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Frequently Asked Questions

Outline

Introduction

Households

Businesses

General

Carbon Neutral Indiana (CNI)

 

Introduction

What does "carbon neutral" mean?

See answer here.

 

Why does carbon neutrality matter?

See answer here.

 

What is Carbon Neutral Indiana?

See answer here.

 

Households

How can my household become carbon neutral?

See answer here.

 

What does it cost for a household to be carbon neutral?

It depends on your carbon footprint, but it's about $15 per person. This is similar to a Netflix subscription. For the entire household, it'll probably be similar to their water bill.

Compare this to the social cost of carbon. As Ben Franklin said, an ounce of prevention is worth a pound of cure. A ton of CO2e might cause $220 in economic damages, but we can prevent those damages by cleaning up our carbon trash.

 

We buy "green power," are we carbon neutral?

No. See the question about solar panels below.

Also, we generally do not recommend such programs. Learn more on this website.

 

We have solar panels, are we carbon neutral?

No. Having solar panels does not make your household carbon neutral.

Imagine the average four person household in Indianapolis, Indiana. Emissions associated with their electricity are about 7.14 tons:

Now imagine they install enough solar panels so they don't need to buy electricity from the grid. This would reduce their emissions by 7.14 tons, from 72 tons to 65 tons:

You can see the average family still generates carbon emissions from many other activities, like transportation, natural gas, and purchasing goods and services.

 

How do we reduce our direct carbon emissions?

The most powerful way to reduce a negative behavior is to put a price on that behavior.

For example, imagine a person who swears a lot. Their partner has tried for years to get them to stop. So they agree that whenever the person swears they put money into a jar. This will transform their mindset and behavior.

This is called an "internal carbon price."

Microsoft is recognized as one of the world's most leading companies on climate action. They began transforming their company's culture by instituting a "carbon fee."

So becoming carbon neutral -- i.e. paying to clean up your carbon trash -- will cause you to reduce your direct emissions.

What specific steps can you take? We are working on an online curriculum to answer this question. In the meantime, see these resources:

  • Reduce the amount of air that leaks into / out of your home (see these 19 common areas of leakage)
  • Improve your home's insulation (and use low carbon insulation materials like hemp-based insulation)
  • Buy high quality clothing (e.g. wool shirts). Fast fashion creates about 10% of global emissions.
  • Fly less or not at all
  • Invest in energy efficiency -- appliances, LEDs, etc.
  • Use a heat pump
  • Install solar energy at your home
  • Work from home one or two days per week
  • Switch vehicles to get higher MPG -- hybrid, hybrid plugin, electric
  • Participate in "meatless Monday"
  • Switch search engines from Google to Ecosia

Of course there are many other ways you can reduce your carbon footprint. Here are more resources:

Exploring this information might feel like climbing a mountain. You might feel like you lose your footing and slide down the mountain.

That's why we recommend becoming carbon neutral first. It gives you a solid footing from which you can plan your next steps.

 

Businesses

How can my business become carbon neutral?

The process is similar as for households:

  1. Measure your business's carbon footprint
  2. Clean it up with a monthly or annual subscription

 

Why should my business become carbon neutral?

Here are a few reasons:

  1. Cleaning up our carbon trash is the right thing to do.
  2. It's a low cost way to do a lot of good. Learn about the social cost of carbon for more.
  3. It'll help you attract intelligent, ambitious, passionate employees.
  4. It's a low cost, high impact marketing investment. 70% of consumers are willing to pay 10% more for environmentally friendly products.
  5. Differentiate yourself from your competition.
  6. By being an early adopter, you'll be proud of leading on an important issue.
  7. Your descendants will be more proud of you.

 

What does it cost for a business to be carbon neutral?

About 1/4th of 1% of annual revenue, paid monthly or annually.

For example, for an advertising agency with $5M in revenue, it might cost about $1,000/mo to clean up their carbon trash and be carbon neutral.

 

General

What is the "social cost of carbon?"

The social cost of carbon is a unit of measure. It measures the economic damages caused by a ton of carbon emissions.

We all know putting carbon emissions into the atmosphere is bad, but how bad is it? This is a question for economists.

In fact, the 2018 Nobel Prize for Economics went to a man who created the entire field studying this question, Professor William Nordhaus at Yale University.

Economists debate the exact number, but researchers at Stanford University pegged it as high as $220/ton:

"A recent U.S. government study concluded, based on the results of three widely used economic impact models, that an additional ton of carbon dioxide emitted in 2015 would cause $37 worth of economic damages. These damages are expected to take various forms, including decreased agricultural yields, harm to human health and lower worker productivity, all related to climate change.

But according to a new study, published... in the journal Nature Climate Change, the actual cost could be much higher. 'We estimate that the social cost of carbon is not $37 per ton, as previously estimated, but $220 per ton,' said study coauthor Frances Moore, a PhD candidate in the Emmett Interdisciplinary Program in Environment and Resources in Stanford's School of Earth Sciences."

The social cost of carbon is a critical concept. We're in this problem because many of us are internalizing the benefits of carbon while externalizing the costs of carbon. These costs usually fall on the most vulnerable.

Become carbon neutral follows the timeless, universal principle of do no harm. 

And each household can prevent a lot of harm! If the average American household emits 40 tons of carbon dioxide annually, that means the average American household shifts 40 x $220/ton = $8,800 in social costs onto others. But by investing in projects that reduce emissions or pull carbon out of the atmosphere, that same family can prevent causing those damages for about $50/mo.

 

How do carbon markets and offsets work?

 

 

 

 

 

Here's all of that in narrative format:

First, a "project developer" works with a "project owner" to develop a carbon offset project. They must bring in scientists / consultants to verify their plans, and they submit 100+ page project description document to a "registry" (e.g. Verified Carbon Standard). Here is the project description document of the Afognak project we support.

The registry analyzes the project to see if it passes certain criteria (e.g. it's additional, reasonably permanent, etc.) then they give the thumbs up.

The project developer develops the project (e.g. plants the trees, gives the cows a methane abatement supplement, change a landfill to capture the methane, etc.).

Usually a third party comes out to verify everything is legitimate.

Then, a year after commencing, the registry may "issue" carbon offsets. Each represents one ton of CO2e either sequestered or prevented from being emitted in the first place. Each of these offsets has a unique serial number and is tracked in a public database. Once it's issued, it can be bought/sold like any other commodity.

Let's say the project developer is acting like a wholesaler. They sell them to someone like Carbon Neutral Indiana. Then we retail them to the end consumer.

Finally, when any of our clients (a household, a business, etc.) wants to claim those offsets against their carbon footprints, we "retire" the offsets on their behalf. This means they are taken out of circulation and can't be bought / sold by anyone else.  Here's an example of what the retirement record looks like.

An analogy for all of this is a coupon for a haircut. You could pass the coupon around, but eventually someone is going to get a haircut. At that point, the coupon is torn up so nobody else can use it. In the case of an offset it isn't torn up by "retired."

If you'd like to go deeper, here's an excellent introduction.

 

Why are carbon markets important?

Carbon markets represent a pay for performance approach to climate mitigation. They also provide transparency, innovation, as well as a mechanism to funnel resources from developed nations to developing nations.

They can also be a highly efficient way to reduce emissions. They enable you to seek out the least cost way to reduce emissions. There’s economic analysis showing that with the cost savings you can get from markets, if you reinvested those into climate mitigation, you could double climate ambition at no extra cost.

 

How do you ensure carbon offsets are of high quality?

See guidance starting on page 18 here.

 

What if a forest that generates offsets burns down?

Coming soon.

 

What does it mean to retire carbon offsets?

Retiring an offset means it's claimed against an individual or organization's carbon footprint, and it has been taken out of circulation to ensure it can only be claimed once.

Here's an example of what a retirement record looks like.

An analogy is what happens to a coupon for a haircut. You could pass the coupon around, but eventually someone is going to get a haircut. At that point, the coupon is torn up so nobody else can use it. In the case of an offset it isn't torn up by "retired."

 

Shouldn't I reduce my emissions first and buy offsets as a last resort?

Coming soon.

 

How can I support carbon offset projects in Indiana?

Coming soon.

 

Is purchasing carbon offsets tax deductible?

This does not constitute legal or accounting advice. According to our understanding, they are not tax deductible as a personal expense. For a business expense, they are.

 

Carbon Neutral Indiana

How can I best support CNI's mission?

The most important thing you can do is to become carbon neutral as soon as possible.

Once you are, you'll understand that process. You'll speak with more authority, and you'll be more persuasive.

Then the next things to do (in order) are:

  1. Put up a yard sign if you can. 60% of people who become carbon neutral hear about it from yard signs.
  2. Tell your friends and coworkers by posting about it on social media. This video is a great one to share.
  3. Donate to support our mission financially.
  4. Commit to learning. The more sophisticated our community is, the more it can accomplish. Review materials on this website. We are creating an online curriculum to educate people about critical concepts. Stay tuned.
  5. Be on the lookout for opportunities to make zero percent interest loans, like our recent $19,500 loan from 30+ people.

 

How can I keep up with CNI developments?

We post to our blog regularly. You can also follow us on:

Once you become carbon neutral, you'll have access to our Slack channel -- a chatroom essentially -- with hundreds of participants.

 

What is CNI's strategy?

See answer here.

 

Who is behind CNI?

See answer here.

 

How did CNI get started?

See answer here.

 

Will this expand beyond Indiana?

Yes, it already is.

We focus our outreach on Indiana but feel free to refer your friends around the country. In fact, we've already certified households in states throughout the country like:

  • Washington
  • Texas
  • Colorado
  • California
  • Maryland
  • Michigan
  • Oklahoma
  • Ohio
  • New York

A highly respected venture philanthropy firm said that -- once we help about 500 households total -- we'd be a good candidate for their investment to scale state chapters throughout the country. We already purchased domain names for all states -- like CarbonNeutralTexas.org.

Carbon Neutral America will be a national non-profit with state chapters like The Nature Conservancy or Habitat for Humanity.

Learn more about the potential carbon benefits of this national expansion.

 

Where does the money go when I purchase carbon offsets through CNI?

We support a portfolio of many types of verified carbon projects.

We sell carbon offsets as a fundraiser. That means, when you purchase through Carbon Neutral Indiana you are not only getting the carbon benefits of the verified offsets but you're also enabling our other work as well.

We use roughly 60% of carbon offset revenues to purchase offsets at discounted, wholesale prices. We invest the other 40% into growth -- educating more households and businesses and measuring their carbon footprints.

 

Why should I buy carbon offsets from CNI and not another organization?

Coming soon.

 

How does CNI fit into the larger climate movement?

Climate solutions fall into two categories: (1) specific projects that reduce emissions and (2) carbon pricing that transforms how economic actors make decisions.

Specific projects have an immediate payoff in terms of reducing emissions. Carbon pricing, on the other hand, changes our economic paradigm and increases investment to projects that reduce emissions. It has a multiplier effect.

1. Specific projects that reduce emissions.

These are climate solutions you know like solar and wind electricity, electric buildings, public transportation, plant rich diets, etc.

Several frameworks group and rank these solutions:

The third Accelerating America’s Pledge report by Bloomberg Philanthropies’ groups them by three principles: renewable electricity, electrifying end uses like buildings and cars, and investing in natural carbon sinks like forests.

McKinsey & Company’s famous GHG Abatement Cost Curve sorted them by highest potential per dollar invested (see their 2020 report for an updated analysis).

Project Drawdown sorted these solutions as well. CNI's founder analyzed these solutions in Indiana's context as part of Indiana Drawdown.

And finally, researchers at Princeton University’s Carbon Mitigation Initiative created The Net-Zero America Project (NZAP). This research informs, “a new National Academies of Science, Engineering and Medicine Committee…”

2. Pricing carbon.

A boring accounting problem created our ecological crisis. It’s simply that we’ve been internalizing profits and externalizing costs. In other words, we've taken short term gains from exploiting the environment, but pushed off the environmental damages to others elsewhere in the world as well as in the future.

As is relates to carbon, each ton of CO2e we emit causes $220 in social costs. Pricing carbon enlarges our circle of responsibility and changes the way we make decisions.

Many of the reports cited above encourage not only specific projects that reduce emissions but also carbon pricing and associated carbon markets.

For example, Bloomberg’s Accelerating America’s Pledge report:

"While this chapter highlights critical climate policies within each of the three principles, certain actions transcend these categories and have more cross-cutting implications. The most obvious of these are state efforts to price carbon emissions or set a formal cap on economy-wide emissions...

Carbon pricing has been studied in-depth and is widely seen as a particularly efficient way of reducing emissions in some sectors if not all."

And McKinsey & Company’s 2020 report:

"All of the 1.5°C scenarios would require major business, economic, and societal shifts—each enormous in its own right, and with intricate interdependencies. We identified five critical shifts and determined what it would take for them to occur… [The fifth is ramp] up carbon management and markets… Currently, it is impossible to chart a 1.5-degree pathway that does not remove CO2 to offset ongoing emissions. The math simply does not work."

Carbon pricing is supported by international experts and will become more common. The Financial Times published the following in Jan 2019:

"Four former chairs of the Federal Reserve have joined with leading economists from both major political parties to issue an unprecedented call for a carbon tax in the US, saying 'immediate' action is needed to address the risks of climate change.

Janet Yellen, Ben Bernanke, Alan Greenspan and Paul Volcker proposed an emissions tax that would be used to pay lump-sum cash rebates to US citizens.

The statement signed by 27 Nobel laureates and 15 former chairs of the Council of Economic Advisers described the mechanism as a 'cost-effective lever to reduce carbon emissions' that would correct 'a well-known market failure'."

And Elon Musk, the Leonardo DaVinci of our day, said:

"If you ask any economist they will tell you that is the obvious thing to do, put the correct price on carbon because we currently have an error in the economy which misprices carbon at zero or something closer to zero. It is a fundamental economic error.

To make it neither a left or right issue, we should make it a revenue-neutral carbon tax… If countries agree to an appropriately priced and targeted carbon tax, we could see a transition [to clean energy] that has a 15- to 20-year timeframe as opposed to a 40- or 50-year timeframe.”

2A. Pricing carbon with regulation

Various groups advocate a mandatory carbon price, enforced by the government. Citizens Climate Lobby at the federal level, for example, and Climate Xchange at the state level. Regional experiments like RGGI show it can reduce emissions while also spurring the economy. We see a mandatory price on carbon as critical.

2B. Pricing carbon by shifting social norms

CNI — along with the rest of the carbon neutral movement — is changing social norms and making it commonplace to pay a voluntary carbon price.

First we are making it normal to be carbon neutral. Once enough people are — i.e taking responsibility for and cleaning up their “carbon trash” — it will be expected of every decent person and business. The reputational costs will be too high, and businesses would lose their social license to operate if they don’t.

In this way, CNI’s approach complements the mandatory approach. One is top down, enforced by legislation. The other is bottom up, enforced by a new social norm. In other words, we don’t need to wait for legislators to start shifting social norms. 

CNI increases awareness of social costs of carbon, early adopters take responsibility and show leadership by becoming carbon neutral, and finally we have enough momentum to enact a society wide carbon price. How? We’ll  connect the early adopters with politicians willing to lead and achieve what the World Resource Institute calls an “ambition loop.” This is a virtuous cycle in which early adopters provide political cover for politicians to take a risk. Then, those politicians enact legislation that empowers those early adopters.