"Boing Boing does not understand wind credits" - do you?
by Celine Ruben-Salama, New York, NY on 11. 3.06
On Tuesday we learned that Whole Foods customers can now pick up Wind Power Cards while doing their grocery shopping. Conveniently placed close to check-out, the cards are meant to facilitate carbon offsetting for individuals and families alike. But how does it work?
For all thoses confused, the Wind Power Card buys credits which represent the additional cost and value of wind energy. Essentially, buyers of the card are financing wind power that goes into the national grid, which of course for now is more expensive to produce than conventional "brown" energy. Purchasing a credit does not replace or reduce your conventional electric bill. You are simply paying a voluntary preminum to help increase the ratio of clean to dirty energy in the national grid. Here is a simple illustration of the concept.
Seemingly harmless, the Wind Power Cards set off a roaring debate in online sustainability circles this week.
On Wednesday, Strange New Products posted on the topic trashing the cards and equating Renewable Energy Choice (RCE), the company that issues the cards, to Enron.
The cards are not even an investment, because you won't get any material value in return. It's all going to help another company get rich. Most companies seek investors to secure capital. But in this case, RCE is asking people for free money under the context of doing your part to help the environment.Ingenious.
Later that day Boing Boing (a top 3 blog) picked up the thread announcing that the cards are nothing but "useless" except for doubling as "refrigerator magnet[s]." The big beef being that when you buy a card, there is no direct connection between the wind-generated electricity you purchased and the actual electricity delivered to your home.
Not that it isn't tricky but clearly, neither blog grasped the concept of the wind power cards. Sustainablog* got into the action, pointing out this out. Shortly after the discussion boards at greenbusiness.net erupted with a flurry of opinionated comments on the topic "Boing Boing does not understand wind credits."
Many had misgivings about the possibly misleading marketing of the Wind Power Cards claiming that the word "credit" should imply a credit to your bill. Yet others were upset that the card looked like a phone card, but lacked similar functionality. Enlightened comments such as the following from Jessica Drummond, peppered the debate too. She said: "I see the purchasing of REC''s as a voluntary cap and trade system for suburban moms."
What do you think about the cards? And more importantly, do you understand wind credits?
*Sustainablog is run by Jeff MacIntire-Strasburg, who also writes for TreeHugger
Wind credits are essentially a donation to a company involved with wind power. This donation hopefully helps them lower costs and compete against less green energy generation methods by bridging the cost gap. If you want your energy load to be accounted for on the electric grid with wind power, you will need to talk with your electric supplier to see if they offer wind power or not if your state's Public Service Commision participates in electric supplier choice or not (many don't). Suppliers do not simply flood the grid with power which causes coal plants to not supply power to the grid. Electric load is calculated closely to match supply with demand within tight tolerances. Extra supply is sold on the spot market at Locational Marginal Pricing (a premium). If these wind companies are simply donating their generation to the grid based on these credits, I suppose mid-merit power plants would not have to fire up their generators to catch up with high demand during those hot summer days. This all assumes a lot with what this company is doing with the finances donated through these wind credits...............
If I buy a wind card will more electricity come from a windmill? NOPE.
If I don't buy a wind card will less electricity come from a windmill? NOPE.
The only thing accomplished by buying a card is seperating me from my money.
Sounds like a scam to me.
Which part of "funding wind-power projects" don't you understand? You think wind turbines grow on trees?
so really it should be called a "wind donation" card. And donating money to a for-profit company (I assume that this is the case her) is kinda odd.
And anyway: in the end this donation is just going to end up encouraging wastefull behaviour by keeping energy prices low.
I seriously doubt these are used for funding wind projects. By that I mean I can't imagine a CEO, project planner, etc, saying "If we sell 1,000,000 $15 cards we can put up another windmill." I don't think these things are part of planning a windmill project at all.
They are just a mechanism to get some marginal revenue.
Some people donate to museums, some to social causes.. Why not clean energy? Nothing far-fetched about it.
All wind and CO2 credits are a scam. It merely appeases one's own guilt for using energy. Nothing more. It's a vanity luxury and will do nothing to prevent environmental concerns. If you feel the need to buy credits, why not use less energy? How can you even be sure the money will go towards wind energy or planting trees?
"How can you even be sure the money will go towards wind energy or planting trees?"
ergo
"All wind and CO2 credits are a scam."
I think there's probably a way not to throw the baby with the bathwater. First, better market the thing (not call them credits if they are not, or if they are, explain how), and make it clear to people that buying those doesn't mean you can consume more of feel good about wasting. It's merely one more thing that can be done on top of other things.
I don't have a problem with having the option of donating to help the cause of windpower. But why not call a spade a spade? Calling a piece of plastic a "credit" does cause confusion, especially when it is basically a useless piece of consumer shrapnell that will eventually become landfill. The whole contoversy could have been averted by thinking out long term implications from a truly "green" perspective. A plastic token of a consumer's feel good spending kind of cancels itself out, doesn't it? (Think of the energy used to make the cards and deliver them to the retailers!) I would be more inclined to donate via paypal. This is just another marketing ploy aimed at people who enjoy the bounce of jumping on the green bandwagon.
What it boils down to is that people have a hard time paying for something so intangible. Personally, I fully support clean energy development and have bought offsets in the past, but I have to admit, I had a hard time doing so. The whole offset notion, however, is a great way to raise awareness while facilitating cash flow into new green energy development. There are non-profits out there who sell RECs and VERs so if you don't like the idea of people making money by selling an intangible asset, go that route. If they don't do it (even if they're for-profit), who will? Bush and his friends at the EPA?
The problem I see with this are:
1. It is a for profit company, as much as I think this is a nice idea it would benefit more to get involved in a green energy co-op in your community that directly feeds it into the grid.
2. No accountability. If I would buy such a card I would have no say in what the company does with the money nor really be able to find out. I have to take their word for it.
If it is NOT a scam (and it very well could be considering how they appeal to people's conscience etc.) then it is badly thought out.
If you donate to a Museum or a Charity at least you get a nice little note saying thank you and you can get a tax deduction, in this case you blindly give your money to a for-profit company in the HOPES that they actually do with the money what they say they do.
if the group offering the cards for sale is some not-for-profit org or there is some guarantee that the money you spend on these cards will be directed toward wind farm capital investment, i say great. but if it's a commercial business, what's to prevent their offering 100% of the proceeds from these sales as dividends to their investors? it all really banks on their being some guarantee that the money is actually used for what is advertised. here's a link to the company's site, so people can decide for themselves:
http://www.renewablechoice.com/
of course, the whole thing also banks on the idea that wind energy is significantly more expensive than fossil fuel generation. i would argue that it varies by locale. why perpetuate the idea that alternative energy costs more and requires people to voluntarily pay more when it isn't always true?
"A plastic token of a consumer's feel good spending kind of cancels itself out, doesn't it?"
Yeah, though they probably figured that people like to have something in return when they make donations (I remember reading somewhere that orgs that offer members cards or t-shirts or just a bunch of papers in return for a donation get more than those who don't offer anything tangible), but it might have been a better idea to have a poster close to the registers explaining the concept and asking clients when they are paying for their stuff: "Would you like to add some money to your bill for X wind-power project?"
That's just one implementation of this concept. Definitely not the best one I've seen, but it certainly is good to see wind power become more mainstream..
Personally, I recommend that you buy green power directly from a utility.
I think it's a great product. Wind will be made available to the extent that we pay the somewhat higher capital costs.
All energy is delivered on the same system. We can't track individual electrons, yet we still need a way to create demand for energy sources that do less harm. We need to find a way to collectively invest in the wind infrastructure.
This is a wonderful way to ensure that your energy purchase creates demand for sustainable energy.
I like that it is a push system, and that you just see them when you go to the store. I can't wait to start getting them!!
The only thing I want to check is how much goes to energy and how much is taken as profit compared with other programs.
I must say I prefer the Bullfrog Power (http://www.bullfrogpower.com/) model for supporting sustainable energy sources where it's available (Bullfrog is a clean energy provider who charge a premium over other power companies). However, the credits do still make sense and are a valid way of funding the extra financial cost of clean energy.
I get the idea of spending money to offset the emissions of, for example, flying to Europe, since there is no airplane that runs on veggie oil and, thus, no alternative. But I also don't quite get these cards. Wouldn't it be better if instead of spending money on these cards, people started getting their electricity for clean sources? In NY, at least, it's not that much more expensive: ConEd Solutions charges a cent more per kilowatt-hour than the "dirty" ConEd, but you don't pay taxes on your electric bill, so really the increase is not that much. Isn't that significantly better than using fossil fuels for your electricity -- and then paying to offset those emissions?
But if you're buying green power direct from a utility, you're essentially doing the same as buying an offset card. As long as the utility (and generator) doesn't sell more credits than they produce, then all is good.
There are third-party standards/verification schemes such as EcoLogo -- http://www.environmentalchoice.com/English/ECP%20Home/ -- to ensure that fair deals are done.
Offsets/credits are an unusual way to run a market, but the whole concept of the green economy is in its infancy.
The problem with the "wind cards" is that they are intentionally designed to mimic stored value cards. From the dollar value on the card, to the fact that the website instructs the consumer to "activate" the card: here . It's already "active". The card itself serves no purpose other than a magnet, which conveniently advertises Renewable Choice Energy, a for-profit company.
Yesterday, I spoke with Ian at Renewable Choice Energy. They refused to divulge what percentage of the proceeds are given to wind farms, and what percentage they keep for themselves as profit. That's a major issue here.
If Whole Foods wants to support wind energy, then they should honestly gather money, and contribute it to wind farms or wind energy organizations. Funneling it all through a for-profit company who refuses to disclose how much they keep for themselves is ridiculous.
Since the US is not a Kyoto signatory,all reponses to the challenges created by global warming are market-based and voluntary.Buying credits isn't "donating";it is financing new efforts in clean energy that in all likelihood would not be undertaken otherwise.
At ACES(www.acesprogram.com)we applaud anything that adds to the effort to mitigate GHGs.We prefer a broader approach than just windfarms;there is no silver bullet and a wide range of possibilities needs to be put into effect. Waste-to-energy,solar where appropriate, no-till farming, alternative fuels --- the list goes on.We use carbon credits as an integral part of our program because they are the fastest,easiest,cheapest way to mitigate a substantial part of your personal carbon foot print --- which is what the wind credits at WholeFoods are all about --- but we believe that they are just a first step in environmental stewardship. Our task is to make available the best information,products, services and action plans for folks to choose from so that they, from an educated perspective, can assimilate into their own lives those aspects of environmental action which resonate with them. Not everybody can do everything, but everyone can do something. Arguments about who ought to do what remind me of Suzuki saying that mankind is hurtling toward a brick wall at 150mph and folks are fighting over who gets to sit where.
Global warming is happening --- andit's up to us to do something. So choose your own thing, give an "attaboy" to you neighbor for their efforts, warn folks off any known scams (after you've done the research)and remember we're all in this together.
And,of course, accept our warm invitation to visit us at :
www.acesprogram.com
and sign up for our newsletter Peace,
VA Simpson
vs@acesprogram.com
Private companies can be for profit or non-profit. Either way, the finances are not entirely public. Within the realm of non-profits, you can be a 501(c)(3) and accept charitable donations - which gives a tax benefit to the donor. BUT - you must be apolitical, so do these environmental issues qualify as apolitical? I don't know the answer to that. Maybe a 501(c)(6) business league? Nope...it's not tax-friendly to the donor and the non-profit is furthering a product. How about for-profit, to drum up sales?
Why not encourage the company to disclose what percentage is company overhead and what percentage is spent on wind credits, if that's the hang up?
Wind Credits - is it safe to say that people have problems with offsets in general? Things like Terrapass included?
Wind Credit purchasing - does the purchase of wind credits go to the price differential between the cost of standard non-renewable energy and the cost of wind energy? By paying for the credit, you are paying the difference so wind can be competitively produced with the non-renewables? Maybe we could get a word from someone that buys wind credits???
So, I keep hearing the word "donation" being thrown around. This isn't a donation, it's a subsidy:
Subsidy:
1. "a sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive"
2. "a sum of money granted to support an arts organization or other undertaking held to be in the public interest."
This is how these programs work, at least for now. This is NOT a "donation" to a for-profit company.
By buying these cards, you are simply doing what governments and private organizations do every day, all over the world. You are subsidizing a new industry so that it can grow, and eventually survive on it's own.
When you can buy "wind credits" from a non-profit I'll be the first in line. How about setting up a fund and asking people to donate (or "buy wind credits") to provide your local high school a wind power system? You still get the wind power and you add community support and maybe even lower property taxes to the deal.
These wind credits (or carbon offsets or whatever) have never made sense to me when the money is going to for-profit entities (or for planting trees). Since the issue with adding more green energy capacity seems to be the up front capital costs, why not have green energy bonds that have a low (effectively subsidized) interest rate and a maturity duration equivilant to when the capital cost can be recouped from the wind farm? They could be sold the same way, serve effectively the same purpose, but they introduce accountability. They also make it a micro-investment instead of a handout.
I think BoingBoing understands quite the cards quite clearly.
Their point was that the cards are misleading, and they are right in that assessment.
This isn't a credit of any sort, it's a donation to a for-profit company who is promising to invest that money into wind power.
I purchased the credits from RCE because of Whole foods, I knew what I was purchasing when I did it.If you have some extra money, support a cause that you believe in.
Well, I think I understand it.
It kinda how the Catholic church used to sell indulgences so that sinners could get into heaven.
Instead people who don't practice what they preach has buy a little card and pretend they are being green and salve their guilty conscience.
Have I got it right?
Leaving aside for a moment the question of whether this entire scheme is or isn't a scam (and by following the money, you can easily draw your own conclusion), and leaving aside whether or not commercial wind generation has any economic merit (hefty tax-payer funded subsidies notwithstanding) -- the question arises, why would I pay money into this dubious scheme?
Could I not, if I were so inclined, more easily just invest in a publicly traded wind power generation company by purchasing equity? The advantages being that I would actually recieve shares in the company, and theoretically, dividends. At least you'd know with some certainty where your money is being spent.
This is clearly a case of "caveat emptor". Otherwise, I'd be happy to give you a good deal on a sack of "magic beans", in exchange for your family cow.
Wow, the comments here express a lot of misunderstanding about how carbon offsets / green tags/ RECs work.
First in the interest of full disclosure – I am a co-owner of an organization that sells carbon offsets (although we are a co-operatively owned non-profit).
To respond to some of the concerns:
“...How can you even be sure the money will go towards wind energy...”
Because these projects are audited by a third party and certified. The third party guarantees that the money will go towards wind energy. The auditing and certification is quite intensive and expensive.
“...why perpetuate the idea that alternative energy costs more...”
All legitimate offset programs must meet the criteria of “Additionality.” This means that offsets can only be used for projects that would not otherwise be financially viable. And the the offsets can only be used for the portion of the cost that is “additionality.”
“..a for-profit company (I assume that this is the case her) is kinda odd...”
See the comment above on “additionality” - the money can only be used on a project that was not otherwise financially viable.
For example, let's say that the utility grid buys power at 9 cents a kWh, but it costs 10 cents /kWh to produce wind power – the offsets would cover the 1 cent difference.
“..others were upset that the card looked like a phone card...”
I agree that this was a mistake. Most offset sellers produce “certificates” rather than “cards” - I do think cards are confusing for consumers.
"Could I not, if I were so inclined, more easily just invest in a publicly traded wind power generation company by purchasing equity?"
Absolutely.
But the people targeted by those are probably not those who will take the time and/or have the money to buy stocks. The attraction of these is that they are convenient, easy, small/inexpensive..
A small action is better than good intentions but no action, and right now, most people do nothing to encourage clean power development.
Hey Rob (above commenter), I wrote the original article at Strange New Products. Just to clarify my position, I don't want anyone to think that I feel RCE has malicious intent to defraud.
I'm confident RCE is going to use the money to put more wind electricity into the power grid, because that's exactly what RCE is in the business of doing.
The way I see it, RCE is setting up a business model of collecting free money from consumers, for the purpose of building profits. It plans to use these donations to help them do more business, and effectively increase its value and position in the market. And they're selling it to us under the pretext of "doing your part to save the environment".
Some people might argue differently, that RCE's goals are to save the environment. But the way I see it, they're a for-profit, and their first priority is to make money, and then make more money.
I'm realize other companies sell energy credits also. This is the first time, however, I saw an energy company reaching for money at the checkout stands of grocery stores.
"But the people targeted by those are probably not those who will take the time and/or have the money to buy stocks."
Are you telling me that the same demographic which has the disposable income to shop for $10 pies at a boutique supermarket like Whole Foods, and has $15 to throw away on, literally, nothing (if you don't count the spurious ego-stroking value), can't afford to invest in the stock market?
But I could be wrong?
http://www.realestatejournal.com/propertyreport/apartment/20050513-chittum.html
Nope. Apparently my assumptions are correct.
"The attraction of these is that they are convenient, easy, small/inexpensive.."
So it's the yuppie version of lottery tickets and cigarettes?
"A small action is better than good intentions but no action, and right now, most people do nothing to encourage clean power development."
It is debatable whether buying one of these cards is any kind of action at all -- or at least one that is likely to have the desired result.
If wind energy companies have access to free money, then they have no incentive to ever become competitive with less expensive sources of power. Buying one of these cards, then, simply encourages an unworkable revenue model, and will only help to keep wind energy expensive and uncompetitive.
Great dialogue.. For another example of using green power certificates to make your home and car "Carbon Neutral", see Krystal Planet's website at
www.krystal-planet.com/cdrake
--------------------------
Also be sure to support the new movie on climate change - www.TheGreatWarming.com
“...if I were so inclined, more easily just invest in a publicly traded....”
You are completely missing the whole point of OFFSETS. People buy OFFSETS to OFFSET a specific amount of ghg emissions – it might be for a trip they took, an event, their annual power consumption or their total annual ghg emissions. That's why these are called OFFSETS. They are not investments, they are not donations, they are OFFSETS.
If you buy equity in a corporation you have no idea how much ghg emissions that equity investment offests. However, if you buy an offset (or green-tag / REC) you know who much ghg emissions that is offsetting.
And you should have some guarantee of that offset. For larger projects there is usually some sort of third party audit or certification. For the smaller projects that my organization does we send a report to offset purchasers about the project and our accounting is completely public. Our policies and methodology is based on the so-called “Gold Standard” of carbon offsets (although the projects are not in the majority-world so they don't qualify for the Gold Standard).
I can't find anywhere on RCE website that mentions what certification process they use.
And then of course there is the whole issue of the new ISO 14,000 standard .....
Seriously folks, before you label all this a “scam” maybe you should at least do a little research on the Gold Standard, the ISO 14064 standard, Green-E certification, EcoLogo certification, etc. etc.
I did some research on the WEB about REC's. They are traded like a commodity on the Chicago Climate Exchange at http://www.chicagoclimatex.com/. The price listed for 1 metric ton of CO2 credits is $4.20.
At this web site: http://www.wges.com/wind_energy/reduction.htm I found that wind power creates 1199 pounds of CO2 credits per Megawatthour. That equates to .000544 metric tons of CO2 per kilowatthour.
Renewable Choice sells a 750 Kilowatthour card for $15. Based on the numbers that I found, they can purchase the equivalent of 750 kilowatthours of CO2 credits for $1.71 (.000544 metric tons per kilowatthour x $4.20 per metric ton x 750 Kilowatthours).
So you give them $15 and they use about $2 to buy and resell CO2 credits. The rest covers their operating costs and what looks like a hefty profit.
This doesn't really look like money well spent to me.
“...I don't think these things are part of planning a windmill project at all....”
Sorry, you are wrong. Many larger renewable energy projects account for selling carbon credits as part of their financial model. Some projects would not even go ahead if it weren't for carbon credits being used either directly (sold by the project developer) or indirectly (the utility paying a premium for green power because they can sell carbon credits).
In fact, even the old version of RETScreen software used carbon credits as part of their financial analysis. Which means carbon credits have been part of even the most basic planning process for several years now.
“...for the purpose of building profits. ..under the pretext of 'doing your part to save the environment'”
If you buy RECs from a source that uses third-party verification/ certification the third party guarantees that there is a specific environmental benefit (measured in pounds/kgs of ghg emission reductions). TerraPass has a good explanation of verification at: http://www.terrapass.com/projects/verification.html
A certain percentage (sometimes 10%) of the cost of the credit does go to management fees (the profit part) but the majority of the cost should go to the environmental benefit.
You seem to be implying that all of the cost of the credit goes to building profits with not guarantee that there is an environmental benefit. This is a serious accusation and it would mean that the third party verification organizations have defrauded people of thousands of dollars. If you really believe that you should start a class action law suit. Good luck with that.
“..$15 and they use about $2 to buy and resell CO2 credits...”
But that assumes that RCE is buying credits from the the Chicago Climate Exchange instead of using funds to support real world renewable energy projects.
The CCE carbon credit pricing is notorious for being well below the cost of real world renewable energy projects. That is because the CCE credits are used on a wide range of projects some of which are a bit dubious (sequestration projects, majority-world projects that use cheap labour, etc.).
You will find that cost of the renewable energy projects is often more than $15 per tonne. For example, in our local area we have calculated the cost for solar hot water projects to be about $35 / metric tonne and for solar photovoltaic projects more than $100 / metric tonne. And that is just the cost of additionality – not the total cost of the project.
Preston, a non-profit can absolutely run a wind power corporation! The political restriction on a 501(C3) is that you can't use more than 20% (I think) of your total funds on lobbying. And a 501(C4) is compltely free to lobby.
Though this does bring up a broader issue of the need to create a simple non-profit business class in the tax system. Businesses should be encouraged to function without a profit (an exchange of value where one party effectively wins out and the other loses). We should be able to have businesses that are focused on offering a service or product at a price that allows an equal exchange of value. These businesses would not be taxed, since they don't make a profit. (The income of all employees would still be taxed, of course.) This is sort of the situation by default already, but an official designation of a "non-profit" business (as opposed to an organization) would be useful, I think.
"You are completely missing the whole point of OFFSETS. People buy OFFSETS to OFFSET a specific amount of ghg emissions – it might be for a trip they took, an event, their annual power consumption or their total annual ghg emissions. That's why these are called OFFSETS. They are not investments, they are not donations, they are OFFSETS."
Okay, so let's say a person, for whatever reason, decides to purchase on of these 'OFFSETS'. What exactly do they recieve in exchange for their money?
The amount of energy that you used is added to the grid. You are now among the people who 'uses' entirely green energy. I don't understand why this would be problematic. Lots of treehugger products offer primarily psychic benefits for their additional cost. If you consume cotton you might feel better if you know that you're purchase supported communities rather than pull them apart. You consume energy so you might pay the difference in cost to make sure that the energy you buy supports new markets rather than causing global warming.
There are absolutely no reason for those who already offset their energy use, by paying money to cooperatives and non-profits, not to continue to do so. There is no reason to stop advocating for that.
If you haven't done it, however, one reason might be that it is hard. You actually have to sit down and write a check. This program is only better to the extent that it is easier. I've personally been procrastinating on beginning to offset my energy use and so this is a fantastic way for me to start while I try to find a better approach. Also it is great advertising for the concept.