Sunday, August 21, 2005

Market Solutions for Automobile Guilt

Online! After several frustrating weekends the wifi internet access at our weekend cabin is working. Beach blogging today. Are you feeling guilty about driving your SUV? Or your 4-door sedan? Come on, every vehicle emits CO2. And if you believe that global warming is caused by you, then you should feel guilty about the damage you are creating. Several companies have arrangements where you can buy someone else's right to emit CO2. If your household emits 50 tons of CO2 per year, then you can buy off other parties for an equivalent 50 tons of CO2, so the net effect is zero emissions. Slate Online has an article describing the process and the companies. Via new blogging friends at Democracy Market in California.
The nonprofit Carbonfund is one group that buys credits, which represent the right to emit a given quantity of greenhouse gases, on a market called the Chicago Climate Exchange. The companies listed on CCX, all of whom have voluntarily agreed to emissions reductions, buy and sell pollution rights to one another as a cost-effective means of meeting their targets. Carbonfund buys credits from companies with low emissions and then "retires" them. Instead of a company buying credits so they can continue to pollute, Carbonfund tears them up and that much less fuel gets burned.
Another approach is to directly underwrite CO2-saving energy research and use.
TerraPass, a for-profit group cooked up by a Wharton professor and his students, is one of many ventures that sell you the chance to offset your fossil-fueled existence, either by underwriting non-fossil power or by paying for pollution reductions. NewWind Energy, for instance, uses your guilt money to make wind power available to power companies at prices that are competitive with fossil fuel-based energy sources... [NWE] charges about $37 to cancel out a ton of CO2 emissions.
The Slate author calculated that his household emits 50 tons of CO2 per year. The cheapest trade he found was Carbon Source for $5.50 per ton. So he can face his friends for only $274 per year. One caution, in a market you have to trust your trading partner to carry out his side of the deal. Can the nonprofits/companies cheat? Yes, they can. So there needs to be some auditing and spreading the word about who carries through and who doesn't. Good intentions only get you so far when you have to implement your promises. And outside of cheating, sometimes it's hard for your partner to implement your lofty ambitions. The Dutch have found great frustrations in paying a Brazilians landfill to burn methane. I covered this in "Gallant Effort for Kyoto" Oh, and for that guilt. If you go with TerraPass you get a neat bumper sticker to put on your gas guzzler! Added. I like TerraPass's blog's analysis of MBTE. Congress decreed that MBTE be added to gasoline. Then it was found that MBTE was getting into water tables all over the country. So of course the people who demanded that MBTE be mandated tried to blame the pollution of the water on the oil companies. But the companies had just followed the law. Congress is to blame. Good news: in this year's energy bill Congress took some responsibility by allowing protection to the oil companies against law suits. But step back. If Congress has said to reduce which-ever exhaust pollutant and left it to the oil companies to find the solution there would have been two big effects. 1- To the greenies delight, they could blame the e-e-evil oil companies. 2- The oil companies could have looked at alternate ways of getting the required reduction. And among the alternates, when one turned out to have side effects, they could have gone with another solution = the Market Way.

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