Carbon Offsets: What's Out There?

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Renewable Energy Certificates (RECs) are created by the policies of 20 US states which require their power companies to obtain a minimum percentage of their power from renewable energy resources. These state policies are known as Renewable Portfolio Standards. States that rely on non-renewable energy sources meet the standards by purchasing RECs.

As a result of these state standards, renewable power companies created a new product, the REC. The renewable power companies sell their power to the grid in the usual way, because a given quantity of power does the same amount of work regardless of its source. And they sell the REC as a separate product which represents the environmental attributes of the power’s source. Each REC represents one MWh that has been generated by a renewable resource. The Environmental Resources Trust and Green-e certify projects to ensure that an REC is what it is supposed to be, and that it is not sold twice. Power companies that have to meet state standards buy most of the RECs. Carbon offset vendors also buy them to sell to you. Because RECs can only be bought once, they are “retired” by the vendors.

Retiring RECs creates a voluntary price support for an industry that has to compete against “dirty” power companies which, ironically, receive much greater subsidies. Buying this type of offset helps finance the increased costs of green energy producers to make them financially viable. As the demand for RECs increases, renewable energy sources become more cost effective relative to “dirty” sources, a clear carbon benefit.

Vendors’ websites display various projects for which they hold RECs, enabling you to choose what project you want to support. The vendor will purchase RECs from your selected project and retire them. Of the offset vendors that sell RECs, I favour Native Energy, because it provides an economic base for Native Americans in the Great Plains. Also, CleanAirPass (Canadian) buys RECs from other countries until they become available in Canada. Other organizations that sell RECs include Carbonfund.org, AtmosClear Climate Club (whose confusing website refers to RECs as ERCs ), Bonneville Environmental Foundation, Terrapass, and eBlueHorizons.

Non-Governmental Renewable Energy Offsets
While some groups advocate RECs as a way to avoid double funding of a project, other groups claim that for a project to be additional (it wouldn’t exist but for your contribution), it must steer clear of these mechanisms. These groups verify their projects with third party reports.

Climate Care in the UK funds its own projects. They have numerous small scale, innovative projects such as treadle pumps for irrigation in India and efficient lights for diesel-powered electricity users in the Marshall Islands. You can support Climate Care through Offsetters Carbon Neutral Society, a Vancouver-based organization.

Climate Trust (carboncounter.org) was organized to meet Oregon laws for new power plants. Most of its offsets are efficiency improvements that support new technologies that are likely to prove useful elsewhere. They have some are international and/or forestry projects.

In the past, we’ve used the Solar Electric Light Fund, but their website doesn’t have a carbon offset section any more.

Kyoto-Based Offsets
The Kyoto Protocol resulted in Certified Emissions Reductions (CERs), created by UN approved projects. Developing countries sell CERs to fund sustainable projects and industrial countries buy them to achieve emissions reductions for less money than they could at home. This sounds pretty good, except that the UN has a poor reputation for its failure to adequately ground-truth projects and its historical tendency to disrupt communities by favouring big projects over grassroots. Also, because the Soviet Union and Eastern European countries had their worst level of efficiency in the Kyoto baseline year of 1990, critics note that CERs originating in those countries often represent minimal improvements in efficiency.

But if you want to buy Kyoto-based CERs anyway, they’re available at Global Cool in the UK for CN $45/ton, C02balance (UK, mostly reforestation), AgCert International (Ireland) or atmosfair (Germany).

Voluntary Cap and Trade Markets
The Chicago Climate Exchange and Environmental Resources Trust have developed registries by which companies can set voluntary carbon emission reduction goals and then trade reductions with other companies. The Chicago Climate Exchange trades Chicago Climate Exchange Credits or CCECs. The Environmental Resources Trust trades RECs. Companies with inexpensive options for reducing their emissions sell their “extra” reductions to companies that would not otherwise meet their targets. Companies like Dupont, Ford and Motorola participate in these exchanges. The registries see themselves as a proving ground for future mandatory “cap and trade” programmes. The offsets have a corporate flavour, but the cap-and-trade system is one of the more politically viable solutions and worthy of some support.

You can retire Chicago Climate Exchange Credits through Carbonfund.org, DriveNeutral.org, Carbonneutral.com, CleanAirPass (Canadian) and Terrapass.

For the REALLY Serious Shopper
The consumer guide found at www.cleanair-coolplanet.org/ConsumersGuidetoCarbonOffsets.pdf gives a good discussion of the pros and cons of nine vendors. Page 39 lists all the offset organizations.

My Recommendations
My recommendations reflect a preference for sustainable energy sources, a lukewarm enthusiasm for the cap-and-trade markets, and a full scale avoidance of Kyoto-based and reforestation offsets. I like the small scale, grassroots projects in less developed countries, and I like subsidizing the North American renewable energy market by retiring RECs.

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