PG&E’s “ClimateSmart” Offsets Are Anything But

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"PG&E’s “ClimateSmart” Offsets Are Anything But"

One reason I began posting my Rules of Carbon Offsets is a dubious program by the California utility PG&E called ClimateSmart, which is supposed to allow PG&E customers to become “climate neutral.”

This program actually manages to violate Rules 0, 1, and 2 all at once! It really makes clear why offsets are bastardized emissions reductions — and why trees are an especially dubious offset.

vaneck200.jpgThis picture graces the “Our Projects” page of the ClimateSmart website. The caption reads “Photo of van Eck Forest, courtesy of Pacific Forest Trust.” Well that burns Rule 1 and 2 — no trees, and certainly not trees in a California forest comprising half your offset portfolio. (This forestry offset is particularly outrageous, as we will see at the end of this post.)

Worse, what PG&E is offering to do is offset customer’s greenhouse gas emissions generated from their electricity purchases and natural gas consumption.

The $64,000 question is — Why doesn’t PG&E just sell renewable power to its customers? Remember Rule Zero of Offsets:

Before you pay others to reduce their emissions on your behalf, you need to do everything reasonably possible to reduce your own emissions first. As the saying goes, “Physician, Heal Thyself” before presuming to heal other people.

How does Rule Zero apply here? Consider what PG&E says:

The fastest, most cost-effective way to reduce greenhouse gas emissions is to use your energy more efficiently–taking advantage of PG&E’s smart energy rebates and programs. After doing what you can to reduce your energy use, make the rest “climate neutral” with ClimateSmart.

OK, energy efficiency is the first thing you do — I’ve made that argument myself many times. But “after doing what you can to reduce your energy use,” the obvious next step is not paying someone else to reduce their emissions, but to purchase green power, directly eliminating any greenhouse gas emissions from your electricity use.

California is a state rich in renewable resources — selling green power to customers who want zero emissions would be easy for PG&E. So why don’t they? My guess is the cost is considerably higher than the forestry projects.

Yes, since GHGs don’t have a price like, say, sulfur dioxide, lots of cheap GHG-reducing projects have been ignored. Isn’t it a good idea that PG&E get money from their customers to fund such projects? Not really, for two reasons.

First, California has already enacted a law mandating a return of greenhouse gas emissions to 1990 levels by 2020 — a 25% cut in just 13 years! That almost certainly means California will soon be enacting a cap & trade system that will set a fairly high price for GHGs. And that means all these cheap offsets projects will get funded soon anyway, which in climate-speak means PG&E’s projects probably don’t pass the addionality test. This is especially true for one of PG&E’s specific projects.

What offsets does PG&E offer? The company explains:

PG&E will only invest in greenhouse gas reduction projects for which there is an approved project protocol from the California Climate Action Registry (Registry).

The problem is that the Registry is not concerned with offsets, but with helping to enable companies to set greenhouse gas baselines and overseeing certification of voluntary GHG reduction projects. The Registry wouldn’t care if 100% of PG&E’s offsets were trees. Nor would the Registry care if a tree planting project decreased the earth’s albedo (reflectivity) and negated the GHG benefit, as a study by Livermore Laboraties and the Carnegie Institution concludes is entirely possible for non-tropical forests.

Based on my conversations with environmentalists, as I’ve said in Rule 2, I would not allow more than 10% of an offset portfolio to be for trees, and those could only be urban shade trees or certified tropical forest preservation — certainly not the dubious project PG&E seems to be pushing, as we’ll see. (Even two of the highest rated offset-selling companies have a 20% limit on trees, see here pp. 17 and 18.)

PG&E writes:

Currently, the Registry’s only approved protocols are for forestry-based carbon sequestration and livestock manure management projects. As a result, PG&E’s 2007 ClimateSmart Solicitation is limited to these types of projects.

Again, that seems lame to me. A customer’s electricity emissions should be avoided with green electricity.

But what is worse than lame is the tree project PG&E is pursuing. Salon.com published an expos© on PG&E and this project that is so astonishing I am just going to repeat it here:

Last December, however, PG&E spokesman Keely Wachs announced that customers’ dollars would initially be invested in California forests. Indeed, the project closest to meeting the registry’s standard involves selling credits from the 2,100-acre van Eck Forest in Northern California’s Humboldt County. Laurie Wayburn, president of the Pacific Forest Trust, which is managing that project, predicted it will be certified in August….

This sounds good. But I decided to give it a closer look. I tracked down Charles Michler, an advisor to the Fred M. van Eck Forest Foundation, based at Purdue University in Indiana. Michler told me the forest’s current sustainable management is owed to a conservation easement placed on the property back in 2001.

A conservation easement means that a property’s owners have been paid for their agreement not to develop the land, a stipulation that stays with the land title, forever. But this easement went further, Michler said, including what he called “very strict” guidelines for conservation. In other words, my payments to PG&E for carbon credits weren’t going to plant or protect any trees in the van Eck Forest; that had all already been arranged. Indeed, the foundation board was still deciding what to do with the PG&E money if it came through. One possible use, Michler speculated, might be to fund another building for the forestry department at Purdue — a likely disappointment for PG&E customers who think their money will be used to plant redwoods.

Ouch! Again in offset lingo, this project fails the additionality test miserably — the climate benefit, if there is any, would have happened anyway.

So we have utility customers paying for a project that would have happened anyway and probably doesn’t even reduce global warming. To add minor ironic insult to injury, the money might go towards a building that itself would generate more greenhouse gas emissions.

Such is the path we traverse once we enter the offset labyrinth.

Bottom Line: For electricity customers interested in going carbon neutral, PG&E should be selling them renewable power not trees that supposedly offset fossil fuel power.

One more point: For customers who want to offset the emissions from their direct natural gas purchases, PG&E could offer certified offsets, but given the imminence of a GHG price in California (if not the nation), I’m not certain even that has much value. Instead, when California enacts a cap & trade system, PG&E should offer to buy and retire emission credits for those customers. That would really be going carbon neutral.

Interestingly, Salon notes:

The company expects to collect $20 million, over three years, from the 5 percent of clients it predicts will sign up to buy the offsets…. In the meantime, it will spend another $16 million to administer and market the program. That extra money will come from a rate increase, averaging 2 to 3 cents a month, approved by California regulators. Which means even PG&E’s customers who won’t buy offsets will pay to advertise them.

Yes, all PG&E customers are paying to advertise offsets that may not even be offsetting climate change and were going to happen anyway.

If PG&E really, really wants to sell legitimate offsets to its customers, I strongly urge it to assemble an independent group of environmental and energy folk with expertise in the area of offsets. That group could come up with guidelines for PG&E that would have some credibility. I’d be happy to provide the names of some people.

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13 Responses to PG&E’s “ClimateSmart” Offsets Are Anything But

  1. anonymous says:

    I’ve always liked this blog, but this is a somewhat malicious attack on a company that tries to do a lot of good. The ClimateSmart program just rolled out to customers in the last week or so and yes, it’s not perfect. But PG&E felt it better to do offsets that can be verified, i.e. ones that have project protocols. The portfolio will expand beyond forestry as soon as there are more protocols to measure and verify the projects with. And all of PG&E’s rate increases have to be approved by the California Public Utilities Commission, which has been at the forefront of environmental responsibility measures in the state. Expanding beyond forestry projects also requires the approval of the CPUC. I don’t think you quite understand how involved the state is in most of PG&E’s actions.

    And speaking of independent group of environmental and energy folk, the program has an external advisory group. http://www.pge.com/about_us/environment/features/external_advisory_group.html
    Did you not see the little congratulatory blub from Dan Kammen, who you’ve cited on this blog?

    Again, the program isn’t perfect. But I don’t think you’ve done all your homework.

  2. Joe says:

    I do agree that PG&E is a pretty green company as utilities go, with very low greenhouse gas emissions and an outstanding energy efficiency program. So kudos to PG&E for that. But this program is not well thought through — and I think it sets a very bad precedent for utilities that are far less green. That’s why I have called them out.

    It turns out I know two members of the advisory group and have spoken to them, and I think they would be the first to admit that 1) they haven’t spent a lot of time on offsets in general, and 2) they had no idea about the details of the van Eck Forestry Project, which, if Salon is accurate, utterly fails any reasonable test for a good offset project.

    I like Dan Kammen. I just e-mailed him my post.

    I have now talked to several people about this program, and previously have talked to dozens of people about offsets. I am very careful to do my homework.

    My friends on the advisory group urged me to share my concerns with PG&E, which I have just done.

    I will report any and all corrections to what is in this post. If you can identify any mistakes, please do so. I have zero desire to be malicious, but I have a great desire to see California and the nation and the world achieve real greenhouse gas reductions.

  3. John says:

    I’ve been following this discussion of offsets, and rules for offsets, and one of the things I’m struck by is the near desperation of folks to support anything that seems to be done in good faith, even if it has a whole panalopy of unwanted and unintended consequences.

    And I do think PG&Es program is being done in good faith. The company has a relatively good track record, and they have a great advisory group, some of whom I know personally and admire a great deal.

    But none of that matters, if the program — in the long run — doesn’t make the most efficient use of resources to cut the most GHG. And it does not.
    The time when feel good programs that are less than optimal (and in this case, in the long run, potentially perverse in terms of results) is long gone.

    We’re in the bottom-of-the-ninth-with-two-outs-and-no-one-on-base; We’re in the fourth-quarter-fourth-down-no-time-outs- ten-yards-to-go kind of territory, here when it comes to global warming.

    Good intentions, and promises of real results eventually are way too little way too late.

    For my money, I’d put the PG&E program into the “nice try guys” category and save the praise for those who are focusing on getting their own house in order and blazing new ground. Encouraging others to do so with potentially specious and probably temporary offsets just delays the kind of fundamental investments we need to make. In a sense, this is just another of a long line of actions in the environmental world I call “the tragedy of small victories.”

    As Gore noted, the most dangerous thing facing us right now is that we do some half-measures, declare victory, and call it a day for a decade or so as we pursue these half-measures. As for offsets, at the end of the day, we run the risk of actually aggravating GW, we’ll certainly misallocate scarce resources and in any case, we’ll run out of “others” long before we get where we need to go. So doesn’t all this offset activity merely delay what we need now and need badly — a new energy infrastructure?

    There is a place for offsets — one time trips, for example. And properly structured offsets subject to rules may make sense. But it’s time to move beyond good intentions.

  4. Peter Miller says:

    While I agree that there are plenty of forest offset programs that deserve your criticism, I don’t think the ClimateSmart program is one of them. Here’s my somewhat lengthy reasoning. Full disclosure – I’m am member of the Climate Smart Environmental Advisory Group.

    First, PG&E is aggressively pursuing all available efficiency and renewable resources and supports a mandatory cap on emissions at the state and federal levels. The ClimateSmart program is in addition to all those other efforts. In particular, all carbon credits generated through this program will be retired and will not count towards PG&E’s emissions reductions obligations under AB32.

    This contradicts your argument that Climate Smart projects are not additional because they would have been funded as part of a mandatory cap and trade program anyway. Any projects that are funded through ClimateSmart will not be available to meet cap & trade obligations which will have to be met by investments in additional reductions. (It is important to point out here that ARB has yet to decide the scope of the CA cap & trade program and, in particular, whether forest sector projects will be eligible to participate at all.) In effect, PG&E is doing exactly what you recommend: it is offering to buy and retire emissions credits for its customers.

    Second, PG&E is limited to investing in projects that comply with the Climate Registry’s protocols in order to insure that all projects meet stringent accounting standards and are verified by independent third parties. The Climate Registry’s forest protocols in particular are, I believe, the most stringent and comprehensive forest protocol in use today. As you are well aware, there are plenty of offset programs that don’t meet these high standards.

    Third, I think you are misreading the Gibbard et.al. article you cite regarding the net climate impact of tree planting. That study concluded that the albedo effect dominates for forests in high latitudes (i.e. 45°-90°) while the evaporation effect dominates in low latitudes. For mid-latitudes, like California (roughly 30°-40°), the two effects tend to balance each other out, allowing the sequestration effect to dominate. I think it’s also worth noting that the study’s conclusions are based on global averages which mask substantial regional variation and, more importantly, the results of a single modeling study should be extensively reviewed and confirmed by other efforts before it is generally accepted as truth.

    I also disagree with your statement that the Registry isn’t concerned about albedo effects. The Registry protocols are intended to capture the full range of climate effects. The reason albedo isn’t part of the accounting requirements is the lack of any scientific confidence or feasible methodology on whether and how to measure those effects.

    Third, despite what the Salon article says, PG&E has not contracted for any emissions reductions yet since the RFO was just released last week. (The RFO and associated documents is available at http://www.pge.com/about_us/environment/features/climatesmart_2007_requests.html)

    If the Van Eck project bids into the program, PG&E can evaluate whether the proposed reductions are additional. As clearly stated in the RFO, bidders are required to demonstrate that the proposed reductions would not have occurred but for the funding provided by the Climate Smart program. Generally, the Registry protocols include the requirement of legal additionality under which projects are not allowed to claim credit for reductions that are required under a legal or regulatory obligation.

    I think it’s also worth noting that an overly aggressive concern about additionality can be problematic. For example, the Climate Registry forest protocols generally credit forest landowners with all carbon savings above what would be required under the California Forest Practices Act (CFPA). (That’s assuming there are no other legally binding obligations that would cause management to exceed the CFPA) Some people have argued that this is excessive because some landowners would have managed their stands in ways that would exceed the CFPA and, as a result, we might pay them for savings that would have occurred otherwise. I’m sure you’ll recognize this as the classic “free riders” concern that has bedeviled energy efficiency programs for decades. The forest sector program response is the same as it is for efficiency programs. Effectively run programs can account for and minimize free ridership, provide cost effective benefits, and maximize free drivers, leading to long-term market transformation.

    Finally, there is widespread agreement that it would be better to have a more diverse portfolio of offset projects and there is a concerted effort underway to expand the range of eligible project types beyond the forestry projects. As you note manure management protocols were recently adopted and, pending PUC approval, will also be eligible. Urban forestry protocols are being developed by the Registry and should be adopted sometime in 2008.

    We may disagree, but I believe that PG&E has created a credible program that can serve as a model for other efforts and that it has already assembled an independent advisory group with expertise in the area of offsets. I think your concerns with most offset programs are on target, but that the Climate Smart program doesn’t suffer from those same flaws.

  5. Joe says:

    This is useful input and after I have talked to PG&E I will do a full reply. You are, I believe, mistaken about the study and PG&E made a mistake in featuring the van Eck forest on their web site as one of the solutions they were pursuing. More to come.

  6. Dear Joe,

    Several mutual friends and colleagues forwarded me your blog on ClimateSmart™ and I have the utmost respect for your work. However, your posting has a number of inaccuracies and I am writing to clarify how PG&E designed and plans to implement the ClimateSmart program.

    We conceived of ClimateSmart during our January 24, 2006 testimony (https://www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionTariff_Test_PGE_20060124-01.pdf) before the California Public Utilities Commission (CPUC):
    “PG&E’s voluntary [program] is designed to be the proverbial “icing on the cake,” supplementing other programs and policies that address climate change.” (page 1-2)

    That means ClimateSmart must be understood in the context of PG&E and California’s ambitious energy and climate change policies.
    • As a world leader in energy efficiency, we are investing $1 billion in enhanced energy-efficiency programs from 2006 to 2008. (http://www.pge.com/about_us/environment/features/energy_efficiency.html)
    • PG&E delivers some of the cleanest electric power of any major electric company in the United States. And we are aggressively adding renewable electric power resources to our energy portfolio. (http://www.pge.com/about_us/environment/features/clean_energy.html)
    • We are committed to leading by example when it comes to climate change. (http://www.pge.com/about_us/environment/features/climatechange.html)

    After an eleven month public approval process, the CPUC approved the program (http://www.cpuc.ca.gov/word_pdf/final_decision/63046.doc) on a 5-0 decision on December 14, 2006. In their summary, they stated:

    “Pacific Gas and Electric (PG&E) demonstrates strong environmental leadership by being the first utility in the nation to offer its customers a means to offset their greenhouse gas (GHG) emissions. This proposal is a very important step in developing awareness of the causes of global warming and creating a sustainable and credible emissions offset program.” (page 2)

    But don’t take our word for it; listen to what others have said.

    Numerous organizations sent in letters during the extensive CPUC regulatory proceedings on ClimateSmart, including Environmental Defense, Small Business California, and the Natural Resources Defense Council. Here is a link to those letters (https://www.pge.com/regulation/ClimateProtectionTariff/Testimony/PGE/2006-01-Fwd/ClimateProtectionTariff_Test_PGE_20060606-01.pdf).

    Since the unanimous approval of the program by the CPUC, here is a sampling of what climate change policy leaders have said:

    “ClimateSmart, combined with energy efficiency and solar power, can shrink our climate footprint. We hope that ClimateSmart can play an integral role in helping San Francisco meet our aggressive greenhouse gas emissions reduction goals.”
    — Jared Blumenfeld, Director, Department of the Environment, City and County of San Francisco

    “ClimateSmart’s focus on transparency, accountability, and environmental protection provides a great example for all carbon offset programs.”
    — Diane Wittenberg, President, California Climate Action Registry

    “The Climate Group congratulates PG&E for its ongoing leadership to address global warming through programs such as ClimateSmart. The company’s actions are serving to educate and deepen community awareness of the issue, while providing an opportunity for the general public to take positive steps to reduce their carbon footprint.”
    — Mark Kenber, Policy Director, The Climate Group

    “We can prevent the most devastating consequences of global warming, but only if we act swiftly and decisively to reduce global warming emissions. By meeting strict standards for offsets, the ClimateSmart program will engage individuals and businesses as part of the solution in the fight on global warming.”
    — Karen Douglas, Director, California Climate Initiative, Environmental Defense

    “NRDC today reaffirms its view that the ClimateSmart program is an effective way for PG&E customers to invest individually in rigorously verified environmental benefits, even as we continue to emphasize (like PG&E itself) that voluntary measures are complementary to the mandatory measures that are needed to meet the challenge of global warming.”
    — Luke Tonachel, Energy Program Analyst, Natural Resources Defense Council

    “I am delighted to see the PG&E ClimateSmart program opening to enrollment, and intend for our family to sign up right away. Voluntary programs such as ClimateSmart illustrate the opportunities that exist to address global warming, and the power of individuals to send a message that personal action is both possible and significant.”
    — Dan Kammen, Professor in the Energy and Resources Group, in the Goldman School of Public Policy, and Director of the Renewable and Appropriate Energy Laboratory, University of California, Berkeley

    Our partners joined with us to debate the challenges of the voluntary carbon market.

    On June 28, when the program was launched (http://www.pge.com/news/news_releases/q2_2007/070628.html), we held a symposium called “Voluntary Carbon Offset Programs: A License to Pollute or a Climate Change Remedy?” This program featured the views from:

    • Ricardo Bayon, Director, Ecosystem Marketplace and Author of Voluntary Carbon Markets
    • Cheri Chastain, Sustainability Coordinator, Sierra Nevada Brewing Company
    • Eric Holst, Manager, Center for Conservation Incentives, Environmental Defense
    • Dan Kammen, Professor, Energy and Resources Group, in the Goldman School of Public Policy, and Director, Renewable and Appropriate Energy Laboratory, University of California at Berkeley
    • Peter Liu, Initial Founder and Vice-Chairman, New Resource Bank
    • Wendy Pulling, Director, Environmental Policy, PG&E
    • Laurie Wayburn, Co-Founder and President, Pacific Forest Trust
    • Diane Wittenberg, President, California Climate Action Registry

    The audio of the program can be heard here (http://www.pge.com/about_us/environment/features/news/climatesmart_symp_discussion.html). We encourage you and your readers to listen to it.

    Through ClimateSmart, PG&E will be purchasing greenhouse gas emissions reductions through a formal, competitive process.

    We are investing 100% of the ClimateSmart payments toward new GHG emission reduction projects in California.

    On June 28 we initiated a competitive process (http://www.pge.com/about_us/environment/features/climatesmart_2007_requests.html) to select the projects in which we will invest. The process is based on PG&E’s best practice of renewable and conventional energy purchasing process. We are currently in the process of collecting those offers and will select the projects later this year. Eligibility for the ClimateSmart competitive bid process requires that Projects meet the stringent requirements of either the Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Forest%20Project%20Protocol_Version%202.0.pdf) or Livestock Project Reporting Protocol (http://www.climateregistry.org/docs/PROTOCOLS/CCAR_Livestock_Project_Reporting_Protocol_June_2007.pdf) of the California Climate Action Registry (http://www.climateregistry.org/) (Registry). It is designed to include other types of GHG emission reduction projects as the Registry completes and adopts a broader range of project measurement protocols.

    PG&E is applying stringent additionality requirements.

    Additionality is most commonly defined as doing something that wouldn’t have been done under a “business as usual” condition. While that is a simple principle, most people involved in quantifying GHG emissions reductions agree that it is complicated to implement. In order to quantify these reductions, PG&E is applying two additionality tests to projects submitting bids to our request – regulatory additionality and financial additionality.

    By following the stringent Registry protocols, we are ensuring regulatory additionality. The Registry’s Forest Project Protocol (http://www.climateregistry.org/docs/PROTOCOLS/Forestry/Forest%20Project%20Protocol_Version%202.0.pdf) states that “Project Developers are required to describe their project activity and explain how their project activity exceeds, or is additional to, the baseline qualitative characterization, including any mandatory statutes or regulations used to characterize the project baseline.” (page25)

    In addition to the Registry additionality requirements, PG&E – as a part of our competitive solicitation process (http://www.pge.com/about_us/environment/features/climatesmart_2007_requests.html) – is requiring every bidder to specify exactly how ClimateSmart funding would be used for new projects. This is our financial additionality test. In our request for offers we state that we “will require all ClimateSmart Projects to provide evidence that but for ClimateSmart funds, the Project that generates the Registry-certified GHG emission reductions would not have occurred.” (page 9)

    As you indicated in the Salon.com article that you referenced in your post, people should not invest in carbon offset program if they don’t meet basic additionality standards. PG&E won’t invest in them and neither should anyone else. The pictures of the van Eck and Garcia River forests are just examples of the projects that are going through the Registry certification process. They may or may not qualify for the PG&E program based on their response to the competitive bid process. You blog has shown us that the van Eck picture may be confusing, so we will take a fresh look at how we caption that photo to make sure that we are being as clear as possible.

    Accountability and transparency are key aspects of this program.

    With ClimateSmart, our goal is to create a voluntary GHG emission reduction program with the highest standards of accountability and transparency. In developing the program, we worked with regulators, key environmental groups, and other stakeholders to create this process, incorporating a wide variety of best practice oversight and verification measures. Some of the measures we have put in place to reach these high standards are:

    • Limiting investments to projects with an approved project protocol from the Registry and accepted by the CPUC
    • Seeking ongoing feedback and input from an External Advisory Group (http://www.pge.com/about_us/environment/features/external_advisory_group.html) of respected community, environmental, business, and government leaders
    • Requiring that all emission reductions for the selected projects are independently certified and registered with the Registry
    • Permanently retiring all of ClimateSmart’s certified GHG emission reductions, which means they cannot be used by PG&E or anyone else for any other purpose
    • Requiring an independent, annual program audit and regularly reporting the results to the CPUC and enrolled customers

    Through the ClimateSmart competitive bidding process, we are also requiring all projects to be new. Even if a project had been certified, PG&E will not purchase the reductions unless they occurred after December 14, 2006, the date which the CPUC unanimously approved the program. PG&E will only enter into contracts for projects that invest in new GHG emission reductions that would not have otherwise occurred.

    Voluntary programs are only part of the solution.

    As stated by Peter Darbee, Chairman, CEO and President of PG&E Corporation before the U.S. Senate Committee on Environment and Public Works on June 28 (http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=90c23c0e-52a2-4b4e-b0cc-d8938bf5fba0), PG&E believes:

    “Voluntary programs alone are insufficient and will not send the appropriate price signal to U.S. industry to make a measurable impact on global climate change. Only a mandatory, national reduction program is capable of stimulating sustained action and investment on the scale required to meaningfully reduce emissions and establish the U.S. as a leader in the response to global climate change.”

    Consistent with our policy position on mandatory regulation, in 2006, PG&E joined with other leading businesses and environmental nongovernmental organizations as part of the U.S. Climate Action Partnership (http://www.us-cap.org/) to develop a set of policy principles and a legislative framework for a federal, market-based, mandatory climate change program.

    And, while we prefer a national approach to addressing climate change, we also recognize the important role that states can play—in terms of acting as a catalyst for federal legislation, bringing forth innovative ideas and approaches to tackle the complexities of the issue, and making progress toward combating climate change. That is why we worked constructively with the California legislature and the Administration to enact AB 32 (Nunez/Pavely), the Global Warming Solutions Act, and were the first major utility to support its passage.

    We also supported passage of SB 1368 (Perata), which requires that all power sold to utilities in the state under long-term contracts meet a GHG emissions performance standard that is equivalent to that of an efficient, combined-cycle natural gas plant. Implementation of these two pieces of legislation will ensure that California continues on a path of reducing its overall carbon footprint and challenging its businesses to do the same.

    The ClimateSmart program was designed as a demonstration program to provide customers with an option to mitigate the GHG emissions associated with their own energy use. When mandatory GHG regulations are about to be implemented, PG&E will re-evaluate the program and determine if it should be ended or modified to ensure consistency with any such new mandates.

    We look forward to continued discussion on these important topics and would welcome the opportunity to discuss ClimateSmart, as well as PG&E’s broader commitment to climate change, with you personally the next time you are in San Francisco.

    Kind Regards,

    Robert Parkhurst
    Pacific Gas and Electric Company
    ClimateSmart Manager

  7. Poonam says:

    PG&E is up to their greenwashing tactics again! Here’s why ClimateSmart isn’t all that PG&E and the press states it is:

    1) PG&E’s new “ClimateSmart” doesn’t commit PG&E to provide any green energy.

    2) ClimateSmart is about PG&E allowing you, the customer, to pay more money each month to offset their company’s emissions.

    3) Californians need clean energy and PG&E should be looking out for our best interest instead of fighting to cover its tracks.

    4) PG&E’s corporate social responsibility report admits it’s plan “to enroll approximately 4 to 5 percent of eligible customers into the program by the end of its third year.” That leaves 95% of the impact completely untouched.

    5) PG$E is launching a $17 million PR campaign to advertise “ClimateSmart”. And it is charging it all to you by raising your monthly bill. That’s right. Every time you see an ad from PG&E promoting this greenwashing, you can be proud to know that the state regulators allowed them to pass the buck to you.

    6) This program has nothing to do with PG&E making an effort to reduce emissions from it’s electricity. PG&E is responsible for 18 million tons of carbon emissions each year. It is the largest source of carbon emissions in San Francisco. Unlike most businesses, PG&E can actually reduce emissions from electric power generation all over the state by choosing to sell clean renewable energy. ClimateSmart does not make PG&E’s power any cleaner.

    7) PG$E’s own commitment to ClimateSmart is merely to pay to plant trees to offset the impact of its office buildings, not the impact of the power generators it owns.

    8) Offsets should only be used to address the remaining energy after all other efforts have been made to reduce demand and use renewable energy.

    9) PG&E is using the least sound form of offset. Tree planting, or forest-management, is a double-whammy: it fails to improve our energy system and it forces future generations to manage those particular forests indefinitely. This type of offset is not allowed under Kyoto.

    10) PG$E says it “may enter into ghg emission reduction contracts where the reductions occur over time into the future.” Counting future reductions today is like telling the bank to count all the mortgage payments you plan to make for the next 10 years, and asking them to consider your debt paid off now. This dubious choice of carbon accounting methodology smells like Enron.

    . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

    PG&E’s ClimateSmart plan tells customers that if they care about the climate, they should pay to offset the company’s emissions. PG&E knows that by shifting the responsibility on to the consumers, the overwhelming majority of it’s impact (95%) will never be addressed. This is a common corporate strategy for keeping the public from demanding corporate accountability. Welcome to greenwashing.

    On top of the danger of shifting climate responsibility away from energy companies and government and towards the millions of individual consumers, there is the simple fact that offsetting is not an acceptable strategy for the company determining the type of energy being used by 14 million Californians. PG&E’s primary area of impact, and therefore responsibility, is on the type of electricity it provides. And advertising offsets is no compensation for its claim that nuclear is an environmentally-friendly choice nor of its use of 0% solar. We can do better. “ClimateSmart”? We think it’s more like ClimateCopout. What do you think?

    More ClimateSmart Critique:
    http://climateprogress.org/2007/07/09/pges-climatesmart-offsets-are-anything-but/

    Poonam Whabi
    LetsGreenwashThisCity.org

  8. Mike says:

    Do you agree with the following comments from a knowledgeable advocate for PGE’s ClimateSmart program? —

    Thanks for reaching out with your questions. I agree that the
    high level initial marketing can’t go into as much detail as wonks like
    you and me like, but there is plenty of detail on this high quality
    program and I will have info sent.
    Did you go to the website and read the FAQs and such for starters?
    http://www.pge.com/climatesmart

    Key things that set this program apart: (1) it is subject to CPUC
    regulation and will be transparent; (2) all CO2 reductions are
    independently certified by the governmentally-created nonprofit
    California Climate Action Registry which is nationally recognized as
    having the most rigorous GHG project measurement protocols; (3) the
    protocols will drive high quality GHG reduction projects that are not
    currently receiving enough investment. For example, California has
    2,000 dairies but only about couple dozen of them have methane capture
    for their manure and methane is 21 time more potent than CO2 as a GHG,
    we will also initially invest in saving some forests in CA in permanent
    conservation easements that would otherwise be lost to development or
    lumber interests (such as the Van Eck redwood forest). The project
    types will expand as the Registry develops more protocols, with the
    next ones urban forestry and Clean Air Transportation alternatives
    (transportation is 42% of CA’s GHG emissions whereas electricity is
    only 20% since we don’t have coal). You are probably aware that there
    is a lot of VC money going into renewables now, as well as all PG&E is
    doing to reach 20% renewables by 20% in addition to what we already
    have.

    All ClimateSmart GHG reduction credits will be new and “additional”
    meaning they would not have happened without this investment (not
    required by low etc). The credits will also be retired so they are
    only used to make participants’ homes and/or business climate neutral
    for their energy use – and we know exactly what that usage is and what
    its GHG footprint is because we certify our entity-wide emissions
    through the Registry too, and we were the first utility to do that!
    Also, PG&E is leading by example and was the first customer to sign up

    for ClimateSmart (which was a major win for me inside the Company) and
    has signed up for its own buildings with shareholder dollars (big bucks
    – millions). We hope many other major businesses will follow this lead
    as well as doing energy efficiency and installing renewables etc. We
    have to do a lot of different things at once to catch up on the delays
    we have sadly made as a country due to Bush’s unwillingness to lead on
    Climate Change. But we can show the way in CA and this is an important
    way to raise people’s awareness and give them another (easy) way to
    act.

    Hope that helps for starters. In short, I challenge you to find
    another carbon offset program of this quality or with this kind of
    reporting and oversight. This program is the first of its kind in the
    country at the biggest single utility in the country — raising the bar
    for all carbon offset approaches and developing critical climate change
    systems infrastructure we desperately need as the State is struggling
    to implement AB 32 which won’t take effect until 2012, though we are
    working hard on making that a success too.

    In short, it’s an easy way to take action, and I hope you do —
    Goodness knows we need a lot of good action on many fronts at once
    starting as soon as possible – the tipping point is not far away.

  9. Jonathan says:

    Thanks to the author and the commenters for providing excellent background information for us simple consumers interested in signing up for the program. I conclude that, while the ClimateSmart program might have some hiccups initially in ensuring that contributions are directed to the best sources, signing up for the program now is more likely to help than hurt. It will help PG&E and other utilities measure the seriousness of customers in carbon neutrality (and hopefully indicate interest in increasing green power), fund the critical “startup phase” of this effort, and hopefully do some good for the environment even if the original offset opportunities seem rather scarce. Since I also have a solar array, the modest cost of the program isn’t something I can’t afford to lose if the program regresses rather than improves. One of the main selling points of the program is the simplicity of the sign-up and the integrated billing with the power bill, which I think serves a valuable purpose of bringing carbon offsets to the rest of us. That alone makes this program worth a chance. Thanks again for the thoughtful dialog!

  10. Felix Lopez says:

    My opinion is that many laypeople seek to partake in climate change causes and the reduction of greenhouse gases. I think we should give PG&E an opportunity to work with the CPUC and other bodies to determine the climate smart efforts will work. For full disclocure, I recently got hired by PG&E in the energy efficiency group and this is only my second full week. However, I have been involved in energy conservation and renewable efforts for over twenty years at the ground level – residential energy auditor, commercial & industrial energy efficiency, helped with energy conservation in Yosemite National Park, part of clean air efforts in the Fresno area/ Prior to that I was at the US Forest Service in early days of environmental stewardship at the Youth Conservation Corps program. Our biologist was founder of the Sierra Club in the San Joauqin Valley way back in the 1950s. I believe we need to offer programs such as Climate Smart for the general consumer public. The energy conservation programs provide a similar success story. I don’t claim to be an expert but have a Degree in Biological Science and Masters in Business with focus on energy and researched how FASB provides guidance for renewable assets. I take public transit and recycle. Involved with the California Native Plant Society and even got involved in the initial meetings of the California Climate Action Registry. I travelled to Europe for our grad program and studied energy in Ireland, England, France and Spain. I guess I am saying this to demonstrate that a common citizen like me is involved. I believe the CCAR will be innovative and sincere. We are all involved in helping our planet. And I think we need to give the Climate Smart program a chance.

  11. The conclusions drawn from the Livermore study are way beyond what the study actually measured;

    For a more accurate analysis visit:

    http://ecopreservationsociety.wordpress.com/2008/02/12/does-reforestation-contribute-to-global-warming-a-second-look-at-the-livermore-study/

  12. jbl1120 says:

    Looking for more info from Joe on his response after dialog with PG&E and other commenters. Do you stand behind your original post? Have the responses changed your view on this issue at all?

    Thank you for this informative blog.

  13. Joe says:

    I have been very slow to respond to their new work. It isn’t as bad as I’d feared — Though personally I probably still wouldn’t buy these offsets.