Federal 
"Carbon-Neutral" Lifestyles
26 Jul 2006 in Regulatory Economics, Regulatory Policy, Information Quality, People & Institutions
Former Vice President Al Gore's recent movie An Inconvenient Truth is in the news, along with the numerous lectures he has delivered about global warming. July 25 the Associated Press distributed a story concerning his speech at the Chautauqua Institution in which he said that he and his wife, Tipper, had adopted a "carbon neutral lifestyle."
What makes a lifestyle "carbon neutral"?
We did some research and learned that there is no generally accepted definition of "carbon neutrality," but the premise is simple. For every ton of carbon you emit, whether directly by your actions or indirectly by your consumption decisions, you undertake a compensating action or consumption decision that reduces carbon emissions by the same amount. In principle, your ledger of carbon debits would equal your ledger of carbon credits.
The Natural Resources Defense Council, an advocacy group that favors stringent reductions in emission of carbon dioxide and other "greenhouse gases" has an online publication called Green Life. The June 2006 issue discusses how to go about establishing and maintaining carbon neutrality. Sheryl Eisenberg writes that per capita greenhouse gas emissions in the U.S. amount to 20 tons per year. She says that is "among the highest in the world" but doesn't provide comparative figures. She also says that "personal emissions" from home energy use and driving account for 40% of the total:
The larger part comes from everything else you buy and do. Your clothes, for instance. The songs on your iPod. The food you eat. For all of these things are made, grown or transported with the help of fossil fuels. So is the bike with which you may idealistically pedal to work. So are the solar panels.
Achieving carbon neutrality requires purchasing "carbon offsets":
Carbon offsets are projects that reduce or prevent the accumulation of global warming gases in the atmosphere to make up for the gases that you have inadvertently put there. They achieve this either by increasing the availability of renewable energy, supporting energy-efficiency improvements by industry or capturing and sequestering emissions.
Of course, you don't really buy these projects. What you do is contribute to them. Depending on who you do it with, the contribution may or may not be tax-deductible. What it goes towards will also vary. Some organizations and companies focus on just one thing, such as buying renewable energy certificates. Others make a point of funding different types of projects, much as a mutual fund would. Certain groups choose projects that not only help with global warming, but other environmental or social problems as well, such as forest degradation or poverty.
Eisenberg lists several nonprofit organizations that can provide carbon offsets, including CarbonFund.org, CarbonCounter.org, Native Energy, Bonneville Environmental Foundation, and the Solar Electric Light Fund, and the for-profit company Terrapass. She writes that most such organizations secure third-party certification to ensure that their projects actually achieve the greenhouse gas reductions promised. For renewable energy projects, she recommends relying on third-party certification by Green-e.
Criteria for Green-e certification are provided online, but if carbon neutrality is your goal it's hard to discern how much carbon you actually avoid emitting by purchasing interests in the projects it certifies. Green-e's criteria also encompass more issues than carbon reduction. For example, hydroelectric power generation produces minimal carbon emissions but only projects certified by the Low Impact Hydropower Institute qualify. LIHI's certification criteria include provisions for river flows, water quality, fish passage and protection, watershed protection, threatened and endangered species protection, cultural resource protection, and recreation. It's a complex process, and only 20 hydroelectric plants have applied for and been certified.
CarbonFund.org offers to ways for individuals to pay to offset their CO2 emissionss -- $49.89 per year for the 10 tons of CO2 emittted by your large SUV, for example, or $55 to offset its estimate of your "direct carbon footprinbt." To go "carbon neutral," CarbonFund.org asks for a contribution of $99 per year. Or you can use their handy online carbon calculator, which comes with a page listing the assumptions they used..
CarbonCounter.org has a different online carbon calculator that will provide you either an "estimate" or "exact" figure for the amount of carbon you emit from day-to-day activities at home, but they do not make their assumptions transparent. The "exact" figure is a misnomer; at best, it is a more precise estimate. But both "estimate" and "exact" give very precise values in tons per year -- two significant figures to the right of the decimal place, or ± 0.005 ton per year, which is the same as ± 10 pounds per year. Based on CarbonCounter's internal formulas, you indirectly emit 10 pounds per year by any of the following activities:
- Traveling 30 miles by airplane (takeoff and landing presumably not included)
- Burning 0.56 gallon of gasoline
- Using 5.3 kWh of electricity, 0.9 therms of natural gas, or 0.49 gallon of heating oil
For reasons of excess precision alone, Neutral Source is skeptical that these estimates would satisfy applicable information quality standards if they were disseminated by the federal government. The Environmental Protection Agency has a page providing links to these and other online calculators, but includes a disclaimer renouncing any responsibility for them. (EPA also has its own greenhouse gas calculator, and by law it is responsible for its accuracy.)
CarbonCounter provides carbon offsets at a price of $10 per ton:
It costs $10 per ton to offset your carbon dioxide emissions. 60% of this amount goes toward the establishment and administration of wholesale offsets projects. 20% of this amount goes toward the costs associated with making offset projects available to you on a retail basis through carboncounter.org. The rest of your donation will be used to allow The Climate Trust and Mercy Corps to continue to improve upon and expand their work in issues related to climate control.
The Climate Trust funds the carbon-offset projects, which it says have offset 1.6 million metric tons of CO2 at a cost of $4.9 million ($3.06 per ton). Mercy Corps is a nonprofit development organization that provides "emergency relief services that assist people afflicted by conflict or disaster; sustainable economic development that integrates agriculture, health, housing and infrastructure, economic development, education and environment, and local management; and civil society initiatives that promote citizen participation, accountability, conflict management and the rule of law." The precise relationship between these development projects and CO2 reduction isn't clear.
CarbonCounter is a joint venture between The Climate Trust and Mercy Corps:
The collaborative project brings The Climate Trust's groundbreaking role in identifying and financing projects around the world that reduce CO2 emissions together with Mercy Corps' award-winning expertise in web-based marketing and fundraising.
NRDC's Eisenberg acknowledges that achieving carbon neutrality by purchasing offsets is controversial among environmentalists:
Some people question whether buying offsets isn't like paying for the right to pollute. They think we should focus on bringing our individual emissions down instead. I don't see it that way. Sure, we should do what we can in our personal lives. But dealing with global warming requires something more -- a change in the technologies that power our world. In my view, offsets will get us there quicker.
From an economic perspective, purchasing carbon offsets would be exactly the same as "paying for a right" to emit carbon if the emission of carbon was otherwise restricted by regulation. But it's not, so purchasing carbon offsets does not yield a legally enforceable property right to emit CO2. It is a voluntary exchange between a willing seller (individuals who want a "carbon neutral" lifestyle) and willing buyers (NGOs seeking funds for various purposes including, but not limited to, the reduction in CO2 emissions).
Buyers also have choices in the carbon-neutrality marketplace. If they want to save money, they can shop from NGOs that offer lower estimates of their "carbon footprint" or buy prix fixe deals from outfits like CarbonFund that may or may not approximate their true CO2 emissions. Some sellers will be motivated to low-ball their carbon footprint estimates to attract customers.
In normal product markets, competitors often protect consumers from unscrupulous sellers by exposing disreputable conduct. Both state and federal consumer protection agencies (such as the Federal Trade Commission) have the authority to take legal action against sellers fraudulent or defective products. But the nonprofit world is different, and NGOs generally are exempt from consumer protection laws. To the extent that they are engaged in selling products of value such as carbon offsets, buyers must perform their own due diligence to ensure that they are getting what they pay for.
