What’s the FTC got to do with carbon offsets?

ftc green logoEven a year ago, it would have been hard to imagine that the Federal Trade Commission (FTC) — the federal agency responsible for protecting consumers from misleading marketing claims — would have any reason to wade into the world of climate change and cow power. But last week I went to Washington to represent TerraPass at an FTC hearing on carbon offsets.

Media stories in 2007 expressed concern about possible risks to the public from an unregulated voluntary carbon market. Last July, a Congressional committee (before which our CEO Erik Blachford testified) asked the FTC to examine the offset industry.

All this led to a remarkable event on January 8: on a winter day in Washington when the temperature fittingly reached 72 degrees, 250 people crammed into a hearing room to talk about carbon offsets.

TerraPass was delighted to be one of only three offset retailers invited to share their opinions with the FTC in person. For carbon wonks not able to get to DC, the proceedings could be watched on a live webcast (see agenda (pdf) and video and transcripts).

The workshop consisted of presentations and panel discussions with about 25 experts from offset retailers, environmental and consumer groups, federal agencies, lawyers, and economists. Invited speakers shared their views on the carbon offset phenomenon and helped the FTC consider what guidance it might provide to consumers and industry participants.

I was impressed to see leaders from the Center for Resource Solutions and the International Emissions Trading Association discuss their recently released offset standards. The Green-e Climate Standard (pdf) and the Voluntary Carbon Standard (pdf) developed over the past two years, with extensive stakeholder involvement, showed the progress the offset industry has made in policing itself. We are heartened by these developments, but at the same time, TerraPass believes that some government oversight from the FTC and/or the Environmental Protection Agency (EPA) would bolster the credibility of the voluntary carbon market.

During my panel, I described what we do to protect our customers when they purchase offsets from TerraPass:

  • Select carbon reduction projects that meet the most rigorous protocols;
  • Conduct independent verification procedures;
  • Fully disclose our projects on our web site and include a Product Content Label with every TerraPass;
  • Submit to annual audits confirming that consumer purchases are matched by an equivalent amount of carbon reductions;
  • Guarantee vintage matching: carbon reductions occur in the year customers buy them.

I encouraged other offset companies and organizations to develop comparable policies. I also welcomed the FTC’s involvement and added that we can all be stronger if this federal agency adds its imprimatur of confidence for consumers — and weeds out any bad actors that aren’t playing by the rules.

Carbon offset providers that meet the tough standards TerraPass follow are delivering an important service to individuals (closing in on 100,000 at TerraPass alone) that want to be part of solutions to global warming. Conserving energy, adopting new technologies when they become affordable, and buying high quality, independently verified carbon offsets are promising ways to reduce greenhouse gases now. As climate science presents an even more urgent picture of the risks of inaction, we need to enlarge the community of people choosing innovation over complacency.

The FTC has asked interested parties to submit written comments later this month (TerraPass will publish its comments on this blog, too). It’s good to see the FTC exploring how it can help the offset industry and protect consumers. TerraPass is also pleased to be a trusted source for best practices regarding offsets. I will keep you posted as this story unfolds.

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  1. Aaron A. - January 14, 2008

    I’ve only skimmed through the transcripts, but so far I’m pleasantly surprised. I would have expected at least one person to take the “nail ’em to the wall” approach, to rant about how offsets are just a placebo or a scheme to capitalize on peoples’ guilt. They actually seem quite level-headed, and willing to learn how offsets work, and how consumers can tell whether an offset actually provides what it claims to.
    — A.
    Another thing I liked: in session 2, there’s a brief mention of a Univ. of Michigan study showing that offset buyers’ homes consumed “significantly less electricity” than their peers.

  2. matt - January 15, 2008

    You discussed third party verification. This has always been a great idea for a large offset provider, like yourself. For a smaller organization trying to “break in” to the offset business this can be extremely expensive and maybe prohibitive. Many smaller providers are involved in innovative projects that there might not be an organization that even verifies it.
    The other question I have always had about tree planting vintage. One plants a “forest” as an offset project. Do you sell each individual trees offsets or look at how much all the trees offset in a year? When I look on line it seems like most providers are selling trees, not carbon reduction per year.

  3. Jeb - January 16, 2008

    It is important that the public have faith in the market for carbon offsets. For this reason, the FTC’s interest in the market should be welcomed.

  4. Tom Arnold - January 16, 2008

    Hi Matt:
    We don’t do forestry projects. Most tree-planting projects are sold on a front-loaded basis — estimates are made upfront about the reductions that could be achieved over the next 40 or 100 years, and that’s is what is sold to you.
    As for the smaller providers, I think Jeb is right — the public faith in the market is important. So much so that we think everyone has to be third party verified. Its kind of like electric cars — innovation is awesome, but you still have to pass crash tests. We think it should be the same for carbon offsets.

  5. Aaron A. - January 16, 2008

    Tom Arnold said:
    Most tree-planting projects are sold on a front-loaded basis — estimates are made upfront about the reductions that could be achieved over the next 40 or 100 years, and that’s is what is sold to you.

    This is what makes tree-planting such easy fodder for those who criticize offseting. I’d imagine I’m like most buyers; my 2008 offset purchase corresponds to my 2008 energy use. If this is a tree-planting project, front-loaded as Mr. Arnold said, my 2008 energy use won’t be fully offset until 2040 or later.

    Just as inflation makes a dollar today worth more than a dollar tomorrow, a ton of CO2 reductions today are more useful than a ton of reductions in 2040. Trees have many other benefits, and many religions prescribe tree planting as part of their overall message of stewardship, but trees take a long time to reach their climate-moderating potential.

    — A.

  6. w Baroli - January 17, 2008

    It seems to me another avenue for carbon reduction is the creation of a carbon trade standards and third party certification and enrollment in the Exchange would be that of sustainable agriculture.
    What about registering small sustainable farms that practice organic or Certified Naturally Grown farming practice. Quite honestly small farms have no mechanism in the current corporate structure to off set the enormous risks or costs associated with converting. The idea of enrolling and then using the credits as carbon offsets is a good practice and it has short as well as long term advantages.
    Additionally, the carbon offsets can be immediate. For instance, CSA farms reduce carbon emissions both in long distance transportation and costly cold storage. The food goes from the farm to the consumer directly and is generally less than 200 miles away instead of 1500. These types of farms use handpicking, cover cropping (which sequesters carbon) and other methods of cultivation vs. enormous diesel powered tractors literally tons and tons of nitrogen fertilizers, and cold storage to a middleman that then distributes yet again to the food outlets which then the consumer must drive to – the savings to carbon off set are immense.
    The fact is the mono-cropping agri-business is a huge polluter and they get away with it because of the relationships in Washington, however rewarding the small sustainable farms with a third party certification wins on two fronts, enormous reduction of carbon and carbon sequestering, and a way the consumer can see the costs of organic production go down as the methods are rewarded by a program like carbon trading.
    Just a thought.

  7. Steve C. - January 23, 2008

    Bravo to Mr. Arnold for mentioning the tree planting benefits. Trees and young forests actually consume more carbon dioxide during their first twenty years of growth. Similar to humans (trees share 20% of our DNA), the high metabolisms (think of those teen years when you could eat endlessly and not gain a pound) at the early growth stages require the most energy. Ice cores from our past also show that when C02 is higher, vegetation in our forests grow proportionately faster.