Demand for pollution credits will surge: IFC

The voluntary market allowing companies to offset their contributions to climate change will grow ten-fold by 2012, though poor oversight could impair supply, according to a new report by consultancy ICF International Inc.

Demand among companies looking to offset their greenhouse-gas emissions blamed for global warming will grow to 220 million tonnes of carbon dioxide by 2012, up from 20 million tonnes now, the report from Fairfax, Virginia-based ICF International said today in its 2008 outlook of the voluntary carbon market.

As companies such as Dell Inc and Volkswagen AG advertise buying carbon credits to offset emissions that result from making their products, the market has come under more scrutiny.

The US Federal Trade Commission said last month that the unregulated market makes it hard to verify the validity of the projects that result in the credits.

"The soaring demand for them has resulted in highly fragmented product supply and pricing, with complex, unregulated, and non-transparent markets creating additional risks and uncertainties," ICF International said in a statement.

As much as $300 million may be spent by companies this year to offset their greenhouse-gas emissions in the unregulated markets.

Alexandra Marty, manager of ICF's climate change activities in London, said in a statement that voluntary markets will be successful with a set of standards overseen by independent groups "free from conflict of interest".

The FTC is reviewing a set of marketing guidelines that would attempt to ensure the claims by companies about their environmental purchases are accurate.

The International Emissions Trading Association, The Climate Group and The World Business Council for Sustainable Development released a new standard last year that creates methods to count carbon credits and sets up a tracking registry.