A free market approach to combating global warming

At TechCocktail IV in Washington, DC, we had the pleasure of meeting the folks behind Earth Aid, a platform for consolidating all of your utility bills while earning money for reducing you energy usage.

The new company launched only a month ago and it has found a way of filling a gap in the carbon trading market: companies can buy and sell credits on voluntary carbon markets, but households couldn't participate because there was no system for turning small energy savings into something meaningful. Earth Aid steps in to buy your credits, bundle them with credits from other households, and then sell them just like big business does. If you cut your personal energy usage, Earth Aid will cut you a check.

How does it work?

When you sign up for the free service, you provide Earth Aid with access to your utility statements. They can only see how much you've paid the utility companies per month and how much energy you used. With this data, they create your personal "baseline" of energy usage and suggest ways that, given your energy consumption profile, you could probably save energy and cut down on your energy bills. If you implement these solutions and succeed in reducing your energy use from the baseline, then voila, you get a check in the mail.

Why is this site awesome?

The first reason is that the site empowers individual households to contribute to fighting climate change at the micro level.  By actually compensating individuals for taking positive steps for the environment, it encourages these behaviors on a larger scale. Let's say you are considering buying compact flourescent lightbulbs, but when you get to the store, you see that traditional incandescent bulbs are so much cheaper. If you knew that you would immediately reap savings from both a reduced energy bill and from a direct check for your reduced energy consumption, then you might see that the more expensive, efficient bulb is worth it.

Second, this company is encouraging a purely voluntary, free-market solution to the global warming problem. Households sell credits because it benefits them financially to do so and companies buy the credits so they can claim carbon neutrality. It's win-win and no regulators need to be involved. Granted, households are a very small piece of the climate change challenge, but this sets a good example on a micro scale.

Finally, I just love how the site organizes my utility information. What Mint is to personal finance, Earth Aid is to energy consumption -- clear charts and visualizations help make sense of my household energy usage and where I might find opportunities for reductions and savings.

Best of luck to this new venture.