A coal burning boiler at the University's steam plant is the starting point for the school's campaign to reduce greenhouse gases. At one point environmental groups protested the plant's emissions. The University's Chris Suedbeck says since then there's been some changes made.
"Instead of just burning straight coal we're blending in wood chips and oat hulls and so forth to extend the coal and reduce the emissions," says Suedbeck.
University officials say the strategy has reduced the boiler's emission of greenhouse gases about 25 percent. Suedbeck says that's good for the atmosphere and it also earns the school some dollars.
The University of Minnesota pulled off this seemingly contradictory feat because it's a member of the Chicago Climate Exchange. It's basically like the stock market. But instead of stocks, Suedbeck says the products bought and sold are greenhouse gases like carbon dioxide.
"In the Chicago Climate Exchange we have been awarded contracts each year going back to 2003," says Suedbeck. "The combined value of those contracts is somewhere a little bit over a million dollars, we're estimating."
The dollars come from companies which buy the University's pollution reduction credits on the exchange. Basically these companies are emitting too many greenhouse gases. So they buy credits to balance the books. It's all legally binding. Overseeing the process is economist Richard Sandor, a University of Minnesota Ph.D. He's founder, chairman and CEO of the Chicago Climate Exchange.
"The idea here is to create financial incentives that achieve environmental and social objectives," says Sandor. "Capitalism, free markets, are not, not, in opposition to environmentalism."
“Capitalism, free markets, are not in opposition to environmentalism.”Richard Sandor
Sandor says the exchange is a kind of economic laboratory. Among its 250 members are major corporations like Ford, IBM, DuPont and Motorola. Sandor says the members of the exchange produce about 10 percent of the nation's non-vehicle greenhouse gases. Each member agrees to reduce that figure one percent a year or buy credits. Sandor says the credit prices rise and fall based on demand.
"Markets send price signals. It's the price signals that changes behavior," says Sandor. "But ultimately it is that stimulus to changing behavior that solves the problems, not the markets per se."
Among the newest exchange members are farmers. They're paid to plant crops which remove carbon from the atmosphere. North Dakota farmers alone have some 800,000 acres in the exchange. Many of the member corporations figure it's a good business practice. Mike Loch is with Motorola. He expects eventually Congress will pass mandatory emission limits. Loch says when that happens, Motorola will have a headstart on cutting back.
"By being members of Chicago Climate Exchange it helped us to validate and establish a baseline," says Loch. "Where we can at least demonstrate all the benefits of reductions that we've made to date."
Whether the exchange works is something that interests Robert Shimek. He's with the Indigenous Environmental Network headquartered in Bemidji. Shimek wonders if the members of the Chicago Climate Exchange will accurately measure their own pollution.
"Well, I think here's always a possibility that the corporations will play some kind of a shell game with the numbers, the statistics," says Shimek. "I think we've seen that over and over."
Chicago Climate Exchange officials say auditors will certify pollution reductions. One thing Shimek and exchange founder Richard Sandor agree on is that a market system is only part of the answer to global warming. As Shimek puts it, everyone shares responsibility.