Collect Them All! Emissions Trading Reaches the Home Investor

Did you know that for $5—less than the price of a movie ticket—you could formally retire a ton of carbon dioxide (CO2) emissions, the main cause of global warming? Or, if you prefer, $60 buys a ton of sulfur dioxide (SO2), the culprit in acid rain, preventing it from ever being emitted. It’s all part of an emerging consumer market for emissions, or “pollution,” trading, once the exclusive province of large energy corporations. In its classic form, emissions trading involves a low-emissions company selling its “right to pollute” to another firm that would otherwise exceed its federal quota.

Pioneering this emerging consumer market is the New York-based company Natsource, the first in the U.S. with an Environmental Action Desk devoted exclusively to the retail market. Fran Morrill, who manages the newly organized desk, says, “It’s still a tiny market, but we’ve already done hundreds of trades. It’s easy to do.” The most popular trades, she says, are in greenhouse gases, “both because of the importance of the issue and because it’s an attractive price. And with all the discussion of global climate change, it’s a sexy product right now.” For the $5 (plus $5 shipping and handling per order), the purchaser gets a certificate confirming that there’s a ton of CO2 reserved in his or her name.

In Natsource’s case, purchasing credits contributes specifically to two ongoing emission-reduction programs: a carbon sequestration project in the Pacific Coast forests of Panama, and a natural-gas electric generation plant in Argentina. The power plant uses the revenues from credits to fund cogeneration with the excess steam it generates, thus offsetting the creation of approximately one million metric tons of CO2 each year.

Greenhouse gas credits have proven a popular purchase for educational institutions. California’s Los Altos High School organized an Earth Day raffle to buy 50 tons of credits from Natsource. In New York City, East Side Middle School held a bake sale that raised money to acquire and retire credits. On the college level, the Barnard-Columbia Earth Day Coalition was a customer.

Another company, New York-based Cantor Fitzgerald, also sells emissions credits to individuals, though its greenhouse gas program is just getting off the ground. Cantor’s primary product offsets sulfur dioxide emissions. According to Carleton Bartels, managing director of the company’s environmental brokerage services division, “We’ve had people buy credits to give away as birthday and wedding presents, as retirement gifts, and as honoraria for speakers.” Credits for a ton of SO2 range from $60 to $220, depending on market conditions.

Easy Terms

It’s not necessary to understand the stock market to buy emissions credits. At Natsource, for instance, the greenhouse gas buyer simply sends an e-mail to ghginfo@natsource.com, specifying the number of tons per certificate, then follows up with a mailed-in check or credit card number. At Cantor Fitzgerald, an e-mail to ebs@cantor.com will do the trick. “If we hear from someone we purchase the allowance,” says Bartels. “It’s a quirky little business.”

And even, potentially, a profitable one. If purchasers hold on to their emissions credits until they appreciate in the market, then donate them to a nonprofit organization, they can claim a federal tax deduction at the higher valuation. “If the price of the credits goes up, absolutely there can be an advantage,” says Morrill.

Environmental groups, particularly the New York City-based Environmental Defense, have championed the fledgling business of small-scale emissions trading. Joe Goffman, a senior attorney at Environmental Defense, says, “It’s our view that it’s a positive thing if individuals get involved, because it’s another source of revenue for emissions reduction. As long as the credit being traded equals real, net emissions reductions, it’s worthwhile.” Goffman is on the board of the Environmental Resources Trust, which recently received 15,000 SO2 credits (potentially worth $3 million) as a donation. “We created a special retirement fund for emissions credits,” he adds. Some donations to nonprofit groups are coming directly from utilities, including a gift from Connecticut’s United Illuminating to the American Lung Association. The utility gets both positive publicity and a tax deduction.

One reason that the greenhouse gas programs are still small is that the U.S., in failing to ratify the Kyoto Treaty, has not committed itself to any kind of emissions cap. “The credits are being traded in what we call an uncertain ‘pre-compliance’ market,” says Morrill. “Companies get involved because it’s a way of hedging their bets and preparing for the controls they think are inevitable. If they buy credits now and hoard them, they could be very valuable down the road. All indications are pointing in that direction.”

Animal Rights National Conference 2018