Testing the Validity of Eco-Claims

To get a sense of how well-intentioned people can lose their bearings in the sea of green hype, consider the case of Fiji Water. With its bottles featuring images of pristine tropical flowers, the Fiji company started to worry when critics began bashing the environmental impact of water bottles, which will pile up in landfills for thousands of years. It got more worried when it became fashionable for consumers to calculate the carbon footprint of the products they buy—the amount of greenhouse gas emitted in manufacturing and distribution. The bottled-water business has absurdly big feet. Unlike tap water, bottled water doesn't flow freely to the people who drink it, but must be carried by gas-guzzling trucks and planes in bottles made of plastic (which is made from petroleum). So late last year, Fiji decided to meet the "water backlash" head-on with a plan to reduce the use of packaging, switch to more efficiently recyclable plastics and compensate for other carbon sins by buying offsets that would reduce emissions elsewhere. The goal was to make Fiji not only trendily "carbon neutral" but carbon negative. Never mind that most experts say that the whole premise of carbon offsets is based on dubious math (how to measure a carbon footprint?) and morals (paying others so you can pollute?). Consuming a bottle of Fiji Water will actually reduce the amount of carbon being released into the atmosphere, the company's marketing now claims.

Guilt over the environment is at a historic high, generating a flood of makeshift fixes, false claims and doomed schemes to achieve redemption. Many of these green ideas suffer mainly from overhype, and contain in them the kernel of a scheme that could work very well. In the following chapter, we look at how hype has oversold six of the hottest green ideas, and how reason can salvage the workable bits. That process is already underway for biofuels, which were originally embraced with wild enthusiasm in all its forms ("bio" sounds green and must be good, right?) but is now facing a backlash that brutally distinguishes efficient sources (cellulose) from the inefficient (corn). That same sanity check needs to be applied to everything from carbon markets (which work only in the right conditions) to the rage for hybrid cars (only half the models produce real fuel-economy gains) and the explosion of green marketing (one study finds fewer than 1 percent of the claims to be legitimate). All these cases offer important lessons on how people and governments should move forward on green issues.

The important question is: how valid are other green claims? (Before going any further, let's agree that buying more Fiji Water would not solve the world's climate problem.) If it were truly as easy as many companies claim to erase our carbon footprints, why is everybody in a tizzy about climate change? The answer is, of course, that it's not that easy. The similarity between sales of carbon offsets and medieval church indulgences is striking, not least because there's about equal proof that the two actually work.

Marketing departments don't have a monopoly on nonsolutions. Green energy guru Amory Lovins has been asserting all his life that it costs less to be green than not to be. Although Lovins's views are now "painfully respectable," as he puts it, companies that have tried to put them into practice have found it tough going. Many problems also arise from that bane of environmentalists and economists, the law of unintended consequences. Biofuels, which have driven up the price of food without doing much to slice emissions, is a classic case in point. Carbon trading, the backbone of most plans to reduce worldwide emissions, also suffers from this problem. A recent WWF report found that the EU's emissions-trading scheme could result in a financial windfall for European power companies. The system, which gives greenhouse-gas emission credits away free of charge, could lead to a €34 billion gain for Germany's coal-reliant power generators. Many experts question the extent to which it will lower carbon emissions overall.

The proliferation of green marketing hype may be a symptom of the sheer complexity of steering the global economy to a future in which per capita carbon emissions are 80 percent lower than they are now in developed countries, a widely discussed target. How much will such cuts cost? Nicholas Stern, former chief economist for the World Bank and an adviser to the British government, has put the cost of making drastic cuts in emissions at 1 percent of GDP. He arrives at this figure by assuming there's a 50 percent probability that global temperatures will rise by 5 degrees Celsius in the next century, leading to massive and costly disruptions. "The basic way of looking at it is, would you pay around 1 percent of GDP to bring down that probability from around 50 percent to 3 or 4?" he says.

The question of what it will cost to reduce carbon in the atmosphere is difficult because the answer depends on how bad we expect the effects of global warming to be. Some economists assume that global warming will be less disruptive than Stern does, effectively raising the cost of taking action now to 3 to 5 percent of GDP. Another unknown is what technologies might arise to make a carbon-free future more palatable.

Each step on the path toward a carbon-free future will bring more realism to the issue. As governments and companies get more experience with how to wring efficiencies from the economy and how to regulate green marketing claims, the Wild West character of the green business will settle down to something a bit more reliable. Even now, some green claims are legitimate, of course. Hybrid cars like Toyota's Prius and Honda's Civic Hybrid get demonstrably better gas mileage than their nonhybrid counterparts. Insulating homes is a surefire way of saving energy. Second-generation biofuels such as jatropha hold the promise of making a real dent on tailpipe emissions. Factories, cars and industries could work more efficiently than they do now, to the benefit of the environment. Between now and then, many unrealistic ideas will have to be scrapped. What follows is an attempt to separate the garbage from the ideas that should be recycled, perhaps in new forms.

Watch Those Labels
Green marketing comes in waves. The last big one in the United States hit in 1992, when "recycling" and "biodegradable" first became buzzwords and the U.S. Federal Trade Commission issued its first green guide, clarifying how terms like "recyclable" could be used. That wave faded as the price of oil fell in the late 1990s. "Now there's a new wave," says James A. Kohm, the director of the enforcement division at the consumer-protection arm of the U.S. Federal Trade Commission. "It's really more of a tsunami."

It sure is. Kohn says he knew the tsunami was coming when he saw ads for the first "carbon-neutral Super Bowl," "carbon-neutral NASCAR race" and "NBC's Green Week." New claims are visible in the aisles of any supermarket or hardware store. The flood of promotions prompted the FTC to bump up its scheduled review of environmental-marketing claims to last April, a year earlier than planned. The European Commission recently toughened voluntary guidelines on ecolabeling, and now audits green claims. The U.S. rules are not voluntary, and could lead to prosecutions, says Kohm. "We try to get the worst offenders and make them an example."

There shouldn't be much trouble finding candidates. Scot Case, vice president of TerraChoice, an environmental-watchdog group in Ottawa, Canada, says that while few brands used to tie themselves to "global issues," now it seems "everyone is making these claims," often "using these terms knowing that they haven't been defined." Last year TerraChoice sent researchers into big-box stores in North America to evaluate the green claims of 1,018 consumer products, and found that 1,017 were illegitimate, including beauty products that promised a "totally organic experience" but included "zero evidence that the product contained any organic ingredients," says Case. (TerraChoice won't identify the retailers for fear of libel.) "We saw absolutely ridiculous claims," Case says. "And vague, too. What the heck does 'earth-friendly' mean?"

Most claims were not false so much as misleading. Some garbage bags, for instance, are promoted as "compostable," implying that you can throw them into the compost bin and by spring they'll be fertilizer. Plastic bags, of course, take thousands of years to break down, unless they are sent to an institutional composting facility that stirs waste with huge tractors to create heat and speed decomposition. Most consumers don't do that. They throw the bags away, thinking they will magically dematerialize into dirt on their own.

Many beauty products marketed as "organic" or "natural" actually contain fossil fuels. True, petroleum is the product of decayed plants and animals, but that's not what customers have in mind when they pay a premium for organic. And because petrochemicals are mixed with so many nonorganic chemicals, it's even a stretch to call them "natural." In April Dr. Bronner's, a line of beauty products, filed a lawsuit in California Superior Court against 13 personal-care brands, including Avalon, Jason, Kiss My Face and Estée Lauder, for deceptive and false advertising. Among the claims were that Kiss My Face's "Obsessively Organic" cleansers contained olefin sulfonate, a petrochemical, and that Avalon "Organics" contain the petrochemical Amdiopropyl Betaine. The defendants say that the use of processed oil derivatives does not undermine their "all natural" labels, and call for a clearer legal definition of what constitutes "eco-friendly."

Another firm is also trying to lend credibility to the industry by creating a "Greenwashing Index" Web site, where consumers can rate green ad campaigns for accuracy of the claims. The site, established by Austin, Texas-based environmental-marketing firm EnviroMedia, in collaboration with the University of Oregon, aims to help consumers understand authentic and inauthentic green advertising, and since launching in January, some 113 ads from six countries have been posted and reviewed. Among the Web site's most egregious "greenwashers": the energy and automotive industries, with bottled water close behind. Consumer electronics and renewable energy are faring better.

So far it seems that few green consumer products are aptly designated. The only claim that TerraChoice considered legitimate came from a brand of paper towels, which made independently certified claims and specified how much of the total content was recycled.

Lesson: Watchdog agencies should have the power to prosecute false claims; clearer definitions required.

Beware Phony Hybrids
There are few symbols of personal green virtue more popular than the hybrid car. And some like the Toyota Prius (more than a million sold worldwide, getting 46 miles to the gallon) are the real deal.

But just because a vehicle is a hybrid doesn't mean it's green. Terry Penney says his Prius gets a 50 percent efficiency boost from hybrid technology, while some copycats get only 10 percent. "I go into car dealerships and they try to feed me a line of crap," says Penney, the technology manager for advanced vehicles and fuels at the U.S. National Renewable Energy Laboratory.

In fact, half of all hybrid vehicles currently on the market are no more fuel-efficient than their nonhybrid versions, according to the Union of Concerned Scientists. The other half are phonies. "Hollow hybrids" have neither the hybrid technology—a battery that boosts the combustion engine—nor the efficiency to warrant the designation. Saturn's 2007 hybrid, Chevy's 2007 Silverado and the 2007 GMC Sierra Hybrid pickup are examples, says David Friedman, research director for the Union of Concerned Scientists' Clean Vehicles Program. Then there are "muscle hybrids," which use the battery to boost the power of a big engine rather than to increase fuel economy. The Lexus line and hybrid Honda Accords fall into this category, says Friedman. Charles Territo, spokesperson for the Alliance of Automobile Manufacturers, says that in the past, hybrid customers saw fuel efficiency as only one of many important factors, and automakers were simply meeting those varied demands. In the past three months, he says, a "very dramatic shift" in consumer demand is producing a much clearer focus on fuel economy.

Consider Honda. Last year it ditched its Accord hybrids. Spokesperson Chris Naughton says the vehicle tried to balance fuel economy and performance in a way that proved unpopular. He says Honda has learned from the flop and is now focusing hybrid models solely on fuel efficiency.

The point is efficiency. Penney is on his fourth Prius in seven years, and turns in the cars every two years before the tax credit runs out. Friedman drives a Honda Civic HX, which he considers simpler technology that gets almost as good mileage as the hybrid, for a much lower sticker price. "In the near term, it's the simpler technology that gets us farther," he says. "That's the asterisk to all of this."

Lesson: Governments need to think about what kind of hybrids they are buying for their own fleets, or promoting through tax and other incentives.

How To Eat Green
Organic-food lovers prefer locally grown vegetables in part because they assume local is greener. Surely local tomatoes travel fewer "food miles" in an oil-fueled vehicle to get from field to table, right? It sounds logical, but it doesn't hold filtered water. "Food miles are a great indicator of localness," but not of environmental impact, says Rich Pirog, associate director of the Leopold Center for Sustainable Agriculture at Iowa State University.

A big share of food exports are fruits and vegetables shipped between the northern and southern hemispheres to take advantage of alternating winters. But growing them locally might take more energy—to heat, light and irrigate winter greenhouses—than to ship the food. "You can't just look at the transportation piece," says Gail Feenstra, a food analyst at the University of California, Davis. "It's one piece of the whole puzzle. It might be a big piece, but more likely it's a small piece of the food chain's environmental impacts."

The method of transport matters as much as the distance from farm to fork. Sea-freight emissions are less than half those of airfreight, trains are cleaner than trucks, and a tractor-trailer is a green machine compared with an old pickup. If you live east of Columbus, Ohio, it's actually greener to drink French Bordeaux than wine from California, which is trucked over the Rockies, says one study. How food is grown and harvested is also key: New York state apples, for instance, can be less ecofriendly than those imported from New Zealand, where growing conditions produce greater yields with less energy.

The meat equation is also complicated. Some studies show that cattle fed on grass at local organic farms emit 40 percent less methane (a potent greenhouse gas) and consume 85 percent less energy than cows raised on concentrated feed at industrial ranches. When it comes time for slaughter, however, the organic farms must often ship cows to and from centralized slaughterhouses before distributing the meat to retail markets. By the time local beef reaches the plate, it's racked up more miles than industrial beef. Regional food-transport systems are eight to 17 times more efficient than local ones, says the Leopold Center. So local tomatoes may not be as green as they appear.

Lesson: States need to encourage efficiency market by market, rather than assuming local is better.

Carbon Confusion
The fuzziest of all green ideas is carbon offsets. The idea is that you can pay someone to compensate for your own polluting ways. Companies like TerraPass and ClimateSave sell customers certificates for projects that will supposedly shrink their carbon footprint—an individual version of the widely touted carbon market. By some estimates, the personal-offset market was worth $10 million in 2007 and is growing fast. That may not be a good thing.

It's extremely difficult to accurately calculate either the amount of carbon tossed off by the typical household or airline flight, or the amount of carbon absorbed by offset projects like planting trees, funding green research and the like. It's also very hard to figure out where the money spent on offsets really goes. "On a fundamental level, offsets are fraudulent because it's impossible to quantify how much of an offset any project generates," says Kevin Smith, a researcher at Carbon Trade Watch. "You end up having to speculate on a fantasy scenario."

Take the case of airlines, which have recently jumped on the offset bandwagon. Airlines like Delta now offer a flat-rate offset—$5 for domestic flights, $11 for international flights. Others, like Continental, offer options: on a New York-London flight, you can buy an offset for $12.41 (reforestation projects), $32.51 (renewable energy), $36.20 ("gold standard" renewable energy and energy efficiency) or $23.38 (a combination of all three). That three wildly different price points and packages each supposedly produces the same total reduction in carbon emissions speaks to the lack of agreement on what defines an offset. Brian Mullis, president of Sustainable Travel, the company that provides the offsets to Continental, says that while the packages do have the same estimated impact, the higher-priced options have a potential "multiplier effect" because they promote long-term sustainable development. "A metric ton is a metric ton," he says. "But how it's generated has different benefits. We're trying to give customers the option."

The common fallacy for offsets is that they lead directly to activities that compensate for the carbon released by the activity in question. In the case of the plane flight, that is true only for the cheapest option: reforestation, the planting of trees, which absorb carbon. But figuring out how much involves a series of speculative assumptions—about the energy cost of planting the tree, the future growth of the tree and so on. "It's very unproductive to leave people with the impression that we could possibly plant our way out of the problem," says Joe Romm, an expert who has testified before the U.S. Congress on carbon offsets.

The pricier options from firms like Sustainable Travel involve paying other firms to undertake some activity—developing a windmill or solar panel, for instance—that one day may lead to carbon-emissions reductions. The customer buys an offset, and in return gets an abstract and often unprovable promise to reduce emissions. Auden Schendler learned about what he calls this "Wild West" market the hard way. As the in-house "corporate sustainability" advocate for the Aspen Skiing Co., in Colorado, he persuaded his employer to spend $42,000 annually on Renewable Energy Credits, or RECs, but changed his mind last year when closer study revealed that the cheap RECs he had bought probably weren't having much impact. "It wasn't my finest hour," Schendler says. "There are good and bad RECs and the public has no clue. If you're a business, why would you buy the good ones? Why spend $170 when you could spend $2 and get the same PR mileage?" In an unregulated industry, the carbon cowboy is king.

Lesson: Until there is an agreed method for defining and calculating offsets, governments should consider limiting, not promoting, their spread.

A Market For Carbon
Both candidates for U.S. president have come out in favor of a carbon-trading scheme to provide a free-market incentive to reduce the production of greenhouse gases. Under these "cap and trade" arrangements, governments impose limits on the amount of carbon that factories or companies are allowed to emit, and require those who want to exceed the limit to buy "carbon credits." Since 2005, developed countries like Australia and Canada have had mandatory markets in place, and the European Union has been trading carbon credits since 2002 under its voluntary pilot program. Since the United States hasn't ratified the Kyoto agreement, carbon is traded instead on the Chicago Climate Exchange (CCX), currently the world's only voluntary carbon-credit market.

Evidence that even Europe's highly regulated scheme is working is weak at best. One idea behind the United Nations' Clean Development Mechanism (CDM), the program the EU and others that have ratified Kyoto are following, is that industries from countries like France and Britain will pay their counterparts in India and China to emit less carbon, financing technologies that allow them to build more-efficient factories. The problem is that even those developing countries that have ratified Kyoto aren't expected to reduce their emissions, which means there's nothing to stop a company's taking money from the CDM to close down a polluting factory and using it to build another one. Gujurat Fluorochemicals, an Indian company, made €27 million in the last three months of 2006 (triple its total company earnings over the year before) in large part from the sale of carbon credits to Europe. The boost in profits, experts say, likely helped to fund its construction of a new plant to make Teflon and caustic soda, which are both pollutants. (Gujurat Fluorochemicals couldn't be reached for comment.) In short, oversight is poor. "There's a lot for us to learn," says Dan Esty, an environmental-law professor at Yale University. "Most notably, we need to have a market that has much greater auditing and the certification to really make sure that money is well spent and projects are authentic and verified."

The U.S. market, being voluntary, has been selling its carbon credits far too cheaply—for $3 to $5 per ton—compared with the CDM, where credits trade for 10 times more. The discrepancy is due to lax standards that don't comply with international agreements. Projects (such as reforestation) that are considered legitimate offsets on the CCX are not recognized in Europe; with more credits available and less of a demand for them, they're selling cheap. Still, the U.S. Congress in November announced that it was going to become carbon-neutral by buying enough offsets on the CCX to negate the impact the roughly 30,000 metric tons of carbon emitted annually by its antiquated coal-burning power plant. At $2.97 per ton, Congress spent nearly $90,000 on offsets that included planting trees, underground storage of carbon dioxide, and wind and solar power. But a subsequent audit found that a number of the projects would have happened regardless of whether the offsets had been purchased or not. For example, farmers in North Dakota, who were paid to till their land in a way that traps carbon underground, told a Washington Post reporter that they would have worked this way even without offsets.

It could take years to hammer out an effective carbon-trading scheme. "If we're going to be serious, we have to put that market into a real regulatory structure, with mandatory emissions reductions," says Esty. The voluntary market in the United States, for instance, "does not have any degree of regulations, and as a result it's more or less just practicing for the real deal to come."

Lesson: Carbon trading could work, but only if participation is mandatory and regulatory oversight is strict.

Gasoline Substitute
Several studies and spiking food prices have debunked the belief that ethanol, made from fermenting crops, is a green substitute for gasoline. Ethanol fell from grace because it yields at most only a third more energy than it takes to produce. The search is now on for more-efficient, nonfood sources of biofuels like jatropha and sugar cane. One promising candidate is cellulose, a substance found in agricultural waste.

About 20 firms in the United States are trying to derive ethanol from waste crops. The Department of Energy has earmarked $385 million over four years for six private firms. One of them, BlueFire Ethanol, is building a pilot plant in California alongside a landfill, which supplies cellulose. Firms like BP, GM and DuPont are making exploratory investments. Verenium, an independent firm, last month opened a small plant that uses bagasse, a byproduct of sugar cane.

Cellulose is especially appealing because it is derived from waste, but it's unclear exactly what type of waste will work best on a commercial scale. As a result, investors are cautious. "A lot of money is sitting on the sidelines," says University of Illinois researcher Dr. Chris Somerville. "The potential is big enough to see deep investments."

Lesson: Finding a world-beating new biofuel quickly will take lots of money and the nerve to lose some of it.