The chairman of the House Select Committee on Energy Independence and Global Warming praised the Federal Trade Commission for agreeing to review the voluntary carbon offset market and determine whether more federal oversight is needed, according to an Aug. 13 committee statement.

“I applaud the FTC for taking a closer look at these consumer products,” Rep. Edward J. Markey (D-Mass.) said. “Carbon offsets can play an important role in the efforts to cut global warming pollution, but they need to be held to the same standards as other consumer products to ensure they are effective,” he said.

In an Aug. 9 letter, FTC Chairman Deborah Platt Majoras said she agreed with Markey that the market poses consumer protection challenges. “Carbon offset claims may present a heightened potential for deception because it is very difficult, if not impossible, for consumers to verify the accuracy of a seller's claims,” she wrote.

The letter was in response to a July 18 request from Markey for an FTC review of the market to prevent unfair or deceptive trade practices. At a committee hearing earlier in the day, Markey said purchases of carbon offsets are largely unregulated and, as the practice becomes more widespread, the potential for false marketing claims grows (138 DEN A-1, 7/19/07).

Carbon offsets are credits that consumers, businesses, and government agencies can buy to compensate for the global warming emissions caused by driving, using electricity, or other activities. The offsets are intended to compensate for carbon-emitting actions by funding tree planting, preserving areas from deforestation, or supporting renewable energy projects such as wind and solar power.

In her letter, Majoras said the FTC expects to host a series of workshops in the upcoming months, one of which will focus on carbon offsets. Through this meeting and other outreach efforts, the commission will seek input on the need for more direct FTC guidance than that already provided by the Green Guides and other advertising directives.

Claims Must Be Truthful.

FTC's Environmental Guides, commonly referred to as the Green Guides, indicate how the commission will apply Section 5 of the FTC Act, which prohibits unfair or deceptive acts or practices to environmental marketing claims.

As part of the review process, FTC also will consider any self-regulatory efforts under way, she said. Information from the workshops will be considered for the scheduled 2008 review of the Green Guides, according to Majoras.

Majoras said the same legal requirements that apply to other forms of advertising also apply to carbon offset claims. “Claims must be truthful and not deceptive, and marketers must have evidence to substantiate those claims,” she said.

The commission plans to use guidance to focus on unfair and deceptive practices, rather than establish environmental policy standards, “which is more appropriately handled by agencies with expertise in those areas,” she said.

By Patricia Ware

Copyright 2007, The Bureau of National Affairs, Inc., Washington, D.C.