PG&E sells offsets for carbon-neutral living
David R. Baker, Chronicle Staff Writer
Tuesday, December 19, 2006
The fight against global warming has created its own odd market, one in which companies sell their ability to remove greenhouse gases from the air.
Some of these companies plant trees to absorb carbon dioxide. Others create systems to capture methane produced by dairy cows. Some build windmills to generate electricity that otherwise would come from power plants burning coal or natural gas.
Their buyers? Companies or individuals who want to offset the amount of carbon dioxide they pump into the atmosphere as part of their everyday lives.
While similar markets exist overseas, it's a relatively new phenomenon in the United States.
Here, the market still doesn't have many participants and is noticeably short on rules. As public concern over climate change rises, however, the market is expected to grow.
That market got one of its biggest boosts last week when Pacific Gas and Electric Co. jumped in.
The utility, California's largest, announced a program that will let its customers calculate and offset the amount of carbon dioxide their power supply produces. The average residential customer who volunteers for the program will spend an estimated $4.31 each month, with the exact figure based on how much electricity and natural gas the person uses. Businesses that buy power from PG&E also can participate.
Executives at San Francisco's PG&E expect about 4 percent of their customers to sign up in the next three years, generating about $20 million. That money will be spent restoring or conserving California forests.
Nothing compels people to join the program, which is scheduled to begin in spring. Like all companies participating in this new market, PG&E is betting on the altruism of its customers.
"All of us Californians will be getting something in return that's very tangible," said Wendy Pulling, PG&E's director of environmental policy. "The projects we'll be investing in will be here in California, and they'll be protecting and preserving our forests."
Americans have, sometimes, been willing to spend more to protect the environment. But it's a checkered history. For example, during California's disastrous experiment with electricity deregulation in the late 1990s, some companies pitched themselves as offering clean, renewable power. Most people ignored them, sticking with their traditional utilities.
Then again, Americans in general and Californians in particular have rushed to buy hybrid cars such as the Toyota Prius, even though they cost more.
"The average consumer wants to be part of the solution. They want it to be easy, and they want it to be clear," said Tom Arnold. His Menlo Park company, TerraPass, gives people a way to calculate how much carbon dioxide they pump into the environment. They can then pay money, through TerraPass, to fund projects that will offset those greenhouse gases.
In the two years since it formed, TerraPass has signed up 26,000 customers and funded 11 projects involving wind power, energy efficiency and the capture of methane from cows. The small company, privately held, has not yet turned a profit, although it hopes to do so in the first quarter of 2007.
"We like to say that, in theory, we're for-profit," Arnold said.
Other groups offering similar services are nonprofits. A recent study of the nascent market found about 30 businesses or nonprofit groups offering to make consumers "carbon neutral."
The study also found that the quality of those offerings varied widely. Some companies sell offsets that, in reality, may do little to reduce carbon dioxide emissions, said Adam Markham, whose environmental organization commissioned the study.
"There's no seal of approval. There are no agreed standards in this emerging market," said Markham, executive director of Clean Air-Cool Planet, a nonprofit organization that pushes for action on climate change. "You're going on faith with some of them. There's a little element of 'buyer beware.' "
Dirty doings
PG&E and other companies are letting Californians pay to offset the greenhouse gases they produce in their daily lives. For example, a ton of carbon dioxide is produced when you:
-- Fly 2,000 miles.
-- Drive 1,350 miles in a large SUV.
-- Drive 1,900 miles in a mid-size car.
-- Run an average U.S. household for 60 days.
Sources: Clean Air-Cool Planet, Trexler Climate + Energy Services Inc.
E-mail David R. Baker at dbaker@sfchronicle.com.
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