Carbon Trading for Consumers: TerraPass for your Car
09 December 2004
A startup born out of a project at the Wharton School at the University of Pennsylvania is offering an early form of a carbon trading system for auto consumers: the TerraPass.
The basic concept is simple. Car owners purchase (online) a TerraPass from the company. The company then pools the money and invests in renewable energy projects—especially projects that might not have made it through an initial capital-intensive startup phase.
This is similar to the carbon emissions trading concept emerging from the Kyoto Protocol, just brought down to a consumer scale.
Some general information on the investment instruments, supported projects and regulation of the process are available here on the company’s website. I think they will have to provide more specific information on investments and projects as this scheme grows.
I like this idea, with some caveats.
Currently, TerraPass buyers pick one of three categories of vehicle:
| TerraPass Products | ||||
|---|---|---|---|---|
| Category | Mileage | Tonnes CO2 | Price | $/tonne CO2 |
| Term of all TerraPass products is for 1 year or 12,000 miles. | ||||
| Efficient | 25+ | 4 | $39.95 | $9.99 |
| Standard | 17–24 | 6 | $49.95 | $8.33 |
| Utility/Performance | 10–16 | 10 | $79.95 | $7.99 |
There are a couple of downsides to this implementation of the concept. First, the mileage categories and carbon remediated per category are out of synch with EPA data, for example, and a bit mismatched. Second, given a choice like this, many—if not most—people will opt for the least expensive product. I’m also not convinced that carbon trading requires a volume discount.
Much better to have car owners input their make, model and mileage into the system, and then calculate the amount of carbon remediated and the resulting price, perhaps using Kyoto trading data as a pricing mechanism. Doing it that way could also open up the avenue for automakers to include this as part of the sticker price, or at least an option.
GM, for example, which is doing well in reducing its stationary CO2 emissions but just was pilloried by the UCS for their poor performance with their mobile source emissions (i.e., the CO2 flowing from the tailpipes of cars they make) could sign up for a scheme such as this as an interim step.
If there is a negative to this, it’s probably more on the consumer side. Pay a fee, pollute guilt-free—potentially the green equivalent of a medieval indulgence. That sort of thing. A marked change in buying preferences and driving patterns toward fuel efficiency and low-emissions would be the quickest route to making substantive improvements. If carbon trading for consumers delays that shift, then it is not a good thing in the long-term, despite its short term benefits.
But deliberately used as an element in a every-growing movement toward sustainable energy and transportation, the consumer carbon trading scheme has a great deal of potential.
Mike:
Thanks for the thoughtful comments on Terrapass. The company is only six weeks old, so all the feedback we are getting is very useful.
Can you give us some detail on what you mean by the EPA data? Are we off base on the tonneage? I like your idea of carbon calculator -- probably something we should do.
As for the medieval indulgence argument -- we think its more important to get people to change their current car's pollution profile. Some people, like farmers, really do need trucks, and we can provide a responsible option for them. Secondly, for what its worth, most of the demand is for the economy and standard passes. So the concept may not resonate with people that have already made a SUV purchase decision.
Thanks again for your interest!
Posted by: Tom Arnold | 10 December 2004 at 06:33 AM
Re: the tonnage, your current classification scheme lets some tonnage go un-remediated. Here’s an example.
Under your current scheme, an Audi A4 Cabriolet, an Acura RSX and a Toyota Corolla are all “Efficient” (25+mpg). According to EPA calculations, the A4 emits 7.4 tons GHG/year; the Acura RSX 6.4 tons/year; and the Toyota Corolla 5.4 tons/year. If the goal is to match tons to dollars, the flat rate doesn’t work.
If I adjust your product term to 15,000 miles (EPA standard) and convert from your metric tons (tonnes) to US tons, the amount of CO2 remediated by the Efficient TerraPass is 5.5 tons for 15,000 miles.
There are only a handful of cars that emit that low a level of GHG annually. (And I’m cheating a bit, equating the EPA GHG calculation which incorporates three GHGs with your CO2 figure, but you get the point.)
That’s why I think you should tie it to the model directly, and calculate on a posted $/ton basis. :-)
re: the comment on the indulgence, I agree with the immediate remediative (redemptive?) action and benefit of carbon trading, and I think you’ve hit on a really good concept by bringing that to a consumer level. Unlike an indulgence, a TerraPass delivers an immediate, measurable benefit. So the problem is not really yours, nor is it the problem of your responsible buyers with need who want to offset their emissions.
It only becomes a problem if mass adoption (good for you) stalls the development of more sustainable buying and driving habits. That’s not as much your problem as it is a general problem of education and understanding.
Posted by: Mike | 10 December 2004 at 07:44 AM
Hi Mike:
Just a quick update for you and your readers.
First, we did adjust the product categories to better reflect the categorization – cutting the mileage cutoffs for vehicle categories.
Second, we are sticking with the 12K mile total, as that is what the Federal Highway statistics indicates as the average miles driven in the US; see (http://nhts.ornl.gov/2001/presentations/vehicleMiles/VehicleMiles.pdf )
Finally, you scooped the LA times by a full month or so. http://www.latimes.com/classified/automotive/highway1/la-hy-wharton19jan19,0,3541628.story?coll=la-home-highway1
Business is going well – we’ve attracted 270 members so far, and we continue to get traffic from your site every day.
Thanks for your insightful commentary,
Tom
Posted by: Tom Arnold | 29 January 2005 at 10:35 AM
Tom,
I perused your site and was hoping to see a more defined method that listed just how the carbon trading is done. Example:
- Power Plant puts out x tons of CO2 (Carbon equivalents) per year.
- Power plant pays to have x number of trees planted
- These trees convert C02 to carbon in the trees,
sequestering the carbon unless it is burned.
- If the carbon in the trees equals the carbon in
the C02 emitted by the factory, there is a balance.
- I saw the article about the methane production and
the comment that that methane has 10x the effect of
C02. So if my dollars were to take out the equivalent
of the tons of methane produced (if my car emitted
10 tons and you took out 1 ton of methane, the balance
is truly there.
I am not sure I see this level of detail in the figures.
If I missed it by mistake, please indicate the references.
If I had this, I would be trying to sell TerraPass to others and know it would really help.
Thanks
Bruce Naegel
Posted by: Bruce Naegel | 09 March 2005 at 05:33 PM
Check out http://www.facefoundation.nl . Click through to the link on SERVICES then CO2 METER. Send me an e-mail if you have any questions. Peter
Posted by: Peter Clarke | 15 March 2005 at 09:01 AM
piece of shits u donot hav any info.ASS HOLES FUCRSSSSSSSSSS.
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