Florida businesses dabble in voluntary carbon-trading markets.
National or regional pollution credit-trading programs already exist for certain pollutants — those that generate acid rain, for example. Such systems attempt to use market forces to reduce overall pollution: More efficient operations that can reduce their emissions cheaply get "credits" for making additional reductions that they can sell to older, less-efficient operations. Overall pollution falls without having to enforce the same level of reduction on every operation. Under a carbon cap-and-trade system, utilities, which generate more carbon than any other sector, likely would be limited to a set amount of carbon-related emissions. If they generate excess carbon, they will end up having to pay for it in some way — most likely by buying "offsets" or "credits" from other operations that have reduced their carbon emissions.
Florida’s vulnerability to climate-change impacts such as sea-level rise has raised the level of interest in cap-and-trade issues.
Since repowering Gannon, renamed Bayside Power Station, Tampa Electric has earned millions of carbon credits on the Chicago Exchange. While some members buy and sell credits, the utility is banking its credits, hoping to use them to offset its future emissions if a mandatory cap-and-trade system comes to pass.
That appears increasingly likely. The U.S. House of Representatives passed a version of national cap-and-trade this summer, part of the more than 1,200-page Waxman-Markey climate bill. At press time, the Senate was considering its own bill, sponsored by Sens. John Kerry and Barbara Boxer, that would require factories and utilities to cut emissions by about 20% from 2005 levels and about 80% by midcentury.
"Regardless of what you believe about global warming, the world is changing," says Ted Kury, director of energy studies at the University of Florida’s Public Utility Research Center. "It’s going to start costing people to emit carbon into the atmosphere, and that includes you — from your car, your flat screen television and your three computers."
Cap-and-trade has generated keen interest in Florida in part because of the state’s vulnerability to climate-change impacts such as sea-level rise. So far, the economic activity here is confined to two groups: Companies like Tampa Electric that are voluntarily participating in carbon-trading markets, and the host of entrepreneurial consultants they’re paying to teach them how do it. Carbon trading "is one of the rare times when the public’s interest lines up with making money," says Susan Glickman, a longtime lobbyist for Florida environmental organizations.
Among the consultants is Tampa-based Eco2AssetSolutions, a wholly owned subsidiary of Lykes Bros., the old Florida family company with big land and agricultural holdings. The company created Eco2 earlier this year to guide companies through the complicated lexicon of carbon trading. Eco2’s services include "greenhouse gas quantification" — measuring how much carbon a company produces. It also does "carbon-asset management" — teaching a firm how to reduce carbon if it generates too much of it, or how to cash in if it’s among the Florida companies, primarily large landholders, that are positioned to "sequester" carbon, or actually take it out of the atmosphere.
Sandra Kling, Eco2’s chief environmental scientist, says there are many reasons for companies to join voluntary markets like the Chicago Exchange. They might want to gain experience in advance of federal action or just cut costs, for example. But the biggest reason most companies are joining so far, Kling says, is "public relations and branding."
For most companies, however, the public relations benefits are probably not worth the risks associated with jumping headfirst into carbon trading. Experts say the first peril is knowing whom to trust among the slew of consultants, lawyers, "aggregators" and some derisively nicknamed "carbon-baggers" that have come out of the woodwork to verify carbon credits and sell other services.
"It’s buyer beware," says Scott A. Sager, a senior project manager at Environmental Services in Jacksonville, a consulting firm for forestry companies and other private landowners. "We’ve seen landowners sign on for 15- or 20-year contracts who would have gotten more money or a better deal if they had done more research."