CARBON NEUTRAL: THE DARK SIDE

Responsible offsetting is still possible.

Another Inconvenient Truth; Behind the feel-good hype of carbon offsets, some of the deals don’t deliver
March 26, 2007 (Business Week)

WHO
Organizations, corporations, cities, and individuals are seeking to protect the climate—or at least claim bragging rights for protecting the climate.

WHAT
- Rather than take the arduous step of significantly cutting their own emissions of carbon dioxide, many in the ranks of the environmentally concerned are paying to have someone else curtail air pollution or develop "renewable" energy sources. Carbon offsets, as the most common variety of these deals is known, have become one of the most widely promoted products marketed to checkbook environmentalists.
- The growing green marketplace offers an alternative to carbon offsets, renewable energy certificates (RECs). Producers of wind-generated power and other "renewable" energy sell the certificates as a way of promoting the creation of additional renewable energy sources.

WHEN
Hollywood celebrated environmental activism at this year's Academy Awards. The Academy of Motion Picture Arts & Sciences promoted the show itself having "gone green," by offsets issued by TerraPass Inc., a two-year-old for-profit company in San Francisco.
- Vail Resorts’ broker, Renewable Choice Energy of Boulder, Colo., declines to identify any of the investments it makes on behalf of Vail Resorts or its scores of other clients. Neither party will discuss the price of the RECs. What Renewable Choice will say is that the RECs it buys and sells are confirmed by the Center for Resource Solutions, the San Francisco nonprofit, as representing power not counting toward any government mandate and coming from projects built since 1997.

WHERE
- A sprawling garbage dump outside of Springdale, Ark., from which TerraPass has purchased thousands of tons of gas reductions launched its methane system long before any promise of carbon-offset sales. In other words, it appears that the main effects of the TerraPass offsets in this instance are to salve guilty celebrity consciences and provide Waste Management, a $13 billion company based in Houston, with some extra revenue.
- One RECs buyer is Vail Resorts, which runs ski and vacation destinations in the West.

WHY
- The market for carbon offsets in the U.S. could be as high as $100 million. Done carefully, offsets can have a positive effect and raise ecological awareness. Some deals amount to little more than feel-good hype. Largely symbolic deals may divert attention and resources from more expensive and effective measures.
- When traced to their source, these dubious offsets often encourage climate protection that would have happened regardless of the buying and selling of paper certificates.
- Vail Resorts declares in marketing material that it is now "100% powered by wind." It decided last year to enter a multiyear agreement to buy, for a fraction of the cost, RECs representing 152,000 megawatt hours of wind-generated electricity each year, equivalent to its annual use. "We're in the travel business," says Rob Katz, chief executive of Vail Resorts. "We're not in the electricity-generation business."

QUOTES
All six other project developers selling offsets to TerraPass that BusinessWeek was able to contact said they were pleased with the extra cash. But five of the six said the offsets hadn't played a significant role in their decision to cut emissions. "It's just icing on the cake," says Barry Edwards, director of utilities and engineering at Catawba County, N.C., which installed a system in 1998 to turn landfill gas into electricity to power 944 homes. "We would have done this project anyway."
- Voluntary REC purchases "are pure corporate marketing and image management" for buyers, says Mike O'Sullivan, senior vice-president for development at Juno Beach (Fla.)-based fpl Energy, the nation's largest developer of wind power. "The economics of our wind investments have to work without the green credits."