Ever wondered how big an impact your business has on the environment? TerraPass just launched a calculator designed specifically for businesses that will let you determine your business’s impact on the environment in just a few minutes. TerraPass is a social enterprise that provides carbon offsetting products to individuals and businesses. Headquartered in San Francisco, California, TerraPass uses proceeds from member purchases to fund greenhouse gas reduction projects such as wind farms and methane digesters. TerraPass products include a Road TerraPass to offset car emissions, a Flight TerraPass to offset airplane emissions, a Home TerraPass for home energy use, and a Wedding TerraPass for weddings and other events.
globeTerraPass runs a carbon offset program, which allows people to add a few dollars to the price of an airline ticket or hotel stay that will be used to plant a tree or some such project to even out the emissions. These programs are proving popular with consumers, but the Business Technology Blog is skeptical that businesses will follow suit even though tech equipment is one of the biggest energy hogs out there: It’s one thing to spend a few of your own bucks planting a tree; it’s another for a business to spend many times that – especially when that money belongs to shareholders.
But Benson Cowan, president and CEO of Butterfield & Robinson, which leads luxury vacations and tours, doesn’t think about it that way. “We’re not a publicly held corporation with a single-minded focus on the bottom line and return to the shareholders,” he tells the Business Technology Blog, by way of caveat. That said, he’s convinced that the money his company spends on environmental sustainability programs – about $125,000 a year, a quarter of which goes to carbon offset programs – will save him money in the long run. (Last year, Cowan brought in an independent consultant to help determine his business’s environmental impact, but he anticipates using the TerraPass calculator in the future.)
The reason: He’s protecting his business against “a sudden seismic shift that could fundamentally change the market,” he tells us. He points to the state of the auto industry today, where U.S. automakers are paying the price for failing to invest in fuel-efficient vehicles years ago.
Benson calculates how much he’ll spend each year on offsets and other donations based on how much energy his business consumes. It’s basically a self-imposed tax that encourages the business to look for ways to reduce its environmental impact. In his case, the tax has pushed the company to print its catalog on recycled paper with non-metallic ink, and to move more business onto the Internet. He can then boast about these moves and his sustainability efforts to potential customers – even if they don’t care now, Benson says it’s just a matter of time until they do.
TerraPass's portfolio of carbon reduction projects is evenly divided between three project types:[1]
Wind energy. One third of TerraPass emissions reductions come from wind energy projects in the United States. TerraPass purchases Green-e certified wind RECs, and calculates the carbon reduction from these RECs based on the EPA eGRID methodology.[2]
Dairy farm methane digesters. One third of TerraPass emissions reductions come from digesters that collect the methane from cow manure on dairy farms and burn, often generating renewable energy in the process. Methane is a greenhouse gas with a global warming potential about 23 times that of carbon dioxide.
Landfill methane flaring. One third of TerraPass emissions reductions come from landfill methane flaring, a method similar to dairy farm methane digesters, in which the methane is instead collected from decomposing garbage.
Impact
TerraPass purchases carbon credits on the Chicago Climate Exchange, as well as Renewable Energy Credits from wind farms. All of the RECs TerraPass purchases are Green-e certified through the Center for Resource Solutions.[3]
In addition, TerraPass itself is audited by the Center for Resource Solutions. The audit covers a number of aspects of the company's operations. The primary focus of the audit is to verify that TerraPass fulfills its carbon purchase obligations on behalf of its customers; to enforce certain carbon portfolio quality standards; and to review TerraPass marketing language and disclosure policies for accuracy.
Partnerships
To expand their reach into additional areas of the carbon offset market, TerraPass has entered into several business partnerships:
- In August 2006, TerraPass began selling airplane emission offsets through Expedia[4]. In contrast to offsets sold through TerraPass's website, Expedia offsets are intended to offset the specific flight(s) booked through the travel site.
- In January 2007, TerraPass partnered with uShip.com to provide a "TerraPass Certified Green Provider Program" to shipping companies wishing to offset their carbon dioxide emissions.
- In June 2007, Flexcar partnered with TerraPass to provide a premium "Green Membership;" in addition to regular Flexcar privileges, Green members receive one ton of CO2 offsets through TerraPass.[5] [6]
Adam Stein, co-founder and VP of Marketing, is also an occasional contributor to environmental news site Grist [7]
Controversy in the carbon offset industry
The voluntary carbon market is a young but rapidly growing industry, achieving worldwide sales of approximately $100 million in 2006.[8] The industry has experienced a number of controversies.
Indulgence controversy
Critics have likened the sale of carbon offsets to papal indulgences, a way for the guilty to pay for absolution rather than changing their behavior.[9] Others suggest that the indulgence analogy is flawed because carbon offsets actually reduce carbon emissions. Therefore, it is argued, offsets are an effective way of addressing the actual problem of fuel and energy use.[10]
TerraPass conducted a survey of its customers and found that they are far more likely than average Americans to reduce their carbon footprint through a variety of means, including conservation. For example, 26% of TerraPass customers take public transportation to work, five times the national average.[11]
Additionality
Additionality refers to the concept of whether a carbon offset represents an emissions reduction that wouldn't have happened but for the sale of the offset, or whether the offset simply represents a "business as usual" reduction that would have happened anyway. Additionality is viewed as a key quality requirement for a functioning market in carbon offsets. [12]
Although all carbon offset retailers claim that their offsets are additional, some press articles have questioned these claims. For example, in March 2007, BusinessWeek magazine inquired of project managers regarding the impact of offset revenue; the article suggested that offsets merely provided additional revenue to CO2 reduction projects that would have happened anyway, and that offset funding did not play an important role in either the existence or the scale of the projects.[13] However, the article weighed additionality by interviewing alone; testing for compliance with CDM additionality criteria requires deeper analysis.
Throughout March and April 2007, TerraPass performed a public review of one of the principal claims of the article, that a methane flaring system in the local landfill at Tontitown, Arkansas had been mandated by law. TerraPass's investigation concluded that:
- Waste Management's investment in the methane flaring system far exceeded that required by law,
- As much as 99% of the methane captured by the system was a result of these additional investments, and
- Waste Management invested further into expanding the system later, without any regulatory pressure. [14]
An independent panel of experts agreed that the project met a "threshold of additionality" and suggested various process improvement for future project selection, which TerraPass agreed to implement. [15]
Standards
Because the carbon offset industry is young and unregulated, a frequent criticism centers on the lack of product standards.[16] As a result, TerraPass and some other vendors seek third-party verification to provide quality assurance. Nevertheless, this heterogeneous and homegrown system of verification makes product comparison across vendors difficult.
Several standards are under development. Two of the most visible efforts are the Voluntary Carbon Standard, which is patterned after the United Nations Clean Development Mechanism, and the Green-e Retail Greenhouse Gas Reduction Certification Program, developed by CRS.
TerraPass is an active contributor to standards development, and recently testified before the House Select Committee on Energy Independence and Global Warming, a congressional committee focused on climate change and energy independence. During his testimony, TerraPass CEO Erik Blachford called for governmental involvement in standards for the carbon offset industry.[17]
References
- ^ TerraPass project portfolio
- ^ EPA eGRID database
- ^ Center for Resource Solutions
- ^ "Expedia.com Offers Travelers a Greener Way to Fly"
- ^ "Flexcar and TerraPass Take the Carbon Out of Car-Sharing"
- ^ "Flexcar teams up with TerraPass to reduce carbon emissions"
- ^ Grist.org user profile for Adam Stein
- ^ State of the Voluntary Carbon Market 2007, Ecosystem Marketplace, July 18, 2007
- ^ Carbon Neutral Myth? Protesters Take On Offset Companies
- ^ An observation on the offset debate - Many offset critics appear to be shadowboxing
- ^ TerraPass customer survey results: indulgence myth pretty much dead
- ^ Ask the Climate Expert, January, 2007
- ^ Another Inconvenient Truth, BusinessWeek, March 26, 2007.
- ^ TerraPass Additionality Project
- ^ Tontitown Project Determination
- ^ On Your Mark, Offset, Go! A guide to offsetting your carbon emissions
- ^ TerraPass goes to Washington
