A kerfuffle has broken out in the green blogosphere. The state of play thus far:
- Steve Johnson noticed the new "Wind Power Card" from Renewable Choice Energy, available now at a Whole Foods near you. He is not a big fan:
When you buy a card, you don't get any wind-generated electricity delivered to your home however. In fact, all you get is a card that doubles as a refrigerator magnet. Actually, you don't even get any credits, it's just a word they use to give you a sense of getting something from your money. The money you spend goes towards helping Renewable Choice Energy buy and sell electricity.
The cards are not even an investment, because you won't get any material value in return. It's all going to help another company get rich. Most companies seek investors to secure capital. But in this case, RCE is asking people for free money under the context of doing your part to help the environment. - The mighty BoingBoing (1.7 million unique visitors a day) picked it up and added some RCE bashing.
- Over at Sustainablog, Jeff responded with some umbrage, defending RCE.
- The mighty BoingBoing responded in kind, and several readers chimed in. Consensus: wind credits may be OK, but the cards are deceptive.
- Shea Gunther, founder of RCE, pointed to a post about how wind credits work, and another with pictures of how the cards are presented in Whole Foods.
- CitizenGreen has thoughts; GroovyGreen weighs in; so does Ecospree; Jeff again; Treehugger too.
What to make of all this?
As I see it, there are two separable questions. OK, three, but the first two go together.
First: Are wind power credits legit, and furthermore, is Renewable Choice Energy's for-profit business model legit?
Second: Are the cards designed and sold in such a way as to deceive customers about what they're getting?
On the first question, here's how I see it: when you buy a wind power credit, you are in effect making a voluntary donation to wind-energy producers. In their FAQ, RCE disagrees:
10. Is this really just a donation?
Most definitely not. Better energy, just like any other commodity, costs more than lower quality energy. The extra amount you pay for wind power goes directly to the wind farms to help ensure that wind energy can be competitive in today's market and to encourage development for the future.
You voluntarily pay an extra amount, which goes to wind farms. In English we call that a donation.
Say I bought a cup of coffee. As I was leaving, someone approached me and said, "hey, if you give me an extra quarter on top of what you paid for that coffee, I'll send it to an organic coffee collective in Costa Rica." Now, I might support organic coffee, so I might give him the quarter, but am I really "buying better coffee"? Not in any common sense understanding. I'm not buying anything, not getting anything of commensurate value in return, except the satisfaction of doing a good thing. That's what wind credits are about -- the satisfaction of knowing that some tiny increment of wind power will be added to the grid, displacing dirty energy.
At present, wind power costs more to produce than dirty energy. Your purchase of wind credits offsets that disparity a little bit. Nonetheless, it's an act of altruism -- or if you prefer, civic duty.
RCE plays the role of broker -- classic middle man. It buys credits from the wind-energy producers and sells them to you, the consumer. It makes the process easy for you. In exchange for that service, it takes out a chunk of the donation. That just strikes me as a commission, what you'd pay any broker. It's a perfectly conventional business model, though perhaps not destined to be a successful one.
Anyway, I could be wrong about all that, but it's my basic impression.
It's not an ideal set-up. I'd certainly prefer legal, regulatory, or legislative action that evens the energy playing field -- a carbon tax, or boosted renewable energy portfolios. But in the absence of that, asking civic-minded citizens to chip in is harmless. If nothing else, it shows that there's interest in and support for renewables. If you don't want RCE skimming off your credits, well, find the credits yourself and buy them direct.
Now. The cards. Are they deceptive?
I can see where BoingBoing is coming from on this. The cards are the exact size and shape of credit, discount, or stored-value cards. They have a dollar figure on them. A careless consumer could easily get the impression they were buying credit toward their own power bill -- exchanging money for something of equal value, rather than simply donating money.
Of course, the customer would have to be seriously careless, as there's an enormous poster hovering over the display, spelling out the deal. But maybe some day the poster will be gone. Who knows how the cards will be packaged down the road.
Thing is, RCE is trying to commodify wind credits -- make them just another item you throw in your cart at the store. There's nothing wrong with that (unless you're philosophically opposed to wind credits). In fact, it's inevitable.
But it doesn't need to be a card, and if the card confuses or misleads some people, why cling to it? It would be just as easy to make it some kind of certificate or lapel pin or colored bracelet or ... anything. "Thanks for helping to support wind power -- here's your commemorative engraved pen." This is a fuss that didn't need to happen.
This Friday, don’t just Buy Nothing—use nothing!
‘Heretic’ battles straw man
Comments
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TariffDude Posted 4:38 am
04 Nov 2006
"Just admit that the cards are deceptive. They absolutely do not represent an "offset" in any way, shape or form. They are a subsidy, a charitable donation to a corporation, nothing more. It might be accurate to say that purchasing one of these cards is equivalent to not cutting down X number of trees, but to say it is equivalent to planting X number of trees assumes that any power this company generates with wind would otherwise be generated in some other known way, which would require you to be able to read the future - which, of course, is nonsense, just like this entire scheme."
I get a distinct impression this guy is out to make money first and help the environment second. Otherwise, why not be upfront about it? Sure, you can argue about what the definition of "is" is, but aren't you ashamed of yourself? I hardly consider souring people on wind power (to which there is already a large amount of irrational opposition) a public service.
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Laurence Aurbach Posted 4:48 am
04 Nov 2006
RCE comes to me and says, "Hey, if you pay a little extra we'll dump some great coffee into a pool somewhere. Maybe it'll go to you. Maybe it'll go to a factory. Maybe it'll go to Canada. Who knows."
If I make the arrangement through my local utility, they get a market signal that one of their customers will pay more for better coffee. If I make the arrangement through RCE, my local utility remains clueless about its customer's preference.
If I make the arrangement through my local utility, I am billed for what I use. So I have an incentive to conserve. If I make the arrangement through RCE, my credits are pre-paid and I have no immediate incentive to conserve (although I can always buy more credits later on).
Of course, the ideal thing is to get my coffee direct, instead of diluted in a giant pool of inferior coffee. Then if the national coffee spigots get clogged, I'll still have my own supply. But to get undiluted coffee, I have to grow my own, or get my neighborhood, city or region to grow it. That's where co-ops and municipal ownership have a real advantage.
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claxton6 Posted 5:44 am
04 Nov 2006
I can't disagree with this more strongly. What you're buying is the environmental good portion of the wind energy. When turbines are running, that does lessen the demand from other sources on the grid, and the wind power cards--or, as they used to be called, green tags--make wind turbines competitive with other sources of electricity. The electricity goes into the grid at market price, and the "greenness" accrues to the purchaser of the cards. That "greenness" is meaningless is a result of a market and policy failure, not something defective in the cards.
The biggest problem with green tags, wind power cards, and, frankly, even to some extent every green power program out there, is that the power grid is marvelously counterintuitive, plus the added complication of the debundling described above.
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TariffDude Posted 8:44 am
04 Nov 2006
The card has a kilowatt rating! I would love to be the proud owner of 750 kilowatt hours of environmental good... Pardon the sarcasm, but surely you see my point.
And don't get me wrong, I see where you are coming from, I agree that giving money to this company is probably a good thing to do. But it's a donation.
And consider the possibility that this company taking donations (as far as I'm concerned, by willfully deceitful means) could place it at an advantage over someone else who can offer wind power more cheaply.
It's important to realize that these cards don't "offset" anything - you are still deriving your power from the same sources as before - so unless these turbines are anywhere near you you're subsidizing someone else's electric bill, which is a very kind thing to do, no doubt, but how many people realize that that is what these cards represent? I agree the electric grid is goofy, and I would have no problem with this company asking for donations or "selling" a sense of environmental well-being... but these cards are BS.
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claxton6 Posted 12:42 am
05 Nov 2006
The first thing to say is that I was speaking loosely above; I don't think there's any one "grid" out there; we have lots of grids, and each state has done deregulation differently, so all of this is going to differ a little between states. I think.
I'm numbering here to make it easier for people to tell me where I'm wrong.
1. How the grid works: every major power supplier runs their generators, which feed into the grid. All consumers get their power from the grid. No one (except for people off the grid, or industrial users with their own generators) gets their power directly from any particular generating facility.
1a. The point of the grid is to match, as precisely as possible, supply to demand.
1b. There are (roughly) three types of generators: base load, peaking, and intermittent, determined by how expensive the electricity they produce is and how easy they are to bring on- and off-line. Base load is cheap, but responds slower to changes in demand. Peaking is expensive, but easy to turn on and off. Intermittent (usually expensive) can't really be controlled when it will produce.
1c. Combining 1a and 1b, when intermittent is running, it displaces other power sources (peaking or base load).
Consumers (either end-users or power marketers, I think) pay the established rate. To get into the market, suppliers have to be able to supply at that rate. If it costs them more than that rate to create the electricity, they can't enter the market (it's a losing proposition).
Because wind power can't perform at the current established rate, it can't operate in the market without charging more in some way (a green pricing program, for example).
There is a market for "green benefits" of renewable energy -- people who want those benefits but can't purchase RE directly (their power marketers don't provide it).
Thus, combining 3 and 4, wind power cards (or green tags, as they used to be called) are created. These unbundle the green benefits from the electricity they were produced alongside. The electricity goes to the grid, at the regular market rate. The green benefits accrues to the wind card buyers.
Now, it's true that the cards don't offset the power that feeds into the card purchaser's home. But they do offset somewhere---namely, in the grid to which the wind power provider feeds.
Compare this to the situation in my city, Springfield, IL. We're working on getting the public utility to purchase 10% of its power from wind, in a farm to be built just for us. The farm won't be near us, it'll probably be a couple of counties away.
Opponents of the plan say: "Why should we be doing this when we won't be getting the electricity from the wind farm." The reason is that while the electricity won't come to us, the benefits do. We're the ones who get to say we're offsetting 10% of our electricity consumption.
What's really tricky is that people see the coal plant on the southeast side of town and think that the connection between it and their homes is greater than the connection between the wind farm and their homes. But technically, that's not the case: the electricity from that coal plant goes onto the grid, just like the electricity from the wind farm. And there's no absolute connection between the electrons put out by "our" coal plant and those that arrive in our homes.
So, if you reject the idea that wind power cards "offset" emissions for their purchasers, then I don't see how you can accept that a general RE commitment (like my town is making) offsets our emissions. They're based on the exact same understanding of the grid and the exact same kind of accounting.
The one major difference that I can see is that, in the case of my town, we're sucking it up and paying the extra cost up from, whereas with the wind power cards, the builders are anticipating that they can successful de-bundle the green benefits from the electricity and sell the two separately. So, in one case, the commitment comes up front (and has no risk) whereas in the other the commitment comes after the wind farm has been built (and is thus risky). But the wind farm was built with the expectation that they'd be able to sell the green benefits. Without that expectation, it wouldn't be built, and by wiping out that expectation, you're lessening the chance that future wind farms will be built.
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atreyger Posted 1:32 am
05 Nov 2006
But, from what I understand the real benefit of the extra money that you give the companies is that it goes into litigation, production, and placement of new wind farms. That's a good thing.
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TariffDude Posted 6:20 am
05 Nov 2006
My original point was that for it to be considered an offset somebody has got to be getting wind energy who would've been getting energy from coal (or whatever). But just for the sake of argument, what if a company is able to produce wind or some other type of renewable energy more cheaply than RCE, but doesn't resort to deceitful means to supplement its production to the point that it is cost-competetive? I'm not opposed to green tags in principle (although I might dispute the degree to which they are literally an offset) but just the way this company advertises them.
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claxton6 Posted 7:49 am
05 Nov 2006
See, I can't answer that, because I don't think that RCE is being deceitful. Litigation is part of the overhead of setting up a wind farm (or a coal plant, for that matter, as, again, my city is delightfully finding out). All of that has to go into the cost of the electricity--just like equipment and wages of construction people, operators, and office workers, etc. If your hypothetical company can produce electricity from wind (or another RE source) at or below the market rate, then they don't need wind cards or green tags. If they can't, then they do (or they need some other way of getting down to the market rate, such as an increased subsidy).
However, when wind providers get to the point where they can sell at the market rate (either through improved technology or because fossil fuel electricity gets more expensive), then essentially RCE goes out of business. No one needs extra overhead.
As to the dubiousness of the kilowatt-hour rating ... I don't see that as any different than buying a block of green power from your power company.
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claxton6 Posted 8:19 am
05 Nov 2006
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tomgray Posted 8:44 am
05 Nov 2006
If it were really a donation, then there would be no limit to what you could donate. Renewable energy credits are limited by the number of kilowatt-hours of electricity that are produced. No kWh, no credit.
There is a credit tracking and certification organization, Green-e, that certifies credits sold to consumers. Check their site for a list of qualifying sellers.
Regards,
Thomas O. Gray
American Wind Energy Association
www.awea.org
www.ifnotwind.org
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Jonathan Posted 2:48 pm
05 Nov 2006
It's extremely obvious that the cards are designed to mimic stored value cards. From the dollar amount printed on the card, to the fact that consumers are encouraged to "activate" the card: http://www.renewablechoice.com/windpowercard/index.php#pa... . The card itself is never "active", serves no purpose, and only exists to carry the ruse. Also, at my local Whole Foods in Boulder, Colorado, there was no explanatory poster, just a display of cards which the store clerk refused to allow me to photograph.
Renewable Energy Credits, on their own, are legitimate, and not particularly difficult to understand. The Wikipedia entry offers a fine explanation: http://en.wikipedia.org/wiki/Renewable_Energy_Credits .
What Renewable Choice Energy is doing is not legitimate.
People hand over money, and receive nothing in return. That's a donation. The arguments I've seen against that have been very thin, and required creative interpretation of the technical definition of "donation".
There's nothing wrong with making a donation, as people generally feel good about donating to a good cause. The problem is this: Renewable Choice Energy is a privately-held corporation that keeps a piece of that donation, and THEY REFUSE TO DISCLOSE HOW MUCH THEY KEEP.
Large corporations such as Whole Foods support socially responsible causes because they benefit from the resultant reputation for social responsibility. In this case, it looks like Whole Foods is looking to "offset" the cost of that reputation by collecting money from its customers, and funneling it through a wealthy energy broker before it actually reaches the "good cause".
The entire marketing scheme is manipulative and underhanded, and that's why it's igniting such a firestorm in the blogosphere.
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sharisec Posted 3:31 am
07 Nov 2006
For weeks I had visions of wind, solar and water power dancing in my head and lighting up my home. I would gladly pay $4.95 per 100 blocks for this green power... until I read the fine print. Nope, there's no guarantee that I would actually receive any of this wonderful, happy and healthy green power.
The fireplace holds the charred remains of my childish dreams. I debated whether I was being selfish for wanting this power actually delivered to my specific home. And whether I was a bad environmentalist for not wanting some random Joe to benefit from my benevolence.
But just like the conclusions made about this card, I decided I had the right to be angray and refuse to participate. Who knows what will really happen to my purchase (AKA: donation). Why should some shmuck who could care less about receiving clean energy benefit from my dollars? Well, he shouldn't. And until I know that I specifically can, the power company can keep it's green power scam.
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Laurence Aurbach Posted 4:27 am
07 Nov 2006
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atreyger Posted 4:32 am
07 Nov 2006
What you are doing is in effect helping to create more renewable energy by giving the companies money to do so. It is definitely socially responsible and should not be avoided, just because you personally are only receiving a small percentage of renewable electricity. If you consider that if everyone did the same, renewable energy would be the predominant form of energy used. And no singular schmuck gets the energy from your donation. All of us schmucks do.
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wiscidea Posted 6:11 am
07 Nov 2006
(1) Whole Foods does not agree to reduce their own consumption of fossil fuel proportionately.
(2) A company producing wind energy pockets the money, but does not agree to reduce the cost of its energy to consumers proportionately.
(3) Petroleum is likely consumed to produce, market, distribute, and dispose of the refrigerator magnets.
(4) There is no mechanism to ensure more research is done to reduce dependency on fossil fuels.
(5) A bunch of people use the cards to feel like they are doing something about the problem of fossil fuels and therefore don't bother doing something that actually helps solve the problem.
(6) Money is diverted from responsible companies trying to earn a living by actually selling something
Who benefits? I do not know.
I suggest each person use their dollars to purchase products from environmentally responsible companies, which are generally more expensive, and thereby support development of an environmentally responsible economy. This will create customers for wind power and make building the infrastructure worthwhile for someone with the resources to do so.
If you really want to support the wind industry: purchase products from companies using wind power, invest in companies producing it, learn about various applications for wind power (such as decentralized energy for rural manufacturers), write a letter to the paper, look into whether you might use wind power for your home or business...
or just send your dollars DIRECTLY to the wind energy company with a short note saying how much you appreciate what they are doing. Skip the extra plastic, the extra marketing materials, and the false sense of accomplishment.
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planetrelations Posted 3:49 pm
07 Nov 2006
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bigtinysue Posted 2:54 am
08 Nov 2006
Face it: unless you have the good fortune to produce all or some of your own electricity, you're stuck using what's delivered to you by your local electricity service provider, through their wires. Don't like the fact that the primarily coal-fired mix you probably get is in large part responsible for sky-rocketing incidences of childhood asthma? Too bad. Don't like the fact that CO2 emissions from the way your electricity is produced are so dramatically off the chart that its changing your weather? So sad.
Unless, of course, you are selfless enough (like Whole Foods) to understand that your investment in getting more renewable energy into the national power mix benefits everyone -- not just you.
It's true, once an electron gets on the grid, it's just an electron. But the havoc that it can wreak in getting there and the effects it leaves in its wake are what you, conscious consumer, should be concerned with. And if you don't think that an electron that was sourced from a wind turbine that has ZERO emissions, that provides agricultural stimulus for the farmers whose land it's built on, and that leaves no harmful by-products behind isn't worth more, then you are seriously underestimating the value of your green dollar.
And what about Renewable Choice Energy making money on promoting wind energy? Oh, the horrors of it -- a group of highly talented, devoted people who choose to work for far less than their market value in the service of something that the really believe in! Would you rather they went to work for your local utility?
So you wish the card was a pin or bumper sticker instead? Give me a break -- just the fact that millions of Whole Foods shoppers who might not even give the negative impacts of the way their energy is produced a second thought are getting some exposure to the issue is a HUGE deal! Or would you rather just limit their consiousness to their choice of granola?
So while your grousing about how renewable energy credits in general and Renewable Choice Energy in particular are less than perfect, please take a few minutes to think about how you would do it any better. The Green-e certified renewable energy credit system offers the only audited mechanism for consumers to make sure that the energy replaced to the electricity grid comes from sources that are consistent with their personal values. The Whole Foods cards give people who wouldn't have considered making this choice a chance to do so in a convenient, consumer friendly way. Got a better idea? I'm all ears...
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wiscidea Posted 4:04 am
08 Nov 2006
"The Whole Foods cards give people who wouldn't have considered making this choice a chance to do so in a convenient, consumer friendly way. Got a better idea? I'm all ears..."
If that question was directed toward my cynical remarks, I would like to repeat the lower portion of my post...
"I suggest each person use their dollars to purchase products from environmentally responsible companies, which are generally more expensive, and thereby support development of an environmentally responsible economy. This will create customers for wind power and make building the infrastructure worthwhile for someone with the resources to do so.
If you really want to support the wind industry: purchase products from companies using wind power, invest in companies producing it, learn about various applications for wind power (such as decentralized energy for rural manufacturers), write a letter to the paper, look into whether you might use wind power for your home or business...
or just send your dollars DIRECTLY to the wind energy company with a short note saying how much you appreciate what they are doing. Skip the extra plastic, the extra marketing materials, and the false sense of accomplishment."
Perhaps I should have added "encourage others to do the same".
Feel free to tear into these suggestions and tell me why buying the cards is the better thing to do. I'm all eyes...
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PaliGoy Posted 3:31 am
15 Nov 2006
But somehow we feel like we should be getting something tangible in return when we buy energy credits. Why is that exactly?
It's because when we make a donation we expect it to go to a non-profit. Since these aren't non-profits, we expect something in return. The idea of someone scraping a profit off the top of our donation makes us sick.
Well in the RCE business, there are MULTIPLE companies making a profit off your donation:
1> RCE uses some of your donation to buy energy credits, some to pay their costs, and some to line the pockets of wealthy investors looking to make money off of "green" business models so they can buy bigger cars.
2> Magnet manufacturers use some of your donation to manufacture the magnets, package and ship them, and cover other costs, including the petrochemical refining and oil drilling and whatnot that their suppliers need to supply them with magnets and inks and plastic wrappers. Then they take some profit off the top to line the pockets of investors looking to make money off of not-so-green business models so they can buy bigger cars.
So let's say you find a non-profit energy credits reseller online, who doesn't send you anything in return for your donation except an email. Maybe then you'll have found a good way to send your donation directly to the wind farmer.
3> The wind farmer is probably struggling to compete with non-wind energy providers. They are very thankful for your donations, because your donations allow them to cover their higher costs of producing energy. If you find a wind farm that gets just enough donations to cover their costs, then you'd probably call that a non-profit wind farm. In fact, in order to stay in business, wind farmers need investors to pay for the machinery, and those investors won't pay for the machinery unless they get some profit in return. So in fact, part of your donation goes to wind farm profits that line the pockets of investors hoping to make money in the energy industry.
4> Whole Foods: Is this RCE thing a product they sell? I haven't seen it, but I assume it's treated as a product, which means Whole Foods has to cover the costs to stock and sell the magnet, and presumably takes a profit off the top as well.
In the end, buying from RCE is a little bit like giving money to a beggar. You have the best intentions as a giver, and your money may be well spent, but you never know exactly what your money gets spent on.
Here's where I would estimate your money goes when you spend it on energy credit magnets at Whole Foods. Let's say you spend $100:
$12 - profit for Whole Foods' investors
$1 - Whole foods' costs
$20 - profit for RCE's investors
$1 - costs for RCE
$1 - profit for the magnet-maker's investors
$5 - costs for the magnets
$10 - profit for the wind farmers' investors
$50 - donation to producing wind energy
If these costs were, for example, printed on the label, would buying it still be a good thing to do? Probably, as a short-term way to get more people investing in green energy. But it's not ideal.
Overall we forgive Whole Foods, the magnet company, and the wind farmer, but not RCE. Why? Because they give us something in return so we don't expect them to operate as non-profits.
We expect a company like BCE to act as a non-profit, and that's the problem with this whole scheme. Thankfully, there are non-profits out there that do the same thing, and we should use them.
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bOlogOs Posted 1:18 am
11 Jun 2008
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