Environmentally-sensitive rental car customers can now drive someone else's vehicle with a clean conscious. Automotive News [sub] reports that Enterprise, National and Alamo are all set to sell "carbon offsets" with their rental contracts. The opt-in program adds $1.25 to the price of the rental. The money goes towards "carbon offset projects, such as wind farms, that reduce the amount of carbon dioxide going into the atmosphere." TerraPass, which handles the credits, estimates that every 100k customers participating will offset over 30m pounds of CO2. We called TerraPass to ask how much of the fee went directly to projects (i.e. what percentage was "absorbed" by administrative costs). Their PR rep Samantha Weeks said "We're a privately held company. We don't disclose information like that." So now you [don't] know.
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With TerraPass, it’s all about the “green”.
These people deserve every penny they make.
How many suckers actually fall for this? And if they don’t reveal the ends to which the money is applied, how is fraud prevented?
I am deeply skeptical about these offset companies. If it were as easy to offset global heating as paying an extra $1.25 for a car rental, experts woudln’t be so worried about it.
I am offsetting my own driving by insulating my roof to R-40, a huge improvement from R-insignificant.
I actually thought of starting one of these companies, but I decided I couldn’t live with myself. Lot’s of people will get rich on these schemes.
I do my part in preventing global cooling, which as Time magazine, the New York Times, and others warned us was the greatest threat facing mankind in the lates 70’s
http://amazing.deter.com/content/Politics/Time%20-%20Another%20Ice%20Age.pdf
Maybe someday down the road there will be a TerraPass exec being grilled by a Federal Grand Jury. While I’m cynical about folks who (literally) buy into carbon offsets, I hate to see people taken advantage of.
Yes, my God, a narrow escape from Global cooling!
Tell me, morbo, do you visit an MD who practices medicine using the knowledge base of the late 19th century? Was your electrician trained in 1675? Does your company employ chemists who think there are just four elements?
Do you think that maybe, just maybe, there would be considerable research done in climatology in the last 30 years and the sensationalizations of the press from 1974 might not be terribly relevant today? Maybe?
Do you think that maybe, just maybe, there would be considerable research done in climatology in the last 30 years and the sensationalizations of the press from 1974 might not be terribly relevant today? Maybe?
Exactly. Just like the global warming sensationalizations of today won’t be relevant in 2034.
I’ve been wanting to buy a TerraPass for my H2 for some time now…
“We don’t disclose information like that.” hahaha of coursenot! Big time kudos for calling BS on carbon offsets! The first time I heard if this concept I laughed out loud…and immediately began trying to think up my own carbon offset scam!
Tell you what, I’ll let my grass grow an extra eighth of an inch for every $10,000 in carbon offset donations I receive. Think of the polar bears!
I can’t comment on this particular company or its profit and cost structure, but the concept of creating a credit market is completely legitimate and makes good sense, assuming that (a) you have a problem with pollution and (b) some pollution is necessary for living, and therefore inevitable, despite its drawbacks.
It’s not a guilt-relieving measure, but a free-market method of associating a direct economic cost with pollution, the payment of which can then be used to fund a project that (attempts to) balance the damage created by your polluting behavior.
The problem in tackling pollution is one of externalities. The cost created by the damage is generally only obvious over the long term and in the aggregate, so the polluter basically gets away with it without paying for the true cost of conduct. The credit offsets assign a cost to it, and the price paid can be used to pay for projects that can offset the damage that you are inflicting on everyone else.
The only ways to deal with pollution are to ignore it, regulate it, or to make people pay for it. If you go with the latter alternative, you can tax it or you can let the marketplace attempt to price it. The carbon offset approach is actually the most politically conservative approach, because it keeps the government out of it and allows the private sector to manage it, presumably with greater efficiency and fewer arbitrary restrictions.
But private sector companies aren’t going to do it for free, they will want to earn a profit. If a non-profit or government agency did it, they will still need to cover their overhead costs, so none of the alternatives are free. A good follow-up question would be to find out how much of the money goes toward offset projects, and to detail what kind of projects they are.
CarShark :
January 17th, 2008 at 2:17 pm
Do you think that maybe, just maybe, there would be considerable research done in climatology in the last 30 years and the sensationalizations of the press from 1974 might not be terribly relevant today? Maybe?
Exactly. Just like the global warming sensationalizations of today won’t be relevant in 2034.
Thank you, Car Shark for saving me typing that same thing. Many people refuse to understand the relativity of our knowledge at any given time.
Pch101,
the question is, are the offset companies doing anything that is
a. effective
b. would not get done without their contributions?
c. that truly offsets the amount of CO2 the customer is trying to offset?
Maybe, but I’m real skeptical.
To the global warming naysayers: don’t wander too far east or west lest you fall off of the flat earth.
the question is, are the offset companies doing anything that is
a. effective
b. would not get done without their contributions?
c. that truly offsets the amount of CO2 the customer is trying to offset?
Maybe, but I’m real skeptical.
You should be skeptical. But I’d reserve your skepticism (as you have) for the execution of the idea, not for the concept itself.
For those who believe in free enterprise, the economic theory behind the credit is solid. But whether it will actually help solve the underlying environmental problem is a matter of debate.
In theory, you should be able to achieve a carbon-neutral result by balancing carbon-reducing activities with the carbon production. In practice, this might make as much sense as a crack addict trying to balance his addiction by eating more carrots. I suppose that the truth lies somewhere in between.
“To the global warming naysayers: don’t wander too far east or west lest you fall off of the flat earth.”
“tactics like comparing climate change skeptics to people “who believe that the Earth is flat,” is comparable to those [tactics] used by the power brokers within the rise of fascism during the early 20th century”
-Jonah Goldberg.
I’m actually a fan of carbon offsets & a customer of TerraPass. According to their calcs, it costs $69/yr after they absorb their undisclosed cut to offset the carbon my 07 Tahoe exhales in 12k miles. If Lutz’s math is right & building vehicles that meet the new CAFE targets implicit carbon goals will cost $6k per vehicle, I’d rather drive see $750 go into offset projects over the 10yr life of a vehicle than into heavy metal/ exotic polymer batteries that will eventually find their way into landfills, etc.
If you think of a Matrix & Prius as comparable besides the Synergy hybrid system, what’s the unit price bump for the technology that reduces carbon output by ~80% & doubles fuel economy? Based on invoice pricing, I reckon it’s in the neighborhood of $5k. The truth of the matter, detailed in many scientific & economic analysis (including several covered on TTAC) is that most U.S. carbon emissions are created to support industrial & utility needs rather than by private motor vehicles. CAFE regs are a costly & inefficient means to reducing carbon output especially in light of what carbon offsets cost in an unregulated market.
Last but not least, I love seeing the look on my liberal friends faces when I explain how it is that my Tahoe has a smaller carbon footprint than their hybrid. They [eventually] grudgingly accept that my fuel bill & Terrapass primarily impact my economics not our ecosystem…
My wife rented a car from Enterprise last week and I was surprised to find the carbon-offset credit being offered for the rental. I passed it up, figuring it was just a way for Enterprise to add another unnecessary fee to their rental. I guess it’s at least some comfort that the money is going to a third party.
Then again, I began wondering how much of the money is going to a third party, especially after reading mgrabo‘s comment. My wife rented a Chevy Cobalt from Enterprise (I tried to get her a Versa; no luck). Even if you assume the Cobalt is driven 30,000 miles in a year, its CO2 emissions can be offset with a $99 TerraPass purchase. If Enterprise is selling this for $1.25 per day and it only costs $99 per year for the offset, it becomes much more clear why nobody involved is unwilling to detail how much of the fee actually goes to reducing the carbon footprint.
PCH,
There is a fundamental problem with your percieved set of options.
The free market will not take care of it without a regulation or tax (and this is coming from MR. free market for TTAC, so believe it).
Right now, if you buy an offset, it is because you want to. If it works, great, but it likely won’t. People being people, you are looking at a tragedy of the commons scenario with a spin.
Since people are mostly buying a concept, there is little need for regulation. However, to really get the carbon offset that some think we need (I am skeptical myself), we would have to FORCE people to buy them. Call it a regulation, or a tax, it is not a free market at that point.
You might get some of the benefits of a free market because the offset companies would likely be much quicker at getting to an answer on what was the most capital efficient means to get an offset, but you probably won’t. The regulation from the government will likely come with a predetermined measurement of efficiency that will warp the market and likely keep it from finding the true best answer.
In other words, what you get will not be a free market in credits, but a highly regulated one. Thus the final answer is that the free market will not deal with pollution.
I will admit, for fans of the market, that government will have to deal with pollution. Therefore, we need to endeavor to keep government as honest as possible. To do that, we keep it lean, democratic, loaded with checks and balances, and, hopefully, empty of career politicians. We also need to get government out of the Academy as much as possible so that we can get more reliable answers on questions of science. With government making science and education a pathway to wealth, we will never know.
The reason there will be huge fraud in the carbon credit market is that it will be very difficult to measure the effectiveness of any given project and therefore the cost to remove a certain amount of carbon from the atmosphere.
Many of these companies will use the money to create new, innovative ways to remove carbon from the atmosphere with varying levels of unintended consequences. Richard Branson is currently offering $25 mil in a design contest.
“The winner of the contest must devise a plan to remove greenhouse gases from the atmosphere without creating adverse effects.” How do we know how much to remove? http://www.washingtonpost.com/wp-dyn/content/article/2007/02/09/AR2007020900693.html
And many more will do absolutely nothing but collect checks.
My favorite example of shady carbon offset company is the one owned by Al Gore. He gets to balance his carbon footprint by writing checks to himself!
In conclusion you can now buy carbon credits from me. I sell enough credits to drive your Tahoe and still shame your Prius driving friends for not being green enough for $100/year. But for a limited time only you get enough for not one but 2 Tahoes a motor boat and a jet ski for only $19.95, thats right just $19.95. Get them now before this once in a lifetime opportunity expires!
However, to really get the carbon offset that some think we need (I am skeptical myself), we would have to FORCE people to buy them.
That’s true (although you see it as a negative, and I don’t.)
The reason that it’s true — because it’s too damn cheap to pollute. As it stands today, the polluter gets a free pass, because the cost of pollution is not built into the price of polluting behavior.
Imagine if I could take a gun, fire a clip’s worth of ammo into the air, and suffer no consequences when a bullet lands on someone else’s head because there were no cops and/or laws to stop me. That’s the situation that we’re into today — when we pollute today, we melt your grandchildrens’ icecap. If we have no conscience, and if there is no price for us to pay, then our only pain is the pleasure that we derive from having done it to someone else, the unknown victim who gets whacked in the head as the result of our behavior.
So the answers are to regulate pollution out of existence or to raise the cost of pollution. With an offset, the marketplace will determine the exact cost. If the government taxes it, it may set the wrong price or it may cost too much to collect it, so a credit-based solution should be more efficient.
So I’m all for the credit, at least in theory. The only theoretical counterargument to it is that you don’t believe that pollution is a problem, which is your right but strikes me as an exercise in wishful thinking, no matter what Jonah Goldberg or his right-wing brethren such as Rush Limbaugh may want to believe.
PCH,
HA!
HAHA!
We mostly agree!
I do see using force as a negative, but I also think it is likely the lesser of two evils.
Where we disagree is over the use of the term “free market.” I don’t believe that market will ever really be free. If you are willing to use the term “Market Mechanism” to describe an offset market, or a “Regulated Market”, then we can move forward. I would just as soon have Congress sitting around choosing the winners and losers in the Carbon market, if it means they have less time to do so in all the rest of the markets. (In reality, we need pollution markets, not just carbon).
Dump CAFE for an offset idea? Sure, why not. It would save Detroit. They could ONLY make big cars, which is what they are good at. They would be profitable. Asians would likely make most of the small efficient cars, which they are better at, and everyone will be better off for a while at least.
Maybe we could end ethanol subsidies while we are at it? Using it for an oxygenate makes sense, so let’s subsidies it as a pollution offset, and forget about making it a fuel substitute until we know how to do it efficiently.
The real bugaboo will be nuclear, which is really the only big solution we have. I have been saying for years that the solution to nuclear waste is making spaceflight as safe as commercial air travel and then sending the stuff off planet. So long as the cost of the solution makes it into the cost of the energy, it all works.
I personally love the idea of forced carbon offsetting because it will finally allow us to make all those poor people adopt our green ideas, which are perfectly good and we would adopt them too if only we had the time.
@ Landcrusher:
The real bugaboo will be nuclear, which is really the only big solution we have. I have been saying for years that the solution to nuclear waste is making spaceflight as safe as commercial air travel and then sending the stuff off planet. So long as the cost of the solution makes it into the cost of the energy, it all works.
Given the huge cost by weight of achieving orbital escape velocity, the ‘off planet’ option is not realistic.
Nuclear makes sense to me. I’d pick a ‘nuke offset’ if offered on my utility bill.
Nuclear waste can be stored ‘on planet’ for very low cost at very low risk. The problem is environmentalist who demand zero risk. Discussion with them is pointless. In the meantime, we burn 1-2% more coal every year…
Where we disagree is over the use of the term “free market.” I don’t believe that market will ever really be free. If you are willing to use the term “Market Mechanism” to describe an offset market, or a “Regulated Market”, then we can move forward.
There are already established markets for other types of credits that disprove your speculation.
Here’s a metaphor to illustrate the credit pricing concept vis-a-vis the free market: your car. The guv’mint has made all sorts of rules about the need for manufacturers to install seat belts, air bags, brake lights, to design the car in such a way that it doesn’t implode when it hits a wall at a moderate speed, etc., etc., yadda, yadda, yadda.
That’s a lot of regulation. But the one thing that the government doesn’t regulate is the purchase price. It may even regulate how the retail asking price is displayed, but it doesn’t actually instruct the seller how much he or she can charge.
This is more or less how it works today with credits. Government agencies make rules about what a credit is, what it is based upon and how credits are created. But the market ultimately decides how much that credit is worth, the government doesn’t get involved in determining that.
The credit itself may be managed, but the transaction price is subject to a mutually agreed upon choice between buyer and seller that is not set by a government body. Government can create conditions that influence the likely price, but
The bullshit math (hockey stick graph) of the CO2 instigated global warming aside (I do believe in global warming, I just also believe that solar output and cyclic variation in ocean currents is the cause as opposed to manmade carbon output), what EXACTLY is wrong with a warmer planet? Rising oceans and increased tropical disease is a problem. But increased food production (longer growing seasons) and decreased seasonal fuel usage (no winter heating bills) is a plus. People will adapt and adjust, as we have throuhout the ages.
PCH,
Let me try to explain the difference as I see it. Even in the highly regulated car market, there are differences which make the value proposition of each choice quite different. You as the consumer assign your own value to the various aspects of the product.
Under a carbon offset market, most players will want maximum carbon per dollar. However, the government will be calling the shots. Who knows how much carbon one acre of trees really grabs vs. another? The government will be assigning the value. It will be like paying for your gas using your odometer reading instead of measuring the fuel with the government assigning the miles per gallon.
You may see this thing working another way, but I don’t. The lawmakers will have their hands all over this thing to make sure they get big cash from all the players involved.
Companies may try to market themselves as different, but I see it working much like the electric markets or air transport (which are not free, even when “deregulated”).
At some point, regulation strangles innovation to the point that a market is not free. Calling it such is lying to the public, and pushing them into ignorance.
Trees,
Space shots are mostly expensive due to rarity. There is no reason why space flight tomorrow cannot be as cheap as air travel is today (except the government and lack of volume). One of my best friends is an honest to goodness rocket scientist, and he agrees. Maybe you can google around and find a copy of Burt Rutan’s presentation at TED.
Under a carbon offset market, most players will want maximum carbon per dollar. However, the government will be calling the shots. Who knows how much carbon one acre of trees really grabs vs. another? The government will be assigning the value. It will be like paying for your gas using your odometer reading instead of measuring the fuel with the government assigning the miles per gallon.
Tax credits are nothing new. They already exist for real estate construction, business development, and alternative energy production, for example, so there are many years of precedents and case studies that can be used to design a carbon offset credit.
The management of those existing markets should alleviate your fears about how it would work with a government-allocated credit. The tendency of the US government has been to create programs that allow for a fair bit of discretion on the part of the private sector. Of course, this discretion creates its own opportunities for gaming the system, but that is to be expected of anything that involves humans and money, and should be accounted for when designing these programs, rather than designing them without any expectations of loophole hunting.
With these existing programs, the US government has kept a hands-off approach to establishing what the market pays for the credits themselves. They define and create the rules for what constitutes a credit, but they allow the market to decide what that credit is actually worth, and the prices do vary over time, depending upon supply and demand.
It wouldn’t result in a perfect system, but it would be an improvement over the do-nothing approach that we have today. I suspect that the buyers of the credits — the polluters — will be most guilty of gaming the system, when they figure how to work whatever scoring system is used to their advantage so that they are required to buy as few credits as possible. But if it results in overall improvements, it would be hard to complain.
These won’t be anything like tax credits, but that is not the point. Where we disagree is whether the market for carbon credits should be described as a “free market”. I say no.
Varying prices is an essential element of, but not a definition of a free market. In a free market, you would go buy credits, and the amount you get for the dollar would vary not only by price, but by quality or efficiency or accuracy. One company might sell you the credits of an acre of pine trees and say it’s 100 credits for 100 dollars. Another might sell you the offset from using wind power to produce some energy and tell you it’s 100 credits for 105 dollars. But in fact, they may or may not be ridding us of that much carbon. The buyer would have to measure. In the carbon market, the government will likely assign the amount of credits for the activity. Whether the pine is properly cared for, or the windmills are properly lubed (or whatever) will not likely make a difference because the government will have decided what each activity is worth. They will do this based on lobbying dollars and vote getting! Not by objective measures!
This is VERY important. We have several markets in our country that are not free, but that are called free by people who want to destroy support for free markets, or have other agendas, or are just ignorant. The markets for air travel, health care, insurance, energy, and many other things are so overly regulated or otherwise warped that they are NOT FREE MARKETS. This may be due to necessity, nature, or government fiat. It may be bad or good. However, calling these markets free is likely worse for society than committing several felonies.
Have your carbon market with my blessing, but don’t call it free because it will not be. It could not be, even with a perfect government it would fail the test.