As sustainability initiatives become increasingly prevalent, companies are looking for ways to increase their overall “green” optics. This is equally a marketing measure meant to appeal to a consumer base that is gradually becoming more environmentally conscious, as well as a necessity, as governments require companies to pay carbon taxes of various degrees depending on how many emissions are produced by said company. In order to give companies the ability to more freely choose how they want to reduce their overall environmental impact, there are several systems in place: carbon credits/offsets, carbon taxes, and the emissions trading system.
A carbon tax is the most rigid out of the systems in place and is implemented in only a few countries around the world. It is essentially a flat tax on all carbon emissions. Any good or service that involves the creation of carbon dioxide could be levied with a carbon tax, although many countries that have implemented it may only have the tax on a few key sectors. A carbon tax would be difficult to implement on a large scale worldwide due to its inflexibility but would ultimately be the most effective incentive to make companies reduce their overall carbon output. [1]
Emissions trading, also known as cap and trade, is designed to allow polluters to decide for themselves in a free market how much of their pollution they want to reduce and how much they want to buy themselves out of. Essentially, each company would start a year with a permitted amount of allowed pollution (based on tonnes of CO2 emitted), and anything beyond that allowance would have to be bought from companies that were able to emit less CO2 than their “cap” permitted. [2] The idea was that the market would be driven by supply and demand, with companies having a great opportunity to not only save money but also profit by reducing their overall emissions. In practice, at least in the United States, the system failed due to the caps on emissions not being low enough, as well as the cap not being on the emissions themselves but rather the rate of emission. [3]
The government would be required to take a more proactive approach by consistently lowering the emissions cap over time to incentivize continued sustainable innovation in pollution-emitting sectors to prevent companies from finding the easiest loophole around the system. In the case of cap and trade in the United States, companies simply slowed the rate of their emissions while increasing the time they spent emitting. The European Union has made great strides in the continued reduction of the emissions cap and hopes that by 2030 there will be a 42% reduction in emissions compared to 2005 levels. [4]
Carbon credits and carbon offsets essentially function the same way as the cap and trade system, but instead of the need to “trade” carbon tonne allowances with other companies, carbon offsets can be used internally or through a third party so a company can reduce its overall carbon footprint. This can be as simple as switching over to renewable energy initiatives to power offices, cleaning up ecosystems damaged by production, and sourcing plastics used from recycled materials. Carbon offsets can be measured through life-cycle assessments of products, the CO2-absorbing ability of restored plant life, and the reduction of emissions when using renewable energy sources instead of fossil fuels. [5]
Although carbon credits and carbon offsets are often mistaken for one another, I like to think of carbon credits as the active protection of natural or grown plant life, while carbon offsets are the reduction of practices that are causing harm to the environment with the implementation of more sustainable ones. Carbon credit initiatives involve protecting trees from deforestation caused by both logging and urban spread, as well as the growth of plant life that can absorb CO2. Government initiatives such as REDD+ (Reducing Emissions from Deforestation and Degradation) provide forest owners with alternate ways to profit from their trees rather than just logging them. In countries such as Vietnam, the REDD+ initiative has protected many forests at risk of deforestation while preserving the livelihoods of the individuals involved in the industry. [6]
Panda Industries seeks to grow and harvest bamboo, a resilient plant that sequesters 340% more CO2 than the timber used for lumber. This would make Panda a year-round carbon offset generator, which could then be sold to other companies on top of our Bamboo Strand Board. Yielding 80 tons of CO2 sequestered per acre, we aim to create one of the largest commercial land sinks on the planet and set the standard for industrial sustainability.