Starting next month, a City-County Council committee will begin exploring the possibility of selling carbon credits as a way to help fund the preservation and acquisition of green-space and parks in Indianapolis.
It’s not a slam-dunk proposition, at least not yet. The carbon market—especially for municipalities—is young and largely unregulated. So a dose of caution mixed with optimism is required. But we applaud efforts to examine carbon credits as a potential funding tool in a market that many expect to expand quickly.
The concept raises money by selling carbon credits to companies and other entities that wish to offset their polluting greenhouse gas emissions by investing in carbon-reducing forestry projects or related initiatives. This could involve planting trees or simply preserving existing woodlands.
Such efforts have largely been focused on tropical rainforests and other large-scale projects. For instance, Amazon is paying farmers in Brazil to restore vegetation in the rainforest that shares the company’s name, NBC News recently reported. Also, Delta Air Lines is spending $30 million to protect 500,000 acres of Indonesian swamp and a Cambodian wildlife sanctuary.
Slowly, a few cities also are beginning to explore the possibilities. As IBJ’s Leslie Bonilla Muñiz reported last week, projects are already underway in and around Seattle, Washington, and Austin, Texas.
In the Seattle area, King County bought land for use in a 15-acre pilot near the city of Sammamish. It produced 3,025 credits and has earned nearly $70,000.
Such large returns wouldn’t be expected in Indiana because native trees here aren’t as large and effective at storing carbon as those in the Pacific Northwest. Still, the demand for carbon credits is expected to grow exponentially. And City-County Councilor John Barth, chair of the Environmental Sustainability Committee, is wisely prepping the council to be ready when the time is ripe.
A study by McKinsey & Company estimates businesses bought carbon credits to offset 95 million tons of carbon in 2020, twice as much as in 2017. As more and more companies pledge to reach net-zero emissions to help stop climate change, the demand for carbon credits could increase 15-fold by 2030 and 100-fold by 2050, according to the Task Force on Scaling Voluntary Carbon Markets. By 2030, the carbon market could be worth $50 billion.
The City-County Council’s exploration of the concept is largely being aided by local environmental groups such as Keep Indianapolis Beautiful, Carbon Neutral Indiana and the Indiana Forest Alliance.
Now would also seem to be the perfect time to engage Indianapolis-area companies contemplating a net-zero pledge to see if any of them would be willing to buy carbon credits from the city.
Such a partnership would help local companies meet their environmental goals and assist the city in adding much needed greenspace while providing the necessary funding to properly preserve and maintain existing parks.
As the highly effective business philosopher Stephen Covey liked to say: Think win-win.•
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