Reducing Emissions While Increasing Revenue May Be Tricky — But Carbon Credits Could Give Some Companies An Upper Hand

Picture credit: Gary Chan on Unsplash

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World leaders gathered in Glasgow, Scotland, late last year to discuss international agreements on climate change at the United Nations Climate Change Conference (COP26).

One of the key goals at COP26 was to establish international rules for a global carbon credit market. Some progress was made in that area with the establishment of a market where countries can trade carbon credits.

However, much uncertainty remains as to how that may work on an individual company level. An organic waste-processing company says it is continuing to focus on its own voluntary carbon credit program, reducing environmental pressure and making money at the same time.

SusGlobal Energy Corp. SNRG said on May 24th during the release of its first-quarter results that it expects to monetize its recently established carbon credit program in the second quarter of 2022. 

The Toronto-based company, which processes organic waste from municipalities and produces regenerative products such as organic fertilizer from such waste, signed an agreement with Bluesource Canada ULC in November to develop and market greenhouse gas credits from its main site in Belleville, Ontario. Bluesource counsels organizations across North America on their climate and environmental goals.

How Does it All Work?

Landfills are among the largest emitters of greenhouse gasses. By diverting organic waste away from landfills and instead of processing it at its facilities, SusGlobal reports that it both reduces emissions and produces regenerative products such as premium fertilizers that can be found at major retailers such as Home Depot Inc. HD.

Bluesource audits the tonnage of the processed waste to determine the number of carbon credits SusGlobal should receive. From there, the company sells its credits to large emitters who need to offset their own carbon footprints.

It’s a model that has commonly been used by other companies such as electric vehicle producer Tesla Inc. TSLA.

Eventually, SusGlobal’s revenue from the carbon credits will be dwarfed by the amount of revenue from the waste it processes as increasing regulation determines less frequent use of landfills, SusGlobal CEO Marc Hazout said.

“It’s a win-win situation for SNRG, whose model has always been to divert organic waste from landfills and then produce regenerative products as part of our circular economy model,” he said.

For now, the incentivized carbon credit system is voluntary, but world governments, as shown by the COP26 frameworks, are leaning toward legislation that would require zero emissions and thus increase the value of carbon credits, Hazout noted. 

“Eventually we’re going to graduate toward a mandatory market, and those are the markets that were discussed at COP26,” Hazout stated.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.

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