Going Green -- or Gifting a Right to Pollute?

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At the 2007 Academy Awards, where it's traditional for the stars to walk away with bags of expensive swag, A-list attendees received certificates for 100,000 pounds of something called "carbon offsets."

And one night on "The Daily Show With Jon Stewart," guest Dennis Miller also came out and handed the host some carbon offsets.

Like a designer dress, carbon offsets are an environmental tool that have become suddenly fashionable.

"I think people are very frustrated with the government and business response to climate change," said Tom Arnold, chief environmental officer for Terrapass in San Francisco.

A carbon offset is a way to, theoretically, cancel out or neutralize the amount of carbon dioxide (CO2) you create in your daily life. For instance, every gallon of gasoline burned by your car creates 20 pounds of the gas carbon dioxide, which is believed to contribute to global warming.

When you buy carbon offsets from a company that trades in them, that company in turn pays another company to do something that either eliminates CO2, or generates energy in a way that does not create CO2. They might plant trees, or create electricity with solar or wind power.

The idea is to balance every act of carbon creation with something that either eliminates it or at least does not contribute to the problem.

Multi-Billion-Dollar Industry to Benefit the World

Carbon credits and offsets are a multi-billion-dollar-a-year commodity traded on open markets. Some big companies, from Seattle City Light to Vail Resorts, the Colorado ski area, have declared themselves carbon neutral through credit trading.

Carbon dioxide is created in stunning amounts according to the Web site calculators of several organizations that sell carbon offsets. A four-cylinder car driven 12,000 miles a year creates nearly 11,000 pounds of CO2. A round-trip flight between Los Angeles and San Francisco creates an estimated 400 pounds of CO2 per passenger.

So Charlotte Seligman, who lives in a small house in San Francisco, bought carbon offsets for her home and even gave some out as Christmas gifts.

"It made sense to me," she said. "If more people did it and it gets to a tipping point, I think it could make a difference."

Paul Lowrey, who lives in San Francisco and has two cars, one of them an SUV, bought a year's worth of carbon offsets.

"For each car, it's about $35, the cost of a night out on the town," Lowrey said.

The question some people have is whether Lowrey and people like him should still be driving that carbon dioxide-belching SUV.

Former Vice President Al Gore, now campaigning against global warming, recently got in a jam because he lives in a 20-room house with a $30,000 utility bill. Gore said his life is "carbon neutral" because he buys offsets.

But Frank O'Donnell, president of Clean Air Watch, believes this is all well-intentioned -- but possibly off the mark.

"In many cases, it reminds me of the Middle Ages, where a sinner would buy indulgences from the church to make up for their misdeeds, and then they'd go right back to sinning," O'Donnell said. "I mean, it really doesn't change things."

"One of the real problems with this is that it may divert attention from what we really need, and that is strong, decisive action by the federal government to actually limit and reduce carbon emissions nationwide," O'Donnell added.

Even the carbon traders see the flaws. At DriveNeutral, a non-profit organization in San Francisco, director Jason Smith said, "We want people to know what climate change looks like, how their personal behavior contributes to it, and we're giving them a solution to contribute to right away to make a difference."

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