FTC Looks at Carbon Offset Sales

If you think you've done the environment wrong by driving, flying, or keeping your house too toasty in the winter, some businesses have a product to sell you. It's called an offset. And for prices ranging from five to a hundred dollars, you too can make up for sending climate changing greenhouse gases into the atmosphere. Or can you? The Federal Trade Commission is looking at whether offset consumers are getting what they pay for. The Allegheny Front's Jennifer Szweda Jordan has this report.

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OPEN: If you think you've done the environment wrong by driving, flying, or keeping your house too toasty in the winter, some businesses have a product to sell you. It's called an offset. And for prices ranging from five to a hundred dollars, you too can make up for sending climate changing greenhouse gases into the atmosphere. Or can you? The Federal Trade Commission is looking at whether offset consumers are getting what they pay for. The Allegheny Front's Jennifer Szweda Jordan has this report.

JORDAN: Dairy farmer Shawn Saylor presses a button on a wall in his milking parlor. It releases a stream of water along the sloped floor, rinsing away manure as it goes.

Nat. Sound: Water rushing

SAYLOR AND JORDAN: I've never tried it. Laughter - What did you say? - You can jump on an innertube and ride through there.

JORDAN: Well, you wouldn't want to sail down this stream. The water and manure end up in a dark pool that flows into an underground tank. The tank digests the manure and captures methane to use for electricity. Besides producing electricity, the setup keeps methane - a greenhouse gas 20-some times more potent than carbon -- out of the atmosphere.

An energy company called Native Energy funded about 100-thousand dollars of Saylor's methane digester costs by selling offset credits. Offsets are often traded in the shorthand term of carbon credits, even though methane is the greenhouse gas that's sometimes being reduced. The company charges 12 dollars to offset a ton of carbon dioxide.

Their investment didn't make up the bulk of Saylor's 800-thousand dollar project. But Native Energy's contribution enabled the farmer to move forward.

SAYLOR: It was that pillow there or that cushion that I had to show we definitely had enough money to go ahead with it.

JORDAN: If you're in the market for buying offsets, experts say that's what you want to hear. You want to know that your investment actually helped a project happen - that environmental laws wouldn't have required it anyway. For example, are you investing in planting trees in a public forest where they would have been planted all along? The issue's known as additionality. It's a jargony term that refers to whether a project is actually creating additional benefits for the environment. And it's one of the key questions the FTC is considering.

The FTC's look at offset trading is part of a larger effort to revise its so-called "Green Guides" on environmental advertising claims. The attorneys general of Vermont and nine other states have asked the FTC to develop guidelines for businesses selling offset credits. They're asking the commission to ensure that offset projects don't sell credits twice.

The FTC's Jim Kohm says the commission will have a limited role in establishing guidelines for offsets.

KOHM: The FTC is concerned about not what effect offsets have on the environment or whether or not offsets are a good policy or not. Our concern is simply whether they're sold in a manner that's deceptive or truthful.

JORDAN: Last year about 91 million dollars in carbon credits were purchased by businesses, corporations and individuals. Some estimate that market will reach four billion dollars within the next few years. Individuals bought the smallest portion of that - a little less than three million dollars.

Native Energy, the company that helped fund Saylor's project, is pleased with the FTC's approach. Spokesman Billy Connelly says his company hopes there will be, quote, flexibility in additionality. He says there are some projects that, while already complete, still need ongoing funding.

CONNELLY: We saw this with projects we helped in Alaska' where the purchase from NE of the CO2 offsets wasn't to help build the project but to help get over other technical barriers because of the weather conditions that operating wind turbines in Alaska are faced with.

JORDAN: Connelly says his company appreciates that the FTC is focusing on fair and deceptive practices rather than creating environmental policy standards.

Michael Gillenwater, however, says this view hurts the offset industry. Gillenwater is a researcher at Princeton University. He says the FTC is too narrowly interpreting their mandate and he projects the agency's not going to be too active in enforcing its own guidelines.

GILLENWATER: It's hard to write guidelines on what claims can be made in marketing materials when you haven't decided what's good, what's bad by establishing some standards.

JORDAN: The FTC's Kohm disagrees.

KOHM: We're interested in, is there guidance the FTC can give that would help a company not step over the line. Without standards the lines may not be as crisp as they otherwise would and that's without any opinion about whether a standard is a good thing or not. Just because the line isn't crisp doesn't mean there aren't clearly activities that are over the line.

JORDAN: Back on the farm, Saylor says he's pleased the FTC is taking action.

SAYLOR: Who sets the federal standards? Right now there is none. If there is no standards, who's being honest?

JORDAN: Saylor says some companies he considered working with on his methane project estimated it would create much greater energy savings (or credits, etc) than did Native Energy.

SAYLOR: Native Energy looked at it really close. I felt they were able to back what they were doing. They wanna know what they're buying and what the money's going for.

JORDAN: Saylor heads outside and looks at the end product of what Native Energy's money supported.

The farmer picks up and slowly stirs through a gloved hand what appears to be fluffy tan-colored mulch. It's the solid portion of what's left after the digester's done working but it doesn't smell bad, or look like manure. And Saylor says it's a reusable product - he can actually use it for cow's bedding instead of sawdust, which is getting harder to find. He says the digester is the first, and most critical piece in an environmentally friendly, renewable farm he hopes to create.

SAYLOR: Things like this aren't going to fix our energy uses here but we gotta start somewhere and start filling in the holes.

JORDAN: In the meantime , hundreds of products that are advertised as energy-saving, low-polluting, and generally good for the environment, will continue to be discussed at the Federal Trade Commission. The commission doesn't expect to complete its Green Guides before the end of the year.

Until the FTC's work is done, experts say offset consumers may want to review offset information and ratings put out by Environmental Defense, Tufts University, and Clean Air Cool Planet.

For The Allegheny Front, I'm Jennifer Szweda Jordan.