Can buying carbon credits to offset the greenhouse gases you spew in daily life really help save us from global warming?
if you don’t quite understand all the talk about buying “carbon credits” to offset your greenhouse gas emissions by funding renewable-energy plants in Latin America, you’re not alone.
Britt Bravo is a 37-year-old Oakland writer and consultant who spends her time writing about activists, publishing a blog called “Have Fun, Do Good,” and pondering things like the size of her carbon footprint. But even she wondered exactly how and if she could offset the 1,872 pounds of carbon dioxide she’d expend on her round-trip flight to Washington, D.C. for a nonprofit technology conference. (She’d learned about carbon credits from an episode of Living with Ed, a reality series that chronicles Ed Begley, Jr.’s attempts to live an eco-friendly life.)
Bravo researched her options and sent $9.95 to TerraPass, a Bay Area company that invests in wind energy and biomass projects. For that fee, the company said she could offset 2,500 pounds of carbon dioxide—enough to erase the footprint of her flight. More than a donation, the money would be an investment in actual carbon reduction.
For the price of a burrito and a beer, she could offset her carbon and at least some of her guilt.
“I hope it makes a difference,” says Bravo, who walks or rides public transportation to and from her Oakland home whenever possible. “I’m still waiting for more research to come out about if it makes an impact and which companies are best. But spending $10 every time I make a cross-country flight to support a clean-energy project seems like a low-risk investment.”
Although purchasing carbon credits (also referred to as “carbon offsets” in many circumstances) is a relatively new idea in the United States, it’s gaining traction among green-minded consumers. Like Bravo, many don’t see these credits as a blank check to be wasteful, but rather as an additional way to reduce emissions after making other lifestyle adjustments.
Al Gore, Ben & Jerry’s ice cream, Clif Bar energy bars and The Barenaked Ladies rock band are just some of those investing in carbon offsets in order to reduce their gigantic carbon footprints. In 2007, the Academy Awards caused a stir by purchasing carbon credits to make up for the 250,000 pounds of carbon dioxide released during its annual ceremony (All those stars need to be ferried around, and then there’s the electricity to power those big lights and cameras).
But as the concept gains popularity, it also gains critics who believe a system that doesn’t yet enforce ceilings on greenhouse gas emissions—either on companies or individuals—is simply allowing people to buy an environmental indulgence. Some have cast carbon credits as an easy out for the rich and famous.
And in this new world of green-consciousness, consumers are asking tough questions: Does this really reduce carbon in the environment or just make us feel better? Who is monitoring these offsets? How do we know that the net result is really carbon neutral? And will the ability to trade carbon credits mean that individuals (especially those with the means) and corporations alike will keep on using what they’re using and simply buy their way out of any pinch related to “reduce, reuse and recycle?”
Carbon credits seem at once deceptively simple and completely baffling, part of a larger emerging system called “the carbon market.” Here’s how it works: the government sets a limit on how much carbon dioxide a factory can spew into the atmosphere. Because the onus to comply is on factory owners not to exceed that limit, ostensibly they will do everything that’s cost-effective to mitigate their pollution. That may mean buying new, more energy-efficient equipment or looking into alternative fuel sources like wind or solar power. Even so, the company may come in 100 tons over quota. In that case, it can invest in a carbon offset—in essence, a promise that somewhere, someone else will pollute 100 tons less carbon. The factory might still be releasing too much carbon dioxide, but the net result is “carbon neutrality” as some other factory slows down its own carbon dioxide output.
The idea of carbon trading really took off in the Kyoto Protocol, a 1997 international agreement between 169 countries to reduce greenhouse gases. The treaty set up a system wherein member states could trade credits to one another to meet treaty-established quotas for the reduction of greenhouse emissions. One credit is considered equivalent to one ton of carbon dioxide emissions.
Many advocates expect that it’s only a matter of time until the United States joins this effort and begins to regulate the carbon dioxide output of its industries. Until then, there’s just California.
Under California’s landmark AB32, the state is the first in the nation to place caps on industries in order to reduce carbon dioxide. The law will require the state to reduce its greenhouse gas emissions to 1990 levels by 2020. In order to do so, California must first determine the baseline 1990 level and then implement a plan that places hard caps on utilities and industries to incrementally reduce greenhouse gas output. California companies will be given “allowances” for how much they can emit and eventually trade those with each other.
City governments and individuals aren’t held to any carbon caps—not yet—but can participate in a voluntary carbon market.
Across the country, cities like Berkeley and Oakland are joining the Chicago Climate Exchange (CCX), a voluntary, legally binding greenhouse gas reduction and trading system for emission sources and offset projects in North America. Timothy Burroughs, climate action coordinator for Berkeley, says the city government has consistently reduced emissions related to its operations annually and earned credits on the Chicago exchange. But instead of selling those credits, Berkeley has chosen to retire them—a net positive for the environment.
“If we are urging our community to reduce its carbon footprint, then we certainly have to be doing it ourselves,” Burroughs says. “We’re providing an example for our own community members but also for other cities.”
To that end, Berkeley may set up its own local carbon market where individuals and businesses can buy and sell carbon credits to benefit local projects, such as purchasing solar panels for school buildings or investing in local energy-efficiency initiatives. The effort is still in the idea stage.
Last month, PG&E became the first utility company in the nation to offer its own voluntary carbon reduction program for customers. Called ClimateSmart, the program lets consumers spend about $5 per month to help pay for projects to offset the pollution created by their gas and electricity consumption. PG&E’s ClimateSmart program is run by an independent advisory board made up of consumer representatives, public policy specialists and environmentalists.
“One hundred percent of that goes into habitat and forestry programs within the state,” says PG&E spokesperson Jennifer Zerwer, who expects the power company to spend $1.5 million of shareholder money over the next three years on reducing two million tons of carbon dioxide emissions. The power company solicited proposals from California projects that provide carbon offsets and will make selections through a competitive bidding process.
Keely Wachs, PG&E’s environmental communications manager, says the company hopes to educate and engage customers on the climate change issue, but does not see the project as the first line of defense on greenhouse gases. “A lot of people who criticize say it’s a license to pollute,” says Wachs. “We’re saying, ‘Hold on a second. That’s not what ours is about.’ We’re going to continue making investments in clean energy.”
Individuals can also purchase credits from several local and national companies that have emerged over the past few years. For an annual fee ranging from $40 to $100, the Bay Area’s TerraPass will fund eco-projects to counterbalance carbon generated by driving a car. Native Energy in Vermont can invest your money to build new wind farms and biomass projects.
It sounds like a good cause, but what does this all mean? For many laypeople, the world of carbon trading is a jungle of technical jargon. And when you’re paying for something that you can’t see or touch, it’s sometimes hard to be sure you’re getting your money’s worth.
According to experts, there’s a lot to consider, but two of the big issues in determining the good done by a credit are “additionality” and “leakage.”
The concept of additionality holds that the money poured into carbon offsets has to actually make a difference—it has to create some benefit that, absent that contribution, never would have come to fruition. In other words, a company has to actively reduce its carbon output for you to be able to buy it as a legitimate credit.
Now the concept gets complicated. An eco-conscious company that builds a new factory that uses biomass and renewable energy would not be eligible for carbon offset funding because the money put in wouldn’t cause any “additional” reduction in carbon dioxide. But a developing country that produces needed electricity with an antiquated, polluting factory would be the perfect candidate. If an investor contributed money to finance a greener plant, here there would be “additionality”—an additional reduction in carbon dioxide that would not have existed without that money.
“The Kyoto Protocol set up the additionality requirement because they didn’t want to just credit people for doing business as usual,” says Tom Kelly, co-founder of KyotoUSA, a grassroots organization that works to encourage cities and local groups nationwide to reduce greenhouse gases for which they are responsible. “They really have to go above and beyond to reduce carbon. This is part of what makes carbon offsets such a difficult area, because it’s so hard to identify and measure what’s truly a credit.”
The second factor, “leakage,” is easier to understand but almost as difficult to measure.
“You might decide to protect a certain tract of forest that wouldn’t otherwise be protected,” explains Laura Harnish, deputy regional director of Environmental Defense, one of the nation’s largest environmental organizations. “But then if some other forest is harvested instead—one that would have been left standing—you’ve got leakage.”
In short, a good offset should have additionality and shouldn’t have leakage.
Even with solid analysis about the ins and outs of what makes a good carbon credit, some consumers view carbon offsets as tools for awareness and even a bandage, but not the cure-all. Others have a dimmer view.
“That’s a crock,” says Hank Chapot, 52, a gardener on the U.C. Berkeley campus who takes his environmentally friendly lifestyle very seriously. “They tell you that you can buy carbon credits so that you’ll feel good and then they claim that they’ll invest into alternative fuel sources, but it’s a feel-good scam. I can say that I’ve bought 200 acres of biomass farm or 200 megawatts of wind power so I can feel good about my next air trip.”
One of Chapot’s main complaints is that a carbon market will reward the large corporations that are historic polluters—the oil and energy companies—by awarding them credits to trade. At the same time, he says, carbon trading is a one-way street for ordinary people: You can buy a credit to counteract your car exhaust, but if you’re a regular Joe who rides a bike to work, you don’t get any credits to sell.
Chapot, who doesn’t own a car, bikes to work in the morning. When he does need to drive, he borrows a car from City CarShare, something that he estimates he’s done only about 10 times in the last year. He chooses locally grown foods when he shops at the Berkeley Bowl, avoiding produce that had to travel long distances in carbon-spouting trucks to get to grocery store shelves. Although he understands that not everyone is capable of living a low-carbon lifestyle, he still thinks that there are better solutions than buying carbon credits.
Chapot and others criticize carbon trading as encouraging business as usual, allowing corporations or individuals to buy their way out of cleaning up their acts.
“The best solution is to just stop doing it,” says Chapot. “Don’t sign up for carbon credits, just stop burning carbon. Wear a sweater in the winter instead of cranking up the heat. Quit buying bottled water. Bike to work or use public transportation. There are plenty of low-tech ways to solve the problem.”
Across the country, numerous companies have opened their doors to sell credits to eco-conscious consumers—often at wildly different prices for what seems, at first glance, to be the same thing. But carbon retailers will tell you that subtle differences exist between the credits sold by different competitors, depending on how those credits are generated.
“Some marketers like to commoditize carbon with the mantra, ‘A ton is a ton is a ton,’” says Billy Connelly, marketing director for Native Energy, a Vermont-based carbon-trading company that sells credits to businesses and individuals. Native Energy credits cost more than other credits, explains Connelly, because they are like “gourmet credits.” The company works only with start-ups, rather than buying and selling credits on the market. The company’s direct relationship with projects makes it easier to monitor how much carbon dioxide is displaced.
“Many other markets just buy energy credits from the ‘super market,’ so you don’t really know what you’re getting,” says Connelly.
Customers who have bought credits from Native Energy include Ben & Jerry’s ice cream, Green Mountain Coffee Roasters and the band R.E.M.
Bay Area–based TerraPass buys and retires credits from the Chicago Climate Exchange, but also invests in clean energy through wind farms and biomass.
TerraPass prides itself on stopping methane (a greenhouse gas that causes even more damage than carbon dioxide) from getting into the atmosphere by “methane capture” on dairy farms. (Yes, that means removing the gas produced by farm animals.) Among its customers are Ford Motors, which purchased credits to offset carbon dioxide created during the construction of its hybrid car fleet, and the Academy Awards. TerraPass has recently partnered with Washington, D.C.–based FlexCar, giving FlexCar customers across the country the option of purchasing credits for the miles they drive.
TerraPass is also unique in its commitment to “match maturity”—meaning that all the credits you buy result in real carbon reductions within the year.
“For example, if you buy a credit for 10 tons of carbon that’s reduced by a reforestation project, it might take 100 years for the trees to take up that 10 tons,” says Tom Arnold, chief environmental officer at TerraPass. “We don’t think we have that kind of time, so all TerraPass projects offset the carbon the same year that you buy the credit.”
Both TerraPass and Native Energy, like the majority of carbon-trading companies, are privately-owned, for-profit corporations, something that may give potential buyers pause. But since carbon offsets are bought and sold as commodities on a market, companies say the for-profit model gives them a better ability to buy and sell within that context.
“Energy is a for-profit business,” says Arnold. “There are no nonprofit farmers or wind farms. These are the businesses that are going to make a difference in reducing carbon, and it’s all profit-driven. You have to set up incentives for businesses to do the right thing.”
Billy Connelly agrees that the for-profit model has its role to play.
“Many consumers think that environmental stewardship is the realm of the nonprofit,” says Connelly. “But without the discipline of the bottom line, we wouldn’t be able to gauge our success. This makes us better equipped to compete with other for-profit corporations because you have to be competitive.”
Overseas, carbon trading is a heavily regulated industry in nations that have signed on to the Kyoto Protocol, but there’s little government oversight for the industry in the United States. As a result, the U.S. carbon market is a confusing free-for-all, where scholars, advocates and trading companies often disagree on what, exactly, qualifies as a credit and how to measure its value. Environmental-minded consumers are often left without any way of knowing what they’re really buying.
“The voluntary carbon market has been referred to as the wild, wild West,” says Caitlin Sparks, U.S. marketing representative for The Gold Standard. The Gold Standard is an independent nonprofit that has developed a set of voluntary guidelines for carbon offset projects to ensure that carbon credits achieve real emissions reductions. “The market is entirely unregulated and lacks federal legislation and guidelines. Consequently, it’s hard for buyers to know what they are actually purchasing. Many credit retailers have been widely criticized for offering credits that don’t achieve any real, measurable reductions.”
Companies that sell carbon credits also have vastly different business models. Some function as little more than middlemen—buying up credits and selling them at a markup. That model has been criticized for making it hard to tell where the credits originally come from. Other companies work with projects from scratch to ensure that the credits they generate are on the level.
“The major problems are with standards and oversight. Consumers don’t know what they’re getting,” says Connelly. “It’s also very complicated, and not yet a well known service. It’s not like gumballs. When you buy a gumball, you can tell a lot by looking at it. You can tell the difference between a good and bad gumball, a big and a small one, blue and red, but carbon offsets are so complex that people start to glaze over when they have to hear about the differences between different ones.”
Kelly of KyotoUSA agrees that the checks and balances aren’t in place yet.
“Because we’re unregulated and because we live in a capitalist economy and because a lot of people are concerned about climate change, companies will sell them these credits,” says Kelly. “But if you try to follow the money trail, it’s often difficult to tell how much of your money goes for that purpose.”
If you’re in the market for a credible credit, you can find help. Although the federal government isn’t keeping tabs on carbon trading, a number of organizations are dedicated to investigating and certifying credits, stamping ones they deem acceptable with the eco-equivalent of the Good Housekeeping seal of approval.
Cal Broomhead, an energy and climate programs manager at the San Francisco Department of the Environment, bought carbon credits last year to offset, in part, his trip to Glacier National Park—it didn’t seem right to emit hundreds of pounds of carbon dioxide on a trip to see melting glaciers without doing something in exchange. When he began his search for the right credit last year, his first stop was Green-e, an independent verification service.
“There are always nuances to these decisions,” says Broomhead, who ended up paying $100 to TerraPass to offset a year’s worth of trips and household energy use. “But if you follow these two basic rules, you’re in good shape: First, reduce your energy consumption as much as possible. Do everything you can before you start buying credits. And when you’re ready to buy, make sure they’re certified.”
Some certification programs are geared to specific sorts of offset projects: Green-e certifies renewable energy projects. California Climate Action Registry certifies forestry and manure management projects. The Gold Standard certifies energy-efficiency projects like biomass to energy programs, wind farms and hydro-energy plants.
Sparks, from The Gold Standard, says her group certifies renewable energy and energy-efficiency projects because these projects address the root cause of climate change—the way we use and produce energy. They help spur a transition from fossil fuel-dependency to a renewables-based economy, while carbon sink projects, like tree-planting, are “end-of-the-pipe solutions.”
“The Gold Standard process is very rigorous,” says Sparks. “In this buyer-beware market, we offer precisely the risk-management that buyers need. As companies become more aware of the issues surrounding offset quality, we are seeing a huge increase in demand for The Gold Standard.”
Since even the most serious consumers are unlikely to be able to parse the subtle nuances to find exactly how much carbon dioxide a company’s projects eliminate, checking for certification may be the only solution.
“Realistically, checking the certification may be the extent of what the average consumer is willing and able to do,” says Virgil Welch, staff attorney for Environmental Defense. “We need to fundamentally reduce the way we consume energy. As more consumers realize how their everyday life affects the environment, you’ll see more people voluntarily reducing their energy consumption. Green-e and programs like that are an important part of that.”
But the problem remains. Without regulation, there’s nothing to compel companies to run their credits through any certification program. And since different programs have different standards and procedures, it’s sometimes hard for the layperson to compare products.
Dan Kammen, a U.C. Berkeley professor of energy from the Energy and Resources Group, says that’s going to change very soon. He and his colleagues have developed a comprehensive carbon calculator [See Credit Rating, page 17] that will hone in on the carbon use of individuals and ultimately distill the price of carbon.
In the near future, Kammen says supermarkets will display the relative carbon content (used in making and transporting) of certain products to help consumers make choices. Bar codes could enable shoppers to rack up carbon credits like they do frequent-flyer miles.
“In the end it will give us what is really needed, which is a price for carbon,” says Kammen. “All of these schemes are fine, but to have wide economic impact, you need to reflect on and act on the actual price.”
As the time approaches for Broomhead to renew his annual TerraPass, he knows that he’s got a major decision to make. Because his first goal is always to reduce his own power consumption, he may not renew his subscription. Instead, he may save that money to eventually install additional solar panels on his roof to heat his Glen Park home without using his old, inefficient furnace.
“The first thing to do is to think in terms of reduction,” says Broomhead. “Change your habits and your equipment. Each person has to look at his lifestyle and make trade-offs. Life is very complicated and not everyone can give up everything. You might need to have a car if you have kids in different schools or if you’re caring for a sick mother or something.”
Broomhead used to bike to work in the city every day, but he gave that up when he became a father.
“It can get pretty dicey riding a bike through that traffic,” he says. “And I wanted to make sure I was in one piece to see my kids.”
For him, carbon credits are the last resort, the place to turn when you’ve already reduced your carbon output as much as you’re able. But putting out some carbon is, for most of us, an unavoidable fact of life.
“It’s like having dirty dishes after you eat,” says Broomhead. “I don’t feel guilty about having made them dirty, but I do feel a responsibility to help clean them up.”
Mike Rosen-Molina is a frequent contributor to The Monthly whose work has also appeared in the East Bay Express, the San Francisco Chronicle and the Fairfield Daily Republic.
Carbon credit: Part of a tradable permit scheme that reduces greenhouse gas emissions by giving them a cash value. A single carbon credit gives its buyer the right to emit one ton of carbon dioxide by ensuring that the seller will reduce or clean up his carbon dioxide output by the same amount.
Carbon offset: An emission reduction that occurs outside of an industrial arena that is regulated or capped and then credited to the capped industry.
Carbon project: The pollution-reducing activity that creates a credit, such as planting trees or switching to clean, renewable fuel sources.
Carbon sink: Any project designed to capture and store carbon dioxide from the atmosphere. For example, planting a forest of new trees to take in excess carbon dioxide would be a carbon sink project.
Leakage: A problem with poor carbon credits, where a carbon-reducing project saves one project by condemning another. For example, setting aside 100 acres of California forest to capture carbon dioxide, while instead bulldozing a different 100 acres in Maryland that would have been left standing had the California forest been harvested. A good carbon credit should not suffer from leakage.
Additionality: A requirement for a good carbon credit, “additionality” means that the carbon project has gone above and beyond business as usual. If you’re going to pay for a credit, that money must be vital for making the carbon project happen—it doesn’t count as a credit if the project would have happened anyway without your contribution.
Kyoto Protocol: A 2005 international agreement addressing climate change, the Kyoto Protocol placed mandatory limits on the signing countries for greenhouse gas emissions. It also put in place the first mandatory carbon credit–trading scheme. The U.S. is not a party to the protocol.
End-of-the-pipe solution: Any solution that deals with pollution by cleaning it up after it’s been created rather than reducing the amount of pollution created in the first place.
Chicago Climate Exchange: Similar to the trading system set up by the Kyoto Protocol, the CCX is a voluntary carbon credit trading scheme that lets companies and cities buy and sell carbon credits on a market.
Biomass: Living and recently dead biological material that can be used as source of renewable fuel. The term usually refers to manure (a.k.a. cow power) or plant matter grown for use as biofuel.
Certification: A guarantee by a third party that the credits offered by a credit-trading company are on the level, satisfying the certifier’s standards for additionality and leakage.
Voluntary market: A carbon market which is not regulated or enforced by any government.
Greg Ranocchia is a 41-year-old single troubleshooter for a chemical and manufacturing company who primarily works from home in Walnut Creek. He occasionally drives to Sacramento, San Francisco and Los Angeles for concerts, on dates or for business. Though he eats out two or three times a week, cooking is Ranocchia’s hobby, and he likes to shop at 99 Ranch Asian market in Richmond to buy imported ingredients. Here’s Ranocchia’s basic annual carbon usage as calculated on a site developed by U.C. Berkeley’s Energy and Resources Group located at http://bie.berkeley.edu/files/.
Carbon used to generate electricity: 3.4 tons (11%)
Carbon used to heat a 900-square-foot apartment:1.3 tons (4%)
Carbon used to drive his 1997 Toyota Camry to San Francisco, Sacramento and Los Angeles: 4.1 tons (13%)
Carbon used on annual train and public transportation trips: 0.4 tons (1%)
Carbon used for airline flights in the last year (three from Oakland to Baltimore, four from San Francisco to Phoenix, and two from Oakland to San Diego): 4.3 tons (14%)
Carbon used for water and sewage: 0.7 tons (2%)
Carbon produced in housing maintenance: 1.2 tons (4%)
Carbon produced by eating out three times a week: 1.5 tons (5%)
Carbon produced by groceries and cooking: 9.1 tons (29%)
Carbon produced in electronics, appliances and vinyl production: 1.8 tons (6%)
Carbon produced in manufacture of furniture and household equipment: 0.7 tons (2%)
Carbon produced to make clothing: 2.2 tons (7%)
Carbon produced to stage concerts and events attended: 0.7 tons (2%)
Total annual primary carbon footprint of Greg Ranocchia: 31.4 tons
Annual average primary carbon footprint for an individual in the U.S.: 49 tons
Annual average primary carbon footprint for an individual in the world: 10 tons
Conservation International, 2011 Crystal Drive, Suite 500, Arlington, VA 22202; (703) 341-2400, (800) 429-5660; www.conservation.org.
TerraPass, 568 Howard St., 5th Floor, San Francisco, CA 94105; (877) 210-9581, (415) 692-3411; www.terrapass.com.
Carbonfund, 1320 Fenwick Lane, Suite 206, Silver Spring, MD 20910; (240) 556-1908; www.carbonfund.org.
Native Energy, 823 Ferry Road, P.O. Box 539, Charlotte, VT 05445; (800) 924-6826; email@example.com, www.nativeenergy.com.
The Climate Trust, 65 SW Yamhill Street, Ste. 400, Portland, OR 97204; (503) 238-1915; www.carboncounter.org.
The Gold Standard c/o BASE, 22 Bäumleingasse, CH-4051, Basel, Switzerland; 41 (0)61 283-0916; www.cdmgoldstandard.org.
Green-e c/o Center for Resource Solutions, P.O. Box 29512, Presidio Building 97, Arguello Boulevard, San Francisco, CA 94129; (415) 561-2100; www.green-e.org.
California Climate Action Registry, 515 S. Flower Street, Suite 1640, Los Angeles, CA 90071; (213) 891-1444; www.climateregistry.org.