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Retail carbon credits for the car driver

You may have heard of the idea of pollution credit trading. I've been pointed to two firms that are selling CO2 credits on the retail level for individuals, to offset the output from driving a car, heating a house etc.

I'll get into the details on how it works a bit below, but if you have a car like mine that is putting out 5 metric tons of CO2 each year, you can for a low price (about $50, which includes a whopping markup) pay a factory somewhere to cut their own output by 5 tons, meaning that net, you are causing zero emissions. Which means you are reducing total emissions by a lot more than you would by switching to a Prius, and you are doing it at a vastly lower cost. (This doesn't mean you shouldn't drive a Prius, it just means this is a lot more effective.)

Normally pollution credits are traded only by the big boys, trading contracts with hundreds or thousands of tonnes of emissions. The retail firms are letting small players get in the game.

This is a fabulous idea, in theory at least, and also a great, if sneaky gift idea. After all, if you buy the gift of not polluting for your loved one all they get is a bumper sticker and a good feeling. At least it's better than giving to The Human Fund in their name.

Here's the catch. I went and priced the credits, and while wanted $50 to credit my car, the actual price of credits on the Chicago Climate Exchange is about $2.16 per tonne of CO2, or about $8 for my actual output as they calculated it. One expects some markup, of course, and even some profit for the company selling the retail credits, but this is nuts. I called the other company, Terrapass and got reasonably frank answers. First of all, they claim they invest more in wind power and other truly non-polluting forms of energy more than they just buy carbon credits. Secondly, this is still a small volume thing, and most of the costs are not the credits, but the $20,000 or so to become a member of the exchange, or so I was told. And of course, in small volumes, administrative costs can swamp the real costs.

Another outfit I found is which is non-profit and cheaper. In some sense since people buy these out of guilt rather than compulsion (they were meant to be forced on polluters to give money to non polluters and make a market) non-profit might make sense, but they are also supposed to be a real market.

Still, if I pay $50, I would love for my $50 to mostly go to reducing pollution, not mostly to administration. Usually when exchanges are expensive there are members who will trade for you at much more modest markups. The folks at Terrapass said they were not yet profitable at the current prices.

And it is such a good idea. Read below for more on pollution credits.

At first I was skeptical of these credits. They seemed to be mostly moving pollution. And indeed often the credits result in cutting pollution somewhere you don't live, though they can be designed to keep things local where possible.

They work as follows. You get an established polluter. They have to promise that they will legitimately cut their emissions by a specified amount, or prove that they have already done so. In theory, watchdogs make sure that this is a real cut, not just closing an unprofitable plant. Usually it is supposed to involve switching to better, less polluting systems, or better air cleaners, or moving from one fuel to another etc. In exchange for this they get bribes, if you will, from people who need to pollute. When the law is involved, the law will set emissions levels, and those who go even lower get credits they can sell to people who want to go over the limits. In voluntary trading, buyers are just bribing the emitters to cut their pollution.

People buy contracts into the future or even into the past. Companies can also trade within themselves, cutting pollution in one part of the business because they have to increase it in another part.

As noted, the biggest flaw is that often people in your town will pay a plant in a remote town so that they can pollute your town more. The people in the other town breathe cleaner air. Doesn't sound good, but it's better, or so the theory goes, than not stopping the pollution anywhere because companies lobby that it's too expensive to do, or only making the greener companies cut back. The credits put a market price on things.

Now I personally take the environmentalist libertarian stance on pollution. Pollution should be absolutely forbidden. To do it, you should have to buy permission from those whose environment you will pollute. If they won't give it, you have to move somewhere else that people will let you do it. But we're not going to get this system any time soon.

Thanks to Nadine for pointing this out to me.


Your blog provides great information on carbon credit trading.

I had no idea about personal usage of the mechanism.

Iam trying to learn a bit moer about this market in India, as to how can a company venture in this industry to provide consultancy services. I ll appreiate if you could share with me some more information on this industry.

Thanks and keep your blog rocking.

Could you please email or call me. I'd like to clear up a few things regarding certified clean car (most notably that the product is 50% CCX credits and 50% green-e certified renewable energy credits which make it much more costly than $8. Not to mention the fact that small businesses like ours cannot buy CCX credits directly from the market, but need to go through liquidators which put a premium on top of the traded rate. Our product includes solar RECs that are valued at over $500/tonCO2 equivalent in certain US markets). I received your message a couple of weeks ago, but the number I was given had been disconnected.

Certified Clean Car's comment above is similar to the answers given by Terrapass. They're buying not just carbon credits but more expensive solar and wind in the mix.

That's an interesting question. While many people who would buy these credits would be thrilled to be supporting solar, wind or other renewables, this ignores the main reasoning behind pollution credits. That is to create a market, and encourage the most efficient means of reducing output.

If my goal is to reduce total CO2, I'm not going to want to spend $500 on solar to remove a ton of CO2 if I could remove 200 tons with the same money by paying a polluting plant to cut its output.

Indeed, this creates an interesting problem for the Prius buyer. You spend about $3,000 more on a Prius over a comparable car, including saved gasoline, or so I have read. With that $3,000, you could offset the output of over 100 ordinary cars. By spending it on the Prius you're making a statement but increasing pollution over what you could do.

Joe, if your business wants to reduce emissions, just plant trees. Think about what the timber is made of....A ton of trees is a ton of carbon...plant indigenous and pland shrubs and you can say youre also protecting biodiversity from extinction...its called helpfully being clean, not mean

A F350 running Biodiesel is at least as clean as a Prius. If you look a the smaller cars running diesel engines (Volkswagen Jetta) that get twice the mileage of a F350, with alternative fuels you can have inexpensive, long lasting cars that are very clean.

I like this idea, but I'd rather see b100 pumps being put in so that I could just 'pay at the pump'.

Having spent much of the past few years working with battery technology investments, I'm not at all clear that the overall environmental impact of hybrids is particularly favorable. Both the battery technology and the associated wire plant are heavily dependent on large quantities of metals such as Copper and Lithium for their construction, with the associated mining/smelting pollution. Assuming one still owns the vehicle around the 8 year mark, the battery plant will need replacement, which is estimated to run about $11K. I foresee a large number of hybrids or their batteries rotting away in dumps (yes, I know that's not the authorized disposal method).

(I won't even get into the safety considerations of crash rescue in the middle of high-voltage wiring and KOH electrolyte. Eeew.)

If anyone concerned about fuel economy and pollution hasn't driven something from the latest crop of diesels, do yourself a favor and check them out. These are not your father's engines. An E320 CDI does 0-60 in 6.8 seconds and generates 500Nm (369 lb-ft) of torque at 1800 RPM with EPA numbers of 27/37 mpg. And that's on a very heavy sedan. I have friends with Jetta TDIs currently getting 55 mpg.

Plug the gas and diesel versions of any car (that has both) into that calculator and you'll see what I mean. The diesel versions consistently generate 2000 fewer pounds of CO2 per year, assuming 10,000 miles driven. They also likely won't kill you if you happen to be locked in the garage with the engine running. The CO emissions are FAR below those of gasoline engines, due to more complete combustion.

I'm of the contention that a rational man can choose a diesel, burn dinosaurs in it, and reasonably conclude he is a better environmental citizen than a driver of either a gasoline-only or a gas hybrid vehicle. (Lest any of the science-impaired go on about particulates, I humbly submit that forest fires generate more of those than diesels ever will.)

I came across this post because I was looking for info about Terrapass. I like the comments about hybrids and how many carbon credits you could by with the extra money. But buying a hybrid is about more than just lower emissions - its at least partially about using significantly less gas and reducing the US dependence on foreign oil. Buying carbon credits doesn't reduce gas consumption as best I can figure.

But I take the point that using home ground biodiesel is good for emissions and using less gas even though diesel vehicles still have particulate matter issues (PM10, etc). How about the best of both worlds - hybrid biodiesel vehicles that can run off only electricity for short haul? Then you can plug into clean solar and wind power.

A couple parting questions:

1. I've never seen anyone say the cost of replacing Prius batteries would be as high as $11k. That sounds like FUD to me, isn't the price more like a couple of grand?

2. Its easy to argue that reusing waste bio oils (eg. cooking oil) for biodiesel is always good, but I keep hearing that most biodiesel takes more petroleum products to grow it than it replaces in demand. That goes for manufacturing fertilizers and energy for processing and farming it. This sounds like the same arguments applied to methanol/alchol based fuels - anyone got some clarity and trut about the issue?

Some of your readers have it exactly right: Price Does Matter.

Whether TerraPass is profitable or not is not the point. Why would you pay $11-30 to offset a ton of CO2 when you can do the same for $5.50 per ton through Your donation will support wind energy, efficiency or reforestation, depending on what projects you choose. And it is tax deductible (putting the net price at closer to $4.75 per ton).

Carbonfund is out to demystify the cost and ease of reducing our climate impact. Our goal is not profit (though we have nothing against it)but rather environmental protection. If TerraPass is not profitable at their cost we welcome any offset provider to charge $5.50 per ton and see how it impacts their volume and thus environmental protection, the real goal.

Thank you,
Eric Carlson

Some carbon credits operate by sequestration. Mainly from planting trees in a sufficient amount to offset a specified amount of carbon output.

"Each carbon credit represents one tonne of carbon dioxide either removed from the atmosphere or saved from being emitted.

Carbon credits were one of the outcomes of the Kyoto Protocol. They are a measure devised by the Kyoto Protocol to reduce world Greenhouse Gas emissions, and hence fight climate change. Carbon credits can be created in many ways but there are two broad types:

Sequestration (capturing or retaining carbon dioxide from the atmosphere) Or Carbon Dioxide Saving Projects

For each tonne of carbon dioxide that is saved or sequestered carbon credit producers may sell one carbon credit.

The carbon credits Carbon Planet provides come from tree sequestration projects, specifically Forests NSW."

taken from

Can someone explain this to me?
I checked with Terrapass and my car uses 571 gallons of gas a yr, I figure that to be about 8,000 lbs of fuel. The amt my car emits in CO2 is 11 metric tons! How can that be? I have a degree in Geology, but do not understand how I can be emitting more than I am using weightwise.
Dan R

Gasoline contains many hydrocarbons, but for example if you take Octane and burn it completely, you get:

2(C8H18) + 25(O2) > 16(CO2) + 18 (H20)

So for every molecule of octane you burn, you produce 8 molecules of CO2. This is ideal, not counting Nitrogen in the air and all the range of carbon chains in gasoline, but you get the idea.

You're forgetting about air intake. Your emissions are composed not only of the fuel you burn, but also of the air you use to burn the fuel. I don't know whether that's enough to get you up to 11 metric tons, it seems sketchy.

Personally I think the whole idea of carbon credits is pure shit. The idea that you can pay somebody else off so you can pollute all you want, doesn't change the fact that you're polluting. It's like dumping mercury into the Missouri River but paying GE to stop putting mercury in lightbulbs. It effects a zero net change in environmental pollution, but it's still rediculous.


Your blog is about buying carbon credits if you want to offset the carbon emissions from your car. Lets says, however, that I owe 100 hybrid cars (this is just a hypothetical situation). Would these institutions that buy and sell carbon credits pay me for the reduced carbon emissions that my 100 hybrid car provide? Can I get verification of reduced emissions for my hybrids and then sell them to companies willing to buy credits?
what are your thoughts?


That would, in theory, be possible. Pollution trading credit systems work by having some verifiable way that the seller has reduced emissions, or in legal regimes, that the seller is emitting below some legally set level for a particular activity. In order to work, it must be verifiable, it must be real, and it must also be economical to perform this verification.

That's bad news for car drivers. Since driving a hybrid car is fairly trivial on the emissions reduction scale. 103 gallons of gas produces 1 ton of CO2 which trades for about $4 in US credit markets. So a hybrid driver getting 45mpg over a gas car driver getting 25mpg going 15,000 miles saves 2.6 tons of CO2, or just over $10 of CO2 credit. At European prices it's closer to $30.

But none of these numbers, sadly, are high enough to pay the costs of administering such a program and doing good enforcement and verification.

For 100 vehicles it is a different story, and I don't see why the exchanges would not be willing to do something here. If there were many thousands of people with 100 vechicles, that is. Even $1000 for 100 vehicles wouldn't begin to pay the legal fees to make something like this work if you were the only person asking, I would guess.

Hybrid cars that get up to twice the mileage are good, but the truth is there are far more effective, larger scale ways to reduce pollution right now.

A more likely situation is for a vendor of low mileage cars, like Toyota, to sell credits for what they do. They do it at a scale which can afford the paperwork and enforcement is very simple since they already have all the accounting in place. So instead your Hybrid costs $50 less rather than each individual owner trying to sell credits.

One of the hard parts about pollution trading is figuring out what's a real reduction, the kind we want to subsidize. On one hand, somebody who takes transit is doing ever more to fight pollution, but unless they switch from a car to transit they didn't reduce the total.

One approach is to allocate each person an equal share somehow, and those who want to drive hummers pay more and those who don't commute at all get credits, but the bureaucracy of that is also large.

Thanks for your comments!

I have given away 90 of the 307 CFLs to offset my CO2.

Here is the idea... check my logic.


Are priced way above the wholesale. The wholesale are underpriced but the retail are overpriced.

There are questions on the mercury in CFLs right now, so they might not be the best pathway here.

So how much is it costing me to exhale? Are you gonna want a credit for my dog?
Hm, a religion that worships the earth and expects penence.
Adolf would have been giddy over this one.

Thanks for reviewing the different sites. I was going to buy some carbon credits but wasn't sure where the best place to buy them was. This post helped.

If you wish to review the different Offset Providers have a look at
We hold information on price per tonne, administration costs and how projects are verified. We are constantly striving to increase transparency in the offset market and have the support of over 40 providers. Have a look and let us know what you think.
Our Carbon Nation Team

But you don't have anything at without a www in front, so you should fix that. And it's a very slow, over-animated web site, and produces PDFs at the end which makes no sense. Did I mention slow?

Woops yes it should obviously be Thank you for taking the time to look at the site. We are aware the site can be a little slow and are in the process of resolving this issue.

Our Carbon Nation

My point was you should not just correct the URL here. Instead, just make "" do a redirectperm to www.whatever so people can type in both.

And switch to a better hosting company, that's the quick way to make it fast. Then, improve the code and go to a cheaper hosting company when you're done.

Okay, so Delta airlines is allowing individuals the option to purchase credits to offset the carbon emissions from their flights. So far it has be popular. Why not expand this into everyday life. Example: one gallon of gas results in the same amount of co2 regardless of the car that burns it right? then at the pump, instead of asking if I want to buy a car wash, ask if I want to offset the CO2 from my fill up today for X cost. In most cases it would be less than a dollar. The station can take a 20% markup (regulated) and the rest buys credits off the climate exchange. This would funnel tens of millions to green energy development. It also means that I can drive my hummer guilt free and dont need to find biofuels.

The same can be done at checkout counters of say wholefoods. Johnson and Johnson could easily calculate the carbon emmission released while making some shampoo. Give that info per item to the big box retailers, link it to the barcode. Then at the end of the purchase ask the customer if that want to offset the carbon for an additional X dollars. It will be added immediately at the point of purchase, retailer takes their 20% and the average cost would be under a buck. I would do it everytime for say 30 cents each visit. Why not? its just 30 cents...

Please post feedback! Thanks

The credits for store purchases would be so cheap as to be pretty meaningless. At the pump or in the home heating and electric bill it would be a different story.

Of course in mandatory credit schemes, buying them is not an option, you can't burn the fuel at all without credits. Usually these get applied to the big vendors who then pass on the cost.

It's 113 gallons to a tonne of CO2, or 8.8kg per gallon. At the Euro price that's 10 cents per gallon ($11/tonne) and with a 20% markup that's closer to $2 on a 15 gallon ($50) fillup, which I could see people doing. Of course with so much demand the price would go up, as it should. And there would need to be more regulations to stop scamming by sellers.

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