The trouble with carbon offsets
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GREEN CITY Are you carbon neutral yet? Al Gore says he is. The concert tours for the Rolling Stones, Dave Matthews, and other big acts say they are too. Indeed, going neutral is hot these days as, almost overnight, the fledgling market in carbon offsets has burgeoned into a multimillion-dollar industry.
The method is simple, at least in theory. For a fee, companies will balance, or offset, the greenhouse gases emitted by your car or home by spending money on climate-healing initiatives such as renewable energy, forestation projects, and capturing deleterious gases like methane from farms and landfills.
But the sheer number of offset firms out there is staggering, with hundreds of companies vying for your dollars. And as the industry has exploded in popularity, questions have arisen about its reliability and whether the millions of dollars being spent are really making it to worthwhile projects.
"It's the Wild, Wild West out there with carbon offsetting," the Sierra Club's Aaron Israel told the Guardian. "Until it becomes a truly functional market, it's going to continue to be confusing to the consumer who really wants to do the right thing."
A San Francisco firm is looking to bring some accountability to the freewheeling new sector. Since California's energy deregulation disaster, the nonprofit Center for Resource Solutions has run the Green-e program, which oversees and authenticates energy companies that claim to produce renewable power. Starting this fall, the CRS's Sarah Krasley told us, Green-e will police the carbon offset market as well and put its seal on worthy companies.
Green-e has already been certifying one method for slowing climate change for years: the sale of renewable energy certificates, or RECs. A local firm called 3 Degrees (formerly 3 Phases Energy) specializes in RECs, mainly for small and large businesses. With each one-megawatt-hour certificate its customers buy, the company helps wind, solar, and other renewable-energy producers compete with cheaper, fossil fuelbased sources of energy. As 3 Degrees' Steve MacDougal explained, "Utilities purchase energy at a commodity price, the same price for coal as for renewables. RECs allow [green-power companies] to have a premium, which makes them more profitable."
While 3 Degrees deals primarily in RECs for business clients, two other local firms, TerraPass and LiveNeutral, peddle offsets for individuals. Since it opened shop just two years ago, the for-profit TerraPass has sold tens of thousands of "passes" on its Web site for car emissions, air travel, home electricity use, and even weddings. The average buyer spends "about $50," company founder Tom Arnold told us, with the money going to initiatives like wind farms in the Midwest and the capturing of greenhouse gas emissions from farms and landfills. About one-third of 3 Degrees' outlays go to RECs.
LiveNeutral takes a different approach from TerraPass or any other company. Rather than spending money on individual projects or methods, the Presidio nonprofit buys and then permanently retires carbon offset credits from the Chicago Climate Exchange. "By purchasing these credits and then never reselling them," LiveNeutral executive director Jason Smith explained, "we drive up the price of the credits and encourage [big greenhouse gas emitters] to reduce." LiveNeutral sells a one-ton emissions reduction credit for $7.50, Smith said. Most customers use the company's DriveNeutral program and purchase five credits to offset one year of driving. The firm also offers a FlyNeutral option for air travel.
But many critics have likened the offset business to medieval papal indulgences, with environmental sins like owning an inefficient vehicle or cranking up the thermostat absolved for the right price. Israel said the Sierra Club does not openly oppose the practice, but he is worried that offsets could become "a distraction for people.... It's really the last thing you should do, not the first. First you should conserve and become more efficient, then you can see about offsetting what's left."
For Arnold, TerraPass's phenomenal success is not about exploiting guilt or bad behavior. Instead, he reasoned, it simply shows that people want to do all they can to make a difference. "Most of our users are already green," he said. "But we want to reach the people who are just now waking up to enormity of the problem too.... What our customers are saying is very American: 'Let's not wait for someone else to do it, let's get something done ourselves.' " *
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