The following is a guest essay from Ted Rose. He is director of business development at Renewable Choice Energy, the company that makes the controversial Wind Power Cards sold at Whole Foods Market.
-----
We here at Renewable Choice hoped the introduction of the Wind Power Card would spark a discussion. Well, mission accomplished. My only personal regret is that I've been so absorbed with the rollout of the product I haven't had a chance to weigh in on the debate until now.
People have wondered why Renewable Choice introduced the Wind Power Card in the first place. That's easy. The goal of the product -- like everything else we do -- is to provide choices that help move our country beyond fossil fuels.
In the case of the Wind Power Card, we're taking on home electricity. For almost a hundred years, we've been taught that our electricity is invisible, cheap, and harmless. This is an example of what I've started calling dinosaur thinking -- old logic that fits neatly with the interests of fossil fuel companies and hurts just about everyone else.
The truth, as most Grist readers know, is that our electricity is killing us. It's producing air pollution and contributing to global warming. Lots of consumers -- not just hard-core environmentalists -- need to learn this and learn it quick. I believe they also need choices, easy choices, to do something about it. That's why Renewable Choice made the Wind Power Card.
The Wind Power Card buys renewable energy credits that capture the premium cost and value of wind energy. There's confusion about how this system works. Believe me, all of us would be happier if choosing wind power could be more tangible, like picking an organic apple instead of a conventional one. Unfortunately, electrons are more slippery than apples. If we want to support renewable energy and each claim our own chunk of wind power, renewable energy credits -- or as we sometimes call them, wind energy credits -- are the best deal going. And recently these credits have come of age. Big companies like Wells Fargo, Whole Foods Market, and Vail Resorts are buying them. They are also used by all 19 states employing a renewable portfolio standard to promote alternative energy development.
Some people have questioned the presentation of the Wind Power Card. After all, the "power" in the Wind Power Card is the renewable energy credits. The card itself is simply device -- a device designed to end its life as a handsome refrigerator magnet.
The motivation was simple: we wanted to put this novel product in a package people would recognize. People are used to connecting plastic cards to a value beyond the plastic itself. We feel confident that any curious consumer who takes the time to read the back of the Wind Power Card will be able to determine the value of the product. That said, we're dedicated to refining this presentation as we go to make the product as easy to comprehend as possible.
Others have maintained we should just call the Wind Power Card a donation. There's a simple response to this: We don't call it a donation, because it isn't one. Each card purchases renewable energy credits, and there are only so many renewable energy credits to go around. These credits are a limited commodity, audited and verified by a third-party.
Some people can accept that, but they want to know how much money actually goes to the wind farm. That query sounds legitimate at first, but it falls prey to the same faulty logic as the donation question. Imagine asking the guy who sells you an organic apple to break down all of the expenses that he incurred to bring the apple to market: How much did you pay the guy who picked the apple? How much money did you spend on watering the apple tree? These are fine questions, but they are beside the point. The real question is: does the price of the apple work for you? Or to bring it back to the Wind Power Card: is it worth $15 a month to ensure that 750 kilowatts of electricity your family uses is replaced with wind power?
I believe there's a deeper challenge lurking beneath the donation logic. It goes something like this: Okay, I get that I bear some responsibility for the electricity I pull off the grid and I see these credits can help meet that responsibility. But why would I want to pay for something that I don't see and don't get to enjoy? I wish I had a nifty answer to this one, but I don't. To me, it strikes to the heart of the matter, the core piece of dinosaur thinking that must be surmounted to move into a culture of personal responsibility for energy consumption.
I honestly don't know if this shift will happen -- we may just leave it to companies and governments to do the work for us on their own timelines -- but I can easily imagine a world in which it does. I can imagine a world where conscious consumers make buying renewable energy credits as basic a household commitment as buying organic produce or recycling.
If you feel called to meet this emerging responsibility in some other way, like paying your utility through a green pricing program, go for it. If you want to find the very best price for your renewable energy credits, shop around. (When you do, you'll find the price customers pay for the Wind Power Card is pretty darn good: two cents a kilowatt hour.)
But in the end, as word of the Wind Power Card spreads, more and more conscious consumers will face a straightforward choice: Either you're paying the premium to replace the energy you use with clean renewable energy -- or you aren't.
Comments View as Flat
Jonathan Posted 6:52 am
09 Nov 2006
The apples are blowin' in the wind
This is a very carefully-written essay, intended to equate questioning RCE's methods with "faulty logic" and "dinosaur thinking". It should be preserved as a classic example of profit-oriented Green rhetoric. A non-savvy reader will walk away from it thinking that if he dares to question RCE's true intentions, he is no better than the fossil fuel companies.
The semantics surrounding "it's not a donation" are downright ridiculous. People give money, and they don't get money/goods/services in return. They only give the money because they want to support a "good cause". That's a donation. It looks like RCE really had to pull out the unabridged dictionary to try to argue the technical definition of "donation" on that one.
The crux issue that's really bothering everyone is this: Renewable Choice Energy refuses to disclose how much of this donation they keep for profit, and how much actually supports renewable energy.
The folksy apple analogy is puerile and patronizing. When you pay for an apple, you know exactly how much "apple" you get. You can see it and weigh it and hold it in your hand.
When you pay for a donation, you want to know how much "donation" you get, and how much gets skimmed off the top by a smooth-talking energy-broker. That this should be dismissed as "faulty logic" is truly insulting and duplicitous.
All of the talk in the world about "conscious consumers" and "emerging responsibility" doesn't matter if RCE refuses to disclose how much of your donation they keep for profit.
The assumption of good intentions is an easily-exploited weakness of the Green demographic. In this case, it appears that Renewable Choice Energy is taking advantage of that weakness for profit.
Permalink
tedrose Posted 9:40 am
09 Nov 2006
Product v. Donation
I have no intention of skimming anything off of anyone, and I'm not collecting donations. I work for a company that sells renewable energy credits to corporations and individuals around the country.
I'm not detailing the breakdown on the product for many of the same boring reasons other retailers don't. There's a dynamic market for renewable energy credits and we're not the only company in the market.
But that admittedly unsatisfying non-answer is beside the point. The apple analogy applies perfectly.
You don't focus on the costs involved in producing an apple because you appreciate the value of the apple. The question in this case is: what's the value of a renewable energy credit?
I can totally appreciate being suspicious of paying for a product that you can't see or touch or taste. But the answer isn't to dismiss the fact that it's a product, label it a donation, and then fume about why your line of questioning has slammed against a brick wall.
I recommend that you learn more about the product itself, perhaps by visiting the website of Green-e, the independent third-party auditor of the program.
Maybe you'll discover what I did when I looked into it about a year ago: Here's a system that helps big companies and regular consumers take a significant step to support renewable energy. I am proud to work for a company that's leading that effort.
Permalink
claxton6 Posted 10:09 am
09 Nov 2006
tangibility and accounting
I think one reason that the cards don't feel more tangible is because of the very problem they're trying to solve, the externality of carbon emissions. If there was a carbon cap, then the wind power cards would automatically become not-donation-like, without being any more tangible, because what you're "getting" is more clearly something that's accounted for.
Permalink
GreenEngineer Posted 10:11 am
09 Nov 2006
Ahh, analogies
Analogies are great, but they will often as not distort the discussion rather than advance it. That's what I see happening here.
Ted Rose makes an entirely legitimate point when he says Each card purchases renewable energy credits, and there are only so many renewable energy credits to go around.
That's the point of RECs, of course. There are a limited number of RECs, based on the amount of RE capacity that has been installed. Purchasing RECs creates demand, driving up their value, thus improving the financial returns on prospective new investment.
Fine. In that sense, from the market's point of view, buying RECs is not like making a charitable donation.
However, from the consumer's point of view, buying RECs is like making a charitable donation: It's a matter of spending additional, entirely optional, money for a product that is not different in any visible or tangible way. Call a subsidy rather than a donation, if you prefer. The apple analogy is a bad one because when I buy an organic apple, I am (or should be) getting a product of superior quality and taste, in addition to superior environmental attributes.
Like it or not, renewable energy "tastes" just like fossil fuel energy. The only difference is that renewable energy is environmentally superior. And so, to respond to Ted's statement that You don't focus on the costs involved in producing an apple because you appreciate the value of the apple. The question in this case is: what's the value of a renewable energy credit?, I can say that the value of a renewable energy credit lies exactly in how much my purchase has done to advance the responsible and ecologically sound deployment of renewable energy.
That is the issue that Ted Rose and others in his industry must address head-on. Don't try to dodge the question. Engage it. As a renewable energy engineer, I understand something that I think many people sense intuitively: RECs can be a very good way to support responsible energy production, or they can distort the renewable energy market and damage the environment.
Subsidizing renewable energy can be a very good idea. Solar rebate programs in California and elsewhere have done a very great deal to bring PV into the mainstream. But subsidies can also be destructive. Subsidies for corn ethanol production encourage destructive farming practices to produce a fuel that shows insignificant net gain in energy and no reduction in greenhouse gas production. Subsidies on biodiesel encourage the clearing of rainforest in favor of palm oil plantations, and may yet doom the orangutang. Subsidies on wind power could encourage the construction of turbines in inappropriate places (sensitive habitat, or areas with poor wind resource). Subsidies that are given to projects that do not pass the "additionality" test may serve to do nothing but (additionally) line the pockets of rich investors.
RECs are not a straightforward subject, and I do not pretend to have all the answers. But for the vendors of these products to dismiss the legitimate concerns of potential customers is foolish and does not support their own long term best interest. Transparency is key, and clear, honest communication is key. Don't be afraid of providing us with the "boring" technical details. Not everyone will care, but some will. And the endorsement of those who do bother to do their homework will enhance your credibility in the eyes of the rest of your customers.
Credibility is hard to win, and easy to lose. And it is ultimately the ONLY virtue that a REC vendor has to call upon, in persuading cosumers to buy their products. Don't squander it.
Permalink
akao79 Posted 2:17 pm
09 Nov 2006
Ahh too many words.
What kind of engineer are you exactly green? You make pretty words but I would like to understand what background you're coming from.
It's a bit of a stretch to compare buying REC's to killing the orangutan. First the REC vendor isn't telling you everything you want to know and now they're killing off species? Hell, you shouldn't even use ethanol and wind energy in the same paragraph.
How perfect does the REC vendor have to get the equation to get you off of coal and nuclear power? That's what it comes down too. Of course companies should be questioned but I wonder if people who write these questions to REC vendors ask the same of the people they write out their power bill to every month.
Permalink
Greg Burnley Posted 4:55 pm
09 Nov 2006
Wind Credits a great way to leveredge buying power
For people like myself, one without access to green power, I view Wind Credits as a positive way to reduce our impact on the enviornment by reducing CO2 emissions. I see the money spent as an investment in an excellent use of technology which will hopefully be one of several to replace the over-use of fossil fuels.
I Purchased a year of credits in August from the company mentioned above, although I do agree that I would like to see some "boring" and "transparent" explanations of how the money is used. For instance, how much do the wind towers cost? how much power do they produce a year? How many wind credits are sold for a tower over its lifetime? Is there significant profit? Whom is it going to. I think that having a profit is ok, that's the foundation of capitalism and progress, but it would be interesting and would make me a more cognizant advocate of Wind and other REC's.
The achievement is second to the intention.
Permalink
willa Posted 10:01 pm
09 Nov 2006
Profit
Of course there must be a profit made on these credits, or no one would do them (and even a nonprofit would have to make enough money to pay for supporting their organizational structure in addition to producing the actual product. No one here was saying they shouldn't. What GreenEngineer was saying (which was exactly to the point!) was that it's fair, and necessary, for people to ask what, exactly, they're getting for their money. Part of the reason they don't want to do that is that they're afraid people will not understand when they see that there's some profit left over after the actual cost of the product, but they need to get past that, because the overwhelming majority will in fact understand. Especially if, say, they were to show a table of their costs compared to the standard costs of energy, and show that while their product costs more, it's because it actually costs more, not because they are skimming extra profit off. That would really cement their credibility.
When there's no transparency, it is a problem (ie, I know this organic apple tastes better than that conventional one, but I don't know for sure whether it's because it's truly organic, or because it's actually a GM fruit engineered somehow to taste better). When there's no transparency and no tangible product, the emperor has no clothes at all. I can evaluate an apple on its merits and tell whether I think it's the product of organic practices, but with a commodity, especially one I can't physically experience at all, who knows? So the potential for abuse, especially with the throngs of gullible customers environmentalism has produced, is considerable. You could sell me biodiesel and I might think that's great, but if what you're not telling me is that orangutans were burned to death to produce it, that's not so great, which is why it's crucial that people who are trying to do the right thing continue to ask lots and lots of questions to keep producers of the things we want honest.
Permalink
dvdthomp Posted 11:33 pm
09 Nov 2006
Shopping around
Thanks for the tip about shopping around. I did, and bought Green-e certified wind RECs from NativeEnergy for 8/10 of one cent per kWh. You saved me 1.2 cents per kWh.
Permalink
GreenEngineer Posted 2:48 am
10 Nov 2006
Responses
akao79,
To answer your question: I studied mechanical engineering at Caltech, and then worked in aerospace and machine design before abandoning that career to sell solar PV systems in Northern California. Now I am a buildings engineer for a green building consulting firm in San Francisco. Mostly I do energy modeling for new buildings these days.
I are an engineer, OK?
Of course, you'd know this if you bothered to read my blog and my bio, which are linked from my profile page.
What you need to understand is that buying RECs can be a way to support alternative energy, but it is not getting off of fossil energy. If you support a new renewable energy project directly by investment, and then don't sell the RECs, then you can honestly claim to be "using renewable energy", even if the project is distant from your point of use. If you're just buying RECs off of someone else's (probably pre-existing) project, then you are subsidizing renewable energy. That can be a very good thing to do but it's not the same as installing or investing in a system of your own.
My point about the orangutangs is that what consistutes good green practice is a complex question. Any project or technology must be considered in its ecological context -- failure to think about ecological context is the reason that we're in this mess in the first place. Granted that some technologies are easier to screw up than others, and biofuels are one of the most difficult to do in a fashion that is clearly environmentally positive. But the principle remains the same: Not all green efforts are equally green, and transparancy is critical to making good decisions. Which is why I found Ted Rose's dismissive attitude so troubling.
Permalink
tedrose Posted 4:59 am
10 Nov 2006
Explaining RECs
I don't mean to sound dismissive at all about any of these queries! I really want people to understand this process as much as possible and as you well know there are plenty of questions from lots of different directions. My point was only to say that focusing on the environmental impact of purchasing RECs (as much of the debate above does) is a more fruitful line of inquiry. That's why I recommended checking out Green-e.
Permalink
claxton6 Posted 5:14 am
10 Nov 2006
off fossil fuels
What you need to understand is that buying RECs can be a way to support alternative energy, but it is not getting off of fossil energy.
In the same way, buying "100% renewable energy" from a green pricing program offered by your utility doesn't get you away from fossil fuels. And yet, no one is clamoring that those programs are being deceitful. Are they?
Permalink
Auden Schendler Posted 7:34 am
13 Nov 2006
disingenuous
I find this comment disingenuous:
"The goal of the product -- like everything else we do -- is to provide choices that help move our country beyond fossil fuels."
Unless I'm mistaken, Renewable Choice is simply a broker for RECs. They buy from the utility, mark it up, then sell it. Where does the profit go? Into their pockets. Yes, there is a market mechanism that may, or may not, drive new renewables. But Renewable Choice could be selling encyclopedias--the point of their business is to make a profit. And there's nothing wrong with that, but to claim an environmental mission is disingenuous. UNLESS a substantial portion of their profits is allocated towards driving new renewable development, as is the case with other REC brokers like Community Energy and the Bonneville Environmental Foundation. Allocating a small portion of profits towards education doesn't do it.
Permalink
rudall Posted 8:39 am
13 Nov 2006
whole foods wind cards
These cards, like so much else that's happening in the REC market right now, are fraudulent.
About 8 years ago we helped invent the idea of buying green power in 100 kwh blocks here in Colorado. Green pricing programs, nationwide, have leveraged many hundreds of millions of dollars for new RE projects.
RECs, in contrast, and with a few critical exceptions, have leveraged hardly any.
If REC marketers want to be taken seriously they have to pony up some information about the sources of their RECs, their vintage, and what how exactly they think these products are contributing to a greener planet.
Otherwise, they are just proving PT Barnum correct: there is an (enviro) fool born every minute.
The only good RECs I know of are provided by Bonneville Environment Foundation and Community Energy. Native Energy, if they can pull off another wind project on Indian land, redgreen power, is another contender.
Whole Foods needs to learn some latin: Caveat emptor!
Permalink
claxton6 Posted 9:02 am
13 Nov 2006
certification
rudall,
I'd love to hear what you think of Renewable Choice's Green-e certification. If you're alleging that's a fraud, that's big news, and deserves to be investigated. I'd also be interested in hearing if my characterization of what RECs are doing in the other thread is correct.
Permalink
ktbrainwater Posted 3:25 am
15 Nov 2006
what to do?
Fradulent?
Are we better off as consumers to buy green power only from utility partners? If I'm not mistaken, Xcel used their money (that is, money from customers) to lobby AGAINST a portfolio standard in Colorado. Some market signal that sends! "Pay us a premium, we'll use to fight against wind!"
Most utilities in the United States have spent the better part of the last few decades figuring out how to block renewable energy from entering the system. Why? Perhaps because they have a monopoly that earns a return based on what they build, not the service they provide.
RECs may be far from a perfect solution, but if I'm interested in having my dollars make a difference, I sure would like to work with the Whole Foods of the world who at least are trying to figure out ways to offer some alternative.
Do I gripe about what the middleman makes who buys the apples from the farm, ships them to Whole Foods and makes a profit along the way? Not usually.
Do I demand "transparency" at the checkout stand about how much money is going to the organic farmer who grew the apple? Not usually.
If I do, where would I look for that information? From some independent third party. Isn't that what Green-s is? I don't know enough to say whether they are a credible group, but it sure seems like a better alternative than the public utilty commission.
Can we stop quibbling about whether one REC is better than another - whether what Vail is doing is better than Aspen - whether Whole Foods is doing enough and collectively recognize that they are doing something! And it's better than what Exxon is doing.
Incomplete? Perhaps. Imperfect? Undoubtedly.
Fradulent? No one is forcing you to buy a card. Fradulent is taking ratepayer money to lobby again wind energy. Fradulent is denying solar installations access to the grid. You want more coal and nuclear? Stick with your utility.
All those with better ideas - PLEASE STEP FORWARD!
Ken
Permalink
Laurence Aurbach Posted 6:21 am
15 Nov 2006
Re: what to do?
ktbrainwater -- I agree with your last paragraph and your definition of fraudulent. But I think you may misunderstand how unbundled electricity works.
Say my electricity bill is $100 per month. My utility is pocketing $35, and using $65 to purchase dirty electricity from suppliers.
Let's say I buy $20 of credits to offset that. The result: My electricity bill is still $100 per month. My utility is still using the same amount of my dollars to purchase dirty electricity from suppliers.
Now let's say I sign up for wind power through my utility, and say it costs the same ($20) as credits. Now my utility is pocketing $35, and using $85 to buy wind power. None of my dollars are used to purchase dirty electricity from suppliers.
Your point about lobbying, denying access, etc., may well be true. But credits do nothing to reduce those activities, and switching to green power via the utility does nothing to support them. What's more, I do think the market signal, while relatively small, is significant and does enter into the utility's long range planning.
Permalink
ktbrainwater Posted 8:39 am
15 Nov 2006
fungibility
Money is fungible. If Xcel takes my money into their coffers and simultaneously works to thwart citizen initiatives for clean energy, how can anyone say that the green pricing program has not contributed to Xcel's activity.
For that matter, electrons are fungible. Why say then that buying credits do not contribute clean power to the grid. They do.
Market signals? Isn't it possible that the market signal that customers are so encouraged to see renewables succeed that they are seeking ways OUTSIDE the utility system perhaps a stronger signal than the "utilities' long range planning."
Isn't that why we've been forced to put ballot iniatives together demanding renewables, because the "long range planning" process has failed us? Market signal? I would call it a "market failure."
The questions remains, where is the market signal the most effective? RECs are certainly not the final solution, but they are a step in teh right direction. I'm not sure the same can be said for most utility programs and so take some issue with rudall's claims above.
Permalink
EnergyOrganic Posted 7:46 am
16 Nov 2006
2.5c/kWh ReneChoice is expensive
CHECK THIS PAGE OUT:
http://www.eere.energy.gov/greenpower/markets/certificate...
WHO benefits from the REC purchase?
how much of the $ goes to build a new project?
how much goes to Xcel?
How much goes to Renewable choice profits?
How does Xcel make most of its revenue (burning coal, right?)
Humankind's future is determined by today's energy choices.
Permalink
Auden Schendler Posted 1:00 am
17 Nov 2006
There are serious issues with RECs
Ktbrainwater:
You could argue that buying RECs are actually worse than utility green purchase programs, becuase whe a utility sells a REC to, say, Renewable Choice, neither group is under any obligation, even implied, to do anything "green" with their profits.
When you asked "Do I demand "transparency" at the checkout stand?" I'd say, not with all things, but with some things that you are buying for the stated benefits, you must. It would be silly if you didn't demand accountability of a donation you made to the red cross--because you expect a certain service to result from your contribution. Same with renewable energy cards--you'd expect renewable energy to result.
This puts the lie to your other point: "Can we stop quibbling about whether one REC is better than another.." But that's the precise issue we need to address here. What RECs, if any, are actually worth buying?
Again, you write: "Fradulent? No one is forcing you to buy a card." True, but no one is forcing you to play three-card monty...and it's still fradulent.
Permalink
ktbrainwater Posted 3:56 am
17 Nov 2006
casting stones helps none
Auden:
You write that some REC companies may be under no obligation to do anything "green." But they are bound by the Green-e program to purchase specific renewable energy credits. Is this not a "green" obligation? As far as I am aware, they are a private company, so why should they be obligated to do something additional with their profits (any more than Aspen Skiing Company should be obligated to do something with their profits...)?
Isn't it enough that the business they are in - along with the other renewable energy companies - is seeking to find ways to bring more renewable energy to market? Not all that glitters is gold and not all that is environmental needs to be structured as a 501(c)(3).
If you are saying that Green-e is fraudulent, I think we all deserve to hear the charges in more detail. As it stands, they claim that, "Green-e certifies renewable electricity products that meet the environmental and consumer protection standards." Where is the fraud?
Can we assume from your comments that you think that Aspen - whom I take to be your employer - has discovered the winning formula for renewable energy development? Can we demand "transparency" from your own environmental claims? If so, what is the annual power demand for snowmaking operations? Is it "environmental" to use (lots of) energy to make artificial snow, even if it's "green"?
(Wouldn't it be better to just wit for Mother Nature to do her thing, even if it does affect the bottom line - isn't that the "environmental" and "sustainable" approach?)
Can we demand to know how the corporate profits of Aspen are put to use? No - we all seem to agree that is not a reasonable question in corporate America.
People ride the lifts (to access public lands) because they value the experience, not because they are interested in making a "donation" to the lift operator and demanding to know how much she is paid. RECs may be less tangible than a pass to ride lifts, but they are a limited commodity and we should be supporting all of those trying to make them a less limited commodity.
If you have more to offer as to why Green-e is a fraud, voice your concern. But you might consider first the Gospel of John - "He that is without sin among you, let him cast the first stone."
Ken
Permalink
GreenEngineer Posted 6:15 am
20 Nov 2006
not all RECs are the same
I don't think that the question here is whether or not Green-E or any other REC provider is a "fraud" (or any other emotionally and legally loaded term). The question is, is the extra money a buy spends on RECs doing good (or bad, or nothing) for the planet?
I assert that RECs can be very positive, but not all REC sources are the same.
Community Energy, which recently won won an award from Environmental Building News is
one of the few [REC vendors] that develops its own renewable energy generation capacity.
This is key to my concern with RECs: they can be straight subsidies of already-existing capacity, or they can directly support the construction of new capacity. RECs bought from Community Energy directly support the creation of new wind projects, which makes them much more meaningful, IMO, than RECs bought from a market broker.
Permalink