On Friday I spoke with CEO Glenn Farris about his company, Biomass Gas & Electric.

CleanTechnica: What does your company do?

GF: We use biomass (primarily woody biomass), but also forest residues, agricultural waste, and woody crops, to produce renewable energy in an environmentally beneficial gasification process that doesn’t involve combustion, and so is carbon neutral. BG&E currently has three contracts (Georgia Power Company, The City of Tallahassee and Progress Energy of Florida) to provide biomass-generated electricity, pipeline gas, and hydrogen. We have many, many other projects in development both in the U.S. and abroad. In states that have a Renewable Portfolio Standard, we provide tradeable renewable energy certificates. In other states, we sell renewable energy credits to large companies like IBM and Alcoa, who want to reduce their carbon footprint. We believe the future of the company is in the production of methane.

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Though the hearings were only exploratory in nature, the FTC was able to address some of the concerns and misgivings the public has about unregulated voluntary carbon markets. The FTC also raised their concern about the validity of some companies’ advertising claims (for an excellent analysis of the carbon-offset hearings, read the piece by Jeremy Elton Jacquot for TreeHugger). In short, people want to see what they get and get what they pay for - and in the world of renewable energy credits and carbon offsets, this can be a tricky prospect.

In response to these hearings, and in an effort to legitimize the fledgling offset and REC industries, carbon offset retailer TerraPass has decided to democratize. By opening up a comment period for seven particular carbon-offset projects, TerraPass has decided to build-in an added layer of transparency to make their enterprise a little less hazy. I applaud TerraPass for this move forward. And I am totally fine if it is purely profit driven.

As companies strive to stay in the black of their ‘triple bottom line’ I hope we will be seeing more of these democratic experiments in the private sector. You don’t have to be a ’stockholder’ to make a comment, just a stakeholder. And when we’re talking climate change, it seems that everyone is a stakeholder. According to the company:

“We welcome comments from our customers, from anyone familiar with the projects themselves, from policy experts, and from the general public.

If you have any feedback for us regarding these projects – their environmental records, the importance of TerraPass support to project success, or anything else, please provide it via email.”

Photo Credit: National Oceanic and Atmospheric Agency

The purchase of a renewable energy credit generally represents one megawatt hour of renewable energy. Although the clean electricity can’t be routed from the wind turbine directly to the business, the investment allows for more renewable energy to built and displace the energy needed from dirty fossil fuels. Many companies and individuals buy RECs in order to make up for, or “offset,” their unavoidable pollution (driving, manufacturing, etc).

In Silicon Valley, the big buyers of RECs include Cisco Systems, Applied Materials, and Yahoo!. The latter just signed up for 1.6 million kilowatt hours of green power costing $24,000 and meeting about 6.5 percent of Yahoo’s Santa Clara energy requirement. The RECs are purchased from Silicon Valley Power, the city-owned utility of Santa Clara.

The increase in REC purchases across the country – the most recent data from the Department of Energy shows sales doubling in 2005 – may affect places like Silicon Valley in the near future. Renewable energy producers will need to get more creative in their search for land for the solar power and wind power systems. Dan Kalafatas, president and Chief Operating Officer of 3 Degrees, the San Francisco-based energy marketing company from which Silicon Valley Power buys its renewable energy credits, noted, “The best sites have been tapped. The long-term fundamental demand will raise prices."

California law says that utilities have to increase their renewable energy use by 2010, so this problem isn’t going away. Efficiency will be key here: while it’s exciting that the demand for green power is increasing, running efficient businesses and households must be the first step, and will help cut the need for energy across the board.

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In southeast Michigan, the local electricity company is DTE Energy. Although it has (or had) a number of business units exploring all manner of alternative energy production, DTE has been relatively resistive to including any renewable energy in its portfolio. Despite consumer demand for green energy, DTE has no plans to construct anything, and has been very resistive to connecting alternative producers to its grid. (This is the same company that fought against connecting a wind turbine installed at a local middle school from connecting to the grid.)

Looking at the renewable energy credit (REC) program that DTE is offering, there isn’t much to it. DTE is offering now has two options for residential customers. One is a premium of 2 cents per kilowatt-hour (kWh) on all electricity used. The other is to buy RECs in blocks of 100 kWh for $2.50 each (2.5 cents per kWh). These are supposed to come from in-state sources, to the greatest extent possible, but DTE has argued that there aren’t many in-state sources available to them.

Michigan’s Pubic Service Commission "Opinion and Order" (PDF) regarding DTE’s program recognizes the comments and criticism about the program and how much (or how little) it will do to encourage the development of renewable energy production in the state of Michigan.

"The primary criticism of the RRP made in the comments centers on the issue of whether and how much the proposed program will encourage development of in-state or in-service-territory renewable resources. Some of the commenters are of the opinion that procuring RECs alone will not prove sufficient to support the development of in-state renewable resources. Other commenters criticize the company’s proposal because Detroit Edison’s only responsibility will be to act as a broker that buys RECs at one price and sells them at a higher price."

The order from MPSC specifically disallows DTE from providing some out-of-state RECs, and has tried to steer the program toward emphasizing in-state energy production as much as possible. A presentation on the Ann Arbor (MI) website notes that "Importing Energy Means Exporting $$$" and goes on to add that 100% of the coal, 96% of the oil, and 75% of the natural gas used in the state is imported. This amounts to an annual outflow of $18 billion from the state. And this is exactly why Michigan (and the rest of the country, too) needs to develop local, renewable energy resources.

As tepid as the DTE program may seem, it’s the only program that I’m aware of that specifically includes funding development of alternative sources of energy in the state of Michigan. On the positive side, some fraction of the proceeds of the REC program will go toward development of in-state renewable energy. And participation in the program serves to indicate consumer interest in the program and a willingness ot pay a premium for green power.

On the downside, this is a company that has demonstrated very little interest in providing green energy for its customers. I’m not sure how much of an effect my participation in the DTE program is going to have towards actual new development. If I want to buy RECs, there are lots of providers around, and many of them are probably competitive with DTE’s rates. The REC program being offered by DTE is unlikely to do much on its own to spur the development of additional in-state sources of renewable energy.

On the other hand, a renewable energy portfolio standard (RPS) would mandate that a certain percentage of a utility’s power come from renewable sources. But that’s a whole further step, and something that some states have, but which the state of Michigan still lacks.

Right now, I’m not signed up with the new DTE program, and I’m not hurrying to do so. Once the portfolio of providers is available, I’ll re-evaluate. And in the meantime, I’m looking for another REC provider that supports renewable energy in-state.