NativeEnergy’s carbon offset investments helped finance the Greensburg, Kan., windmill project. The offset provider caters to celebrities, including Dave Matthews. But there is debate about whether the company's method of selling carbon offsets that have yet to happen is really carbon neutral.

Is Dave Matthews' carbon offsets provider really carbon neutral?

Celebrities like Dave Matthews have used carbon offset provider NativeEnergy to help them be carbon neutral. But there's great debate about the company's method of selling offsets that have yet to happen.

This four-month multimedia investigation by reporters on five continents is a joint project of the Monitor and the New England Center for Investigative Reporting. It was funded, in part, by The Deer Creek Foundation.  

NativeEnergy is the celebrities' choice in offset providers. But the stars might be hard-pressed to say what they are getting.

The Vermont for-profit carbon offset company lists among its eco-conscious customers Ben and Jerry's, the Dave Matthews Band, Jon Bon Jovi, the Democratic National Committee, and the makers of Al Gore's movie "An Inconvenient Truth." The company is a darling of many environmentalists.

But customers using NativeEnergy's online site to calculate and offset their current carbon footprint at $14 a ton are buying a promise that the environmental benefit will be delivered gradually over the next 20 years. Until then, their climate-changing emissions are not neutralized.

The company's model is unique, and controversial. NativeEnergy mostly sells offsets for projects that have yet to happen or are only in the works. What it calls a "help build" concept is not accepted by the leading independent certification organizations, which typically verify only carbon reduction emissions that actually have occurred. NativeEnergy sells its emission reductions upfront – and says they will be verified later, when they occur.

"It's unique because of the future-value question," acknowledges Bob Sheppard, head of Clean Air Cool Planet, the nonprofit that "retires" NativeEnergy's offsets to ensure they are not reused. Most offset companies sell the carbon reduction from a single year, Mr. Sheppard says. "They buy the life-cycle [of a project], estimating it will run 20 years."

Tom Boucher, a former utility official who helped found NativeEnergy, defends his company's method as an innovative way of building new projects that help the environment.

"If you are simply paying for something that is already happening, it's far less compelling," he says in an interview in NativeEnergy's office. "The power of our help-build model with our upfront payments is [that] it really becomes part of the financing. If you just look to our shortened terms and conditions, or wherever we make a claim around an amount, we always have a reference to 'it's over time.' "

NativeEnergy described itself in 2007 as "a privately held Native American energy company," and now says it is "significantly owned" by native American tribes. Tom Stoddard, a former utility company lawyer and vice president of NativeEnergy, says native ownership is 16 percent. Mr. Boucher and Mr. Stoddard are not native Americans. They say they help finance projects that benefit indigenous people.

Tom Goldtooth, executive director of the Indigenous Environmental Network, based in Minnesota, argues that carbon offsets do more harm than help for native peoples. He says indigenous people from Canada to South America are being pushed off land for incoming carbon projects, and often do not share in the economic benefits created by these offset projects.

They are "just another mechanism to relieve society of the fact that we need to make real changes," Mr. Goldtooth says. "It functions to relieve someone of their guilt."

Boucher and Stoddard are adamant that they aid in creating helpful environmental projects that would not exist otherwise – a fundamental requirement of offsets. This "additionality" requirement means offsets cannot be generated by a project that would have been built anyway; the offset must create some new, added, reduction in greenhouse gases to neutralize the emissions of the offset buyer.

NativeEnergy officials cite their part in building windmills in Greensburg, Kan., after that town was devastated by a tornado in 2007. President Obama touted the project to Congress as "a global example of how clean energy can power an entire community."

The US Department of Agriculture gave a $17.4 million loan to John Deere Renewables to finance the Greensburg project; NativeEnergy provided some portion of John Deere's remaining costs of $6 million – they and John Deere will not say how much. Stoddard insists the windmills would not have been constructed without NativeEnergy money. Steve Hewett, the Greensburg town administrator, says "the project was happening. They just made it quicker, and made the pricing look better."

The question of additionality emerges in many carbon offsets: If a windmill or solar project would have been built anyway, then the money from the offsets was not needed and therefore the offset did not create an additional emissions reduction. It does not create a new counterbalance. [Editor's note: It has been called to our attention that NativeEnergy has obtained certification from First Environment, a qualified carbon offset certification organization, in connection with the Greenburg, Kan. windfarm project.]

Tom Rawls, a vice president and spokesman for NativeEnergy, notes that while their website is aimed at encouraging individuals to calculate their "carbon footprint" and make purchases online, many of the company's offsets are bought by businesses to "green" their operations. Rawls contends the businesses that buy offsets understand the complexity.

"We are not selling offsets to turnips," he says. "These are companies that are either very sophisticated or they are large and they have technical people and they understand what they are getting."

This article was written and reported by Doug Struck of the New England Center for Investigative Reporting, with contributions from reporters Ben Arnoldy in India, Sara Miller Llana in Panama, Ilene R. Prusher in Israel, Kathy Marks in Australia, and Katy Jordan and Tyler Maltbie in Boston.

1. GLOBAL INVESTIGATION: Buying carbon offsets may ease eco-guilt but not global warming

2. How the "Vatican Forest" was felled before it grew

3. An offset gone wrong: Green windmills aggrieve Indian farmers

4. Using the green cloak of "certification" to market a plantation in Panama

5. Is Dave Matthews' carbon offsets provider really carbon neutral?

6. Australia leads the pursuit of carbon offset scams

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