This week, I’d like to introduce you to Clearloop, the company that Bob Corney, Laura Zapata and I have started. Our mission is to fight climate change on a large scale by creating a new, second-generation carbon offset: we call it a “carbon mortgage”.
Our carbon mortgage is different from and superior to the so-called “natural” offsets that predominate today. These natural offsets basically consist of buying trees somewhere, often not in the United States, to try to capture carbon. Instead, Clearloop’s second-generation approach offsets unavoidable greenhouse gas emissions by building new solar arrays right here in the United States. We then use the electrical power generated to replace power that would have otherwise been generated by burning fossil fuels—avoiding carbon from being created in the first place.
Here’s why we call this a carbon mortgage: if you want to purchase a home, you will likely take out a mortgage from a bank and then pay that mortgage back in monthly installments over time. Most people can’t simply write a check for their house; a mortgage from the bank makes the purchase of a home realistic and accessible.
Similarly, companies always have some greenhouse gas emissions that they can’t eliminate. We give them a way to take out a carbon mortgage: they “borrow” through Clearloop the atmospheric carbon capacity they unfortunately need to use now but then pay it back in installments over time, over the life of the solar capacity we create. Just as with a homeowner’s mortgage, the “borrow and pay back in installments” structure makes possible larger, more numerous and more creative investments to reduce greenhouse gas emissions than the current “cash-up-front” approach.
To see in more detail how this works, let’s take as an example how a company would approach offsetting the footprint of a gallon of gasoline:
- That gallon of gasoline has a carbon footprint of about 20 pounds of CO2.
- To create the offset for that 20 pounds of CO2, Clearloop builds about one-fifth of a watt of solar capacity as part of a much larger project. This is about one square inch of solar panel.
- We charge the company a fraction of the cost of that square inch of panel, the rest is paid for by the revenues it receives selling the electricity it produces.
- This is new solar capacity, which would not have otherwise been built.
- Over its 30+ year life, this square inch of solar panel will conservatively generate about 56,000 watt-hours of electrical power, which is sold into the grid.
- That new solar power has a zero-carbon footprint and replaces electricity which would have otherwise been generated with fossil fuel, producing 20 pounds of CO2 in the process. Twenty pounds borrowed now; twenty pounds paid back in installments over time.
This approach addresses a real-world problem that climate purists tend to gloss over.
When a company wants to do its part to address climate change, there is no question that the first thing it ought to do is reduce its own emissions wherever it can. But as a practical matter, that reduction in its own operations has economic limits and is sometimes impossible. Think of air travel: people are going to travel, airplanes burn a lot of jet fuel, and there is no realistic alternative to that jet fuel likely to be available anytime soon.
Once a company has done everything practical to reduce its own footprint, it must then turn to offsets to deal with its residual emissions—―investing in greenhouse gas reductions in areas outside of its own operations.
There is no better place to create these offsets than electric power generation. Clearloop and its carbon mortgage offers a powerful and practical way to do this, creating jobs, tax base and important national infrastructure in the process.
Remember: there are a lot more and bigger houses today than there would ever be if there were no such thing as a bank mortgage. And now there can be a lot more and bigger attacks on climate change with a carbon mortgage.