Cashing in on carbon guilt

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Arnold is convinced there will be rapid growth in carbon offsets, because many people want to address global climate change but are unsure where to start.

"The whole idea and innovation behind TerraPass is to make this emotionally relevant to people," Arnold said. "Americans like their cars and the freedom they give them, but they don't like what it does to the environment. This gives them a first-order response."

"We're at 1973 levels of recycling. If we build it to be mainstreamable...we'll have the same impact that recycling did on the waste stream."

--Tom Arnold,
TerraPass

Later, people may consider switching vehicles, using fuels that have fewer emissions or using cars less altogether, he said. TerraPass currently has 25,000 registered customers and says half-a-million people have visited its Web site.

The money that TerraPass collects is funneled into various projects. One-third is invested in wind power projects, one-third goes to projects that convert cow manure to methane (another greenhouse gas), and one-third goes to capturing methane at smaller landfills, Arnold said.

Mandatory regulations?
Arnold said that TerraPass has been "begging" for two years to establish standards for retail carbon offsets. The company worked with the Center for Resource Solutions (CRS) to audit TerraPass' carbon credit activities (It passed).

CRS already provides certification services to ensure that funds from companies that purchase carbon offsets are spent on renewable energy projects and related credits.

In the near future, CRS intends to extend this service to retail customers and propose a standard, called Green-e Retail Greenhouse Gas (GHG) Product Certification Standard.

Meanwhile, the International Emissions Trading Association and the nonprofit Climate Group have proposed what it calls a Voluntary Carbon Standard (click here for PDF).

The Clean Air-Cool Planet study, which was commissioned by corporate customers of the nonprofit, said the growth of retail carbon-offset programs can help create awareness of global warming and, in turn, influence public policy.

However, one question that is not totally clear is how mandatory government regulations designed to restrict corporations' greenhouse gas emissions will affect these voluntary markets.

These regimes, such as the Regional Greenhouse Gas Initiative (RGGI) in the northeastern U.S., are expected to rely on a cap-and-trade system where polluters can trade carbon credits if they stay below their allotted emissions targets.

TerraPass' Arnold said regulators are working on establishing rules for these new markets as well, such as how renewable energy projects are accounted for in emissions reductions.

He likens consumers' purchase of carbon credits to recycling, which has taken decades to become commonplace. The average community recycles 35 percent of waste in the U.S., with some areas, including San Francisco, up near 70 percent, he said.

"We're at 1973 levels of recycling," Arnold said. "If we build it to be mainstreamable and supported in everyday life, we'll have the same impact that recycling did on the waste stream."