Crowdfunding environmental and humanitarian impact through market-based strategy of integrating carbon offsets into retail fossil fuels.
Global Citizens Imperative (GCI) is a nonprofit with the mission of creating fundraising mechanisms for certified carbon reduction projects through integrating voluntary carbon offset fees into retail fossil fuels, deployed to consumers through strategic marketing partnerships with fossil fuel retailers.
GCI has forged partners in the retail heating fuel sector to test the concept with a pilot (“Clean Heat”) that launches in February ‘17 which, if successful, can establish the credible launchpad for our primary initiative- Green Gas, a carbon neutral gasoline program- in the summer of ‘17.
Green Gas will be a carbon offset program sold at gas pumps and other fossil fuel points of sale that presents customers the opportunity to offset the carbon footprint of their purchases. The well-to-wheel GHG footprint of gasoline can be offset for $0.07/gallon, a price our research suggests a significant portion of Americans would be willing to pay, with one such study showing a majority of participants would choose to offset their emissions if given the opportunity. Furthermore, the study shows firms that offer such an option see improved brand perception, a driving principle of our market-based B2B strategy.
Using hybrid vehicle adoption as a conservative reference point on which to project the demand for a carbon “neutral” gasoline, a nationally scaled model would bolster the size of the entire Voluntary Carbon Market (VCM) by 74%1.
The VCM suffers from a lack of demand. While studies suggest significant consumer demand for integrated carbon offsets, individual contributions to the VCM account for less than 1% of demand. Through Green Gas, GCI strives to realize this untapped potential by democratizing access to the VCM. GCI recognizes individuals as powerful agents of change if given the opportunity to make carbon-conscious purchasing decisions- if realized, this opportunity will play an important role in financing our transition to a post-carbon future
What are the key outcomes and impact of your solution?
The strategy is to achieve our desired outcomes through augmenting the fundraising of carbon projects. The primary objective is to integrate Green Gas into in 20% of U.S. gas stations (30,000) in 5 years to crowdfund upwards of $500MM in carbon financing in that period. Alongside gas station adoptio is the goal of achieving a customer adoption rate of at least 10%. The direct carbon reduction at said adoption rates would reach upwards of 30 million tonnes per year. Being said, this project has the potential to catalyze indirect carbon reductions that could be far larger (described below). The allocation of funds will be carried out through a strategy that will be managed with the close advisory of foremost experts in academia, economics, microfinance, and forestry. There will be a focus on funding certified carbon projects that possess the potential of becoming financially independent, which would magnifying the impact of the initial top-layer carbon financing provided by GCI.
Considering the role the VCM plays on bolstering the larger compliance market(CCM), the indirect benefit of Green Gas on overall GHG reductions could have a multiplicative effect. Outside of the direct emissions reductions, a significant, and perhaps even more important role of the VCM is that it serves as the CCM’s testing ground, proving the scalability of newer types of carbon projects that are not yet within the wheelhouse of its larger compliance counterpart. Once carbon projects are accepted into the CCM, they gain access to a far larger pool of potential financing that can dramatically magnify impact.
As it currently stands, our impact investment strategy will focus on projects that augment the carbon sequestration potential of terrestrial sinks, which sequesters carbon while doubly addressing food security issues. The funds will be allocated in collaboration with reputable third party certifiers such as VCS & Gold Standard, and hopefully with the cooperation of governments & experts across disciplines and civic society. The supporting objectives to the primary goals include the extensive implementation of no-till agriculture techniques in the U.S. and abroad. By 2025, GCI, alongside a vast network of partners, will strive to generate a 350% increase in Soil Organic Matter (approximately 30%-70% of pre-agricultural revolution levels) in 25% of the agricultural land in the U.S, Canada and Australia. Additionally, we will seek to bring the soil in 2% of the world’s arid and semi-arid lands to a level of 2% organic matter2
What actions do you propose to realize your stated goals?
FUNDRAISING/ INTERNAL ORGANIZATIONAL ACTIONS
i. Phase 1- Clean Heat Initiative (Residential Heating Fuel) (February 2017) Partner with independent retail fuel businesses to introduce ethical marketing strategies for point of sale fossil fuel carbon offsets and earn credibility before approaching larger retail fuel firms. This pilot is poised to launch to 5,000 customers in February.
ii. Phase 2- Green Gas Initiative (Gas Stations)- (April 2017) Approach 10-20 independent fuel retailers to implement “Green Gas” on a small scale, refining marketing strategies and logistics before scaling up. Identify key metrics and the factors that influence them. The initial cohort of 10-20 locations will be based in Boston, Ma. The hesitancy to try new things will be ameliorated through incentives (proprietary) and strong marketing support for the initial partners, including localized outreach and publicity for the program.
iii. ASSEMBLE MARKETING/FUNDRAISING DREAM TEAM/ADVISORY BOARD- (June 2017) Seek guidance on mass marketing campaigns and brand building, and conduct thorough market research.
iv. SCALE UP- (September-December 2017) Acquire partnerships with 500-1000 stations through leveraging networks, and implementing marketing strategies formed with help of advisory team. We are already in contact with the marketing director of a chain of 1500 fueling stations representing (1% of US market) as a product launch partner.
v. REFINE AND GROW- (2018) Refine program to optimize adoption by both end user and gas station management. Leverage advertising, branding, social media campaigns. Build a following. Build adoption rate, revenue, brand influence, and geographical reach.
CARBON OFFSET PROJECT DEVELOPMENT/ RESOURCE ALLOCATION
i. For our initial pilot, we have chosen to fund a carbon project facilitated by the nonprofit, Taking Root, which helps rural farmers reforest their watershed while educating them on sustainable land-use management strategies that increase their livelihoods.
ii. ASSEMBLE CARBON SEQUESTRATION AND CLIMATE CHANGE DREAM TEAM/ ADVISORY BOARD- Assemble advisory panel of experts in multiple disciplines to advise on project development/resource allocation to maximize the impact of every dollar allocated. Build a portfolio of projects that is bold enough to be on the cutting edge, but safe within accepted science. We’d be honored to build relationships with the following people, for starters: (Tim Flannery, Brian Von Herzen, Allen Savory, Elon Musk, Jeff Lawton, Darren Dohrety, Paul Stamets, Eric Toensmeier, L. Hunter Lovins, Michael Jenkins, & more)
iii. IDENTIFY PROJECT OPPORTUNITIES IN COLLABORATION WITH ADVISORS
iv. CONDUCT FEASIBILITY AND COST BENEFIT ANALYSES
v. IDENTIFY KEY STAKEHOLDERS, SUPPORT NETWORKS, AND PROJECT MANAGERS ON A PROJECT BY PROJECT BASIS
vi. DEFINE STRATEGY, KEY METRICS, AND INTERIM OBJECTIVES ON A PER PROJECT BASIS
vii. ALLOCATE RESOURCES AND EXECUTE PROJECT OUTLINES
viii. EVALUATE, REORIENT, IMPROVE
Who will take these actions?
There are several key groups who will be fundamental to the success and implementation of our objective. At the base level there are the individuals who are willing to participate in voluntarily internalizing the cost of the environmental impact of their gasoline consumption. As the condition of the environment worsens, public awareness increases, and if sufficient government action continues to lag, public concern and willingness to act and contribute to environmental solutions is very likely to steadily increase. Someone with knowledge of the severity and causes of climate change, who is presented with, and chooses an easy and affordable option to personally contribute to the solution will be the pillar of this concept’s success
The next level of participants are the stakeholders of retail gas stations nationwide. The green gas program will provide a valuable marketing service to any participating retailers. The gas stations choose to participate for their own benefit, incentivised to adopt by the advantages of green marketing services. With sufficient public interest and demand, not offering green gas may become a proven disadvantage for many gas stations. To build credibility and proof of concept in order to approach gas stations, the initial stakeholders will be oil and propane home heating suppliers. Our first partnership is with Vermont based HB Energy Solutions, who have chosen to participate in order to differentiate themselves from competition, and “do the right thing”. Before targeting gas stations, we will expand our offering across the northeast region, which accounts for 80% of heating oil consumption in the U.S.
The third level includes the project developers, verifiers, managers, and on the ground workers that create, operate & set standards for the carbon offset projects that will be the providers of carbon offsets and recipients of our crowdfunded contributions. The need is not just for a sufficient amount of offset programs, but programs of quality and true additionality. The market is currently flooded with available offsets, many of which have questionable additionality. By exclusively supporting programs that have received top level accreditation standards that ensure impact and efficacy, we can maximize the benefit of our contributions and drive project development towards projects that have the highest potential to address carbon pollution.
At the top level there are scientists, entrepreneurs, and inventors who are researching and pursuing cutting edge technologies and strategies to combat climate change. In particular we are extremely interested in the work Brian Von Herzen of the Climate Foundation, who is championing revolutionary and potentially massively impactful climate solutions. The ideas exist, people just need the funding to make it happen!
Of course central to all of this will be the Global Citizens Imperative organization itself and the team of committed environmental activists and entrepreneurs we assemble.
GCI is a Boston-based organization. Our primary project, the “Green Gas” fundraising mechanism, will be centered in the northeast USA. By mid-2018, our goal is to expand the program to all 50 states. Our initial resources suggest our carbon offset projects are market driven. We will select carbon projects that meet our customer’s criteria, and our own organizational ethical values. As we grow, we will continue to work with reputable projects across the globe, and will favor whichever geography supports the highest potential for carbon sequestration and livelihood alleviation. However, this will be balanced with the funding of local projects when possible to ensure a portion of the impact as close to the funders. We believe localization of impact may also serve as a marketing benefit in increasing the Green Gas adoption rate.
What do you expect are the costs associated with piloting and implementing the solution, and what is your business model?
GCI is a non-profit organization, however it will be run with a business revenue model that is not dependent on philanthropy. Because our impact is sold as a product (per gallon fee), GCI could theoretically fund its own development by re-investing a gross profit margin of 20-30%. However, given the urgency climate change demands, the initial phase of start-up would be well served by supplemental investment, as is the case with almost all ventures.
The cost of a Gold Standard certified carbon credit ranges from $4-12//ton CO2e. This equates to a cost of roughly $.05/gallon. Because we don’t need inventory on hand for our customers to purchase offsets, we can avoid the cash-flow burden of pre-purchasing our credits. This leaves only administrative and marketing expenses, which is comprised, at present, of three committed founders willing to make a modest income, and the minor expense of website development and promotional material. The pilot stage is underway with a budget of under $1000. The second pilot can also be started on a shoe-string.
GCI’s administrative (SGA) budget is derived from the $0.02-.03/gallon of gross profit for each gallon of Green Gas purchased. Minimum sales for viability of the project in the growth phase is a non-concern. However, if the organization built a robust team of marketing experts and project developers at $200k/year, it would need to rely on a sales volume of roughly $1MM, or 90 average gas stations at 3% customer adoption. Given the 160,000 retail fuel stations in the US, the potential for a revenue on the order of hundreds of millions is real.
A $1MM capacity building grant to ensure optimal implementation of the project would allow the team to build an organizational network and marketing campaign worthy of the task at hand.
GCI’s pro forma can be provided upon request.
The timeline is outlined in detail in the action section. We are launching an initial pilot in 2-3 weeks and plan to launch our Green Gas initiative by June 2017, scaling to a nationally by 2019.
Any project that proves technically and economically viable (has additional carbon impact verified by VCS or Gold Standard), and fits our aforementioned criteria could be a recipient of the funding generated by Green Gas.
• 2Lal R, (2004) Soil carbon sequestration to mitigate climate change, Geoderma 123 (2004) 1-22
• 1 $78MM[140BB(annual US consumption) x 80%(proportion of US oil sold by gas stations) x .07(per gallon fee) x 1%(adoption)] x 2.675(‘15 hybrid adoption rate)= $208MM Projected Market Value of Green Gas
• “Online purchasing creates opportunities to lower the life cycle carbon footprints of consumer products” http://www.pnas.org/content/113/35/9780
• Hybrid Adoption Rate: 2.675% (‘15) http://www.afdc.energy.gov/data/
• Individual participation in VCM: http://www.forest-trends.org/documents/files/doc_5242.pdf (Page 5)
• Projected size of US gasoline offset market: $78 Million per 1% adoption
How can individuals and corporations manage and reduce their carbon contributions?