Carbon Neutral

Both Yahoo and PepsiCo have announced that they will be going carbon neutral through the purchase of a series of carbon offsets. Yahoo will be offsetting 2/3 of its carbon footprint with the funding of renewable energy projects and is looking for the public to suggest methods for reducing the other third. It is estimated that the reduction in CO2 by Yahoo is the equivalent of removing 25,000 cars.

Pepsi on the other hand is investing in enough offsets to balance the carbon produced by all of its offices, manufacturing plants and distribution centres throughout the US. This makes PepsiCo the largest private corporation in the US to go carbon neutral. They too will be offsetting through the investment in renewable energy projects.

But does this truly offset greenhouse gas? The idea of investing in projects with small carbon footprints, and then ‘crediting’ the investor by balancing this reduced footprint against their other GHG emissions is entrenched in the Kyoto Protocol in the form of Clean Development Mechanisms (“CDM”). CDMs however are vigorously regulated and have three key components that do not exist in many of the carbon offsets currently being used in voluntary markets. These are:

1. The project must take place in a developing country. This ensures that GHG emission reduction from developed countries are absolute reductions.


2. The project must be such that it would not have occurred if the additional investment was not made. For example, funding a companies government regulated emissions reductions wouldn’t count as a carbon offset for the investor.


3. The project must met the sustainability goals of the host country. This is a key component of the CDM as it ensures that the new projects met the economic, environmental and social goals of the local community. Unregulated carbon offsets have no such requirement.

Not that carbon offsets are not a good idea. They definitely promote both the renewable energy and sustainable technology markets. The question is whether or not any particular program actually offsets the carbon produced by those claiming the credits. This concern is what has lead many people to question offsets altogether, or at the very least, call for the regulation and validation of this growing sector.