Pacific Gas and Electric Co. is going shopping for more carbon credits.
The utility is seeking bids for its voluntary ClimateSmart program, which allows its customers to pay a monthly fee to offset emissions created from their energy use. PG&E calculates the fee, which is tax deductable, based on the customer's electricity and gas consumption.
The utility held a meeting Thursday for organizations interested in selling carbon credits, which are measured in the amount of emissions reduced. Attendees included Sacramento Tree Foundation, East Bay Municipal Utility District and Independence Bio Products.
"We saw climate change was going to be more and more of an issue when we proposed the program in 2006," said Robert Parkhurst, the climate protection and analysis manager at PG&E. "We want to educate our customers about their carbon footprint and what they can do about it."
ClimateSmart, in place since June 2007, has attracted more than 30,000 customers that include residents, businesses, cities and churches. An average household would pay about $5 per month to go carbon neutral, according to the San Francisco-based PG&E.
Since the program's inception, the utility has signed contracts for projects that would reduce 980,000 tons of greenhouse gas emissions, which PG&E compares to taking 163,000 cars off the road for a year (see list of projects under contract).
PG&E is the only investor-owned utility in California to have a carbon offset program for its customers. The Sacramento Municipal Utility District also runs one.
PG&E's ClimateSmart so far has retired 40,000 tons of emissions, which came from its very first contract with the Conservation Fund to buy offsets from the non-profit's preservation of Garcia River Forest in Mendocino County in California.
ClimateSmart's goal has been to offset 1.5 million tons of emissions during the duration of the pilot program, which is supposed to sunset this year. But PG&E has asked the PUC for an extension that would extend the program through 2011, Parkhurst said.
Carbon offset programs are growing in popularity nationwide, thanks in part to the growing public awareness about the negative impact of man-made greenhouse gas emissions.
Many companies spend money on buying credits to show their commitment to environment protection. Google, for example, announced earlier this year that it had bought enough credits to offset all of its emissions from 2007 and some from 2008 (see Google: Carbon Credit Shopping Ain't Easy).
The carbon trading market will only grow a whole lot more if Congress passes a pending legislation that would require heavy polluters in industries from automobile to power generation to buy credits to offset their emissions. The House passed the bill in June this year, and the Senate is still wrestling with it.
PG&E is willing to buy carbon offsets from nonprofits, businesses, cities or schools. For nonprofit organizations, ClimateSmart represents a good source of funding, particularly as grants have become hard to come by during a poor economy.
"Grant funding only goes so far," said Dorsey Moore, principal of Sustainability for All, a San Jose, Calif., consulting firm, after the meeting. "It's a new financial tool for environmental and social programs."
During the meeting, ClimateSmart managers cautioned against treating the program as a source of grant funding.
For one thing, project developers have to prove that their proposed emission reductions wouldn't have taken place without ClimateSmart. It's not always clear-cut on how to apply this criterion, which is commonly called "additionality" in the carbon-trading world.
PG&E buys carbon offsets through the Los Angeles-based Climate Action Reserve (CAR), which verifies the legitimacy of emission-reduction projects and coordinates the purchase of carbon credits.
Developers of projects selected by PG&E must pay CAR to register the projects and pay CAR for verifying that emissions have been indeed taken place.
PG&E also pays CAR for its service. The utility collects about 3 cents to 4 cents per month from each of its customers to pay for the CAR service and for PG&E's staff time and outreach efforts, Parkhurst said.
Money collected through ClimateSmart only goes to buying offsets, however. The California Public Utilities Commission has authorized the utility to pay on average $9.71 per ton of emission reductions, Parkhurst said. But PG&E doesn't disclose financial terms of the bids it receives or selected.
The utility has expanded its project selection since the program began two years ago.
When PG&E solicited bids for the first time in 2007, it only considered projects for preserving forests. Since then, it has considered those for sequestrating methane gas from dairy operations and landfills, as well as the so-called urban forest and organic waste digestion projects.
"We think [ClimateSmart] is laying the ground work for many projects in the voluntary and later mandatory programs," Parkhurst said.
Image of the Garcia River Forest courtesy of Conservation Fund.