Musings on Offset Market…
Been looking heavily into the carbon offset space recently with a colleage. Very interesting things going on there right now. As you may know, Virgin has made a pretty serious committment towards sustainability and we think this is an interesting market at about $1B in the US and tripling y/y (voluntary offset market). What I find interesting is that I don’t think anyone has really commecialized the model yet and given consumers an easy to use product that they immediately understand. I also think that these businesses are not that defensible at the end of the day. Terra Pass is not that easy to use and really focuses on individual stuff (like offset your flight) but I give them props for being the clear market leader. Others like Native Energy, Be Green and Climate Care also have interesting products out there, and Carbon Fund is doing a really good thing by going non-profit and giving 95% of the offset directly to projects (these guys are my preferred vendor).
That said, I met with an interesting company yesterday that I think might have the best UI/IA I’ve seen out there and they will also allow me to offset my entire life via a subscription each month. It was a really good product. I also saw another company recently that is trying to handle the market in a creative way - through a social game around carbon offsets. But, it got me thinking about the market and defensibility, and I really started to wonder whether or not these guys could really crush it given that Eco Securities and other originators are starting to think about entering the consumer side of the business. If they come in, there is no way that the companies above can really match the value of an originator. Also got me thinking about why I wouldn’t just use my financial manager to fill the same role as Terra Pass or the others. After all, they have a complete understanding of my finances and lifestyle and can easily provide the needed credits to offset.
