The Carbonfund.org Foundation is a 501(c)(3) nonprofit that aims to reduce global warming by having government require people and industries to cut their production and use of fossil fuels (i.e. coal, oil and natural gas). Established in 2003, Carbonfund.org, claims to help individuals and organizations become “carbon neutral” by showing them how to reduce or “offset” their carbon dioxide emissions. The group claims to have worked with over 600,000 individuals and 1,800 organizations—businesses, nonprofits, and religious and academic groups—to fight climate change and be “part of the solution toward a clean energy, low carbon future.” A polar bear stranded on a tiny piece of ice greets visitors to the group’s website. The caption says, “Fight global warming today! For him … and us.”
How do you offset carbon emissions so as to become carbon neutral? The organization explains that donors to Carbonfund.org are investing in carbon-reduction projects. Some projects, such as planting trees to soak up carbon dioxide, directly reduce carbon emissions. Others, such as new wind and solar power projects, are described as alternatives to ”dirty” and “polluting” fossil fuels. But Carbonfund.org emphasizes one other innovative project. It fights global warming by purchasing from companies their “right” to emit carbon dioxide into the environment. “We buy the carbon reductions and retire them, meaning that they are taken out of circulation forever. Simply put, we retire carbon by not using it.”
Say again? Lost in the public relations whirlwind is this core truth: Carbonfund.org’s mission depends on acquiring something that doesn’t exist—yet. There are no pollution “rights” for businesses, nonprofits and individuals to sell or offset.
Of course, individuals and groups may voluntarily choose not to emit carbon by cutting their production or use of fossil fuels. But when Carbonfund.org buys a company’s “carbon offsets”—its quantifiable emissions of carbon—it is buying the emperor’s new clothes, spinning a salable right out of thin air. Christopher Horner, senior fellow at the Competitive Enterprise Institute (CEI), explains Carbonfund.org’s magical thinking: “When you rob Peter to pay Paul, you are guaranteed Peter’s enthusiastic support. In fact, the entire enterprise of buying carbon offsets is Peter’s idea.”
It wasn’t supposed to be this way. The original grand idea behind carbon offsets was to have Congress quickly pass a law requiring everyone to reduce their carbon emissions to specific target levels. Never mind that there are many good reasons to question the causes and extent of climate change. Under a proposed “cap-and-trade” bill, the government would permit utilities and other heavy industries to pollute up to a point, and then they could buy or sell excess carbon pollution emission rights.
If companies successfully reduced their carbon emissions to levels mandated by the government, then they could sell their “excess” carbon offsets to polluting industries that still needed them. In other words, by “capping” the amount of allowable emissions the government would create a pseudo-market allowing “trade” in emission offsets. Energy-using businesses, nonprofits and individuals would also limit their carbon emissions. Thus was born the idea that a group like Carbonfund.org could buy-up and “retire” offsets that would otherwise allow carbon use. Donor contributions from corporations and foundations would supply the funding and offer themselves as good examples of how to accomplish carbon offset projects.
The Fall—and Rise—of Cap and Trade
To retire carbon offsets carbon dioxide emissions have to be a commodity, a scarce good. That’s why a cap-and-trade law is necessary if Carbonfund.org is to work as its founders intended. In 2009 all signs pointed toward easy enactment of cap-and-trade. The U.N., green groups, and Al Gore all declared that global warming was “settled science.” Big businesses, including oil companies (BP) and electric utilities (Duke Energy), endorsed a climate change law. So did Republicans like Lindsey Graham, Newt Gingrich and Governors Tim Pawlenty and Mitt Romney.
When Barack Obama became president he pressed Congress to pass a comprehensive cap-and-trade law and the Democrat-controlled House of Representatives complied by narrowly passing the Waxman-Markey bill (219-212) in June 2009. All that was needed were 60 “Aye” votes in the Democrat-controlled Senate. But in 2010 cap-and-trade died in the Senate, a victim of growing public opposition, the “Climategate” scandal in Britain, and the failure of the UN to reach agreement on emissions targets at the Copenhagen climate conference. (See Patrick Michaels, “The Decline and Fall of Cap and Trade,” CRC’s Green Watch October 2010.)
That’s not the end of the story however. Cap-and-trade is not dead. In May 2010, President Obama directed the Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) to develop carbon dioxide tailpipe and fuel economy standards for autos and trucks beginning with the 2012 model year. Even though Congress has refused to pass a federal law regulating carbon dioxide emissions, Obama claims the Clean Air Act authorizes the EPA to act. According to an EPA fact sheet:
“The EPA establishes [greenhouse gas] emissions under the Clean Air Act, whereas NHTSA establishes fuel economy standards under the Energy Independence and Security Act (EISA) and the Energy Policy and Conservation Act (EPCA)…The goal of the joint rulemakings is coordinated federal standards that are also harmonized with applicable state standards.”
“Congress never said anything in the Clean Air Act or any other law about restricting CO2 emissions,” observes Paul Driessen, senior policy advisor for the Committee for a Constructive Tomorrow and author of Eco-Imperialism: Green Power – Black Death. “The EPA’s assertion of authority is derived solely from a convoluted and in my mind totally wrong Supreme Court interpretation of the Clean Air Act – based largely on five justices being snookered into believing the science is settled on manmade, catastrophic climate change, and it had to help EPA ‘do something’ to prevent a global disaster.” Driessen is referring to a June 30, 2011 decision by the U.S. Supreme Court affirming that under the Clean Air Act EPA possesses the authority to limit carbon emissions as a pollutant.
Driessen is one of many voices critical of EPA overreach. “Congress did not restrict emissions in the Clean Air Act or anywhere else,” said CEI’s Christopher Horner, author of Power Grab: How Obama’s Green Policies Will Steal Your Freedom and Bankrupt America. “The only time Congress referenced the Clean Air Act,” Horner continued, “was to make clear that it gave EPA no regulatory authority over carbon dioxide.”
Wanted: A Carbon Emissions Regulator
Lacking a comprehensive federal cap-and-trade law, the environmental movement and groups like Carbonfund.org are under great pressure to find new ways to regulate carbon emissions. Will state and local governments fill the void?
State and regional programs to reduce carbon emissions were once considered forerunners of an eventual national cap-and-trade program. But today their prospects are uncertain. In 2005 ten northeastern states created the Regional Greenhouse Gas Initiative (RGGI) to regulate emissions from utilities. The states pledged to lower carbon emissions by the year 2018 to a level that would be 10 percent less than the emissions level reached in 1990. But in mid-2011, New Jersey Gov. Chris Christie withdrew his state from the RGGI, calling it a costly and ineffective failure. In 2010 Arizona governor Jan Brewer refused to endorse the emissions control plan devised by the Western Climate Initiative, another regional cap-and-trade pact. This one was set up in 2007 by seven states, including Arizona, along with four Canadian provinces. The agreement was intended to mirror emission reduction and carbon trade programs in Europe. However, many Arizona officials questioned why their state would voluntarily restrict carbon emissions that the federal government does not regulate. Currently, among the American states participating in the Initiative, only California seems to really want to implement the program.
“State governments are being pressured by environmental groups and lobbied by alarmist scientists to insist that CO2 is altering Earth’s climate to a tipping point,” says Paul Driessen. “The states are also tempted by promises that their treasuries will be enriched by federal grants and other revenues generated by carbon trading.”
Indeed, many businesses are eager to allow themselves to be regulated. Instead of fighting costly legal battles, they believe they can use government regulation to their own advantage. For instance, as soon as President Obama announced the tailpipe regulation of carbon emissions 22 vehicle manufacturers pledged to work with regulators to develop new standards. Moreover, corporate America knows that “going green” is good public relations. Consumers are inundated with public service messages about the hazards of greenhouse gases and the benefits of “clean” energy. As a result, more than a few business leaders would rather switch than fight.
What Happens in Europe Should Stay in Europe
Lately supporters of carbon emissions trading have looked to Europe, which already has a carbon market. When it adopted the Kyoto Protocol, the European Union bound itself to limiting carbon emissions. Says Driessen, “They’re trading in something they helped to create.” The Europeans “hope to make billions of dollars on it.”
Certainly that’s what the backers of Carbonfund.org and the Obama administration expected for the U.S. when they promoted cap-and-trade. “The cost of energy for consumers would be driven higher in President Barack Obama’s proposed carbon cap-and-trade system that is projected to raise about $80 billion a year starting in 2012,” wrote Stephen Power in the February 2009 Wall Street Journal. “The budget assumes a starting price of $20 per ton for carbon emissions, an amount that Mr. Obama’s aides say is conservative and would likely rise.”
The results in Europe have proven Obama wrong. Europe’s carbon market demonstrates that cap-and-trade is a contrivance that is easily manipulated and subject to fraudulent scams. In addition, trading in carbon emissions credits is subject to unanticipated market consequences because it isn’t a genuine market for a genuine commodity. A July 1, 2011 radio interview of EU carbon market analyst Stig Schjolset illustrates the inadequacy of the pseudo-market in carbon trading. Host Bruce Gellerman began by observing that the price of carbon emission credits in Europe was in “free-fall.”
Gellerman: California has announced it’s delaying implementing the state’s carbon cap and trade program. Officials cite a slew of lawsuits for stalling the market-based approach to cutting climate change gas emissions. Meanwhile, China, the world’s biggest polluter of greenhouse gases, is speeding up adoption of cap and trade to expand it nationwide by 2015. European Union nations were the first to enact a carbon market, but for the past few weeks, the price for emission credits has been in a free-fall, making it a lot cheaper for companies there to emit climate-warming gases than convert to clean, renewable energy sources … Boy, there’ve been some breathtaking losses in the last few weeks. What, the market lost, what, a third in just four weeks?
Schjolset: That is true … What we have seen lately is that the European Commission, as well as the member states, have started to implement – or at least think about implementing – a number of additional policy measures [related to energy efficiency]. So what the market has been anticipating is that the energy efficiency directive will bring down emissions in Europe. And when emissions are going down, the price of carbon will also go down.
Gellerman: So the irony is as you improve your efficiencies, you lower the price for these carbon allowances – and that really drops the incentive to cut back efficiencies.
Gellerman’s point is that when you voluntarily cut carbon emissions the incentive is lost to purchase the kind of carbon offsets that groups like Carbonfund.org are eager to promote. Gellerman then asked about European Union plans to require U.S. airlines to adopt emission controls.
Schjolset: All airlines landing or taking off from an EU airport will be covered by this scheme from the first of January 2012. That is already written into the EU legislation. And the only thing that can change is if U.S. and Chinese airlines are able to be opted out through some of the court cases. They are now launched in the European Court of Justice … U.S. and Chinese airlines are now disputing Europe’s right to put the mandatory cap on their emissions.
What happens if U.S. airlines are required to submit to EU cap-and-trade rules? According to Schjolset: “[T]hey wouldn’t stop flying into Europe. I think they would comply with the scheme and they would buy carbon permits to cover their emissions and add some costs to ticket prices, as European airlines will do.” In other words, next year EU cap-and-trade is likely to increase U.S. consumer travel costs overseas for the sake of an unproven theory of global warming. It should be further noted that because the EU carbon market buys and sells a make-believe commodity—carbon emission credits—it is wide open to fraud.
Europe’s Emissions Trading System is blamed for allowing the theft in carbon credits from national registries that are supposed to keep track of which plants and factories either have acquired carbon credits by reducing their emissions or need to purchase them because they have exceeded their carbon allowances. London’s Financial Services Authority—a government watchdog agency—warns that scams in carbon trading are increasing. It “issued an alert this week to people being approached by companies promoting carbon credit trading schemes, either by cold calling, email or in person,” BusinessGreen reported on Aug. 4, 2011. “Despite noting that some firms may offer genuine investment opportunities, the FSA is concerned that investors will be sold fake credits or lose money by investing without understanding the risks.”
Carbonfund.org: Its Mission and Activities
Carbonfund.org activists go wherever there are discussions about how to cut carbon emissions. The group encourages international agreements and launches private sector partnerships. Some of these are silly such as the “Zero Carbon Wedding” to “offset the impact of your special day.” Carbonfund.org’s ostensible goal is to promote carbon reduction projects. But like other environmental advocacy groups it has a long term political strategy: Build a network of alliances that will force the U.S. government to agree to a national cap-and-trade law and an international climate change treaty.
The U.S. failure to secure a cap-and-trade law in 2010 was a bitter pill. In November 2010, Carbonfund.org president Eric Carlson went so far as to urge the Obama administration to stay away from international climate change talks in Cancun, Mexico. Why? It was five months after the Senate had failed to take up the House-passed cap-and-trade bill.
“The U.S. has been the 800-pound gorilla in the room at climate negotiations,” Carlson said, according to a press release. “As the largest global emitter per capita with enormous entourages at the meetings, all attention goes toward the U.S. Put simply, the problem is that there are not 67 votes in the U.S. Senate to ratify any climate deal the president might negotiate.”
Carlson wants the nations of the world to negotiate their own carbon emissions deals without U.S. interference. He hopes America may eventually be strong-armed into complying with international regulations in the same way that U.S. airlines may be forced to comply with carbon emission rules set by the European Union. In the meantime Carbonfund.org actively seeks private and public sector allies. In 2005 Carbonfund.org Foundation had total revenue of a mere $39,421. By 2007 revenue totaled $4.9 million. In 2009, after two years of recession, revenues fell to $2.35 million.
Besides foundation president Eric Carlson, the Carbonfund.org board of trustees includes chairman Paul Rowland, senior resident director in Indonesia for the National Democratic Institute for International Affairs; L. Hunter Lovins, cofounder of the prominent Rocky Mountain Institute and the California Conservation Project; Mark Ree, legal adviser to the Office of the General Counsel of the U.S. International Trade Commission; and Mike Staresinic, consultant to the business-backed Alliance to Save Energy. Here are some Carbonfund.org partnerships:
* Carbonfund.org has offset agreements to “retire” carbon with the U.S. Environmental Protection Agency, the U.S. Census Bureau and with the Florida Department of Environmental Protection; as well as with the campaign of Sen. Barbara Boxer, the congressional office of Sen. Dianne Feinstein; and the cities of Chevy Chase, Md. and Bellingham, Wash.
* Carbonfund.org’s business partnerships include Discovery Communications, Volkswagen, Staples and Samsung. It helped Dell plant trees, secured a contribution from Allstate for every insured customer who switched to electronic billing, and championed reforestation by Jet Blue. Carbonfund.org sponsored a carbon dioxide emission mitigation project with Overstock.com, the Salt Lake City-based online retailer. Overstock funds reforestation programs and, in return, Carbonfund.org has declared Overstock’s delivery trucks “carbon neutral.”
* Hyundai, Motorola, Virgin Airlines, and Amtrak have received Carbonfund.org’s “Carbon Free” designation for doing the right thing. Hyundai contributed $100,000 for forest planting projects. And when a Motorola employee reuses a tee-shirt from a previous company event, Carbonfund.org arranges to plant a tree in his honor. Reusing a tee-shirt is considered a “carbon offset” making the energy used to produce the tee-shirt “carbon neutral.”
* In January 2011 Carbonfund.org announced a partnership with San Diego County-based GreenCo gas stations. For an extra five cents per gallon, a “pay at the pump” carbon reduction program gives its proceeds to reforestation in Idaho, wind farms in Texas and similar projects, enabling environmentally-conscious customers to imagine as they fuel up that they have offset the carbon dioxide emissions from their SUVs.
* Carbonfund.org’s link to The Bank Information Center “partners with civil society in developing and transition countries to influence the World Bank and other international financial institutions to promote social and economic justice and ecological sustainability,” says Carbonfund.org’s website.
* The group maintains carbon offset partnerships with religious institutions. Many are Unitarian Universalist, but others include Catholic Relief Services, the Evangelical Environmental Network, the Jewish Community Foundation in Greater Kansas City and Metrowest New Jersey, Presbyterians for Restoring Creation; and Temple Emanuel in Washington, D.C.
* At least forty institutions of higher education partner with Carbonfund.org. They include Austin College, Ball State University, Bard High School Early College, the Carnegie Institution Department of Global Ecology at Stanford University, The College of New Jersey, Columbia University’s Earth Institute, Dartmouth College’s Tuck School of Business, John F. Kennedy University, Yale School of Management, and so on.
America’s economy can’t stand much more of groups like Carbonfund.org. By attracting support from so many businesses, churches, nonprofits and government agencies, Carbonfund.org is building a cadre of organizations dedicated to the illusory quest to cut “carbon emissions,” to achieve “carbon neutrality” in everyday activities. Some day we will look back in wonder at the creation of this fantasyland.
Cheryl Chumley is a freelance reporter based in Washington, DC.