The states of Arkansas, California, Connecticut, Delaware, Illinois, Maine, Mississippi, New Hampshire, Oklahoma, and Vermont have joined the chorus of voices urging the Federal Trade Commission to increase its understanding of, and oversight over, the growing market for carbon offsets and renewable energy certificates (RECs).  In a seven-page letter to the Federal Trade Commission dated January 25, 2008, the states express concern that “[t]he lack of common standards and definitions, along with the intangible nature of carbon offsets, makes it difficult if not impossible for consumers to verify that they are receiving what they paid for and creates a significant potential for deceptive claims.”

The letter identifies many of the thorniest issues facing policy makers in developing and enforcing unified carbon market standards, but it is most notable for its recognition that standard-setting and enforcement alone are not enough.   Rather, if FTC, states, and industry are to ensure the long-term viability of the US carbon market, real reform will also require greater understanding of perceptions and responses to claims made by consumers in this new market.  The letter concludes that:

FTC, and by extension, the States, can and need to do better than to preside over a “consumer beware” market. Particularly given the rising importance of perhaps the need-for-carbon offset-type products in the market, we cannot afford to settle for less. Instead, we need to ensure, by law, that carbon offsets are real, additional, verifiable, enforceable, and accompanied by some system that will permit average consumers to make informed decisions as to whether and what to buy.

The FTC comment period on the Carbon Offset and REC Standards closed January 25.  FTC will use these comments in determining whether changes are necessary to FTC’s Guides for the Use of Environmental Marketing Claims (also known as “Green Guides”).

For further information about this topic, please contact Akin Gump.