Why the hurry? By understanding carbon credit markets today, you will have a competitive advantage tomorrow as your competitors struggle to come up to speed after the US adopts its own carbon-emission caps.
"It's risky to wait until greenhouse gas regulations emerge from the U.S. Congress," write Alex Rau and Robert Toker in their Harvard Business Review short, Start Thinking About Carbon Assets -- Now. Rau is a principal at a carbon-finance consultancy while Toker heads UK Trade and Investment for Florida and Texas.
Carbon credit markets allow companies (or countries and even individuals) to offset their carbon dioxide emissions by purchasing credits from firms that pollute less. Such markets are already underway in countries that signed the Kyoto Protocol and in the European Union. Several "cap-and-trade" proposals are starting to make the rounds in Washington, D.C.
The HBR article answers some basic questions about how carbon credits work, how much they are worth, and the costs of undertaking carbon initiatives. The overall point, however, is that carbon offsets are of importance beyond operational or regulatory concerns. These markets will affect a company's bottom line both by offering new revenue opportunities but also by causing some assets -- those tied to emissions -- to lose value.
"The most successful companies," argue Rau and Toker, "will be those that quickly figure out carbon's strategic implications."