Pacific Gas & Electric Company creates model voluntary carbon offset programme


By Robert Parkhurst


Pacific Gas and Electric Company (PG&E) is committed to helping its customers answer this question by developing innovative smart energy solutions. Examples include the world’s largest portfolio of energy efficiency programmes, the implementation of ten million advanced metering systems, researching electric vehicles as a storage device for renewable energy, and the exploration of new renewable energy sources such as tidal, wave, solar thermal and cow power. This past June, the utility took another bold step forward by introducing ClimateSmartTM, a first-of-its-kind programme that allows customers to take direct action against climate change.

When coupled with a leading clean energy portfolio and world renowned energy efficiency programmes, ClimateSmart provides PG&E customers with the final solution to make their energy use “climate neutral.”

To participate in the voluntary ClimateSmart programme, customers pay a separate amount on their monthly energy bill, based on their actual energy use. The typical PG&E residential customer will pay less than $5 per month. This sum is calculated by PG&E based on the exact amount of greenhouse gases emitted from the customer’s energy use. PG&E will then invest 100 percent of these payments in new, independently certified projects in California that reduce or remove greenhouse gases from the atmosphere – thereby balancing out the emissions from participating customers’ energy use.

What makes PG&E’s approach unique is that customers are first encouraged to use less energy, offering generous smart energy rebates and incentives. Then, after doing what they can to reduce their energy use, they can use ClimateSmart to make whatever energy they consume “climate neutral.” PG&E designed ClimateSmart using the highest standards of accountability and transparency. In the development of the programme the utility worked closely with regulators, key environmental groups and other stakeholders, incorporating a wide variety of oversight and verification measures, and a competitive solicitation process was created to determine the ClimateSmart projects in which to invest customer funds.

According to Diane Wittenberg, president of the California Climate Action Registry, a nonprofit organisation established by California law as the voluntary registry for greenhouse gas emissions: “ClimateSmart’s focus on transparency, accountability and environmental protection provides a great example for all carbon offset programmes.”

On 28 June 2007, PG&E launched the formal competitive process to select the greenhouse gas reduction projects that would offset the emissions from enrolled customers. In this first round, up to 250,000 tons of CO2 reductions was targeted. In response to that request, bids totaling more than 400,000 tons were received.

In order to contract with the ClimateSmart programme, all the projects must demonstrate that they are “additional,” meaning that the projects would not have happened without the financial support of the programme. Currently several of the project offers are under review and it is planned to sign contracts by early 2008.

In addition, PG&E will only invest ClimateSmart dollars in independently certified greenhouse gas emission reduction projects for which there is an approved project protocol from the California Climate Action Registry. These protocols ensure that the reductions are of the highest quality and are real, additional, verifiable, and permanent. The Registry is considered the standard for quality reduction project protocols nationwide.

PG&E is currently seeking two types of projects – those that conserve and restore California’s forests and livestock manure management projects that capture and combust methane gas from dairy farms. Forest loss and depletion is responsible for roughly 25 percent of all CO2 emissions globally, posing a significant challenge. Trees naturally remove CO2 from the atmosphere and can help fight climate change by storing carbon in their trunks, roots and branches. These projects will also benefit wildlife and water quality by permanently protecting and restoring California’s native forests.

Manure management projects capture the methane emissions associated with livestock operations, such as dairy cattle. California has over 1,900 dairies, but only a small number of farmers have installed needed methane capture technologies. ClimateSmart projects will serve as a catalyst to help more dairy farmers invest in these technologies. In addition to creating biogas, the methane digesters provide important environmental benefits, in part because methane is at least 21 times more potent per ton than CO2.

ClimateSmart will also fund the Registry-led development of three additional protocols. This will help to “road test” new greenhouse gas emission reduction project measurement, reporting, and certification protocols. Other measures that have been put in place to ensure that PG&E invests in the best greenhouse gas emission reduction projects available include:

  • Seeking ongoing feedback and input from an external advisory group of respected community, environmental, business, and government leaders
  • Permanently retiring all of ClimateSmart’s certified greenhouse gas emission reductions, which means they cannot be used by PG&E or anyone else for any other purpose
  • Requiring an independent, annual programme audit and regularly reporting the results to the California Public Utilities Commission and enrolled customers.

More than 11,000 customers have already enrolled in the programme, including customers from throughout PG&E’s service area and many different industries. Among these are leading businesses, such as Longs Drugs Stores, Sierra Nevada Brewing Company, New Resource Bank, Bear Valley Mountain Resort, Waldeck’s Office Supply, The Front Porch restaurant, and the San Francisco Chapter of the Recording Academy.

The feedback that has been received from customers has been resoundingly positive. “Many small business owners in Northern California care deeply about stopping global warming, but don’t have the time to research the many programmes available to help,” said Hank Ryan, Executive Director, Small Business California. “ClimateSmart is a valuable investment. This programme allows small businesses to make the right decision the first time.”


PG&E designed ClimateSmart to provide an easy, personal way for different types of customers to take action on climate change – from individual residential customers to whole communities.

An increasing number of cities and counties in California have set aggressive greenhouse gas reduction goals. PG&E is looking to help these communities meet their goals by working in partnership to raise general awareness about climate change, reduce energy use, and offset the community’s remaining energy-related emissions through ClimateSmart.

For any company urging its customers to take action against climate change, it is vital to also engage directly in this challenge. As such PG&E was the first customer to enroll in ClimateSmart, making its buildings “climate neutral.” PG&E is also leading the way in other parts of its business. This includes delivering some of the nation’s cleanest electric power, advocating for regulation of greenhouse gases through partnerships, and investing in renewable energy. Recently a landmark renewable energy agreement was entered into to purchase 553 MW of renewable power from the Mojave Solar Park, making this one of the world’s largest solar commitments.

Other innovative efforts being pioneered include a five-year programme to deploy approximately 10 million new SmartMeter™ electric and gas meters throughout PG&E’s service area. The SmartMeter™ programme represents a significant investment in California’s energy infrastructure and will provide a range of benefits to PG&E customers while increasing operational efficiencies. As the SmartMeter™ network is built, more and more features will be added to empower customers with better information and the ability to make cost saving choices about the way they use energy.

PG&E continues to see the opportunity to educate customers on the impact that their energy use has on climate change, and provide them with a breadth of solutions. ClimateSmart is just one piece of the puzzle.

The fastest, most cost effective way to reduce greenhouse gas emissions is to use energy more efficiently. PG&E is investing more than $1 billion in energy efficiency programmes between 2006 and 2008. PG&E is also administering the California Solar Initiative, an ambitious programme designed to boost the amount of customerinstalled solar capacity in California. To date, PG&E has interconnected more than 18,000 customers with solar generating systems to the power grid – representing more than 153 MW and more than any other utility in the nation.

Customers can also take advantage of educational tools such as a carbon footprint calculator. This easy-to-use calculator is designed to help customers estimate the carbon footprint from the energy they use and the vehicle they drive, and learn how PG&E can help reduce their footprint.

After three years, PG&E expects ClimateSmart to invest in two million tons of greenhouse gas emission reductions. That is equal to taking 350,000 cars off the road for a year. The more customers that sign up, the more reductions will be achieved.

But that is only part of the story. By raising awareness about climate change, PG&E hopes to inspire more people to take action, working in partnership with the utility.