In Washington, DC, eco-vandals smear SUV door handles with dog crap. In Santa Cruz, California, protestors tag more than 60 gas-guzzlers with anti-oil graffiti. In Los Angeles, a Caltech grad student is sentenced to eight years in prison for trashing more than 120 SUVs around the city. It's almost enough to make you feel bad for SUV drivers. After all, some of them are green, too - just not as hardcore about it.
Now they have TerraPass, a clever eco-capitalism experiment. Launched by a group of Wharton Business School classmates, the startup sells a decal that drivers can slap on their windshields. The sticker price - $79.95 for SUVs, less for greener cars - gets invested in renewable energy projects and credits. The credits are traded through local brokers on the new Chicago Climate Exchange.
TerraPass lets consumers participate in an emissions trading system the US established in 1990. (Give credit to economist Ronald Coase, who won a Nobel Prize for the idea in 1991.) Under the system, industrial operations that spew less than their share of emissions can sell a credit to companies that fail to keep gunk out of the air. In effect, the dirtier factories can pay greener operations to do the work of cutting emissions. The approach has taken off worldwide, spawning a billion-dollar market.
And it's not just for big-time polluters. Today, farmers cash in on credits by collecting and processing cow dung, which produces globe-cooking methane. Land-owners earn credits by installing wind farms on their blustery fields, which top off the power grid with carbon-free electricity.
But until now, the Chicago Climate Exchange was off-limits to all but registered traders, and the transaction cost of buying credits piecemeal from small outfits was too high. TerraPass aggregates the money plunked down by guilty - ahem, environmentally concerned - SUV drivers, allowing them to participate in the market.
Burning a gallon of gasoline produces about 20épounds of CO². So the average SUV - which travels 12,000 miles a year - pumps out about 20,000 pounds of greenhouse gases annually. On today's market, TerraPass can scrub that pollution from the environment for less than 80 bucks.
Only a few months old, with a staff just out of grad school and a membership of fewer than 1,000, TerraPass is no match for the world's half a billion cars - the second-biggest source of greenhouse gases. But Ned Ford, a member of the Sierra Club's Global Warming and Energy Committee, believes TerraPass could change the way people think about energy and the environment. "Politicians and business leaders have been telling us for the last 20 years that there's this huge painful cost associated with reducing carbon," he says.
"If you think about your own personal impact on CO², and you find out you can offset it for a reasonable amount of money, it makes you think differently about the problem. TerraPass is mind opening," he says, "and that's pretty cool."
- Douglas McGray
credit Vele Samak, TerraPass, Inc.
Go green: the $ 79.95 windshield decal
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