Getting Your Slice of the Cap-and-Trade Pie

My Emissions Exchange

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When the House of Representatives passed the American Clean Energy and Security Act on June 26, it was a landmark moment for environmental politics. If the bill passes the Senate to become law — no sure thing, given the 60 votes needed in the upper chamber — it would establish the first national caps on carbon emissions. It would also create what would almost certainly be the world's biggest greenhouse-gas market, since companies would have the option to buy and sell carbon credits and offsets. Every smart, efficient enterprise that can rapidly bring down its emissions will be able to make a mint on the carbon market — and so will the carbon middlemen.

How would you like to get in on the action? National cap and trade may be reserved for the big players, but U.S. carbon emissions are made up of a billion individual decisions — including yours — every day: how much we drive, how much electricity we use, what we eat. Now a new website called My Emissions Exchange promises to bring the carbon market to your front yard. If you can drastically reduce the electricity you use in your home, the site will certify your personal emissions reductions and then broker those credits to companies looking to burnish their green reputations. "You're rewarded in two ways if you bring down your personal emissions," says Tom Reilly, the company's president. "You pay less in utility bills, and then you generate carbon credits that we can sell." You win — and so does the earth. (See the top 10 green ideas of 2008.)

The website, which is currently undergoing an early launch, will analyze your household utility bills for a year. (You need at least 12 months of data, to set a reliable baseline for your carbon emissions before you try to reduce them.) Using that data, the site can establish a very rough carbon footprint for your household — the U.S. average is approximately 30 tons of CO₂ per year per family. If you can then reduce your emissions, whether by simply using less electricity or by installing energy-efficient technology, like better boilers and compact fluorescent lightbulbs, the site will calculate how much carbon you've saved. Those translate into carbon credits of 1 ton of CO₂ avoided. The company certifies the credits and brokers the sale. "This is a system that incentivizes you to save energy on a personal level," says Paul Herrgesell, project manager for My Emissions Exchange. "This aligns with your economic interests and encourages you to reduce consumption."

As far as encouragement goes, nothing is quite as persuasive as cash. Reilly and Herrgesell contend that only a small percentage of Americans will ever really go green for green's sake — and utilities will surely resist top-down efforts to get them to sell less electricity. But by appealing to our checkbooks instead of our conscience, My Emissions Exchange might help reduce U.S. carbon emissions better than a stack of hectoring environmental reports. "We're betting that people will respond to a positive incentive and get paid to reduce," says Herrgesell. (See pictures of the world's most polluted places.)

Still, human behavior isn't that easy to change. Reilly and Herrgesell point out that reducing your carbon footprint will also cut your utility costs, but that will likely require an up-front payment — in the form of investment in more energy-efficient utilities — and those remain a hard sell to American consumers. Even if you succeed in reducing your personal carbon emissions drastically, you'll likely produce only a few tons' worth of carbon credits — and with carbon credits worth around $7 a ton on the voluntary market, you won't exactly be able to retire on the payoff. Plus, the website is still evolving, and the company still needs to find corporate buyers who will take on the credits — which right now would be useful only on a voluntary level, not to meet any corporate carbon reductions required by law.

"There's a lot of questions here about how real the reductions are and whether they should be traded as actual emissions cuts," says Kurt Davies, research director for Greenpeace U.S.A.

Reilly and Herrgesell acknowledge that the site is still in its early stages and will need refinement. Over the next two years, they're hoping to get at least 1 million members and establish the site as a clearinghouse for information on energy efficiency. The future of cap and trade will be decided in Congress, not on the Internet — but My Emissions Exchange does give a little power to the people, and that's not a bad thing. "We're realistic about the challenges ahead of us," says Herrgesell. "But I think we can make this market work."

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