RECs Market for People With Cars

Students in business schools are always challenged to come up with the latest and greatest enterprise at some point during their academic career. Benven, a company owned and operated by students from the Wharton School at the University of Pennsylvania, began marketing the TerraPass in January as the simplest and most efficient way for consumers to counteract the effects of their car’s carbon dioxide (C02) emissions.

TerraPass is not a device, but a service. By purchasing a TerraPass, environmentally conscious consumers can finance projects that reduce industrial C02 emissions and, in turn, offset their own contribution to global warming. The concept mirrors the growing Renewable Energy Certificate (REC) market where the positive attributes of clean energy production are bought and sold on the open market. REC contracts, usually called green power purchases, allow the purchaser to effectively offset their home or business energy needs with clean generation. The TerraPass takes that model a step further to offset a consumer’s traveling emissions. “Effectively, TerraPass tips the economic balance in favor of efficiency and renewable-energy projects that otherwise aren’t viable,” said Wharton Professor Karl Ulrich, who is an advisor to and co-founder of Benven. “The power of these market-based mechanisms to effect environmental change – with proven record in reducing industrial pollutants – is finally available to individuals. It’s the definition of a virtuous cycle.” TerraPasses are available for purchase at prices ranging from $29.95 for hybrid vehicles to $79.95 for SUV and utility vehicles. For each TerraPass sold, Benven purchases equivalent amount of carbon dioxide offsets from several sources, such as renewable energy companies or carbon instruments at the Chicago Climate Exchange. By purchasing in large quantities, Benven obtains carbon offsets at reasonable prices and reduces the available pool of CO2 emissions for industrial companies. TerraPass was initially created as a project for a course on operations management taught by Ulrich. “I gave the students a rough concept hoping to marry the theory with practice in real-world problem solving. The students turned this concept into an environmentally friendly business,” Ulrich said. “The students, all MBA candidates with diverse backgrounds worked in teams to launch TerraPass in less than 6 weeks.” Carbon dioxide emissions are proven to cause global warming through the greenhouse effect and global warming may be the most serious environmental problem of our time. Until now, practical solutions to automobile CO2 pollution were limited. Now car owners can buy TerraPass and “clean up after their car” by offsetting the CO2 emissions from their vehicles. In turn, participating companies reduce their CO2 emissions and shift towards environmentally friendly methods or renewable sources of energy. This mechanism is verifiable and results in exactly counterbalancing the CO2 emissions of car drivers, according to Benven. The company plans to expand TerraPass beyond the initial phase to enable greater leverage for individuals who choose to participate in market-based mechanisms to reduce global CO2 emissions.

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