Taking a vacation to the other side of the planet is the ultimate luxury, but it’s one laced with guilt. On top of developed-country remorse, a new form of shame is beginning to stalk those of us taking “unnecessary” airplane rides: What about all that carbon dioxide spewing into the friendly but beleaguered skies? That’s where the nascent carbon-offset market comes in, allowing individuals and companies to compensate for their emissions by investing in projects that reduce carbon in the atmosphere.

Whether you’re flying across the world …

Photos: iStockphoto

When I returned from a trip to India last January, I resolved to buy offsets, and promptly hopped on Google. There was no shortage of organizations lining up to take my money, although quite a few wanted euros or other foreign currencies. However, even those dealing in dollars quickly left me flummoxed, because they calculated my flight at dramatically different costs. Sure, I’d love to pay $12 rather than $92, but would I be cheating the environment? Where do they get these figures? And then there was the profusion of projects I could help fund: wind energy, traffic remediation, tree planting. As if that weren’t enough, I found many a watchdog site dedicated to explaining why certain projects were No Good. Your intrepid reporter was overwhelmed, gave up, and attempted to squelch the guilt with a region-related (but non-climatic) donation to Pakistan earthquake relief.

… or driving across town, buying offsets can lighten your impact.

But a few months later, with another trip looming, I resolved to get to the bottom of the offset riddle. I was somewhat comforted to learn from expert after expert that the offset market really is an incredibly complex beast. Perhaps Eric Carlson, executive director of Carbonfund, said it best: “There’s no definition of what a carbon offset is. It’s a little bit of a Wild West out there. Is this thing real? Is it good?”

Many vocal people would answer no to both questions, arguing that offsets are just a way for polluters to ease their guilt. “Carbon trading leads to privatization of the atmosphere,” Jutta Kill of Forests and the European Union Resource Network told Z Magazine last year. “Those who have caused this terrible problem are now supposed to save us from it while continuing to pollute and making a lot of money.” Critics argue that both industry and individuals should change their habits instead of relying on retail therapy.

But others — some of whom work at the carbon-offset companies and nonprofits described below — believe public education is key to reducing CO2 output and say the offset market can play a role in that. They say individuals can pursue a combination of lifestyle changes: reduce the miles they drive or fly, purchase or lease vehicles with the highest fuel efficiency on the market, carpool or take public transit, use conference calls and electronic communications, install efficient appliances, and improve home heating and cooling efficiency. Then they can buy offsets for the rest, joining entities from Pearl Jam to the Goldman Environmental Prize that are going carbon neutral.

Into the Wild

Carbon trading is carefully regulated in developed countries that signed the Kyoto Protocol. But so far, the offset market in the U.S. has been voluntary and free from any industry-wide oversight or standards for certification, projects, or business models. However, those days may be numbered. In mid-August, seven Northeast and mid-Atlantic states released the final model rule for the Regional Greenhouse Gas Initiative, a mandatory cap-and-trade program designed to reduce power plants’ CO2 emissions 10 percent by 2019. And California passed a statewide law in late September to reduce its emissions to 1990 levels by 2020, a cut of about 25 percent.

The industry buzz is that a California-Northeast trading market would be large enough to tip the entire nation into participating in a regulated cap-and-trade market. Certainly, California’s Global Warming Solutions Act of 2006 is a bold commitment, one that is likely to affect the domestic offset market once the details shake out. Where California leads on environmental issues, the nation usually follows, if sometimes reluctantly.

For now, there are bodies attempting oversight, such as the Climate, Community, and Biodiversity Alliance (CCB), the Center for Resource Solutions, and the Environmental Resources Trust. These are good organizations with solid records and intentions. But in the absence of mandatory regulation, their power is muted. For example, CCB focuses exclusively on forestry projects; CRS certifies only wind and solar projects with its “Green-e” label, although it has announced the development of a general carbon-offset certification program; and ERT, meanwhile, has a greenhouse-gas registry to define emission units, establish protocols, and provide third-party oversight. However, without government imposing industry-wide uniformity, retailers and project managers are free to select whatever oversight body they choose — or none at all — and consumers are unable to compare apples to apples across the board.

Further confusing the issue, companies tend to feel quite strongly about the business model they have chosen, and to sniff loudly at alternative models. Take the hot-button question of renewable-energy credits (RECs), which are megawatt-hours produced by qualifying renewable technology projects installed after 1997. Some companies won’t sell them as offsets because they are concerned about the possibility of them being sold as carbon-reducers twice: first by the renewable energy project itself, and then by the utility where the carbon emissions reduction actually occurs. CRS has a registry to keep careful track of RECs produced and sold to avoid the double selling of RECs, but it has no control over a utility’s carbon reductions, leading some companies to exclude RECs from their portfolios.*

But Mark Trexler — who has been helping companies fight climate change for 17 years and is president of Trexler Climate + Energy Services in Portland, Ore. — says an even more important concern when considering to REC or not to REC is “additionality.” This term means the project that you’re supporting by buying offsets — say, a wind turbine — wouldn’t be happening without that extra funding. This is the key concept underlying the very notion of an offset. If the wind turbine was going to be built anyway because of production tax credits, the falling cost of wind technology, or the rising cost of gas, project managers are not counting any value from your money when deciding to build the project. The project really is business as usual, not additional. While Trexler says there are RECs that can be considered additional, the majority are not.

In short, it really is a Wild West. But while there may not be a perfect choice at the moment, there’s still an argument to be made for participating now rather than waiting. Though voluntary consumer offsets will have only a small direct impact on global warming, Trexler says offsets have another important role to play: they can drive corporate action on climate change and influence long-term public policy.

Company Confidential

There are undoubtedly many offset providers I could have reviewed. I chose these five because they sell to individuals in the U.S. market (you can pay in dollars), they offer the ability to offset your entire carbon footprint (driving, flying, home energy use), and they invest in a variety of projects. All information has come from the companies’ websites or their representatives and has not been verified by third-party sources.

As you read or look into this further, think about additionality. In our voluntary market, people interpret and apply additionality in different ways, and a lot of credits are sold that shouldn’t be, according to Trexler. In the absence of an industry-wide standard to certify projects’ additionality, it’s up to consumers to try to suss that out as best they can. Ask any provider you consider patronizing: Would these projects be happening without the help of offsets?

Conservation International

The D.C.-based nonprofit started offering offsets to companies in 2001 and to individuals in July. So far, 20 companies have participated, committing to several 25- to 30-year projects that will, the group says, offset 16 million tons of carbon.

Cost per metric ton of CO2: $10; you can choose to offset any percentage of your emissions.

How much of your dollar goes to projects: More than 75 percent.

Type of projects: Preserving forests in Madagascar, restoring native tree species in Ecuador, the Philippines, and China. Look for future projects in Indonesia and other countries with rich — and threatened — biodiversity.

Beyond carbon, what do the projects do for communities? Conserve the biodiversity of thousands of endemic plants and animals. Promote human welfare by teaching agro-forestry, an alternative to slash-and-burn agriculture that leads to forestry-management jobs and resource protection.

Are they in it for the long haul? Projects are designed for 25 or 30 years, and CI seeks permanent protection for project lands via local governments. CI favors a management approach that integrates local leadership, though details change from project to project, depending upon whether land is owned by government, indigenous peoples, or private entities. Community outreach and education is key.

How the calculator works: Contains house, flight, and car info, without the option to break out separate pieces. Fields are sometimes vague (for instance, you would say you drive “hardly at all,” rather than entering a specific annual mileage). On the plus side, it has a category no other site does, querying whether you’re vegetarian, vegan, or omnivore. But it fails to explain why your diet might have carbon consequences, and it fundamentally fails to explain the assumptions its calculations are based upon, leaving the unfortunate impression that CI is just asking customers to trust it. This is eased somewhat by the option to donate any amount you want. (Most other organizations ask you to choose 50 or 100 percent of your calculated emissions.)

Certification: CI is currently seeking certification for its projects under the Kyoto Protocol’s stringent Clean Development Mechanism and the Climate, Community, and Biodiversity Alliance standards. The project in Madagascar will be monitored by an as-yet-unselected third party to track delivery of emissions reductions. Forest Stewardship Council or CDM certifiers are possibilities, in keeping with CI’s commitment to CCB standards.

Partners in clime: Pearl Jam and the Dixie Chicks, who are offsetting their tour emissions and asking fans to account for their carbon too.

The Climate Trust

Based in Portland, Ore., this nonprofit provides offsets to an undisclosed number of customers through two arms: The Climate Trust (which has offset 1.9 million metric tons since 1997 on behalf of industrial buyers) and CarbonCounter.org (which has offset 3,025 metric tons since 2002 on behalf of individuals).

Cost per metric ton of CO2: $10; you can choose to pay up front or monthly.

How much of your dollar goes to projects: 92 percent.

Type of projects: Regional projects include upgrading a paper manufacturer and a building in Portland, reforesting a riparian area in Oregon, and preserving a native forest in the Northwest U.S. Farther afield, projects include restoring an Ecuadorian rainforest, financing wind power, and improving transportation efficiency via truck-stop electrification, internet-based carpool matching, and traffic-signal optimization.

Beyond carbon, what do the projects do for communities? The Climate Trust cites a range of benefits, including saving money for companies, building owners, and tenants through energy efficiency; improving water quality and wildlife habitat; maintaining a sanctuary for a Native tribe’s traditional religious practices; providing sustainable local jobs and training; and ensuring that truckers get better sleep and roads are safer.

Are they in it for the long haul? Money from industrial clients is coupled with organizational money to get projects going, so the trust originates most of its projects. It manages projects by reviewing annual verification reports, securing permanent easements for some of the forestry projects, and more. Some forestry projects are of 50-year or 100-year duration. There are underperformance provisions in all of the contracts to ensure long-term integrity.

How the calculator works: Using data from the U.S. Department of Energy and the U.S. Department of Transportation, the calculator crunches numbers for both driving (annual miles driven divided by miles per gallon multiplied by pounds of CO2 per gallon of gas divided by 2,205 pounds per metric ton … whew) and flying (number of miles flown annually multiplied by 0.9682 pounds of CO2 per passenger-mile of air travel divided by 2,205 to get metric tons of CO2 per year per passenger). An RFI, or radiative forcing index, of 2 is also applied to the air-travel category to measure other greenhouse gases such as nitrous oxide and contrails. CarbonCounter offers you “estimate” and “exact” options for home, car, and air, which is handy if you’re feeling lazy about the details and don’t mind paying a bit extra. The home “exact” had a level of detail few people would know without sifting through a year’s utility bills.

Certification: Each project has been or will be verified by a third party who is an expert in that sector. Three projects — improving building efficiency in Portland and reforestation in the Deschutes River Basin and Ecuador — have been verified. The rest are scheduled to be verified in 2007 or 2008.

Amusing/motivating graphic: Little cartoon puffs of pollution indicate exactly how much you’ve soiled the Earth.

Confusing branding: The Climate Trust is head honcho here, with interesting projects and a lot of corporate clients. However, it developed an entirely separate site, CarbonCounter.org, for individuals to calculate their carbon footprints. But if you want to learn anything about the projects you’re funding, you have to drift back over to The Climate Trust.

Native Energy

Founded in 2000, this for-profit based in Charlotte, Vt., has sold its wares to thousands of customers, offsetting “hundreds of thousands” of short tons of carbon [1 short ton = 2,000 pounds], according to Billy Connelly, senior adviser on marketing and communications.

Cost per short ton of CO2 (Native Energy does not measure in metric tons): $12.

How much of your dollar goes to projects: As a for-profit company, Native Energy doesn’t disclose its margins.

Type of projects: Wind farms, renewable farm-methane project

Beyond carbon, what do the projects do for communities? A group of Native tribes from the Plains owns a majority interest in Native Energy, working with both the retail and wholesale markets, as several of the wind farms are on their lands. The methane project sits on a dairy farm near Loganton, Pa., run by the same family since the American Revolution. Ten new wind turbines owned and operated by Alaskan Native villages that currently burn diesel generators for energy will soon be added to Native Energy’s offerings.

Are they in it for the long haul? Projects are owner-managed, and a wind turbine is expected to have a 25-year utility life if well maintained. Native Energy has developed a patent-pending business model that addresses both customer desire for a one-time purchase and industry need for long-term investment. It buys all the units for a project’s expected operating life up front to get the project built. While some in the industry only recommend purchasing offsets for the current year, Trexler says selling offsets into the future isn’t inappropriate and can be key to financing projects.

How the calculator works: Native Energy uses a calculator called SafeClimate, which is based on World Resources Institute protocols but modified to conform with Climate Neutral Network’s requirements for certification in two ways: The home electricity consumption rate adds 7 percent to the kilowatt-hour figure to account for transmission and distribution losses (on average, 1.07 megawatt-hours are generated for every 1 MWh used); and the air-travel section doubles the short-haul emissions rate to account for the RFI. (Per WRI, most offset providers’ air-travel calculations are based on short-, medium-, and long-haul segments, because short trips use more fuel per mile on average than longer trips.) Native Energy’s calculator puts you through a three-step process that allows you some vagaries in the driving section. But air travel and home energy are very specific; the latter is detailed enough to send you hunting for your past utility bills, and you are not allowed to opt out. Entering values of zero doesn’t work either.

Certification: You can buy Green-e certified renewable-energy credits (RECs) through Native Energy’s Cool Watts program. Its WindBuilders (wind-farm RECs/offsets) product is certified by Climate Neutral Network. Its CoolDriver (wind/methane) program is not certified, though Native Energy hopes to get CNN certification in the future.

Eyebrow-raising moment: On the website, a cow’s speech balloon says, “You don’t need to stop driving to help fight global warming.”

Partners in clime: Participant Productions and Paramount Pictures offset CO2 pollution associated with air and ground travel, production energy use, and waste expended in making the book and film of An Inconvenient Truth.

TerraPass

Since its creation in late 2004, this for-profit company has sold offsets to 15,000 people from its headquarters in the San Francisco area, offsetting more than 72,575 metric tons.

Cost per metric ton of CO2: $8 to $11; for the frequent flyer, $1,500 will offset a million miles of flying (a half-million pounds of CO2), and the company will even throw in a folding bike.

How much of your dollar goes to projects? As a for-profit, it doesn’t disclose this information.

Type of projects: Clean energy via wind farms and biodiesel, biomass via methane capture on dairy farms, and waste management and industrial efficiency. The portfolio breaks down into one-third wind energy RECs, two-thirds biomass (cow power) and energy efficiency via purchasing and retiring credits from the Chicago Climate Exchange.

Beyond carbon, what do the projects do for communities? Create renewable energy through wind farms; prevent methane, a greenhouse gas 22 times more potent than CO2, from entering the atmosphere; encourage further efficiency and carbon dioxide reductions by participating companies.

Are they in it for the long haul? Projects are owner-managed, and the economics are broken down into an “ecosystem” of brokers, consumers, and retailers, rather than a traditional nonprofit model. “We’re changing something that used to be a cost burden into a profit opportunity,” says chief environmental officer Tom Arnold. “What kind of ecosystem do you want to build? As big as possible.” With a business model like that, as long as there’s profit, there’s commitment.

How the calculator works: For driving, TerraPass estimates the CO2 a car emits annually, based on mileage and vehicle type, relying on data from the EPA and the World Resources Institute. For flying, it uses WRI protocols to calculate emissions based on distance traveled and type of trip (short-, medium-, or long-haul). TerraPass directs you to choose your exact make, model, and year of car and your number of miles driven annually. From there, it tells you your city and freeway mpg and gallons of gas consumed per year, which is interesting, and your corresponding carbon emitted. However, it only offers set “TerraPasses” for certain amounts of carbon, so it rounds you up — sometimes quite significantly — to the next level. With flights, the same benefits and problems emerge. You can enter your departure and destination cities and it will calculate your miles flown and carbon burned, unlike many other sites that expect you to know your miles. But the TerraPass it offered me was nearly double the carbon I’d released.

Certification: 33 percent of a TerraPass purchase consists of Green-e certified renewable-energy credits (RECs). 100 percent of TerraPass purchases are verified by the nonprofit Center for Resource Solutions, which does a marketing responsibility review, among other things.

Partners in clime: Ford has purchased offsets to mitigate emissions from the manufacturing of its hybrid fleet and has produced a co-branded site with TerraPass for Ford owners.

Carbonfund.org

During the three years it’s been in operation, this Maryland-based nonprofit has sold offsets to more than 5,000 customers, including 30 companies and 15 nonprofits. Total offset: 92,000 metric tons.

Cost per metric ton of CO2: $5.50, but if you are willing to “go zero carbon,” you can get that ton for the low, low price of $4.30, via a partnership with Working Assets, which kicks in the extra $1.20.

How much of your dollar goes to projects? 93 percent goes to climate-change education, offsets, and outreach.

Type of projects: Renewable energy, such as solar for a housing project in Chicago and a veterinary center in Bishop Ranch, Calif.; wind farms and a landfill methane-capture project in the Midwest; and a cow-manure methane generator that powers a desalination plant, providing water for thousands in the Inland Empire, Calif. Reforestation of habitat in Montana, Arkansas, California, and India damaged by insects or fire. Energy efficiency by purchasing and retiring credits from the Chicago Climate Exchange. (Energy efficiency projects supported through CCX might include improving industrial, transportation, or residential technology through building or factory upgrades or changing fuel from coal to natural gas.)

Beyond carbon, what do the projects do for communities? Renewable-energy projects reduce the cost of living for low-income families, improve the economy and add jobs, reduce manure problems, and provide clean drinking water. “By supporting renewables, you’re helping to drive the cost of renewables down below coal,” says Executive Director Eric Carlson. “We think a huge sea change will happen once we do that.” Reforestation projects provide food and habitat for wildlife, protect rivers and streams, add beauty to the landscape, and stabilize soil and threatened watersheds, including habitat for threatened fish.

Are they in it for the long haul? “We want to make it as easy and affordable for anyone to reduce their carbon footprint as possible,” Carlson says. “If the offsets are certified, then price is an important secondary concern because this is about engaging millions of people in the process. For us it’s important that the offsets occur close to the time that the purchase occurs.” To make sure reforestation projects are viable, the organization plants 25 percent more trees than they are obligated to plant.

How the calculator works: Data from the U.S. Department of Energy’s Energy Information Administration and other sources is used to gauge CO2 emissions for driving and flying. The figure for flying is based on short-haul flights, which are more fuel-intensive, rather than the three-tier model. Carlson said other calculators might need to be adjusted upward, as there is a growing school of thought that, because planes burn their fuel at 30,000 feet where the atmosphere is thinner, they do more harm than what is quantified on any of the current carbon calculators.

Certification: Wind-energy commitments are Green-e certified RECs, except where noted on the website; most other renewable-energy commitments are certified by the Environmental Resources Trust. Energy-efficiency credits through the Chicago Climate Exchange are verified by that body and the National Association of Securities Dealers. Carbonfund is also considering efficiency projects certified by ERT. Reforestation projects are not certified but are audited by ERT.

Eyebrow-raising moment: Addressing a project in Arkansas, the website says, “The new trees will be resistant to the borer and be able to produce acorns much faster than ordinary oak trees.” It kind of sounded like these new trees were genetically modified, so I asked Carlson. He said he didn’t know, but that the projects are managed by “reputable” groups — the National Arbor Day Foundation and American Forests. Toby Janson-Smith, director of Climate, Community, and Biodiversity Alliance, said, “Yes, the term ‘ordinary oak trees’ does beget the question, what makes the new trees ‘non-ordinary’?”

Partners in clime: The Goldman Environmental Prize partnered with Carbonfund to go carbon neutral for its 2006 awards.

*[Correction, 26 Oct 2006: Originally, this article did not accurately describe the role of utilities in the debate over RECs. The concern focuses on the possibility that both a utility and a renewable energy project will offer the same offset for sale, leading to double selling.]