Tony Anderson – Carbon Offset

Transcript:

A carbon allowance is an instrument that will be issued by the government or a trading exchange that will give the utilities the right to emit a certain level of carbon.  Sameye Utility is given 50 allowances and we produce 70 units of carbon.  I’m going to have to go out on this market and purchase an additional 20 allowances.

Now, if those are too expensive or not available, I could go to the carbon offset market, and carbon offsets will be instruments that are backed by actual projects; the windmill farm, a solar array, and I could purchase allowances or offset credits from that project to equal my 70 units of carbon so I’m not emitting more than I should be.