with any money at all is using energy. Usually in proportion to the amount of money they have. This is a framework for the redistribution of wealth – nothing more! If it is soooo important to have carbon credits, then why doesn’t the majority of money they generate go to actual projects to reduce carbon emissions? Remember, that’s what they are designed to do – not provide employment for countless bureaucrats that produce absolutely NOTHING and consume energy and generate carbon emissions in the process!!!!!

  3. can I purchase health and exercise offsets as well? I figure I should be able to purchase excercise offsets, so I can loose weight with out actualy excercising.

  4. And this is news because…? What percentage of the price I pay for a soda actually goes to manufacture the aluminium can and add a few spoons of sugar to some fizzy water? It’s amazing that people are allowed to make money in other walks of life, but when you want to help the environment suggenly you have to sign a vow of poverty.

  5. This article is why taxes and regulations are the better of poor options to get the pollution results we need. Companies like Environmental Resolutions (ENVI) and Mantra Venture Group (MVTG) have current day answers solid green… and still have to beg for attention. There is no shortage of hot air in Washington to cloud the issue.

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