Green Investment: Carbon XPrint Bonds and CDs

August 12, 2014GaryKeir

One of the biggest problems in the green revolution is green investment. There simply is not enough money being put towards renewable energy and energy retrofit businesses. So how can an individual or business owner help change that? Aidan Kelly interviews Carbon XPrint founder Gary Keir to learn about his solution: Carbon XPrint Bonds and Certificates of Deposit. AK: Give us an idea of what Carbon XPrint is.

GK: Carbon XPrint is a process to take responsibility for your carbon footprint by making a socially responsible investment in renewable energy and energy efficiency. And when you take responsibility you get certified. It’s a certifiable and measurable way to take responsibility. And you do this by investing in projects that are going to reduce greenhouse gasses. It works very similar to a traditional savings bond or CD, certificate of deposit, and with larger investments, more like typical bonds. The way it would work is you would measure your carbon footprint, and the average person can do this by going to the EPA site and there’s a carbon calculator, and the carbon footprint is measured in tons of greenhouse gasses. Once you know your carbon footprint, and if you want to take responsibility for it, you can go to a bank or credit union or another financial institution and you can purchase Carbon XPrint Bonds or CDs. These are sold by the ton of greenhouse gasses. When you purchase these, the bank then certifies that you took action for your greenhouse gasses, the bank takes that money and it loans it out to renewable energy and energy efficiency projects. The bank then makes money on these loans and at the end of the term, you’re going to get your money back plus some interest.

AK: So are the bonds tied to the borrowers emissions on the other end, as well?

GK: Only in the way that the projects are going to be projects that reduce greenhouse gasses. So renewable energy such as solar and wind for instance, are things that reduce greenhouse gasses because we aren’t burning greenhouse gasses to make that electricity. Also I think a bigger market will be for retrofits of buildings, so saving energy. Because these projects have to be financed before they’re started, you’re not going to know the exact output until the completion of the project.

AK: What about investments in renewable energy and energy efficiency make financial sense? For example, what makes these investments as good as or better than non-sustainable investments, in terms of performance or returns?

GK: Well in terms of pure performance and returns, I think any socially responsible investment is not going to do as well as some other types of investments. The return is a little bit different. When you invest in something that’s a socially responsible investment, you’re getting the knowledge and the satisfaction that the money is going to work on something that you care about. In terms of pure dollar amounts, it’s not going to be as strong as some other types of investments.

AK: What kinds of organizations, businesses or individuals, do you think the bonds will appeal to?

GK: There are several that I think it will work well for. If there are new carbon pollution limits put in by the EPA, it could certainly help companies and building owners meet those limits by purchasing allowances for their carbon usage. Another way I think it can be very useful is more and more companies are in supply chains, and some of these supply chains of large retailers and manufacturers have stronger and stronger sustainability requirements, and if a company wants to remain in that supply chain, they have to meet those sustainability requirements. Sometimes it’s just not feasible, for different reasons, to make a change to their manufacturing line, or put solar collectors on their roof. So Carbon XPrint CDs or bonds will help that company demonstrate sustainability to that supply chain, remain in that supply chain, remain competitive, and then some time down the road when they’re ready to make that renewable energy installation or that efficiency upgrade, they can go ahead and do so, and they can use the capital and the interest from these Carbon XPrint CDs in order to help finance that.

AK: What are the advantages of this approach, buying bonds, over other approaches to reducing the effects of climate change, such as government programs, cap and trade or emissions quotas?

GK: Well, I think there are several advantages over cap and trade and renewable energy credits. There’s nothing wrong with those programs, but with those strategies the money that is paid goes to existing renewable energy and energy efficiency. With the Carbon XPrint approach, money goes to creating new renewable energy and energy efficiency projects, and that’s really where we need the money to go. If these loans are standardized, the more standardized loans there are, financial institutions are more likely to securitize them and sell them off to institutional investors. That money comes back to the bank and can be used for additional renewable energy and energy efficiency projects. Another advantage is that in order for a company in cap and trade to meet those limits, that’s having difficulty, it needs to pay out an expense. With Carbon XPrints, they’re paying money out, that money is tied up for some time, but in the end they’re going to get their money back, plus interest. So I think it makes it a little easier for a company to meet those limits. Also those strategies are a bit defensive. They’re trying to hold off something bad that’s going to happen. I think Carbon XPrint is something that is based on building, on creating, on moving forward and I think nothing motivates like progress. So I think it’s easier for people to get behind a strategy that is forward thinking and not in a defensive mode.

AK: Who will ultimately decide which projects to fund?

GK: In the end it comes down to money, it comes down to a loan. The financial institution has to rate the credit worthiness; is that borrower going to be able to pay that money back. Ultimately it’s going to be the financial institutions. In order to participate in the Carbon Xprint process, projects are going to have to meet certain criteria. There are certain loan standard criteria, for instance the investor confidence project for energy retrofits.

AK: And what separates the Carbon XPrint Bond from green mutual funds or ETFs?

GK: Well, mutual funds and ETFs are usually devoted to stocks. So you’re getting equity in some company. The Carbon XPrint process is about loaning out to create new greenhouse gas reduction projects. So it’s more debt financing. So yes, if you buy stocks in a green company and they’re making green products, you’re doing some good, but the Carbon XPrint process is more that were creating a project that’s going to reduce greenhouse gasses.

AK: What will it mean for XPrint Bonds when they are FDIC certified, or are the already FDIC certified?

GK: There will be different ways that this process will be functioning, but if, for instance you and I, we go to a bank or a credit union, and buy these Carbon XPrint CDs or bonds, then that bank or that credit union is insured, so we are insured up to two hundred and fifty thousand dollars for our individual accounts and up to five-hundred thousand dollars for joint accounts. And if your partner and you both have a joint account and individual accounts, you’re insured up to a million dollars for those three accounts. So in that way, this investment is rather well insured.

AK: So what is the timeline for making this happen? What steps do you need to go through to really make these available to the public?

GK: Well we’re currently talking to some financial institutions, we’re looking for the right financial institution to move forward on this project. Even if we had a bank sign on today, it would still take months because it’s going to take time to create the marketing, to create the internal infrastructure in the financial institution in order to carry this out. I wouldn’t expect to see it before the beginning of next year. But I’d like to have a sale in and get that moving forward much quicker. What we need to do is make a decision and find the right financial institution and then get some companies that are willing to go along and vet this process as well. I don’t have anybody ready to sign the dotted line right now, but we are talking to people. It’s a new process, it’s something that’s very simple, but it’s different and so I can see where people may be worried about jumping into it, but I think in the long run it makes financial sense and it makes it easier for people to become engaged in solving the problem of climate change. Many of us have very limited options in terms of what we can do about climate change. When we think about it, it seems so overwhelming. Many companies have limited options in what they can do as well. I think Carbon XPrint gives them a very valuable and viable, measurable and certifiable way to do something about climate change. So I’m very hopeful for it. Lately we have been gaining some momentum, so we’ll see what happens.

AK: Do you have any other projects in the works currently?

GK: Right now that’s my major project. Personally I have small projects, but that’s the major project for Carbon XPrints right now.

AK: Can you give us an idea of what the smaller projects might be?

GK: I’ve recently become involved in the Passive House, and I’ve become a certified Passive House consultant. I think the it makes logical sense from a physical point of view, it also makes financial sense in the long term. I think it’s very common-sense building standard. So I would like to do more with Passive House. And personally, I lead trips for Sierra Club Outings, and I have a dog sled trip planned for next January in Alaska. Another interesting thing that I just volunteered for is called Warriors on Quiet Waters, and they take recently disabled veterans out fly fishing in Montana. So I’m going to spend a week in Montana in October, going out with the Warriors in Quiet Waters and helping out some of these veterans to fish. And I’m very excited about that, I think it’ll be a really good thing to do.

-Aidan Kelly

Photo Credit: Gary Keir

The information here is not meant to be investment advice or recommendations. You should consult your own investment professional for more information about investment options before making any investment decisions.

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