Carbon Capture, Utilization and Storage (CCUS) is increasingly being acknowledged as a critical component of limiting atmospheric CO2 sufficiently to reach the Paris Agreement goals of 2050. The International Energy Agency and the IPCC have both stated that, without CCUS, net zero goals are not possible to meet. While in its infancy as an offset product, CCUS-backed carbon sequestration has more potential than any other abatement measure to rapidly decarbonize industry. Virginia-based CarbonKerma is the first marketplace to introduce CCUS-backed carbon credit trading in the voluntary market.
As companies are under increasing pressure to make meaningful carbon offset investments under their ESG pledges or mandates, Carbon Capture technologies are expected to play an increasing role in ESG-project portfolios and offset programs.
Criticisms
 | This section needs to be updated. (January 2021) |
The Kyoto mechanism is the only internationally agreed mechanism for regulating carbon credit activities, and crucially, includes checks for additionality and overall effectiveness. Its supporting organisation, the UNFCCC, is the only organisation with a global mandate on the overall effectiveness of emission control systems, although enforcement of decisions relies on national co-operation. The Kyoto trading period only applies for five years between 2008 and 2012. The first phase of the EU ETS system started before then, and is expected to continue in a third phase afterwards, and may co-ordinate with whatever is internationally agreed at but there is general uncertainty as to what will be agreed in Post–Kyoto Protocol negotiations on greenhouse gas emissions. As business investment often operates over decades, this adds risk and uncertainty to their plans. As several countries responsible for a large proportion of global emissions (notably USA, India, China) have avoided mandatory caps, this also means that businesses in capped countries may perceive themselves to be working at a competitive disadvantage against those in uncapped countries as they are now paying for their carbon costs directly.[citation needed]
A key concept behind the cap and trade system is that national quotas should be chosen to represent genuine and meaningful reductions in national output of emissions. Not only does this ensure that overall emissions are reduced but also that the costs of emissions trading are carried fairly across all parties to the trading system. However, governments of capped countries may seek to unilaterally weaken their commitments, as evidenced by the 2006 and 2007 National Allocation Plans for several countries in the EU ETS, which were submitted late and then were initially rejected by the European Commission for being too lax.[34]
A question has been raised over the grandfathering of allowances. Countries within the EU ETS have granted their incumbent businesses most or all of their allowances for free. This can sometimes be perceived as a protectionist obstacle to new entrants into their markets. There have also been accusations of power generators getting a 'windfall' profit by passing on these emissions 'charges' to their customers.[35] As the EU ETS moves into its second phase and joins up with Kyoto, it seems likely that these problems will be reduced as more allowances will be auctioned.
Some sources[36] show that the UK financial service wins a lot from carbon credit trade (which is designed to be profitable). The profit is evident if one checks the statistics: London has secured dominance on the global carbon trading market, with net value $64bn in 2007, according to the report by International Financial Services London. London controlled about 90% of the exchange market (Carbon credit vs money) in 2007. London-based companies made about 59% of the purchases of Carbon credits issued by the UN. And some of the carbon credit's system creators are from the UK, for example, the economist, former Senior Vice-president of the World Bank and government economic advisor in the United Kingdom Nicholas Stern, Baron Stern of Brentford who has founded a consultancy-trading agency "The Carbon Rating Agency (CRA)"[37] on the Isle-of-Man (controlled by firm IDEAglobal Group[38] where Stern was a Vice Chairman at that time[39]) for carbon credit evaluation and rating.[36]
While the carbon credit system can be an effective way to regulate carbon offsets by large institutions in large developed countries, it does not do enough to combat climate change in developing countries. Developing countries would be unlikely to adopt a carbon credit system to curve their emissions. These countries often prioritize economic growth and poverty alleviation over lowering their fossil fuel use and carbon emissions rate.
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