Thursday, February 3, 2011

Carbon credits for individuals

I just learned about an interesting idea for combating global warming: carbon credits for individuals. As you probably know, companies that fail to meet carbon emissions standards can meet their obligations by buying carbon credits, and companies that do better than the requirement can make money by selling them. But now, the somewhat unfortunately named website allows individuals to get a piece of this action as well. You start by submitting copies of your own utility bills for the past year, and then if you significantly reduce your energy use over the next year, you can sell a Voluntary Emissions Reduction (VER) and earn anywhere from $10 to $25. (Presumably, the site itself makes its money by taking a cut of this.)

This is an intriguing idea, but I can't help wondering how much good it will really do. True, the site gives people a sold financial incentive to reduce their carbon footprint, but in most cases, people already have such an incentive: lower utility bills. In fact, the site itself, to encourage people to sign up, talks about how much they can save rather than how much they can earn—suggesting that the potential savings from lower energy use are much a much bigger prize than the potential earnings from selling the carbon credits. So it seems hard to believe that people who weren't motivated to save energy already are going to be motivated by the lure of carbon credits. And even if this site does encourage more households to start cutting their energy use, by selling the carbon credits, it just makes it easier for big companies to avoid doing the same. So it doesn't actually promote energy savings across the board: it just shuffles the savings around, giving one person credit for another's work. (Of course, this is a problem of the cap-and-trade system as a whole, not the site itself. To be honest, the sale of carbon credits reminds me a bit of the sale of indulgences in the Middle Ages: "Go ahead and sin if you want; just pay some money up front and we can make it go away.")

On the other hand, since the carbon credit market exists anyway, there seems no reason why individual households shouldn't get their own little piece of it. My only real gripe with this site is that it's of no personal use to me. It would be great for someone who's been meaning to take more steps to conserve, but keeps putting it off: the credits would provide a bonus for taking action. But in our case, there just isn't that much left to cut. We've already taken most of the steps the site suggests ("Switch to Compact Fluorescent Lightbulbs," "Install a Low-Flow Shower Head," "Hang your clothes out to dry once a week"), and I'm not sure how much more we could reasonably save. True, there are some steps we haven't taken in the past because I found, after crunching the numbers, that they wouldn't be cost-effective, and perhaps with the added bonus from the carbon credits they would be. For example, we chose to replace our old water heater with an efficient tank heater, rather than a super-efficient tankless heater, and maybe the carbon credits would have been enough to make the tankless heater a reasonable choice. But given that we've already replaced the old heater, it's a bit late for that now. Similarly, it's too late to get any credit for adding more insulation to the attic, which we did two years ago. In other words, as far as energy savings go in our house, we've already harvested all the low-hanging fruit—and the steps we haven't taken yet (like upgrading all our windows) would certainly be costly enough to dwarf the potential benefits of a $15 credit.

However, if you should happen to be in a different situation yourself—for instance, if you've just moved into a new home and haven't yet made any energy upgrades—then by all means, try the site and let me know how it works out for you.
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