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March 19, 2007

TerraPass Inc. And The Lucrative Art Of Carbon Trading

The March 26th issue of Business Week investigates the carbon offset trade;

Hollywood celebrated environmental activism at this year's Academy Awards, and not just by giving an Oscar to the Al Gore documentary An Inconvenient Truth. The Academy of Motion Picture Arts & Sciences promoted the show itself having "gone green," by means of a variety of initiatives. One element: Each performer and presenter received a glass statue representing the elimination of the amount of greenhouse gas associated with a celebrity lifestyle over the course of a year. The offsets were issued by TerraPass Inc., a two-year-old for-profit company in San Francisco that identifies climate-protection efforts and, for a fee, gives its customers the opportunity to buy a piece of the environmental action. Each Oscar favor represented 100,000 pounds of emission reductions drawn from TerraPass' portfolio of offset projects.

One of the largest in its portfolio is a sprawling garbage dump outside of Springdale, Ark., from which TerraPass has purchased thousands of tons of gas reductions. The vast sloping mound of the Tontitown landfill rises near stands of bare-limbed hickory and oak trees, with the blue Ozark foothills in the background. The decomposing trash generates methane, a gas 23 times as potent as carbon dioxide in trapping heat in the earth's atmosphere, melting glaciers and raising ocean levels. Waste Management Inc., (WMI ) the huge garbage processor that operates the facility, tends nearly 90 wells dotting the trash mountain, each giving off a barely audible hiss as it sucks methane from the depths of the landfill and delivers the gas to a single towering flare. Once torched, the gas is released into the atmosphere as less-damaging co2. But company officials and Arkansas environmental regulators say Waste Management began to burn methane, and continues to do so, for reasons having nothing to do with TerraPass' offsets.

Concerned that methane might be contaminating groundwater beneath the landfill, Waste Management first floated the idea for a gas-collection system in early 1999. Arkansas regulators urged the company to pursue this remedy. In 2001 the state increased its pressure by imposing a requirement for "corrective action" at the Tontitown facility.

[...]

Regardless of who deserves credit for taking the initiative, one thing is clear: The methane system was launched long before any promise of carbon-offset sales. In other words, it appears that the main effects of the TerraPass offsets in this instance are to salve guilty celebrity consciences and provide Waste Management, a $13 billion company based in Houston, with some extra revenue.


A different example considers dairy farmers who invested years ago in technology that captures methane from cow manure and turns it into electricity - projects never initiated for the purpose of greenhouse gas reduction. Yet, these old, unintended reductions qualify as tradable credits today.

Why would a scheme purported to spur investment in future GHG reduction technologies place a monetary value on existing, incidental reductions achieved and already factored into greenhouse gas baselines? The reductions represent the status quo - selling them today as "offsets" is the equivalent of counting them twice.

Well, as it turns out, they are good for something.

TerraPass typically sells offsets for about $9 per ton of carbon dioxide, or the corresponding amount of methane. The company takes a cut of that $9, but won't say what the percentage is. A broker that introduced TerraPass to the dairy farmers also took a cut. In the end, the farmers say they each received less than $2 a ton out of the original $9.

Via American Thinker.

Posted by Kate at March 19, 2007 10:56 AM
Comments

Absolution fer sale!! ..Red hot Carbon Absolution fer sale here!...Gecher Guilt-free green absolution for your decadent lefty lifestyle here!....sleep soundly with our green placebo for guilt-ridden indulgent leftoid hosebags...get it while the trend lasts!!...Be the first one in your gated community to have your manor's carbon footprint dusted with some magic absolution carbon-negative pixie dust....be the envy of your friends at the charities ball"

Posted by: WL Mackenzie Redux at March 19, 2007 11:08 AM

This nails some good points. Assuming that you need a carbon market this becomes like any other market, it needs rules, certification, contracts and trust.

For example, if you are buying the certificate on pork bellies, somebody somewhere has actually counted the pork bellies, certified they existed and is a trusted member of some trading community so that the contract can actually be counted on.

Carbon markets ar eproblematic, even domestically. Who is the certifying authority, who is the regulator etc etc....so a market in Canada and the US is not up and running properly, why would we assume that carbon credits purchased internationally are real. Who is the certifier, who is the regulator, what happens if someone lies?

I like market solutions but there is a difference between a market and scheme. And if there is a $7 melt out of $9 purchase price that is an enormous amount that is disappearing as "transaction cost", especially in an unregulated unsupervised "market".

Assuming CO2 is a problem a trading system is one solution to it. But this begs the question of who does it, how much and who makes what in the chain....I remain skeptical on so many levels, these are exactly the questions that need to be asked and answered...

Posted by: Stephen at March 19, 2007 11:18 AM

Meanwhile, the Emperor of Kyoto is being exposed as a lying, skanky fraud

"Whose Ox Is Gored?
The media discover the former vice president's environmental exaggerations and hypocrisy.

Monday, March 19, 2007 12:01 a.m. EDT

The media are finally catching up with Al Gore. Criticism of his anti-global-warming franchise and his personal environmental record has gone beyond ankle-biting bloggers. It's now coming from the New York Times and the Nashville Tennessean, his hometown paper that put his birth, as a senator's son, on its front page back in 1948, and where a young Al Gore Jr. worked for five years as a journalist.

Last Tuesday, the Times reported that several eminent scientists "argue that some of Mr. Gore's central points [on global warming] are exaggerated and erroneous." The Tenessean reported yesterday that Mr. Gore received $570,000 in royalties from the owners of zinc mines who held mineral leases on his farm. The mines, which closed in 2003 but are scheduled to reopen under a new operator later this year, "emitted thousands of pounds of toxic substances and several times, the water discharged from the mines into nearby rivers had levels of toxins above what was legal."

All of this comes in the wake of the enormous publicity Mr. Gore received after his documentary "An Inconvenient Truth" won an Oscar. The film features Mr. Gore reprising his famous sighing and lamenting how the average American's energy use is greedily off the charts. At the film's end viewers are asked, "Are you ready to change the way you live?"

The Nashville-based Tennessee Center for Policy Research was skeptical that"

read the rest

3w.opinionjournal.com/diary/?id=110009804

Posted by: Fred at March 19, 2007 11:26 AM

The use of energy argument is interesting....I believe the counter argument is that yes the US is an enormous consumer of energy but it in terms of productivity per BTU the American economy is number one.

So in fact the right [lace for that neergy to be deployed in in that economy....more at the margins...If carbon is taxed equally then the US will still be the highest user, in fact the gap will grow as the marginals at the bottom drop off.

Of course this assumes that all energy will be taxed at a similar rate and not one rate for u.s. and one rate for others...this is called a tax distortion and yields lower productivity and wealth for everyone....

Posted by: Stephen at March 19, 2007 11:33 AM

Carbon offset trading is mainstream now ...it's there for everyone. Stop polluting the planet instantly with PICO Cards. Be carbon neutral now! Feel good and be free ... :0) Check it out at ...

Offset World

Climate change is a serious matter ... eh?

Posted by: John at March 19, 2007 11:36 AM

For further understanding, rather than the term carbon credit, just insert tulip - zero intrinsic value yet cost speculated, and mania with that.

Posted by: Shamrock at March 19, 2007 11:39 AM

WLMR

That about nails it.

Fred

Your link comes up faulty. Please re-post, that sounds interesting.

Syncro

Posted by: Syncrodox at March 19, 2007 12:05 PM

http://www.opinionjournal.com/diary/?id=110009804

Whose Ox Is Gored?
The media discover the former vice president's environmental exaggerations and hypocrisy.

Monday, March 19, 2007 12:01 a.m. EDT

The media are finally catching up with Al Gore. Criticism of his anti-global-warming franchise and his personal environmental record has gone beyond ankle-biting bloggers. It's now coming from the New York Times and the Nashville Tennessean, his hometown paper that put his birth, as a senator's son, on its front page back in 1948, and where a young Al Gore Jr. worked for five years as a journalist.

Last Tuesday, the Times reported that several eminent scientists "argue that some of Mr. Gore's central points [on global warming] are exaggerated and erroneous." The Tenessean reported yesterday that Mr. Gore received $570,000 in royalties from the owners of zinc mines who held mineral leases on his farm. The mines, which closed in 2003 but are scheduled to reopen under a new operator later this year, "emitted thousands of pounds of toxic substances and several times, the water discharged from the mines into nearby rivers had levels of toxins above what was legal."

All of this comes in the wake of the enormous publicity Mr. Gore received after his documentary "An Inconvenient Truth" won an Oscar. The film features Mr. Gore reprising his famous sighing and lamenting how the average American's energy use is greedily off the charts. At the film's end viewers are asked, "Are you ready to change the way you live?"

The Nashville-based Tennessee Center for Policy Research was skeptical that Mr. Gore had been "walking the walk" on the environment. It obtained public records showing that for years Mr. Gore has burned through more electricity at his Nashville home each month than the average American family uses in a year--and his consumption was increasing. The heated Gore pool house alone ran up more than $500 in natural-gas bills every month.

Mr. Gore's office responded by claiming that the Gores "purchase offsets for their carbon emissions to bring their carbon footprint down to zero." But CNSNews.com reports that Mr. Gore doesn't purchase carbon offsets with his own resources, and that they are meaningless in terms of global warming.

The offset purchases are actually made for him by Generation Investment Management, a London-based investment firm that Mr. Gore co-founded, and which provides carbon offsets as a fringe benefit to all 23 of its employees, ensuring that they require no real sacrifice on the part of Mr. Gore or his family. Indeed, their impact is also highly limited. The Carbon Neutral Co.--one of the two vendors that sell offsets to Mr. Gore's company, says that offset purchases "will be unable to reduce greenhouse gas emissions . . . in the short term."

The New York Times last week interviewed many scientists who say they are alarmed "at what they call [Mr. Gore's] alarmism on global warming." In a front-page piece in its science section, the Times headline read "From a Rapt Audience, a Call to Cool the Hype."

The Times quoted Don Easterbrook, an emeritus professor of geology at Western Washington University, as telling hundreds of experts at the annual meeting of the Geological Society of America that "I don't want to pick on Al Gore. But there are a lot of inaccuracies in the statements we are seeing, and we have to temper that with real data." Mr. Easterbrook made clear he has never been paid by any energy corporations and isn't a Republican.

Even James Hansen, a scientist who began issuing warning cries about global warming in the 1980s and is a top adviser to Mr. Gore, concedes that his work may hold "imperfections" and "technical flaws." Other flaws are more serious, such as Mr. Gore's depiction of sea level rises of up to 20 feet, which would cause Florida and New York City to sink below the surface.

Sober scientists privately say such claims are exaggerated. They point to the Intergovernmental Panel on Climate Change, a United Nations body that released its fourth report on global warming last month. While it found humans were the main cause of recent global warming, the report also indicated it was a very slow-moving process. On sea levels, the U.N. panel reported its s best high-end estimate of the rise in sea levels by 2100 was three feet. The new high-end best estimate is less than half the previous prediction, which was still far below Mr. Gore's 20 feet. Similarly, the new report shows that the panel's 2001 report overestimated the human influence on climate change since the Industrial Revolution by at least one-third.

In an email message to the Times, Mr. Gore defended his work as fundamentally accurate. But it's increasingly clear that far from the "consensus" on global warming we are told exists, scientists are having a broad and rich debate on many aspects of it. Nearly two decades after Mr. Gore first claimed that "we face an ecological crisis without any precedent in historic times," we don't know if that is really true.

Then there is the Gore zinc mine. Mr. Gore has personally earned $570,000 in zinc royalties from a mine his father bought in 1973 from Armand Hammer, the business executive famous for his close friendship with the Soviet Union and for pleading guilty to making illegal campaign contributions during Watergate. On the same day Al Gore Sr. bought the 88-acre parcel from Hammer for $160,000, he sold the land and subsurface mining rights to his then 25-year-old son for $140,000. The mineral rights were then leased back to Hammer's Occidental Petroleum and the royalty payments put in the names of Al Gore Jr. and his wife, Tipper.

Gore spokeswoman Kalee Kreider claims the terms of the 30-year Occidental lease agreement gave the Gores "no legal recourse" to get out of it. She said the Gores never thought about selling the land and would not comment on whether they ever tried to void the lease. "There is a certain zone of privacy once people go into private life," Ms. Kreidler said. She said critics of the arrangement should realize it should be viewed in a "1973 context, not a 2007 context. . . . There was a different environmental sensibility about all sorts of things."

But what about a 1992 context? That is the year Mr. Gore published "Earth in the Balance," in which he wrote: "The lakes and rivers sustain us; they flow through the veins of the earth and into our own. But we must take care to let them flow back out as pure as they came, not poison and waste them without thought for the future." Mr. Gore wrote that at a time when he would be collecting zinc royalties for another 11 years.

The mines had a generally good environmental record, but they wouldn't pass muster either with the standard Mr. Gore set in "Earth in the Balance" or with most of his environmentalist friends. In May 2000 the Tennessee Department of Environment and Conservation issued a "Notice of Violation" notifying the Pasminco mine its zinc levels in a nearby river exceeded standards established by the state and the federal Environmental Protection Agency. In 1996 the mine twice failed biomonitoring tests designed to protect water quality in the river for fish and wildlife. "The discharge of industrial wastewater from Outfall #001 [the Caney Fork effluent] contains toxic metals (copper and zinc)," the analysis stated. "The combined effect of these pollutants may be detrimental to fish and aquatic life."

The Gore mines were no small operations. In 2002, the year before they shut down, they ranked 22nd among all metal-mining operations in the U.S., with total toxic releases of 4.1 million pounds. A new mine operator, Strategic Resource Acquisition, is planning to reopen the mines later this year. The Tennessean reports that just last week, Mr. Gore wrote SRA asking it to work with a national environmental group as it makes its plans. He noted that under the previous operator, the mines had, according to the environmental website Scorecard, "pollution releases from the mine in 2002 [that] placed it among the 'dirtiest/worst facilities' in the U.S." Mr. Gore requested that SRA "engage with us in a process to ensure that the mine becomes a global example of environmental best practices." The Tennessean dryly notes that Mr. Gore wrote the letter the week after the paper posed a series of questions to him about his involvement with the zinc mines.

Columnist Steven Milloy recalls talking with Mr. Gore in 2006 about the 1997 Kyoto Protocol he helped negotiate as vice president. "Did we think Kyoto would [reduce global warming] when we signed it? . . . Hell no!" said Mr. Gore, according to Mr. Milloy. The former vice president then explained that the real purpose of Kyoto was to demonstrate that international support could be mustered for action on environmental issues. Mr. Gore clearly believes that the world hasn't acted with enough vigor in the decade since Kyoto, which may explain his growing use of the global-warming hype that concerns many mainstream scientists.

Mr. Gore has called the campaign to combat global warming a "moral imperative." But Mr. Gore faces another imperative: to square his sales pitches with the facts and his personal lifestyle to more align with what he advocates that others practice. "Are you ready to change the way you live?" asks Mr. Gore's film. It's time people ask Mr. Gore "Are you ready to change the way you live, as well as the way you lecture the rest of us?"

Posted by: Fred at March 19, 2007 12:11 PM

The Province of Alberta is creating and supporting carbon trading. Alberta CON MPs support Alberta in doing this.

Ha ha you've just slagged your own party!

Posted by: aa at March 19, 2007 12:35 PM

The Province of Alberta is creating and supporting carbon trading. Alberta CON MPs support Alberta in doing this.

Ha ha you've just slagged your own party!

Posted by: aa at March 19, 2007 12:36 PM

Pump and dump trading.
Where has Canada seen that before?
IIRC, the mining sector and the Vancouver Stock Exchange were once famous for it.

Posted by: concrete at March 19, 2007 1:00 PM

Please refrain from pasting full articles into the comments. A url and short exerpt is enough.

Posted by: Kate at March 19, 2007 1:03 PM

Fred

Thanks, very enlightening.

AA

For the sake of political expediency Stelmach is bowing to the pressure. That doesn't make it correct. Well, I guess it makes it politically correct.

But then that's the name of the game, isn't it? Pacify the sheeple, you know, the ones who fail to educate themselves, the ones who eat the pap spooned out by the MSM, the disinterested and the distracted.

Eff the mushy middle.

Syncro

Posted by: Syncrodox at March 19, 2007 1:21 PM

Terrapass is finally getting its just dessert for totally ripping people off for years , proving finally you can't manufacture environmentalism in a business school classroom, package it, put a label on it, sell it, and profiteer in the good name of environmentalism. Not in Canada anyway you can't!

Posted by: Michele Guillette at March 19, 2007 1:25 PM

Kate

My bad. The url Fred provided earlier didn't work so he posted the whole article in response to my request.

Well, my half bad.

Syncro

Posted by: Syncrodox at March 19, 2007 1:25 PM

I don't get it; I don't get it. Carbon offsets are just a local version of the Kyoto scam, which sees nations paying fines for emissions above x-levels. These fines are, supposedly, sent to 'developing countries' to build eco-friendly industries.

Heh - we all know what happens. Those 'developing countries', which are fortunately exempt, utterly exempt, from any emissions standards will and are, building enormous numbers of emitting and polluting low cost factories (eg China).

Oh, and remember, any scheme that involves transference requires a cost-heavy mediative bureaucracy which moves in rapidly to skim at least 35% and more off of those 'fines'.

The result from the Kyoto scam? More pollution and more emissions globally. And higher costs, because the fines demanded of the west's industries will be passed on to the consumer.

The carbon offset scheme seems to me to be a local version of Kyotoism. You continue to pollute and emit (eg Starbucks continues with its 200,000 mgt of greenhouse gases), but, you pay for this by a 'fine'. You of course, pass this cost on to your consumers. This fine is called a carbon credit purchase by the left, I call it a fine or a brown paper bag bribe. The 'cost' of doing business.

This money is dealt with by a mediation agency - which skims at least 50%-80% off that money. It then offers these 'carbon credits' as cash - what's left of that money, to industries or services that say they'll use that cash to 'lower their emissions'.

So, whether they actually use that money for such a purpose or to purchase a new whatever - is not the issue. There's no accountability or communication between Company A that supplied the money and Recipient B that gets possibly 20% of that amount.

What is happening? Pollutions and emissions increase; they don't decrease. It's a giant money scam, and the mediation agencies, like all fungus parasites, will grow exponentially to feed off this insane transference of wealth.

Result? Not only increased pollution/emissions, but higher, higher costs of living.

But the mediation parasites will be very happy. They'll get rich.

Posted by: ET at March 19, 2007 1:35 PM

new science fiction funded by the taxpayer


http://www.cbc.ca/technology/story/2007/03/19/tech-climate.html

Posted by: cal2 at March 19, 2007 2:03 PM

It's the Sun, son.

Global warming is the result, solar warming is the cause.

Just say no to solar warming denial.

Posted by: foobert at March 19, 2007 2:13 PM

Carbon Credit scam ?? Yep. And if the naive of the world let the perpetraitors (think Dion Suzuki Gore) get it off the ground, it will make this look like pick-pocketing;

" ..The report claims that at least $8-billion US of the pilfering was the result of smuggling, which Security Council (UN)members were aware of and failed to stop.", CTV.(Oil-for-Food Scandal)

//www.ctv.ca/servlet/ArticleNews/story/CTVNews/1126198672832_8/?hub=Canada

Can anyone guess who is/was involved in both ?? A common link.

Posted by: B. Hoax Aware at March 19, 2007 2:32 PM

ET

Exactly.

Syncro

Posted by: Syncrodox at March 19, 2007 2:34 PM

ET, carbon credits are a great way to get oil companies. Did you notice Dion doesn't mention the auto industry. Even though governments at all levels have taxed gasoline far above income and sales taxes, they want to stick it to the oil industry again because it is "profitable." Dion has aligned the LPC with anti-capitalists frankly want to shut down the big, bad oil industry. The fact that oil companies will, as it always has, pass tax (credit) costs onto consumers means nothing to this set. They will set up a tulip, I mean carbon credit, market that supposedly will encourage oil companies to do energy efficient research by taxing them and passing subsidizing their competitors. Typical marxism. What an anachronism this marxism, born before mass consumerism, where everyone, not just favoured few, receive full benefit of capitalism, which has proven to offer the most freedom and affluence. The environmental movement, with their ally Dion, are taking Kyoto's punish the rich countries, to another level, punishing the rich citizens. If this was really about climate change, then environmentalists would be screaming at China and India, where highest "intensity" in CO2 emissions are, rather than Canada, with 2% of total. Of course, they're not. We shouldn't be fooled. Luckily, Canadians are quite philanthropic about the environment, or social programs, or whatever, until the cost to them is revealed. That is what will defeat Dion in the end, coupled with his combining of his vote with the left, where four cars are trying to park in one spot.

Posted by: Shamrock at March 19, 2007 2:42 PM

does anyone think anymore it would seem that critical analysis skills have been overcome by words I am going insane.

Posted by: jmorrison at March 19, 2007 3:28 PM

shamrock - right. Why aren't the Kyotoists after China, India, and the other polluting countries? China's coal industry is enormous, their rapid urbanization is fueled by coal, and their pollution and emissions are gigantic. In most cities, the air is almost unbreathable. As China further industrializes, these will both increase.

Yes, Marxism was indeed before mass consumerism, it was an attack against industrialism for its basic flaw is that it doesn't understand that surplus (capital, goods, services) is necessary because a growing population requires the development of an economic infrastructure that produces in the future, not the same amount, but more. Marxist redistribution and equalization immoblizes the dev't of a surplus.

I think Dion's punishment is not simply to the rich citizens but above all, to the middle class. They will, if he gets his way, bear the brunt of the increased costs of energy. And hopefully, it will be the middle class that reject Dion - for his arrogant elitism, his statist centrist authoritarianism and his complete ignorance of the fact that a networked world doesn't operate within simplistic reductionism (transfer of wealth to build polluting/emitting industries).

Posted by: ET at March 19, 2007 3:44 PM

Buy carbon credits from someone you trust.

Me.

Drive a big SUV and feeling guilty?

Just send for credits in increments of $20 or $100 and get a nice certificate receipt guaranteed to relieve your guilt.

Fix to the inside SUV back window and avoid confrontation with eco-nuts.

Peace of mind is so easy. = TG

Posted by: TonyGuitar at March 19, 2007 3:51 PM

I'd be far more impressed if celebs took to handing out awards to themselves for reducing their own BS emissions. Of course, celebs being what they are, that in itself would turn into a vast BS emission.

Posted by: Geoff W. at March 19, 2007 5:19 PM

ET and TG the conspiracy theorist in me says you are absolutely correct
but a few certificates would make great stocking stuffers

Posted by: kelly at March 19, 2007 11:34 PM

Global warming is a swindle and a fruad our politicains should reject AL GOREs rediclous arguments and reject this liars stupid idiots ideas

Posted by: spurwing plover at March 22, 2007 10:09 AM

I think we all better start getting concerned with protecting and being good stewards over this earth that God left in our hands. He will very soon take it back and establish his kingdom over man's failed experiment of governments. We have polluted excessively, killed off all kinds eco-environments, and put many animals on the endangered species list by our collective actions or in some cases inaction.
Case in point: How is it that the majority of the earth's fish, seafood and shellfish are contaminated with Mercury and other dangerous heavy metals? I've been in treatment for a host of problems due to following the suggested consumption diet of two seafood meals per week for 10 years.
Yes, the people we have put in place to protect us from such atrocities have done an extremely poor job ensuring our rights and representation against the "big money" industrial and business machine that just keeps on churning out victims in it's path.

Posted by: Mike at March 22, 2007 11:04 AM
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