Within the next three years, the federal government is expected to enact legislation capping carbon output levels for U.S. businesses. U.S. companies will either have to reduce their greenhouse gas emissions by a certain percentage, to be determined later, or buy carbon offset credits from businesses that have reduced their carbon output in excess of their required minimum. Why is this a problem for investors? Once the federal carbon caps are in place, carbon offset credits will be much more expensive to purchase. Companies with excessive carbon outputs will pay a steep price for carbon credits.

Why don't companies take a more proactive approach and purchase carbon offset credits now when the price is much lower? Unfortunately, the carbon credit market is presently completely unregulated. There is no standardized system for measuring carbon reduction amounts nor is there any way to verify the legitimacy of such carbon credits as do exist. Companies that wish to market themselves as "green" may voluntarily participate in various carbon reduction efforts, such as reforestation projects. But there is no guarantee that the federal carbon cap program will recognize those efforts once mandatory caps are in place.

Many of the same problems exist with Renewable Energy Certificates (REC). There is no national registry of who owns what RECs, no verification as to whether the energy is actually generated from clean energy sources. There is no standardized method to convert RECs into carbon offset credits. In the next 3-4 years, all investors in all types of companies will be forced to consider carbon output numbers as one more factor in the due diligence process.

Looking for the perfect Christmas gift? Why not buy your kids some carbon offsets? That should give them something to whine about to their therapists.

Unfortunately, CO₂ pollution is no joke, but eBay (NASDAQ: EBAY) is partnering with the Pop!Tech social innovation network to organize the Pop!Tech Carbon Initiative, which allows you to buy your carbon offsets via the Internet marketer. The offsets won't be auctioned, however, but sold in a 'buy it now', flat-price form.

The site offers a simple carbon calculator to allow you to estimate the amount of CO₂ you generate per year. I supposedly am responsible for 11.5 tons.

Once my carbon debt was calculated, I was given some carbon-saving projects from around the world that I could choose to fund to offset my carbon debt. In my case, these included a solar irrigation project in Benin ($10/ton), reforestation in Nicaragua ($5.50/ton), and converting ceramic kilns to biomass in Brazil ($10.50/ton). By these figures, it would cost me roughly $600-$1200 to offset my carbon debt.

The project is scheduled to run through the end of the year, but shop early for the best selection!

Aisle or window? Coach or business class? Carbon offset or enemy of the environment?

In another step forward for the hot new carbon offset industry, Australian airlines Qantas (OTC:QUBSF) and its low-fare carrier Jetstar have launched a program that allows its passengers to buy carbon offsets to compensate for the CO2 emissions of their flight. Travelers can use the carbon calculator to figure out the emissions and cost of offsetting the pollution. For example, a flight from Bangkok to Los Angeles would emit 0.438 tons of C02 per passenger, which could be offset for $5.26 AUD.

Other ways you could offset this amount (pdf) of CO2 include:

• Replace one 100-watt light bulb with a 18-watt fluorescent for 2 1/2 years
• Replace your refrigerator with a high-efficiency model
• Plant a Douglas fir tree for every four flights

Some experts question the impact such programs have on the CO2 problem, but it should serve to answer critics of the airlines. To publicize the program, Qantas vowed to plant 90,000 eucalyptus trees in Australia.

I'm seeing lots of buzz about carbon offsets that leads me to believe the idea is rapidly gaining traction, although most vendors seem to be private companies. Keep an eye peeled for publicly held companies jumping into this market as retailers.

via Gadling