DriveNeutral compensates for pollution from a person's car by participating in a voluntary emissions trading market called the Chicago Climate Exchange (CCX). The 130 corporations, nonprofits, and governments on the exchange are legally bound to achieve annual reductions in carbon dioxide emissions, either by reducing them internally or by buying "emissions credits" from companies that have exceeded reduction targets.
Individual buyers cannot participate in the CCX. But because DriveNeutral is an associate member, it buys blocks of credits and divides them into increments tailored to fit the ecological footprint of an individual automobile. The $25 Castleman paid to offset her Infiniti reflects the current price of carbon, about $1.50 per metric ton.
After purchasing emissions credits, DriveNeutral takes them off the market.
"We intervene, and the overall pool of allowable credits goes down," says CEO Jason Smith. As a result, CO2 emissions decline, while market demand for credits increases, he says.
Over the past two months, DriveNeutral has claimed 600 metric tons in CO2 reductions through 125 car certifications. A for-profit competitor, TerraPass, launched by students at the Wharton School of Business in Philadelphia last year, cites 19,000 tons in CO2 reductions and 2,500 certifications. Carbonfund, a nonprofit that offsets home, office, and transportation emissions, boasts 37,000 tons in reductions.
DriveNeutral's strategy is similar to that of the American Lung Association, which buys and retires blocks of credits on the sulfur dioxide (SO2) emission market. (It's a program that went into effect in 1995 to curb pollutants responsible for acid rain.) But unlike the SO2 market, participation in the CO2 market is voluntary. That's a million-dollar difference, analysts say.