To make amends for emissions, businesses try offsets

Some companies are buying compensation for emissions they can't or won't eliminate.

Jan. 08, 2007, 12:01 p.m. ET

Does building a wind-power plant in Brazil make up for pumping out greenhouse gases in the United States? That's the premise of offsets – the business of buying compensation for emissions that companies can't or won't eliminate. Last week, the Monitor's Laurent Belsie sat down with two experts who track and recommend offsets: Terry Kellogg, executive director of 1% for the Planet, a network of environmentally committed companies based in Newburyport, Mass.; and Bob Sheppard, deputy director of Clean Air-Cool Planet, a nonprofit advocacy group in Portsmouth, N.H. Here are edited excerpts of their conversation:

When companies purchase an offset, are they just buying forgiveness?

Bob Sheppard: I think there's a common misperception, especially in the media now, that carbon offsets are basically an indulgence, or something similar to what the church sold in the Middle Ages. And it's really very far from that. It's really an opportunity for these companies to begin addressing the amount of carbon-dioxide emissions that result from their operations.

But what's the long-term benefit if someone plants trees in Brazil to absorb carbon? Don't a lot of those trees eventually die or burn?

Sheppard: That is one of the concerns of folks, especially regarding carbon sequestration. The good news is that there are a wide range of carbon offsets and that carbon sequestration or tree-planting, which probably 10 or 15 years ago was one of the leading choices out there, has now been supplemented by a number of other options.

What options are there?

Terry Kellogg: An example from my former employer, the Timberland Co., would be the idea that they could retrofit shower heads in inner-city dwellings.

How do low-flow shower heads reduce greenhouse gases?

Kellogg: If you're using less hot water over the course of the shower, then you're using less energy associated with heating that water.

Are there other examples?

Sheppard: There are a wide range of options. There are offsets that come from wind farms, solar projects, and from landfill methane projects, where organizations are tapping methane trapped in capped landfills and actually using it to generate electricity, [to] taking the manure from dairy farms ... and using it to generate electricity.

Kellogg: I think Bob and I would both agree: This is almost a last resort. The first thing you want to do is become absolutely as efficient as you possibly can. The second thing that a lot of companies try to do is invest directly in renewable energy. [At Timberland] we erected a wind turbine at a manufacturing facility and put a massive solar array on our distribution center. Then we looked at the emissions that were left over and asked: What can we do?

Do corporations buy in because the boss is committed – or do committed employees convince the boss?

Kellogg: Every company comes to it in a different way. It's very often an internal champion. But just as often, it's a passionate leader who brings people to the table and gets it done.

Companies want to save energy and resources because it saves them money. But why would they spend money to offset emissions that everyone else is sending into the atmosphere for free?

Kellogg: Increasingly, people want to associate themselves with companies that they feel are doing more than just making a buck. They want to support companies that they feel are values-aligned and in tune with the issues of the day.... A great example is Stonyfield Farm. When they started distributing products in the Pacific Northwest, they engaged in reforestation offsets in the Pacific Northwest. So they got additional support for their market entry through the stories that were created as a result of those offsets. It's brilliant marketing, and it's a great way to better engage your consumer base.

Do companies ever use offsets to appear environmentally friendly, even though they're not?

Kellogg: They may be out there. [But] I think consumers are savvy enough to know when they're being hoodwinked. I would encourage everybody to ask tough questions of companies that are doing this.

What's the best question that an investor can ask?

Sheppard: "Is this the only thing you've done?" That's really simple. We do strongly recommend that offsets might be the first thing, but they shouldn't be the last step [that companies take].

Are some offsets better than others?

Kellogg: There's no question. A report that Clean Air-Cool Planet recently put together does an outstanding job of breaking down some of the key differences.

That report also suggested that individuals can offset their emissions.

Sheppard: There are a number of steps that they can take. The interesting thing is that a number of Web-based providers now make it relatively simple. By merely punching in information on a website, you can calculate the amount of CO2 emissions that your automobile produces or that your home or your small business produces in the course of a year. Of if you happen to be traveling, there are a number of providers now on the Web that allow you to offset your travel as well.

Kellogg: It costs about $100 for the average individual to go carbon neutral. And if that's too much, you can start looking at different parts of your lifestyle and decide to offset your car-transport emissions, for example. I'm a big fan of getting people accustomed to this new currency – the currency of carbon dioxide – and understanding that every certain number of miles you drive has a certain carbon implication. People should be braced to engage in that conversation.

For further information

Clean Air-Cool Planet report: www.cleanair-coolplanet.org/ConsumersGuidetoCarbonOffsets.pdf

Personal Calculators

Climate Neutral Co.: www.carbonneutral.com/calculators/index_shop_calculator.asp

Climate Trust: www.carboncounter.org

Native Energy: www.nativeenergy.com/lifestyle_calc.html

Sustainable Travel: www.sustravel.co.uk/carbon_calculator

World Resources Institute: www.safeclimate.net/calculator