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With so little progress in Copenhagen and even the weak Copenhagen Accord now faltering, what is the future for carbon management and offsetting among businesses?

The lack of certainty about the strength of international carbon reduction targets is an issue not only for businesses looking to invest in internal emissions reductions, but also the clean-tech industry that supplies them. Clean-tech investment, which slowed in the recession, has pretty much ground to a halt, stemming the flow of new products and services to support the low carbon transition.

Yet many businesses are looking longer-term, and have taken a strategic decision to continue investing in managing their emissions, self-regulating by setting internal reduction targets and mitigating the remaining emissions through offsetting.

This strategy is backed up not only by cost savings and early-mover advantage ahead of potential future regulation, but also by consumer demand. The public and media attention around Copenhagen marked a radical departure from previous climate summits, demonstrating that this isn’t just a passing green fad - people are genuinely concerned and are insisting businesses and politicians respond appropriately.

While the public interest in Copenhagen has convinced many business leaders that carbon management and offsetting should be a priority, the summit itself failed to resolve important issues with formal carbon offsetting processes. This could actually reduce use of project-based offsets in the future as confidence in them wanes.

At the summit, the Executive Board responsible for the Clean Development Mechanism - the UN’s process for offset projects in developing countries - acknowledged issues around the lack of regional distribution of projects (70% of projects are in China and India compared to only 2% in Africa) and the potential ‘non-additionality’ of the mechanism (some projects would have happened anyway, so the offset is environmentally worthless).

Carbon Retirement released research showing the inefficiency of the mechanism, which was also debated at the summit.

Many voluntary buyers of carbon offsetting use credits from the CDM because the approval of the UN is attractive in an industry with few mature standards. However, the continued issues with the system are pushing buyers to use alternative standards when offsetting their unavoidable emissions.