The New York Times (pg. C1)  [Printer-friendly version]
January 9, 2008

F.T.C. ASKS IF CARBON-OFFSET MONEY IS WINDING UP TRUE GREEN

By Louise Story

Corporations and shoppers in the United States spent more than $54
million last year on carbon offset credits toward tree planting, wind
farms, solar plants and other projects to balance the emissions
created by, say, using a laptop computer or flying on a jet.

But where exactly is that money going?

The Federal Trade Commission, which regulates advertising claims,
raised the question Tuesday in its first hearing in a series on green
marketing, this one focusing on carbon offsets.

As more companies use offset programs to create an environmental halo
over their products, the commission said it was growing increasingly
concerned that some green marketing assertions were not substantiated.
Environmentalists have a word for such misleading advertising:
"greenwashing."

With the rapid growth of green programs like carbon offsets, "there's
a heightened potential for deception," said Deborah Platt Majoras,
chairwoman of the commission.

The F.T.C. has not updated its environmental advertising guidelines,
known as the Green Guides, since 1998. Back then, the agency did not
create definitions for phrases that are common now -- like renewable
energy, carbon offsets and sustainability.

For now, it is soliciting comments on how to update its guidelines and
is gathering information about how carbon-offset programs work.

Consumers seem to be confronted with green-sounding offers at every
turn. Volkswagen told buyers last year that it would offset their
first year of driving by planting in what it called the VW Forest in
the lower Mississippi alluvial valley (the price starts at $18).

Dell lets visitors to its site fill their shopping carts with carbon
offsets for their printers, computer monitors and even for themselves
(the last at a cost of $99 a year).

Continental Airlines lets travelers track the carbon impact of their
itineraries.

General Electric and Bank of America will translate credit card
rewards points into offsets.

Most suppliers of carbon offsets say that the cost of planting a tree
is roughly $5, and the tree must live for at least 100 years to fully
compensate for the emissions in question. By comparison, an offset
sold by Dell for three years' use of a notebook computer costs $2.

To supply and manage the carbon offsets, big consumer brands are
turning to a growing number of little-known companies, like TerraPass,
and nonprofits, like Carbonfund.org. These intermediaries also cater
to corporations that want to become "carbon-neutral" by purchasing
offsets for the carbon dioxide they release.

Ms. Majoras of the F.T.C. pointed out that spokesmen for events like
the Super Bowl and the Academy Awards have recently started saying
that their events are carbon-neutral (though the Academy Awards drew
criticism for the way its offsets were handled).

The F.T.C. has not accused anyone of wrongdoing -- neither the
providers of carbon offsets nor the consumer brands that sell them.
But environmentalists say -- and the F.T.C.'s hearings suggest -- that
it is only a matter of time until the market faces greater scrutiny
from the government or environmental organizations.

"Is there green substance behind the green sparkle?" said Daniel C.
Esty, director of the Center for Business and the Environment at Yale
University and author of "Green to Gold," a book about how companies
use environmental strategies to their advantage. "The carbon market
is a leading example of the challenge of making sure that when people
put their money into what they hope will improve their planet, that
there is real follow-through."

Carbon offsets are essentially promises to use money in a way that
will reduce carbon emissions. Panelists at the F.T.C.'s session on
Tuesday raised a number of questions about certifications behind the
claims, wondering if the offset companies might be double-counting
carbon reductions that would have happened even without their efforts.

There is even disagreement over how much carbon dioxide can be
neutralized by tree-planting, which is the type of offset that is
easiest to grasp.

Carbonfund.org, for example, which provides offsets to companies like
Amtrak, U-Haul and Allstate, uses the offset money in three ways: to
plant trees; to subsidize wind and solar power so that it can be sold
at more competitive prices; and to purchase credits on the Chicago
Climate Exchange, which barters among hundreds of companies trying to
reduce their emissions.

Even the companies that market carbon offsets say they have wondered
if the providers were living up to their promises. When Gaiam, a yoga-
equipment company, began selling offsets for shipping to consumers
through the Conservation Fund, a nonprofit organization, Chris
Fischer, the company's general manager, says he insisted on visiting
one of the tree sites in Louisiana.

"Not only did I want to know it existed, I wanted to make sure it was
being done the way they said it was being done," Mr. Fischer said.
"It's not just 'did they do it?' -- it's 'did they do it right?"'

Gaiam has sold more than $200,000 in offset credits in the last two
years, Mr. Fischer said.

Other companies have not had immediate success marketing the offsets.
Last spring, Delta Air Lines began selling flight offsets -- $5.50 for
domestic round-trips, and $11 for international ones -- but has so far
not sold as many as it hoped, said Jena Thompson, director of Go Zero
program at the Conservation Fund, which manages Delta's offsets.

Delta is trying to draw more attention to the program this month by
setting up a carbon-offset kiosk at the Sundance Film Festival in Park
City, Utah.

The airline did not consider increasing all ticket prices by the cost
of carbon offsets because customers are price-sensitive, a
spokeswoman, Betsy Talton, said.

Volkswagen has provided free offsets to everyone who purchased a car
in the last five months. The offsets cover a year of driving for a
typical driver, a spokesman, Keith Price, said. The company also gave
customers the chance to buy offsets for additional years, an option
that Mr. Price said had proved most popular in Southern California and
the suburbs of Boston.