Steelcase is a member of the Chicago Climate Exchange. Steelcase is an office furniture company with around $3.5 billion in sales a year based in Grand Rapids, Michigan. Steelcase can change their processes to reduce energy usage, they can put up solar panels, switch lighting fixtures, and they can switch to hybrid vehicles. However, no matter what they do, they will create CO2. As long as you take energy off the national grid, drive cars that run on oil, heat locations using gas, oil or electricity you will be creating CO2.

Steelcase could start planting trees, capturing methane, or building wind farms to harvest electricity. Their shareholders would be outraged and they may not be good at it. There is a core competency to building wind farms; they probably are not the best at doing it. Leave it to the experts. We do not want Steelcase managing sustainable forests in Michigan when the climate in Georgia (or Brazil for that matter) is better suited for CO2 sequestration in trees. We want Steelcase to make the best furniture they can.

Therefore, Richard Sandor created the Chicago Climate Exchange. The idea is that Steelcase can pay for the wind farm, sustainable forest or methane capture through the exchange. The exchange allows the project to receive the needed money to make it a viable business. The project gets done based on its value – its core competency.

This is the purpose of markets from the beginning. It allows for the best use of resources. For small businesses, this is especially true. A small business cannot afford to reconfigure its processes. We advise clients to measure, reduce and offset.

It would not pay for a small business to start producing electricity for itself, instead it can pay a small amount to offset the effect of its electricity use. This money goes to large projects that create renewable energy and upgrade our electricity grid.

It would not pay for a small business to start inventing new energy for cars, instead it can pay a small amount to offset the effect of its transportation costs. This money allows for funding of research on fuel cells for cars.

It would not pay for a small business to start capturing the methane from its waste, instead it can pay a small amount to have the landfill capture and burn off the methane from the whole city’s waste.

Small amounts add up to large actions through offsets. That is why you should buy offsets.

Verus Carbon Neutral sells carbon offsets and the first thing people ask us is: “Why are your offset prices so low?” We don’t think our prices are low relative to the market price. You see, carbon offsets are a commodity; much like corn, soybeans or oil. If the market price drops our price drops.

Then we get asked: “Are your offsets as good other providers?” First of all, we only sell Offsets that are certified and verified by, and registered with, the Chicago Climate Exchange. Secondly, it’s important to note that when the Environmental Defense Fund recommended twelve offset projects in 2008, seven were listed on the Chicago Climate Exchange. We offer project specific offsets to business clients, as they are easier to market/explain to stakeholders.

It’s not surprising that the final question is usually: “Why does your competition charge more?” It’s simple, because they can. If I went to a farmer and said that I will buy a bushel of corn for market price plus $1, he should sell to me all the corn that I can buy. If I can find a buyer who will pay me five times the market price then I will sell it to them. This is a great trick if the market is opaque. The trick vanishes when the market becomes more transparent. The farmer may be annoyed but the buyer will be livid!

Our pricing model is simple CCX Market Price + $0.05 exchange fee + 20% premium — simple, transparent and easy to understand. We have the lowest priced offsets in the world, just check Carbon Catalogue.

Verus Carbon Neutral likes transparency because it builds confidence in the market. We lower our portion of the offset price so that more funding goes to projects. Our hope is that our low price will drive more demand and the market price rise and drive the creation of more offset projects. More projects will help solve the problem of climate change.

Obama has a long list of projects to fund and treasury’s printing presses are going to be working overtime. I think we can all agree that something must be done to keep our economy from plunging into a depression. Funding solutions to two wars, spiraling healthcare costs, financial insecurity, rising unemployment, mediocre public education system, and of course, Climate Change, will leave our grand children with quite a debt. Recovery will be followed by inflation. But we must act now because the prospect of inaction is far worse.

Climate Change tops our list of concerns. I was once told by a VC that oil would have to go below $40 a barrel before investment would stop flowing to alternative energy. That was back in Oct., ’08, when oil was trading at $70. If private and public funding dries up what’s the near-term future for renewable energy? RECs and the offset market are a good start, but voluntary offsets are trading wholesale at $1.65 on the CCX and we retail offsets for around $2.00 a metric ton. RECs average about $20 MWh and are priced slightly higher when translated into CO2e offsets. The problem with RECs is that there is no nationally recognized registry (like the Chicago Climate Exchange) that verifies, tracks and assures no double-counting.

Obama has targeted CO2e reductions to 1990 levels by 2020 (15% decrease) and an additional 80 percent by 2050. A mandatory cap-and-trade is our best option for the following reasons:

• Funds offset projects like renewable energy without adding to the deficit
• Rewards energy conservation for large emitters
• Encourages energy conservation among consumers
• Lowers our dependence on foreign oil
• Lowers CO2e emissions
• Reduces atmospheric mercury
• Supports innovation 

As always, we welcome comments, questions or concerns.