Wednesday Oct 28, 2009

Thoughts on the Future of Green Marketing

As part of a LinkedIn discussion group run by the Association of Climate Change Officers, I responded to a question on green marketing that I thought would be worthwhile to copy here as well.

The question from Janet Smith: Is Green Advertising Overload Blocking Successful Value Propositions? She elaborated on her question in her blog.

And here's my response: I believe that green marketing related to product benefits which accrue directly to consumers (e.g. lower energy costs) will continue to be effective, while image-related green marketing will generally become ineffective for most companies. In fact, I think it is likely that we will get to a point where a generally good green image will be table stakes for being in the game. At that point positive differentiation will be very difficult, leaving only negative differentiation for those who stumble or don't get the basics right.

Friday Jul 31, 2009

A Good Customer for Clean Energy

[Note: I jointly authored this with Dan Sarewitz of ASU]

The House of Representatives has passed a massive climate change bill aimed at legislating a new, climate-friendly energy supply into existence through emissions caps, technology standards, and incentives. The bill’s champions assume that, in response to an array of mandated carrots and sticks, nimble startup firms will be motivated to develop new clean-energy technologies that will ultimately revolutionize our use of energy, while investors smelling early profits will line up to fund these activities.

Unfortunately, a crucial question remains embarrassingly unasked: Who is going to buy enough of these new technologies to establish a market that's large enough to meet our carbon reduction goals? This question is particularly vexing because, in the energy sector, existing business models are deeply entrenched, huge capital investments are at stake, and new technologies often require changes in consumer behavior that inhibit adoption.

Large, reliable, early-adopter customers are essential to new markets—to bring in revenue that helps scale up operations, and to foster confidence that attracts more customers and new investments. Real-world customer feedback also promotes rapid innovation and improves the chances that new products will succeed in the market.

What would the ideal clean-energy customer look like? Imagine an organization big enough to have energy systems that mirror the real world’s, rich enough that its purchasing power could command the attention of innovators, sophisticated enough to assess and deploy the latest technologies, and disciplined enough to push those new technologies relentlessly in the direction of greater efficiency and lower cost, year after year.

Something akin to this ideal customer exists: The Department of Defense, funded annually at about $500 billion (roughly the GDP of Sweden). DoD owns a huge infrastructure, including 570,000 buildings at more than 5,000 facilities and bases (many of which are the equivalent of small cities), hundreds of thousands of vehicles and tens of thousands of aircraft, and annual energy costs of about $20 billion.

For more than 60 years, DoD has been by far the world’s most important customer for driving high-tech innovation. In aviation, telecommunications, advanced materials, semiconductors, and many other fields, the dual role of DoD as investor and major customer has stimulated rapid technological improvements, allowed scale-up of high-tech systems so they became both practical and affordable, and catalyzed the growth of the private sector so technologies could flourish in the broader marketplace. The Internet may be the DoD's crowning achievement. First conceived at DoD’s Advanced Projects Agency, this early computer network eventually created a market for equipment and service providers that soon spilled over into the private sector as the Internet, an unparalleled platform for innovation and wealth creation.

Yet policymakers have, amazingly, ignored the critical role of government as a strategic customer for energy technology. DoD, with its hunger for energy, huge size, and sophisticated technical capabilities and needs, could quickly become the world’s most important consumer and catalyst for clean energy innovation—even as it vastly improves its operational efficiency and flexibility in providing for the nation’s defense. We can see the latent capacity for this role in the early adoption of solar energy cells by the military for use on satellites (in the 1950s!); in the ever-increasing demand for better batteries to support troops in remote locations; in the nation’s largest solar energy farm on Nellis Air Force Base in Nevada.

Congress or the President should ask the Department of Defense develop a plan for committing to a path of progressively increasing efficiency and clean energy across all aspects of its operations, from tanks in the desert to the supermarkets on its bases. This plan should include a DoD commitment to purchase prescribed amounts of increasingly efficient clean energy capability in 2015-2030 time period. Such a commitment would send an immediate, strong economic signal to innovators and investors, and would decisively put the nation, and the world, on a path to a clean energy future.

Monday Jul 27, 2009

Making the Price of Carbon Real

Like many, I'm divided by the passage of Waxman-Markey (aka ACES) in the US House of Representatives. While its passage is a historic event, the bill has so many issues that I find myself as worried as I am excited by it. As Tom Friedman recently wrote (sorry, free registration required to see the whole article):

It is too weak in key areas and way too complicated in others. A simple, straightforward carbon tax would have made much more sense than this Rube Goldberg contraption. It is pathetic that we couldn’t do better. It is appalling that so much had to be given away to polluters. It stinks. It’s a mess. I detest it.
But he immediately turns the tables, saying "Now let’s get it passed in the Senate and make it law.". His main point is that a getting a price on carbon will result in fundamental changes in decision making, which will put us on the right path:

Henceforth, every investment decision made in America — about how homes are built, products manufactured or electricity generated — will look for the least-cost low-carbon option. And weaving carbon emissions into every business decision will drive innovation and deployment of clean technologies to a whole new level and make energy efficiency much more affordable.

At Sun, we've been a strong advocate for establishing a price for carbon, because Tom is correct that it is a basic requirement for "weaving carbon emissions into every business decision". For example, we'd like to be able to use the current cost of carbon along with scenarios of future costs to make the business case for switching our datacenter backup systems to something less carbon intensive than diesel generators. Unfortunately, Waxman-Markey doesn't provide a clear price of carbon for America's energy consumers - business or individual.

Here's why.

Most homes and businesses, including large ones like Sun, don't emit GHG in ways that require them to directly participate in the cap and trade system. When we purchase electricity the corresponding emissions will have been covered by our electric utility, and when we buy fuel and burn it in vehicles, generators, furnaces, etc, the emissions will have been covered by a party somewhere in the refining and distribution process (ACES smartly avoids forcing each of us individually to participate in the cap and trade system every time we drive somewhere or turn on a lightbulb). In both cases the emissions costs will have been passed along and will show up as increases in our electricity or fuel bill.

The challenge is to figure out what part of our bill went to paying for GHG emissions, since that's the number we need to do a standard return on investment (ROI) analysis like the one described above. Assuming we know the amount of emissions (which you can usually get today), then the number we need is the price per ton that was paid for those emissions.

The obvious answer is to use the current price of carbon in the market where utilities and oil companies trade emissions allowances. But in Waxman-Markey that "market price" may be very different from what your utility or oil company paid. In fact they will have gotten emissions allowances from many different sources, including free allowances from the government, auctioned allowances from the government, domestic offsets, cheaper foreign offsets, "banked" allowances from previous years. Note that these will all usually be cheaper (or much cheaper) than the current "market price", and are not publicly visible. I've verified with folks at utilities and who've worked directly on the bill that there is no provision to make the actual "cost of carbon" available to the consumer, and no utility I've talked to plans to voluntarily provide it.

Since the actual carbon price is lower than the publicly visible price, it makes ROI calculations especially problematic. Using the market price will overestimate the savings of going to a lower-carbon solution, but using any number lower than the market price is pretty much of a guess. This isn't exactly reassuring when you're the one who has to justify a major clean energy investment to your CEO and CFO.

Others have argued that the actual price of carbon will be reflected in the consumer prices of the respective energy options, so that decisions can be based off of that. For example, the ACES-adjusted price of coal-based electricity will go up relative to cleaner options, so people will make different decisions. There's two problems with this approach, especially in a business scenario. First, commercial clean energy commitments are almost always multi-year, and extremely so in the case of deploying solar or wind where a 20-year commitment is not uncommon. But it is obviously difficult to do a multi-year ROI analysis without even knowing what the recent carbon costs are as a baseline to project future carbon costs.

The second problem is that the financial advantages of many clean energy options won't show up until the later years of a multi-year analysis. Initial carbon prices will not be high enough to spur a move to cleaner energy, but future carbon prices might. However, to do the financial analysis we again need a combination of recent prices plus a projection of future ones. So while using today's energy prices may work perfectly well for decisions at home, it is inadequate for the type of financial decisions that businesses need to make.

Fortunately this is easy to fix: the cap and trade participants need to make the data available. Here's three possible mechanisms:

  1. Print the included price of carbon on everyone's bill (or at the pump, in the case of gas, diesel, propane, etc)
  2. Same as above, but assume that this is mostly useful to businesses, so print this data for them only
  3. Each utility or major emitter will publish a monthly or quarterly report of their average price of carbon for the preceding period
I believe that any of these would work for us at Sun. The last leaves more to the reader, but makes the data widely available and seems like low effort for the reporting companies. The first and third options make the information available to all US citizens and organizations that will be paying into this system. Personally this form of basic transparency seems like an important ingredient for people to build trust in this complex systems.

If the final version of ACES can establish a visible price for carbon in the US, its value to companies like Sun will rise. But as it exists right now, it does not provide a price for carbon that Sun, or any other company, can use to justify serious efforts to decarbonize our businesses. Addressing this has got to be a top priority as the bill evolves through the Senate and conference.

Friday Feb 27, 2009

Your Cost of Carbon

It appears that the Obama administration is getting closer and closer to implementing some sort of GHG cap and trade system, since the WSJ and others are reporting that the proposed budget is counting on revenues from the sale of allowances.

You may read these articles and see numbers in the 10's or 100's of billions of dollars thrown around, and you may wonder "what is this really going to mean for me?". Let's do some math and find out.

We'll start with the impact of driving a car, which is pretty straightforward. Independent of your vehicle, driving style, etc, gasoline generates just shy of 20 pounds of CO2e per gallon. With around 2200 pounds in a metric ton, that means there's about 110 gallons per ton of CO2e. With carbon at $20 as suggested in the article, if the cost of carbon is passed straight to the consumer (more on this below), then added cost per gallon from the carbon cost is $0.18. This is an interesting number for those of us here in Massachusetts, since its close to the $0.19 increase in state gas taxes that the Governor is considering, and would put the total "tax" on gas in Mass at $0.60/gallon.

At $2.00/gallon, the $0.18 is just shy of 10% "tax". Based on this result you can see that a $40 price of carbon would be a tax of $0.36, and a $10 price at $0.09. Note again that these results hold anywhere in the US.

Next we'll look at the effect on your electricity bill. This isn't quite so simple, since the CO2e varies by location, as well as the cost of electricity. Let's look at Massachusetts as an example, and we'll use the EPA eGrid data, along with the local cost of electricity as reported by the EIA. Using the file eGRID2007V1_1_year05_SummaryTables.pdf from the eGrid site, we find that the output emission rate for GHG for the New England region is 1350 pounds per MWh, or 1.35 lbs/kWH (about average for the US). With 2200 lbs/ton, this results in about 1630 kWH/ton of CO2e. At $20/ton, this is about $0.012 per kWH.

On the price side we'll use the residential cost in Massachusetts, which is $0.177/kWH (in the top 5 highest rates nationwide, btw). With the high price of electricity and the low GHG emissions, this is only bumped up by 6.8% or so to $0.189. Again, $40/ton is twice this, and $10/ton is half this if you want to see a couple of other simple points on the curve.

As a quick comparison, at $20/ton Colorado works out to a $0.018/kWH hike on an average rate of $.099/kWH for an increase of 18%.

Now remember that all of this assumes that the price difference passed on to the consumer is exactly the price that the utilities or refiners pay for the allowances. It's hard to believe we'd pay less, and likely more. In Germany it was reported by the WSJ in 2006 that the consumer prices rose much higher than the allowance costs (full article by subscription only, unfortunately).

Wednesday Jan 07, 2009

Carbon Neutrality, cont.

I wasn't surprised the article in the WSJ over the holidays which was pretty hard on Dell for its "carbon neutral" claim. There's certainly plenty of room for skepticism. There's no formal definition of "carbon neutral", and in the case of a company like Dell (or Sun or others) there's large parts of the environmental impact that fall outside the formal company boundary (e.g. supply chain, product energy usage by customers). Furthermore, as the article points out, the questions of "additionality" and whether the offset dollars are really changing behavior are not clear cut (and probably never will be, imho). Putting this all together, the skepticism wasn't a surprise.

Here's a couple of other thoughts related to the article:

  • I know a number of the folks working on sustainability at Dell, and I know they've got some really good programs underway there. Personally I feel like their carbon neutrality claims have actually detracted from the communicating the good work they're doing.
  • At Sun, our position has not changed. We are not attempting to be carbon neutral, nor are we dealing in offsets or RECs. We are continuing to make major investments to lower our environmental impact, both direct as well as in our supply chain and products. We have achieved over 20% reduction since 2002, and have projects underway to take that down much further.
  • Remember, Dell spent a bunch of money to be able to claim to be carbon neutral. How much more headway could they have made in their other programs if they'd applied that same money?

Wednesday Dec 17, 2008

OPEC Cuts Daily CO2 Emissions by 740K Tons

Today's headline says that OPEC is likely cutting oil production by 2 million barrels/day. Doing the math, that equates to 740K metric tons of CO2e per day, or 270M tons per year.

You can pretty much read the news of the economic slowdown and see the signs of an economy-driven tail-off in global GHG emissions. Obviously we'd all much rather see the reductions coming from efficiency and greener energy, but I'm sure the atmosphere isn't complaining.

Now's the time to make changes - if we can get good practices in place, then maybe we can drive the emissions down from here instead of having to go back up to the previous highs and starting from there.

Tuesday Nov 25, 2008

BICEP: Adding Some Muscle to the Discussion

bicep.jpg

Catching up on my blogging, I wanted to add some commentary on our membership and participation in the launch of BICEP, or Business for Innovative Climate and Energy Policy.

In the US we spend over $1T a year on energy, so it is a major part of our economy. It seems obvious to say, but energy price and availability of energy effect the delivery of every good and service that makes up our economy.

Obviously energy efficiency measures will help the situation. They should drive down prices and ease constraints on availability. Just witness the effects in the US of a downturn in the economy - suddenly oil is below $60 a barrel again, and gas a the pump is under two dollars, based on a decrease in demand in the 5% - 6% range over 2007. If we had dropped our consumption through efficiency the same amount, we would have had the same effect.

But energy efficiency will only get us so far, and then we're going to need a supply of clean energy. Early indications from the incoming Obama administration are encouraging, signaling an interest in putting real measures in place to reduce CO2, including discussions of cap and trade systems, investment in green energy sources, etc.

So given that, why bother with BICEP? The answer is because there are lots of ways to design these programs, and the detailed decisions may lead to very different results for specific industries or the economy overall. Because of this, we, the BICEP founders, felt that it was important to give a voice to energy-using companies who will have to operate within the frameworks that are developed.

As an example, lets look at a one important decision in designing a cap and trade system. Are the credits handed out based on historic emissions, are they auctioned off, or somewhere in the middle? These choices may effect the ability for new companies to get involved, since giving credits to historic emitters creates a barrier to entry for potential low-emissions options that haven't historically emitted. They also dramatically effect the flow of money in the overall system (and remember, we're talking about big flows of money here). For example, auctioned credits bring revenue to the government that can be used for energy programs elsewhere, but builds the price into the energy economy much more like a tax.

We've only just scratched the surface of this one question, and, more importantly, this is only one question of many. The details matter here, big time.

Companies who aren't in the energy business could look at all of this, conclude that discussing legislation in another industry isn't a good idea, so decide not to participate in the discussion. And up until this year, that's the point of view we took at Sun. However, the thing that really changed my mind was the realization that Sun is already in the energy business, and so are all of our customers. Our businesses depend on the the future, ready availability of clean energy.

Because of we decided to become more active in the discussion, and selected BICEP as the primary vehicle for getting our voice heard.

Its great that we're getting top level movement, but the details will matter. We're all in the energy business to some extent, and its time to dig into the details and have a voice in how this turns out.

Friday Oct 03, 2008

Eco is (still) Ecology + Economics

Environmental Leader today reported that "Environmental Friendliness Not Driving PC Sales" (I'd quote the original study, but getting it to read costs more than a couple of PCs).

The conclusions are not surprising: consumers are looking for hard environmental savings, not marketing. In particular, they want to see energy efficiency that leads to real economic savings. But realistically, what else would they use as a criteria? Higher use of recycled cardboard in the packaging? How does a consumer put a value on that?

Unfortunately our whole industry is not yet consistently good at giving people the energy information they need to use the one environmental criteria they seem ready to use - possible savings in the monthly power bill. While Dell highlights some eco interesting looking advancements on the front page of dell.com, I still find it very hard to get any real energy data on specific PC models. Same thing for HP. (Note: in the server space Dell, HP, Sun, and probably others have much better real power data available for most models).

The lesson here for all of is simple, in my mind. We have to explain the concrete environmental and economic benefits in a way that is meaningful to consumers, and give them the hard facts so they assign their own valuation to those benefits. It might not feel "pure" that economics is the way that most people will do that valuation, but if they make better decisions for the environment, isn't that goodness?

Monday Jun 09, 2008

IEA: $45 Trillion Needed To Cut CO2 Emissions 50% By 2050

Environmental Leader has a good article on the report by IEA that says that $45T of investment will be required by 2050 in order to reduce CO2 by 50%. In particular, it highlights the graph which is very interesting, showing 15 of the 50% reduction coming from efficiency gains, and the next 20 of 50% coming at relatively low cost from the power sector. So combined, these two are 70% of the overall reduction, and looking at the graph, can be achieved with near net 0 cost (the efficiency savings cover the added cost of power switchover).

So what's left is a massively expensive effort to convert our industry, cars and trucks to an alternate fuel source. The conclusion of the IEA report is that we would need $500/ton tax or price of carbon to achieve the reductions required in the industry and transport sectors. But wait a minute - the power industry needs a price of carbon under $100 to meet its goals, and the efficiency gains can be met without much of a price of carbon at all. At $500/ton, we'd be looking at an additional cost for electricity of around 30 cents per kWH - are we really going to do that just because another sector is harder to deal with than electricity?

What this graph so nicely points out is that we have three different problems, and because of the economics, maybe we shouldn't treat them the same way. First, we have the need to increase our efficiency. Since this is generally cost neutral or better, this should be able to be done through some kind of incentive program. Second, we need to convert our electricity production, and there's increasing consensus that we can do this at a reasonably low cost.

Finally, our big problem is that we need to wean ourselves of our oil dependence for transportation and industrial use. For better or worse, we also appear to have a massive disconnect in supply and demand in this sector, so we are doubly incented to address this problem. And you can see by the large range of predicted cost in the graph, especially compared to the small range in the power sector, that we don't really yet know how to do this.

So I draw optimism from the left 2/3 of the chart, and am very concerned about the right third. But more importantly, I'm increasingly worried about us using carbon pricing as a big hammer that we're going to fix everything with. We have at least three distinct problems here, so maybe we should be looking at at least that many mechanisms to drive change.

Monday Jun 02, 2008

Carbon Pricing

The Environmental Leader reports on an analysis from Carnegie Mellon claiming that a $35 price for CO2 would results in a 10% decrease in emissions.

I haven't read the report yet, but just at the face of it I'm skeptical when I look at the impact on the pricing and usage of gasoline and electricity. First, lets do gasoline. Roughing out the math, gas produces just under 20 lbs of CO2e per gallon of gas, or 110 gallons per metric ton. So the $35/ton pricing would add $0.35 per gallon. Given the current gas prices, you'd be looking at an additional increase of less than 10%, and much less than the increase over the last 12 months.

Electricity shows a higher increase, but I'm still not sure its enough to change behavior that much. Using 1.3lbs of CO2 per KWh as a US average, that yields around 1,700 KWh per metric ton of CO2e. So a $35 price for CO2 would add about 2 cents per KWh. Average retail electricity price is around $0.10, so this would be a 20% increase in retail electricity prices, and higher for commercial electricity which tends to be lower. This is enough of an increase to cause some changes in behavior, but 10% seems like a stretch. For electricity, however, it would help with the economic case for emerging green alternatives, so would probably do some good on the generation mix side over time.

So when I read the report I'll find out how they get there, but I'm very doubtful for gasoline and transportation, and mildly skeptical for electricity usage at $35/ton. This analysis definitely makes one thing clear: at CO2 prices below $5/ton, there will be no change in behavior.

Monday Oct 01, 2007

Our Eco Sharing Agenda

The organizing principles of our CSR and Eco Responsibility efforts are Innovate, Act, and Share. Most people get Innovate and Act (responsible products and services, and responsible operation of our extended business), but Share is always tougher to explain. Sun's got a rich history of open standards, open source and transparency, but many people, especially outside of tech, don't understand what these really are and why Sun would bother.

Hopefully that will get easier now, as last week we announced OpenEco.org, a site to help organizations of all kinds measure and lower their greenhouse gas (GHG) emissions. We originally built the core of the tool to help measure and track our own GHG emissions, and realized that everyone else must be facing the same challenges we were. The scavenger openeco.jpghunt of finding the underlying data is specific to each company, but the calculations and the tables of common data they use aren't, nor is the data management that you need to do to update each month and track your progress versus your goals. So we brought in Gil Friend from Natural Logic to help generalize what we'd done in a way that would scale and apply appropriately to others (that's his forte), and created OpenEco.org to give everyone a much easier way to get going.

But wait, there's more. If you've measured your GHG emissions, how do you think you are doing versus other companies in your area? What's your GHG per office employee? You don't know, because as everyone cobbles together or buys a custom tool, there's no way to get your data in the same place and format as other organizations in order to compare them. But OpenEco can do that, since it normalizes all of the data and has built-in tools for comparing.

Finally, the cost. It's free, with one caveat: you have to be willing to let others compare against your data. You don't have to have your name attached to the data (it can be anonymous), but the data has to be visible for others to use.

OpenEco.org isn't a complete GHG tool yet, but it covers buildings of all kinds, and other sources will be added quickly by Sun and the community.

It wasn't an accident that we timed our announcement of OpenEco to coincide with the CDP5 Launch Event last week. The core principles of measurement and transparency run through both efforts, and it seemed like a natural to us. Although 2,400 companies reported last week, I suspect many are in the state we were last year, starting to be weighed down by our hand grown tools and mountains of accumulated data. Hopefully OpenEco will lend a hand.

While response has been great, the most common question I've gotten is why Sun bothered to do this. There's really three reasons. First, we believe that climate change is a common problem, so we need shared solutions. Second, we believe in communities. There's upside such as the ability to compare data, and also a big hand in the ongoing upkeep and evolution of the tools. Finally, its one more thing we can use to change our discussion with organizations we want to sell to. As more companies decide that its time to race our climate challenges, hopefully OpenEco will give them a reason to think of Sun, which will give us a chance to show them how we can help them green their datacenters in addition to measuring their GHG emissions.

Please - check out OpenEco, join the community and help us all move forward!

Disclosure Progress

Last week was one of those that deserved a timely post or two, but didn't get them because there was so much going on.

The week started at the Carbon Disclosure Project annual event in NYC. This was commemorating CDP5, the fifth reporting cycle for the project. From the website: "The CDP website is the largest repository of corporate greenhouse gas emissions data in the world." With over 2,400 companies reporting this year, and over 300 of the S&P 500, the CDP is playing a critical role in transparency and reporting of GHG's. Want to see what a particular company is up to? Look 'em up!

This was our first year, and I was proud of our response. Apparently they thought it was good also, as we were named to the Climate Disclosure Leadership Index.

We were a sponsor of the event in NYC, which was hosted by Merrill Lynch. Bill Clinton gave the keynoteBill_Clinton_lores.jpg, which I thought was outstanding. Many of the same themes we've been pushing (measurement, transparency, tie to economics, innovation). If you get the chance, I'd highly recommend reading it or listening using the links on the CDP homepage.

One of the reasons I'm a fan of the CDP is that they keep themselves small, but carry a big punch. They now represent over $41T in investors (that's right, that's a 't' as in 'trillion'), and I believe you are going to see them applying more pressure to the folks who aren't yet reporting.

The key messages about this year's reports were that a) there are more of them, b) they are getting richer and more accurate in content, and c) they are describing more and more proactive action on the part of the reporting companies. Hard to argue with that!

Monday Sep 10, 2007

Externalities, Markets and Offsets

When I first read this op-ed in the WSJ last week, I thought "get real". The steady rise in CO2 is clear evidence that markets aren't working.

Then I reminded myself that, if externalities such as the potential impact of CO2 on the globe were reflected appropriately in the prices of things (such as cars and gas, in this case), then I would actually be in strong agreement with the authors! So hopefully Mr. Crandall and Mr. Singer will be leading the charge to get externalities correctly reflected in the market.

(As an aside, I also hope for GM's sake that they don't think that concern for climate change isn't being reflected in the market - they're way behind and I hope they're actually acting that way internally. We need the US auto makers to catch up on this issue.)

This was a good reminder to me of how much contortions we go through as a result of not having the market reflect key externalities as a matter of course. Obviously its hard to do, and also hard to even figure out what the cost of those externalities should be. But to tie it back to last week's post about offsets, its good to remember that personal offsets wouldn't even need to exist if we had the market pricing appropriately. In fact, the market would do a better job than people's current accounting, since the impact of the goods and services we buy would reflect the externalities correctly as well. People would actually be really 'carbon neutral' just by going about their business, as opposed to the partial version that most people and companies practice today where goods and services are ignored.

So one obvious question is, if through some means we get exernalities priced into the market correctly (through a carefully constructed cap and trade or tax system, for exmaple), what happens to all of the infrastucture we're setting up to offer personal offsets? What happens to the projects that are setting themselves up to get a piece of the offset pie?

Saturday Sep 08, 2007

Pseudo Science Update

Yesterday's post on tree offsets started a good conversation with Adam and Tom Arnold at Terrapass. Apparently Adam's post was part of an ongoing, and now that I've read the others I find we're on the same page. In particular, take a read through Adam's Rules of the road for carbon offsets: the trouble with trees. It's a more complete treatment of the topic than I provided yesterday. Bottom line is still the same: if you're buying offsets, know where they're coming from. It's up to you, but I'd stay away from the trees.
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