Europe's Carbon Trading Market Sees Brisk Business To ease the pain of Europe's mandatory carbon cuts, businesses with low carbon emissions are selling their surplus allowances to businesses with high emissions. This system has grown quickly, and in some unexpected ways.

Europe's Carbon Trading Market Sees Brisk Business

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Now heads of state will discuss their next steps this week, even as Europe is already taking action against climate change. Many European companies are part of an emerging system that we will report on next. European governments imposed limits on how much carbon dioxide certain companies can emit. And there's a carbon market. Some companies find a way to put out less carbon dioxide than they're allowed, so they get to right to sell the rest of their quota to other companies that need it. The system buys time for companies to figure out how to live within their CO2 limits.

As NPR's Christopher Joyce reports, the carbon market has grown in unexpected ways.

CHRISTOPHER JOYCE: I have just received an envelope from Germany…

(Soundbite of paper ripping)

JOYCE: …mailed to me here in Washington by the big private postal service in Europe called DHL. Okay, it's brochures on carbon trading - this new market that sprung up after the Kyoto Climate Treaty took effect in 2005. What's interesting about this envelope, though, is actually what's written on the outside. In bold letters, next to the DHL logo, it says: This is a carbon-neutral shipment. Carbon-neutral. What does that mean? Well, let's go to Germany to find out.

(Soundbite of train stopping)

JOYCE: They're big one trains in Europe. Trains carry lots of people and stuff, and they run on fossil fuels. DHL delivers a lot of mail through this train station near Bonn, and in doing so, they create a lot of greenhouse gases. So two months ago, DHL decided to do something about that.

Mr. MARTIN WEGNER (Head of Technology Projects, DHL Innovation Center): We have introduced a Go Green product, which allows our customers to send their express shipments carbon-neutral, from Europe to whatever place in the world.

JOYCE: That's Martin Wegner, head of technology projects at the DHL Innovation Center.

Mr. WEGNER: We are able to track each leg of the transportation chain and calculate the exact emissions coming from the initial road transportation, then the aviation part of it, and then finally ground transportation again to the customer in the U.S.

JOYCE: DHL will ship carbon neutral for you and charge two percent more. The company takes that money and invests it in projects that produce carbon offsets. What are these offsets? Well, DHL grows trees in a plantation in Costa Rica. They soak up carbon dioxide as they grow. DHL also funds things like a solar energy farm in India. These projects have to be new, things that only would have happened with DHL's investment. The company does this voluntarily. Transportation companies are not covered by the Kyoto climate rules yet. So why would DHL do this?

(Soundbite of train engine)

JOYCE: Well, the answer is just a train ride down from DHL to Frankfurt, to the office of a carbon broker named Anna Lehmann.

Ms. ANNA LEHMANN (Carbon Broker, Carbon Credit Company): Companies, they use this to green their image, to wipe out the carbon footprint.

JOYCE: Lehmann works at the Carbon Credit Company. Like many carbon entrepreneurs in Europe, they've just rented office space in a semi-industrial neighborhood. The place still smells of fresh paint. Lehmann's company helped DHL find its offset projects. She says there are plenty more companies looking for a similar deal. Lehmann says her company doubled its business last year.

Ms. LEHMANN: It's exploding at the moment in Germany. It's becoming very popular. Brokers are now also jumping on this commodity. And companies now also see this option to improve their image and to use this as a marketing tool.

JOYCE: But this voluntary market is like a spring garden, growing without much oversight. Martin Enderlin is with EcoSecurities, another large carbon dealmaker.

Mr. MARTIN ENDERLIN (Board Member, EcoSecurities): If there are people out there who try to make fast money, there is indeed a risk. And everybody can call themselves experts on climate change projects.

JOYCE: Enderlin says there's sometimes no way to guarantee that someone who promises to plant a tree or build a solar power project really follows through.

Has anybody been caught? I mean, who's going to catch them?

(Soundbite of laughter)

Mr. ENDERLIN: This is absolutely right. There is no police there, so there is no law forbidding to invest your money stupidly. They don't sell something which is illegal. They just sell something like hot air.

JOYCE: There are actually companies that will verify that carbon-reduction projects do what they promise. But they work mostly in Europe's mandatory carbon market created by the Kyoto treaty. That's where the big power companies and factories that must limit their emissions do their offset trading. In two years, this mandatory market has generated about $30 billion in trade.

The carbon marketeers say all this action wouldn't have happened without the Kyoto treaty. Niklas Hohne works for a big carbon project company called Ecofys in Germany.

Mr. NIKLAS HOHNE (Consultant, Ecofys): Before CO2 was for free, or emitting it was for free. Nobody even really thought about it. And now, the big companies at a very high level are thinking about it. The banks are thinking about it. It's an asset or not if you have large CO2 emissions or not. So that's - really has changed the way people think about climate change.

JOYCE: At the G8 Summit, there will be a lot of talk about how to bring even more companies into the carbon market and extend it beyond Europe, especially to the U.S. So far, many American companies say they're ready for a carbon market. The Bush administration has been cool to the idea.

Christopher Joyce, NPR News.

INSKEEP: His report is part of our series, Climate Connections. And you can learn more about the effects of climate change from our partners at National Geographic in the latest issue of that magazine.

Also as part of our yearlong series, we'll be answering your questions on global warming, and you can get the first batch on the greenhouse gas carbon dioxide by going to

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