One of the last firms standing in the US offshore wind industry has relocated to Japan to keep afloat, the Financial Times reported on Thursday. Carbon Credit Corp., a UK-based energy company, is backing its fate by selling carbon credits (called Certified Emissions Reductions, or CERs) in Japan through the Sustainable Development University Institute.
As part of its Big 4 consultancy services, Carbon Credit, the firm took on some consultancy work for its Japanese client in February 2016. In return, it got carbon credits made in England. But in the recent months, the firm has shifted its focus, with CEO Nick Marshall saying the firm “decided to put our time, expertise and our capital to work producing carbon credits in Japan.”
The US does not have emissions trading programs yet. But trading carbon credits has been steadily growing among many countries since the passage of the European Union’s emissions trading program in 2005.
In the US, power companies like Duke Energy and NRG Energy have already run into difficulty complying with EPA regulations on carbon dioxide emissions.
A handful of farm companies, too, have piled into the carbon credits market, and built up significant carbon credits that trade across the globe. The nutrient-rich manure left behind by farms, as well as decomposing wood waste, is high in methane, which is more than 20 times more effective than carbon dioxide at trapping heat in the atmosphere.
The technology has emerged as an alternative to expensive and cap-and-trade programs. In its favor, the carbon credits have gotten more costly because of heavy U.S. demand from energy-related companies, resulting in lower prices across the board. But there is a catch: If the EPA were to withdraw the Clean Power Plan (the Obama-era regulation that imposed stricter limits on emissions from coal-fired power plants), greenhouse gas emissions would sky-rocket — doubling just in the power sector alone, according to the EIA. That could put pressure on the cost of carbon credits.
One way to avoid government regulation, though, is to take the carbon credit market — which was the subject of a secret deal made with Chinese regulators in 2011 — directly to the Chinese market. For that, Carbon Credit says it needs to increase its office and transfer its tax and auditing team to Japan.
Thanks to rapid emissions growth, some carbon credits have gone for more than the full market price. But carbon credits are also a big business, so there’s at least a short-term opportunity to make some money off of any government action. The long-term potential remains unclear.