Coyote Blog

Who would have ever predicted this...

BARNET, VT. -- Sara Demetry thought she had found a way to atone for her personal contribution to global warming.

The
psychotherapist clicked on a website that helped her calculate how much
heat-trapping carbon dioxide she and her fiance emitted each year,
mostly by driving and heating their home. Then she paid $150 to e-BlueHorizons.com, a company that promises to offset emissions.

But Demetry's
money did not make as much difference as she thought it would. While
half of it went to plant trees to absorb carbon dioxide, the other half
went to a Bethlehem, N.H., facility that destroys methane -- a gas that
contributes to global warming. The facility has been operating since
2001 -- years before the company began selling offsets -- and Demetry's money did not lead the company to destroy any more methane than it would have anyway.

Well, I predicted it:

I don't have any inside information on TerraPass, the company made
famous by providing the $399.75 certificates that offset all your
emissions for a year.  I do know that the numbers don't seem to add up,
as I wrote here and Protein Wisdom similarly wrote here.

However, I thought about their business model some (since I have been on a role with new business models) and it strikes me that it is brilliant.  Because I am almost positive that they are (legally) reselling the same carbon credits at least three times!...

1. Their energy projects produce electricity, which they sell to
   consumers.  Since the
   electricity is often expensive, they sell it as "CO2-free"
   electricity.  This is possible in some sates -- for example in Texas,
   where Whole Foods made headlines by buying only CO2-free power.  So the
   carbon offset is in the bundle that they sell to
   electricity customers.  That is sale number one. 
2. The company most assuredly seeks out and gets
   government subsidies.  These subsidies are based on the power being
   "CO2-free".  This is sale number two, in exchange for subsidies. 
3. They still have to finance the initial construction of the plant, though.  Regular heartless
   investors require a, you know, return on capital.  So Terrapass
   finances their projects in part by selling these little certificates that you
   saw at the Oscars.  This is a way of financing their plants from people
   to whom they don't have to pay dividends or interest "”just the feel-good
   sense of abatement.  This is the third sale of the carbon credits.

My guess is that the majority of carbon offsets sold are for projects that would have gone ahead anyway, without the purchase of the offset (for example, planting trees or building power plants).  In this case, e-BlueHorizons is doing #3 after the plant was commissioned.   Caveat Emptor.  HT: Maggie's Farm