Are You Carbon Neutral?

As oil prices surge and global warming concerns fuel demand for clean energy, the watchword for 2008 is “green.” With the average American directly responsible for about 10 tons of CO2 emissions annually (home, car, travel) and indirectly causing another 23 tons each year via our role in the general economy (buying clothes, food, etc.), public opinion has shifted sharply in favor of the green scene and the rush to try and reduce emissions of greenhouse gases has made terms like “carbon footprint” part of today’s lexicon.

As individual planet-dwellers we are suddenly being made aware that a mid-sized 30-mpg car driving 12,000 miles/year will create about 3.55 tons of CO2 per year. What about an 8,500-pound H2 Hummer? As the Hummer marketing tagline states, it’s “Like nothing else.” Over a lifespan of 200,000 miles this gasoline-swilling (10/13 miles per gallon city/highway) behemoth will generate an estimated 114.5 tons of CO2 emissions.

For those in the corporate world trying to convince the boss that climate change is as an important strategic issue for business, something momentous is happening: companies are falling over one another chasing “green dollars,” money spent to conserve natural resources, reduce pollution and reduce waste, in the doing also demonstrating good corporate citizenship. Even trade shows are getting into the act. The Consumer Electronics Association (CEA), producers of the 2008 International Consumer Electronics Show (CES), announced last month they had formed a partnership with Carbonfund.org, to reduce the carbon footprint of their industry event.

With a record 1.85 million net square feet of exhibit space featuring more than 2,700 companies and with more than 130,000 industry professionals in attendance, CES’s carbon footprint is Sasquatch-sized. Carbonfund.org will offset the approximately 20,000 tons of carbon associated with CES, including all of the show’s venues, freight, shuttle buses and hotel rooms by investing in a combination of renewable energy, reforestation and energy efficiency projects.

Offsetting Explained

By way of background, carbon offsetting is the act of mitigating greenhouse gas emissions by reducing or displacing the CO2 in another place, typically where it is more economical to do so, to counterbalance the carbon emissions from your activities (called your “carbon footprint”). If you offset your entire carbon footprint, that is called being carbon neutral.

Carbon offsets are fairly simple in theory. If you develop a project that reduces carbon dioxide emissions, the principal cause of global warming, every metric ton (2,205 lbs) of emissions reduced results in the creation of one ton of carbon offset. Once it has been accredited by the United Nations Framework Convention on Climate Change (UNFCCC) a carbon offset project can be linked with official emission trading programs, such as the European Union Emission Trading Scheme. This and other similar markets allow countries that produce too much carbon to buy greenhouse gas emission allowances from countries that have a surplus.

Carbonfund.org supports three types of carbon offset projects: renewable energy, energy efficiency and reforestation projects. There are hundreds of different types of carbon reduction projects. For example, a wind farm generates clean energy, which reduces carbon emissions from coal-burning power plants. In order to finance its operations, a wind farm can sell these reductions in the form of carbon offsets.

Carbon offsetting is not regulated on a global or national basis. That places a burden on those companies offering carbon offsetting to “do the right thing” and to operate in a responsible and fair manner. For its part, Carbonfund.org utilizes the Environmental Resources Trust to audit its project portfolio, ensuring that donations match offset purchases and providing guidance on the developing carbon standards.

A wide variety of carbon offset methods are in use. While tree planting was initially a mainstay of carbon offsetting, renewable energy (energy from sunlight, wind, rain, tides, hydroelectric power and geothermal heat) and methane capture offsets— stopping emissions of methane from stored manure or landfills— recently have gained favor. Some of these offsets are used to reduce the cost differential between renewable and conventional energy production, increasing the commercial viability of a choice to use renewable energy sources.

Renewable Energy Certificates

While carbon emissions trading programs promote low-carbon technologies, another “currency” of the renewable energy market are Renewable Energy Certificates (RECs), also known as Green tags or Tradable Renewable Certificates (TRCs). RECs promote production of carbon-neutral renewable energy by providing a production subsidy to electricity generated from these sources. The general idea is to replace a combustion-based energy producing device with one which uses less fuel per unit of energy provided.

Simply put RECs are tradable environmental commodities that represent purchase of either 1,000 kilowatt hours (kWh) or 1 megawatt-hour (MWh) of electricity generated from an eligible renewable energy resource (such as a wind farm). The other difference between RECs and carbon offsets is that the latter can be from non-electric sources, such as using heat given off by electric generators to reduce fossil fuel use. These so-called co-generation plants produce both electricity and heat from the same power source, thus improving upon the energy efficiency of most power plants which otherwise waste the energy generated as heat.

Making companies eco-efficient is a big challenge and on its face RECs would appear to be a relatively painless solution and for this reason, among others, it is becoming hugely popular. Recently, for example, Intel Corporation announced it will purchase more than 1.3 billion kilowatt hours a year of renewable energy certificates, which includes a portfolio of wind, solar, small hydro-electric and biomass sources.

The U.S. Environmental Protection Agency (EPA) estimates that Intel’s REC purchase has the equivalent environmental impact of taking more than 185,000 passenger cars off the road each year, or avoiding the amount of electricity needed to power more than 130,000 average American homes annually, making Intel the single-largest corporate purchaser of green power in the United States.

EPA’s Green Power Partnership is a voluntary program helping to increase the use of green power among leading U.S. organizations. The program encourages organizations to purchase green power as a way to reduce the risk of climate change and environmental impacts associated with conventional electricity use.

Intel is buying its RECs through Sterling Planet, winner of the U.S. Department of Energy 2007 Renewable Energy Marketer of the Year award. Sterling Planet offers comprehensive carbon neutral solutions for businesses, universities and organizations of all types, bringing together supply and demand side solutions in a rapidly emerging environmental market. The purchase will be certified by the non-profit Center for Resource Solutions’ Green-e program which certifies and verifies green power products.

Many Players

Sterling Planet and carbonfund.org are just two of the contenders crowding the carbon offsetting/REC arena. Indeed, there are so many colorfully-named environmental players that Vince McMahon’s World Wresting Entertainment must be envious. Here’s a small sampling of some of the others:

Chicago Climate Exchange (CCX), launched in 2003, is an integrated commodities market for trading greenhouse gas reduction credits. Although CCX is not a regulated exchange, reductions achieved through CCX use a legally binding compliance regime, providing independent, third-party verification by the Financial Industry Regulatory Authority (FINRA). FINRA, formerly NASD and a leading provider of financial regulatory services is the largest non-governmental regulator for all securities firms doing business in the United States, overseeing over 5,000 brokerage firms.

The CarbonNeutral Company works for companies and individuals who want to tackle climate change. Its core services include carbon consulting and carbon offsetting— both designed to help reduce CO2 emissions. The company reports that its client carbon plans generally involve a mix of internal change as well carbon offsetting. When CO2 is reduced to net zero, the organization, product or service can carry the CarbonNeutral brand, which is a registered trademark.

Portland, Oregon’s Bonneville Environmental Foundation (BEF) was founded in 1998 to support watershed restoration programs and develop new sources of renewable energy. BEF, a non-profit organization, markets green power products to public utilities, businesses, government agencies and individuals. It currently supports 58 renewable energy projects; BEF claims these systems have offset 367,354 lbs. of CO2 that would have gone into the air.

Toronto-based CarbonZero’s philosophy is that emissions reduction projects should be located as close to the offsetter (its customers) as possible. As such, most of CarbonZero’s projects are currently located in Canada. CarbonZero invests into a portfolio of diverse clean energy technologies, from retrofits of old buildings and renewable energy projects, to prototypes of emergent technologies that capture waste heat and kinetic energy for reuse.

Headquartered in San Francisco, California, TerraPass provides carbon offsetting products to individuals and businesses. TerraPass uses proceeds from member purchases to fund greenhouse gas reduction projects such as wind farms and methane digesters. TerraPass products include a Road TerraPass to offset car emissions, a Flight TerraPass to offset airplane emissions, a Home TerraPass for home energy use and even a Wedding TerraPass for weddings and other events.

To ensure maximum transparency and accountability, every TerraPass offset purchase and marketing claim is verified in an annual audit conducted or overseen by the non-profit Center for Resource Solutions (CRS), creator of the Green-e renewable energy certification program.

Glass Half Full or Half Empty?

There are two ways to look at the green trend. Those who view the glass as half full point out that RECs and carbon offset projects provide the means for individuals and corporate entities to make a difference at a time when evidence that global warming exists is “unequivocal” and is very likely caused by human activities.

While we should all aim for a more substantial contribution to environmental conservation, supporters of carbon offsetting/RECs point out that while cutting direct emissions, including all pollution from manufacturing, company owned vehicles, etc. is important, so, too, is buying carbon offset credits from emission reduction projects.

They also note that any meaningful offset must meet an all-important criterion, called “additionality”: Buying an offset must cause some new reduction in emissions that wouldn’t have happened if the money hadn’t been paid.

Those who see the glass half empty respond with two main criticisms:

1) Carbon offsets can be compared to the theological concept of indulgence, that is, depending on forgiveness for sins committed instead of actually repenting and not sinning any more. Carbon offsets, critics say, are an excuse for business as usual with regard to pollution.

2) Some environmental groups argue the current carbon trading market is an unregulated activity with questionable results. When it comes to actually offsetting or reducing carbon emissions, current gains represent a miniscule slice of the problem, they say, and represent little more than feel-good hype.

There is also the possibility of misplaced philanthropy. Recently much has been made about the conversion of Asia’s rainforests for cultivation of palm-oil-based biodiesel fuel. Even though burning biofuels releases CO2, they are carbon neutral because the carbon in the biofuel comes from plant photosynthesis, where CO2 is first captured from the atmosphere by the plant. As crude oil prices edge back toward $100 a barrel, the price of palm oil, currently something in the neighborhood of about $55 per barrel, is quite cost completive.

In Indonesia, currently the world’s second largest producer of palm oil, plantations now cover more than 5 million hectares of the country with 25 percent of Indonesia’s palm oil plantations on the island of Sumatra.

Beyond the loss of forest ecosystems— creation of palm plantations is directly fueling the destruction of one of the world’s only orangutan habitats— the production of palm oil, as currently practiced, could be quite damaging to the environment. Environmental activists maintain the Indonesian crop is planted on what was forest land that has been cleared by means of a slash-and-burn policy, creating fires that unleash millions of tons of carbon dioxide into the atmosphere. They say this defeats the purpose of developing palm-based bio-diesel fuel as a renewable source of energy that does not contribute to greenhouse gases. Greenpeace claims the burning of Indonesia’s peatlands and forests releases 1.8 billion tons of greenhouse gases annually— equal to 4 percent of the global total— even though it occupies 0.1 percent of the land on Earth.

So is the glass half-full or half empty? As with most controversies, the truth is probably somewhere in between. We’d like to know where you stand on this topic. Tell us what you think by sending a note to me at mslovick@hearst.com.

–Murray Slovick ■