When companies announce a plan to get X percent of their energy from wind, solar, or other reneable energy source, it most likely means that they will do it by buying energy credits.
However, the public might perceive these announcements to imply a different story– that a huge number of solar panels were ordered and placed on the roofs of all the company’s buildings. Not likely. Realistically, the company will probably use energy that was generated via fossil fuels.
The disconnect between the two pictures might be upsetting but purchasing energy credits is theoretically the most efficient way for companies to do this.
It looks like Ford is bringing a similar model to all its drivers– CNN reports that the auto company has partnered with Terapass so that “Drivers can pay clean energy firms to remove the same amount of pollution cars create.”
Ford Motor Co. said it will give consumers concerned about harmful greenhouse emissions an opportunity to invest in clean energy projects via a new Web Site that will calculate suggested investments based on the amount of carbon dioxide produced while driving.
I think this is a great idea and it gives all those guilty SUV drivers an easy option to help the environment. Its much easier than trading up for a Prius. The model isn’t perfect though– the NY Times says the model has shortcomings:
Although TerraPass certainly works on a free-market principle, it’s lacking the element of naked self-interest that would drive a truly global change. A more exact parallel to the cap-and-trade system would be one in which drivers who saved fuel by moseying down a 60 miles-per-hour lane could accrue electronic passes they could sell the next morning on eBay to whoever needed to dart to work or the airport that morning at 70 m.p.h. The market for environmental righteousness may be growing, but surely not as fast as the market for speed.
Directionally, we’re headed in the right direction and that’s great by me.
Related Links:
– Coase theorem
– Energy Credits