The Wilson Imperative

Jim Anderson's Postcard from the Telecosm
February 16, 2010 Posted by: Jim Anderson, CFA

Last week the Financial Times reported that Tami and Randy Wilson of Harrisburg, Pennsylvania were the first couple to successfully sell a carbon credit after having reduced their carbon footprint. They accomplished this by dumping their son's heated water bed (as an aside we were somewhat astonished that water beds made it out of the '70s), turning off their TVs and computers when not in use, changing out their light bulbs to a dimmer variety and hanging their laundry to dry rather than using a gas or electric clothes dryer.

The big commitment, however, was investing $58,000 in a massive solar power system that allowed them to go completely "off the grid." Thus, they reduced their electricity bill to zero — at least on sunny days. Harrisburg is not known as a particularly sunny locale but... oh well. All of this added up to a net reduction in carbon usage of one ton per year which the Wilsons put up for sale on a carbon offset exchange Web site. According to the article, the credit was brokered to Molten Metal Equipment Innovations in Ohio for a net return to Randy and Tami after a 20 percent commission of $17.20.

Now $17.20 may not seem like much of a return on an investment of more than $58,000, but don't forget the Wilsons will not have any electricity bills to pay. They can also feel good about what they have done to save the planet. Although they are happy to be environmentally friendly, their real motivation was more pedestrian. Their utility had issued a notice of a 30 percent price increase in the next few months.

Source: Chicago Climate Exchange / SVB Analytics

Frankly, we find the carbon pricing in the story a little confusing. We have been tracking prices on the Chicago Climate Exchange for some years and a recent check showed that 2010 vintage year carbon offset is selling for about 10 cents a ton in the spot market. (See graph nearby).

The peak in prices mirrors, for some reason, the peak in the price of oil. Since then carbon has faded in value as politicians struggle to create the artificial scarcity needed to drive up prices, encourage conservation and the use of alternative source of energy. Based on the market price we see on the Chicago Exchange, the Wilsons did very well for themselves.

All of this had us wondering about our own contribution to global warming. There are a variety of sites that can help calculate your personal footprint. We used carbonfootprint.com to discover that our footprint, at 47.5 metric tons, was more than double the average American and almost five times the amount for a typical citizen of an industrialized country. The entire difference was accounted for by the nature of my job which requires that I spend meaningful time traveling in an aluminum tube at 35,000 feet. In any case, getting my footprint down to the climate change goal of 2 tons per year seemed pretty far out of reach. Even leaving the Honda Pilot at home in exchange for the Porsche Cabriolet had almost no benefit.


Contemplating the story of the Wilson family and my own situation, we can't help but think about the Tshikedi family. Mukendi and his wife Mbuya live in the Democratic Republic of the Congo. Their home is pictured nearby. Their carbon footprint has always been de minimus, limited to the charcoal they burn for cooking and the occasional ride on the back of a merchant's truck to buy supplies in the nearby town. Neither Mukendi nor Mbuya have ever been on a plane or even ridden on a train, despite the fact that the train station is a short, 15-kilometer walk from their village.

Clearly the Tshikedis are climate change heroes. But that is not their aspiration. Their goal for themselves and their six children is to survive long enough to enjoy a quality of life closer to that of the Wilsons in Pennsylvania. If they were successful, the Tshikedi's carbon footprint would expand by several orders of magnitude. Unfortunately, those aspirations are completely out of phase with the politically acceptable philosophy surrounding global warming today.

And therein lays the crux of the debate. If we work to retard the development of the impoverished nations of the world, the pace of CO₂ entering the atmosphere will be slowed. By all popular accounts of the future of the planet's weather, this is a good thing. So the only question that remains is how do we explain that to Mukendi and Mbuya? Or their children?

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