Sunday, September 28, 2008

Carbon Micro Credits (CMCs) -- Monetizing carbon offsets at the "Bottom of the Pyramid"


"We hold these truths to be self-evident, that all men are created equal; that they are endowed by their Creator with inherent and inalienable rights; that among these, are life, liberty and the pursuit of happiness; including the right to own, manage, benefit directly from, sell and transfer ownership of their own carbon offsets.”

[ if Thomas Jefferson were writing today... ]

Trading of carbon credits is forecast to become the largest commodity market in the world. But will the poor benefit from this carbon bonanza? And when? Will individuals in the Developing World be able to control and sell their own realized carbon offsets? Or will they be expropriated by governments and well-meaning but over-controlling corporations, NGOs and charities?

Described here is a pro bono, markets-based mechanism (= self-funding) that I conceived to allow millions of people in the Developing World to monetize their own carbon savings from cooking with solar, for example, and thereby improve their standard of living. This could be called "cloud carbon offsetting" or "crowd-sourcing carbon credits".

In its purest form, this concept requires NO charity. Just advocacy and implementation.

I am attempting to put together a consortium of companies and groups interested in realizing this universal wealth-creation mechanism because every poor person in the Developing World owns something valuable -- their own carbon footprint, which is worth about US$ 75 - 100/year if sold on a climate exchange. For people living on US$ 1.00/day, this is literally carbon manna.

More specifically, by cooking with solar or a more efficient charcoal stove, poor families can reduce their carbon footprint by 15-20 lbs of CO2/day, worth about $75 - 100/year. They also save US$ 100 - 200/year on biomass/carbon-based fuels, for a total net monetary gain of US$ 175 - 300/year.

Serialized cookers matched to unique cell phone numbers will allow the credits to be claimed daily and "monetized" as either tradable cell-phone minutes or any form of e-currency. Cell phone minutes are already a universal non-corruptible, non-inflatable currency in many parts of Africa and Asia. In short, cell phone minutes are a fungible and transmutable store of value.

Verification of the credits can be performed daily by a multi-level peer-review or monitor system in each village, and by system auditing at the cell-phone company that allows each unique cell number to claim only one micro-credit/day.

Participating families should be required to buy their cell phones and cookers with their first claimed carbon micro-credits (CMCs), so the program is self-funding. Bundled CMCs could be pre-sold via climate exchanges to fund the program's start-up costs. The entire program is therefore self-sustaining and driven by the profit-motive and self-interest at all levels.

Simple cell phones cost less than $5.00 to produce, and solar cookers range in price from $ 10 - 100. Transnational cell phone companies in Africa such as MTN and Safaricom should embrace this program as a means to grow their own business. Due to the low start-up costs and already established cell-phone networks in Africa, this program is immediately implementable and scalable to millions of families.

Assuming 5 billion people in the Developing World and 1 billion families, if only 10% of families converted to solar cooking and did not emit 3.5 tons/year/family of CO2, and assuming reduced deforestation in perpetuity from not cutting down trees (biomass), this modest conversion rate alone would offset the annual CO2 emissions of the entire United Kingdom.

Moreover, once there is an installed base of cell phones in a Developing Country, they may serve other important functions such as: (1) tele-education of children; (2) dissemination of public-health messages to parents (e.g. upcoming vaccine campaigns -- “Vaccinate your child for polio and receive 60 free cell-phone minutes!”); and (3) timely notification of national emergencies such as typhoons or tsunamis. Also, by not cooking with biomass in an enclosed dwelling, children will no longer be exposed to smoke that some experts estimate causes more premature deaths annually than malaria (1.5 - 2 million/year).

By empowering the "Bottom of the Pyramid" to quantify and monetize their own Carbon Micro-credits (CMCs), poor families in the Developing World could immediately realize a 25-50% increase in their daily standard of living by selling their CMCs and by no longer having to buy biomass-based fuels that can consume up to 60 % of their daily income in countries such as Kenya.

Moreover, because the program is self-funding and entirely driven by self-interest and the profit motive, EVERY entity involved in the program benefits immediately. Besides poor families, these entities include: Carbon Project Developers (EcoSecurities Ltd. or Carbon Capital Markets Ltd.), Climate Exchanges (European Climate Exchange or Chicago Climate Exchange), Cell-phone Companies (China Mobile, MTN, Safaricom), Solar Cooker/ Charcoal Stove Manufacturers, Carbon-offset Validation Firms (Det Norske Veritas, Tuev Sued AG, SGS Group), and Companies buying carbon credits to offset their own carbon emissions. Finally, of course, every human being worldwide benefits from lower greenhouse gas emissions and reduced global warming.

Successful implementation of this system will empower poor families to immediately improve their standard of living. It will also allow them to learn about the profit motive, time payments, personal property rights and personal choice, and allow partial freedom from government-induced inflation. They will also begin to understand the negative effects that cooking with biomass has on the health of Planet Earth and their children (due to forced passive smoking from cooking in-doors).

Also, once enfranchised with a cell phone and a universal currency for trade (CMCs), many individuals will start home-based businesses to further improve their standard of living. The carbon offsets from this program and the associated increase in standards of living can easily be quantified. Because this program can be immediately implemented with current technology, it should scale easily to include millions of families in the Developing World, a happy result that cannot be quantified.

Globally & warmly yours,

David Palella

San Diego, CA
tel: 858-793-0741