Professor, Students Donate Website Proceeds to Renewable Energy Projects

Karl Ulrich, a proud environmentalist who bikes to work daily, used to fret over what his fuel-thirsty Ford F-150 pickup did to the atmosphere every time he drove from Pennsylvania to property he owns in Vermont.

Karl Ulrich, a proud environmentalist who bikes to work daily, used to fret over what his fuel-thirsty Ford F-150 pickup did to the atmosphere every time he drove from Pennsylvania to property he owns in Vermont.

"I'm living with this contradiction," Ulrich said. "I think, 'I'm burning up a lot of gas.' ... But there's no way for me to write a check, to pay for my sins."

Ulrich, a professor who chairs the Wharton School's operations and information management department, bet that other enviro-conscious motorists also suffered from heavy consciences. So he recruited the most readily available minds to tackle the problem: his students.

As a class project late last year, about 40 Wharton students helped develop TerraPass, a Web-based business that lets drivers of dirty vehicles wipe their consciences clean.

TerraPass pools its subscribers' money to help pay for renewable energy projects such as wind farms and biomass energy. Those no-emission and low-emission projects cleanly create electricity that would have otherwise been produced at polluting, coal-fired power plants.

Fully operating since February, TerraPass says it has already attracted a few hundred members and is now trying to build its brand -- in part by pressuring famous people to sign up. Earlier this month, its Web site issued a challenge to California Gov. Arnold Schwarzenegger to have his personal fleet of Hummers certified by TerraPass.

Wharton business student Tom Arnold, who serves as the company's chief environmental officer, makes no bones about targeting the Terminator.

"The neat thing about Arnold is that he straddles both left and right, is pro business and pro environment," Tom Arnold said. "To us, this looks like an ideal TerraPass customer."

So far, Schwarzenegger has not responded.

The service won't appeal to everyone, Ulrich acknowledged. Once the concept is explained, "about one in 10 hand you their money."

Assuaging guilt and fueling a sense of environmental righteousness are the usual motivators. Rusty Feasel, a TerraPass customer in Dallas, makes his living selling all-terrain vehicles.

"I'm looking at this TerraPass to buy off my guilt about what I'm selling now," Feasel said.

Here's how the system works:

A motorist goes to the company Web site, ( and signs up for a year's worth of "offset" emissions.

The price, paid online via credit card or a PayPal account, depends on the type of vehicle -- $29.95 for hybrids; $39.95 for compact cars; $49.95 for larger cars; $79.95 for sport utilities and gas-guzzling sports cars.

TerraPass passes on part of the money to enterprises that fund "green" energy projects -- those that produce electricity with zero or reduced emissions. A portion of the proceeds funds TerraPass itself; Ulrich would not say what portion of the money stays with the company.

The customer receives a windshield "certification" similar to an inspection sticker, plus a bumper sticker reminding other drivers, "Clean Up After Your Car."

TerraPass' MBA student-managers draw no salaries, although they do have equity shares of the company.

In addition to start-up money provided by Ulrich, the company said it recently convinced local angel investors to loosen their purse strings; the firm is also a semi-finalist in the Wharton Business Plan Competition, and will compete for a grand prize of $75,000 in cash and services next month. The firm's student managers are convinced they have a market for their product.

"We believe there's a base that's excited about this. We just have to find them," said MBA student Adam Stein, one of 10 students who decided once the class was over to try to further develop the company.

For now, TerraPass uses an intermediary company to fund renewable energy projects and ensure that they achieve the promised reductions in emissions and energy use.

TerraPass is also a member of the Chicago Climate Exchange, a kind of marketplace for industrial emissions. The exchange allows industrial firms to buy and sell carbon "credits" on the world market so they can meet the requirements of the Kyoto Protocol, a 39-nation agreement on controlling global warming.

While the United States is not a party to the Kyoto agreement, the exchange says the buying and selling of carbon credits -- with companies whose emissions exceed the agreement's limits buying "credits" from those that belch out less than the allowed amount -- could become big business. Clearly -- or perhaps not so clearly -- the concept gets pretty abstract pretty fast. But, Ulrich said, "This is real. ... We do remediate."

He said the TerraPass program actually gives consumers more air-clearing bang for their bucks than buying a low-emissions vehicle. For $10, he said, it can buy clean energy that makes up for a ton of carbon dioxide emissions. A small car typically spews out three to four tons of carbon dioxide per year; an SUV, twice that much.

So while customers' cars still pollute as much as ever, the idea is that the clean-energy projects supported by their payments to TerraPass -- wind turbines, hydroelectric power and the like -- will fill in with electricity that would have otherwise been made at air-fouling powerplants.

The concept behind TerraPass, while novel, is not unique. Several outfits worldwide offer to plant trees to offset the carbon emissions of automobiles. Better World Club Inc., a Portland, Ore.-based travel club, throws in $11 carbon "offsets" that fund clean-energy projects when members sign up for insurance or book their travel through the club.

Arthur Stamoulis, policy analyst for the Clean Air Council in Philadelphia, lauded the concept when he heard about TerraPass.

"Any program that addresses global warming is a welcome step," he said.

Still, Stamoulis challenged consumers to buy more fuel-efficient cars.

"I wouldn't view buying a TerraPass as a free pass for SUV owners," he said. "It's not absolution for the sins of driving a Hummer."

Source: Knight Ridder/Tribune Business News