When Cal Broomhead drove to the Grand Tetons and Yellowstone last summer on vacation, he felt pretty bad about the carbon dioxide emissions from his Volvo station wagon.
So he paid $100 to a company that then subsidized a wind energy project that generates electricity without producing greenhouses gases. Broomhead was told his contribution made up for a year of driving about 12,000 miles as well as his household’s annual use of electricity and natural gas.
In the new vernacular, Broomhead and his family were “carbon neutral.”
“It makes me feel good. It means I’m walking my talk,” he said.
A new green fever is sweeping the nation, much of it fueled by worry over global warming. Broomhead and tens of thousands of others are using Internet calculators to determine their “carbon footprint” and then paying to “offset” that damage.
Still to be determined is whether carbon offsets are the new commodity that will truly help the environment – or merely salve the consciences of people who don’t want to give up the luxury of big cars, jet travel, overheated homes, blazing lights and gluttonous appliances.
More than four dozen companies worldwide sell carbon offsets, the credits for cutting emissions through green energy projects. And although many seek independent experts who verify that the money is used to cut greenhouse gases, the businesses are unregulated by the government and lack even voluntary standards. That opens the door to fraud and mismanagement, critics say.
Denis Hayes, who coordinated the first Earth Day in 1970, doesn’t see harm in individuals buying carbon credits. But it could be like trying to absolve sins by buying indulgences, he said.
“I find it slightly offensive that somebody who literally goes on two safaris a year, drives a Rolls-Royce, has at least three houses, and offsets his carbon emissions for $85 can brag about it,” he said. “It’s doing some good, but it doesn’t in any way compensate for his impact on global warming.”
Broomhead, 56, agrees. He has decided to purchase offsets only after taking other steps to lower emissions, such as replacing incandescent lightbulbs and inefficient appliances. Broomhead, who manages the energy and climate program for San Francisco’s Department of the Environment, has also put solar panels on his house in the Glen Park neighborhood.
Studies show that at the present rate, global citizens will produce 2 trillion tons of carbon dioxide over the next 50 years. At least 642 billion tons must be cut to stabilize Earth’s greenhouse gas levels and escape the most extreme effects of global warming – melting ice fields, rising sea levels, widespread extinctions of species, and extreme weather like drought, heat waves and hurricanes.
Much of that responsibility falls to U.S. residents, who on average put out 21 tons a year of greenhouse gas emissions per person. By comparison, the global average is 4.5 tons per person, according to a 2006 report prepared by environmental consultant Trexler Climate and Energy Services.
In response, individuals, businesses and institutions are lining up to turn a carbon deficit into a carbon credit and win environmental grace. Even the opulent Academy Awards ceremony claimed carbon neutrality, and the Earth Day Network, which is organizing Earth Day events across the nation, is weighing ways to offset emissions from world’s greenest of celebrations on and around April 22.
This is how it works:
More than 40 profit and nonprofit companies offer online calculators where people can tabulate the greenhouse gas emissions that they cause. By plugging in annual use of kilowatt hours and therms of natural gas, along with miles of car and airplane travel, they get their estimated tonnage. Some calculators take into consideration recycling and other good deeds.
The calculators take the estimated tonnage and charge $10 per ton of carbon dioxide. An individual can produce 1 ton of emission, for example, by flying 2,000 miles in an airplane or driving 1,900 miles in a midsize car.
With the money, the company buys carbon offsets from projects worldwide such as new wind farms, or conversion of cow manure to electricity-producing biogas fuels, or installation of new efficiency measures at power plants. The projects must have the effect of reducing, or offsetting, emissions by either preventing more greenhouses gases from going to the atmosphere or absorbing gases already there.
In the United States, the buying and selling of carbon offsets by individuals and businesses has created a voluntary carbon market. It’s voluntary because the government has not joined the 163 countries that signed the Kyoto Protocol, an international agreement that mandates the reduction of greenhouse gases. There are also no federal regulations that require U.S. utilities and businesses to “cap” and reduce emissions.
It’s different in Europe, where the European Parliament has required mandatory cuts, creating a true regulatory carbon market. There, businesses that cut their emissions to below legal caps have a saleable commodity. They can sell their credits to businesses that can’t sufficiently reduce emissions.
Transactions in the European Union’s cap-and-trade carbon market jumped from $11 billion in 2005 to $30 billion in 2007, according to figures from the World Bank and Point Carbon, an industry analyst.
Some experts predict that carbon offsets will be the world’s biggest commodity market in the next 10 years.
Offsets have taken on new significance in this country with the Supreme Court’s ruling two weeks ago that the U.S. Environmental Protection Agency can regulate carbon dioxide as a pollutant under the Clean Air Act. The decision opens the way for lawsuits that demand federal regulation.
Congress is considering limits on greenhouse gases, possibly by taxing companies that produce them or establishing cap-and-cut systems.
Oregon is already regulating carbon dioxide, and California is on its way to implementing new laws that require 25 percent cuts in greenhouse gases by 2020. Northeastern states are also putting caps in place.
Portland, Ore.-based Climate Trust, the nation’s largest supplier of carbon offsets to regulated businesses, got started a decade ago when Oregon passed its landmark law requiring new power plants to reduce or offset carbon dioxide emissions, stimulating that state’s participation in the regulatory carbon market.
Climate Trust also works in the voluntary market because it sells to individuals and businesses that just want to find ways to help reduce emissions.
Mike Burnett, executive director of Climate Trust, agrees with Broomhead and Hayes: People should take other energy-reducing steps before buying offsets, he said.
“You cut waste, invest in efficiency, select renewable choices from your utility, and then offset the rest,” he said.
He believes in a carbon market and what it could do to help slow global warming.
“Offsets are a way for us to address the climate challenge at the lowest possible cost to society,” Burnett said.
The size of the voluntary carbon market can only be guessed at, but its growth appears phenomenal, said Ricardo Bayon, an industry analyst at Ecosystem Marketplace in Mill Valley. Between 10 million and 20 million tons of carbon dioxide offsets were traded yearly in 2005 and 2006, his group estimates.
“We think it could be nearer to 100 million tons this year,” Bayon said.
While the absence of standards, transparency and uniform certification pose problems, many environmental groups endorse the idea. Personal footprint calculations can help make people aware how much pollution they cause, and changing those behaviors can make a difference, they say.
People should also be cautious about what they spend money on, experts agree. Likewise, the carbon companies need to be diligent about researching projects they subsidize and determining how much good those projects will do, said Hayes, the original Earth Day organizer.
There are groups out there that “plant a sapling for $2, not water it, not fertilize it, and figure out how much carbon dioxide it would absorb over 50 years,” he said.
Providers such as Climate Trust, NativeEnergy, Sustainable Travel International and MyClimate agree that to count as a carbon offset, a project’s reduction of global warming gas must be real, permanent, verifiable and truly “additional,” a term from the Kyoto Protocol. The projects must be in addition to a business-as-usual scenario. If a business is reducing emissions to comply with a law, or getting credit for the reductions elsewhere, or if the reductions would have occurred without any extra funding, it wouldn’t count as a carbon offset.
Lawyers refer to it as the “but for” test, Hayes said: “But for this money, the project wouldn’t go forward.”
Last month, some of the high-profile providers got bad publicity over what appears to be inadequate vetting of the projects they use to offset emissions.
The Academy of Motion Picture Arts and Sciences used TerraPass Inc., a San Francisco company started in 2004, to wash away the greenhouse gas emissions associated with a year of celebrity lifestyle.
Each performer and presenter received a glass statue representing about 50 tons of offsets. But a BusinessWeek investigation into TerraPass projects found that 5 out of 6 would have occurred anyway, which could violate the company’s promise of raising money to do projects that wouldn’t otherwise be built.
In one project where the company helped pay for an Arkansas landfill to capture and burn off methane, a greenhouse gas that escapes from rotting garbage, the magazine quoted state officials as saying that the mitigation would probably have occurred anyway as a corrective action to protect groundwater.
In his Battery Street office, TerraPass CEO Tom Arnold said his company has appointed three experts to investigate whether the project meets the test of a true carbon offset. All the findings will be made public, he said.
“This is a very young market still trying to find its feet. I think we learned a lot about project selection,” Arnold said.
Others aren’t so sanguine. Burnett at Climate Trust said, “It would be extremely difficult for an offset project to go through our due diligence process and then for us to be surprised at the end.”
Picking less-than-solid projects can lead to consumer backlash against the voluntary carbon offset market and affect the political process of setting up a regulated market in the United States, Burnett said.
The World Resources Institute, the World Business Council for Sustainable Development and others are working on ways to hold carbon-credit companies accountable for actually reducing or preventing emissions. And the Climate Group, a global nonprofit with an office in San Francisco, is working with an industry group, the International Emissions Trading Association, to develop voluntary standards for projects that should qualify as offsets.
The debate over uniform standards is a critical step in keeping the public’s faith in purchasing offsets, cautioned Ecosystem Marketplace’s Bayon, who has contributed to a new book on voluntary carbon markets.
“The issue of standards and quality is an important one,” he said. “There are a small handful of companies where credits may not pass muster. The majority are credible. But a few bad apples are enough to spoil the market.”
He disagrees with the cynics who compare buying carbon offsets to buying indulgences.
“In contrast to heaven, the state of our atmosphere is something measurable.”
Jane Kay, Chronicle Environment Writer
15 April 2007
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