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• What is ERT?
  
  ERT pioneers the use of market forces to protect and improve the global environment. Founded in 1996, with the help of Environmental Defense, we are focused exclusively on building markets that encourage private parties to serve their own best interests and the best interests of the environment.   ERT has three principal programs: the GHG Registry^SM records validated greenhouse gas (“GHG”) emissions profiles to help create a market that will enable efficient emissions reductions; the EcoPower^SM Program catalyzes the market for clean energy by substantiating and marketing blocks of power that include new renewable sources of energy and have significantly reduced environmental impacts; ERT's EcoLands^SM Program enables and encourages landowners to make environmentally beneficial land use decisions.
  
  ERT is not an advocacy organization and has no political affiliation. We are implementing economic ideas that address today’s environmental challenges, using the organization’s non-profit status to take risks, produce results, and publicize successes.
  
  

• How is ERT different from other environmental organizations?
  
  While there are a number of organizations working in different ways to address the same specific challenges as ERT – tempering climate change, promoting clean energy and using lands in environmentally beneficial ways – ERT is unique in its commitment to building markets in service of the environment.  We are, first and foremost, environmentalists, committed to improving our global environment; to the best of our knowledge, however, ERT is the only environmental organization solely dedicated to enabling transactions between private parties that demonstrate the potential for market-based environmental solutions and develop the needed building blocks for well-functioning markets in service of the environment – like improved access to information, a functional market mechanism and lower transaction costs. 
  
  

• What is the link between ERT and Environmental Defense?
  
  ERT was founded in 1996 with the help of Environmental Defense (then known as the Environmental Defense Fund or EDF).  As an advocacy organization, EDF has been a leader in advocating for environmental policies that use economic incentives and market-based instruments to bridge the gap between economic and environmental goals.  EDF also saw a need for an organization to work directly with private parties in building markets in service of the environment. ERT was created to fill that need. 
  
  Economists Dan Dudek and Zach Willey, and attorney Joe Goffman of Environmental Defense were the moving forces in launching ERT, and all three currently serve on ERT’s board.  As senior policy experts with Environmental Defense, all three have done groundbreaking work on developing market-based solutions to environmental challenges – Dan Dudek and Joe Goffman were instrumental in creating the EPA’s sulfur dioxide emissions cap and trading program, which has used the power of the market to dramatically lower acid rain in the United States, faster and at a fraction of the cost originally predicted; Zach Willey has been a leader in developing markets that enable private land owners to use their land and water rights in ways that protect the environment, especially fish and wildlife habitat.

  In the past, Environmental Defense has provided financial support to ERT.  Also, given the organizations’ overlapping interests in promoting market-based solutions to environmental challenges, ERT staff occasionally consult and collaborate with Environmental Defense staff.  However, ERT is an independent organization and does not advocate on behalf of Environmental Defense or any other organization.
  
  

• Why is ERT so focused on markets?
  
  Because markets are the most powerful economic organizing force ever created.  In the United States, our market-based economy has produced the highest standard of living in the world.  The power of markets has also been employed successfully to improve the environment – the SO₂ “cap-and-trade” system has dramatically and cost-effectively reduced acid rain in the Northeastern United States; tradable fishing permits have helped stem the problem of overfishing in certain U.S. fisheries; and a market in tradable permits facilitated the phase-out of lead from gasoline.
  
  Markets are only a mechanism – a uniquely efficient mechanism – for organizing and allocating resources, but they aren’t necessarily inherently good for the environment.  In fact, when there is no cost to a particular activity, like polluting the air, markets ruthlessly encourage participants to consume as much of that activity as they can.  That partly explains why Americans are also among the world’s most significant polluters.
  
  ERT is not focused on markets for the sake of markets.  We believe that the market is a powerful tool, one that can be harnessed for the benefit of the environment.  When we set our environmental goals and properly allocate the costs of those goals, markets will achieve the goals most effectively and efficiently, spurring innovation, rewarding leaders and punishing laggards.
  
  

• Can free markets eliminate the need for government action to protect the environment?
  
  No.  There will always be an important role for government to play in protecting the health of our environment, particularly where the environmental interest at issue is a so-called “public good” – like clean air or clean water.  Market-oriented environmentalism, however, requires us to rethink government’s role.  In some cases, government can enable markets that help improve the environment by eliminating regulation – for example, by deregulating electricity markets to allow new sources of electric energy, including clean, renewable sources like wind and solar, to compete with the traditional, dirty sources of power provided by government-created monopolist electric utilities, government can enable the power of a competitive marketplace to improve the environment. 

  Where regulation is necessary, government can use market-oriented mechanisms to encourage the most efficient, cost-effective environmental protection – for example, instead of using traditional “command-and-control” regulations to specify air pollution control technologies, government can set a fixed cap on total permitted emissions of a specified pollutant, then allow emitters to determine how best to meet that cap, including allowing trading of emissions credits.  A “cap-and-trade” system, like the SO₂ trading program employed to combat acid rain, encourages innovation, allows the lowest-cost avoiders to capitalize on investments to reduce their emissions below the capped limits and presses the profit motive into action to spur investment in the environment.
  
  

• Where does ERT get its money to operate?
  
  ERT is a non-profit organization under section 501(c)(3) of the Internal Revenue Code. ERT receives most of its operating revenue from philanthropic organizations – for example, the Smith Richardson Foundation, Great Lakes Protection Fund, Joyce Foundation and Sand County Foundation/Bradley Fund for the Environment have been early and generous supporters of ERT’s work.

  Other funding comes from fee-for-service revenue generated by each of the Program Directors for their respective expertise, as well as from brokering various transactions that improve the environment, e.g., advising municipalities on the purchase of clean power. 

  ERT has also received generous support from individuals who support our work in pioneering markets to improve the environment. 
  
  

• If ERT is involved in profit-oriented markets, why is it a non-profit organization?
  
  Because ERT gets involved in markets before they are markets.  At the core of our public purpose is ERT’s commitment to develop the necessary building blocks for markets that will benefit the environment.  Typically, we perceive an environmental opportunity and become involved when profit-oriented market participants still regard the profit opportunity as too speculative.   

  The essentials for a well-functioning market include:
  
  

  • Clearly identified property rights – e.g. a right, defined by contract, to enforce sustainable forestry practices that will sequester carbon, improve local water quality and/or protect animal habitat

  • A well-defined and fungible commodity – e.g. reductions in CO₂ emissions

  • Generally accepted measurement standards and verification principles – e.g. methods to define and assure consumers of the environmental benefits associated with producing clean power

  • Market mechanism to enable buyers and sellers to transact – e.g. a registry that records and tracks CO₂ emissions reductions and facilitates trading

  • Broadly available, reliable sources of information – e.g. publicly accessible information about availability, comparative attributes and price of clean power

  • Standardized forms and practices that minimize transaction costs – e.g. contracts for changes in land use that allow landowners to monetize the benefits of ecological services provided to others

  Working with philanthropic support from individuals and foundations, ERT identifies the missing pieces of a well-functioning market and brings together interested public and private parties to begin filling in those pieces.  Once the market is up and running smoothly with plenty of for-profit participants, ERT’s mission is fulfilled, and we move on to a new, environmental “proto-market.”
  
  

• How do ERT's programs reflect its mission?
  
  ERT’s three principal programs are developing markets that will efficiently and cost-effectively address identified environmental challenges.  The GHG Registry^SM records validated greenhouse gas (“GHG”) emissions profiles to help create a market that will enable efficient emissions reductions – working with private and public entities, ERT is developing a common currency in tradable GHG emissions reductions, supported by standardized measurement and verification protocols; the GHG Registry^SM provides an independent verification and tracking service that enables market participants to track and trade emissions reductions with confidence.  ERT believes that the emissions trading system its GHG Registry^SM is enabling will be a powerful tool in reducing global greenhouse gas emissions without crippling economic growth and development.

  The EcoPower^SM Program catalyzes the market for clean energy by substantiating and marketing blocks of power that include new renewable sources of energy and have significantly reduced environmental impacts.  As states deregulate electricity markets, allowing consumers to choose their sources of electricity supply, consumers can begin to enjoy the benefits of reliable, stably-priced and clean electricity.  But in a world where choice has never before been available, and where the electrons that flow into homes and businesses cannot be identified to a particular source, there is a dearth of reliable information necessary to support a well-functioning market.  By defining an electricity product with specified environmental benefits – EcoPower^SM – educating consumers about their clean power options and substantiating the associated environmental benefits, ERT is helping to develop a mature, robust market for clean and sustainable energy generation.

  ERT's EcoLands^SM Program enables and encourages landowners to make environmentally beneficial land use decisions.  Often, landowners are locked into marginally profitable uses of their land – farming, ranching or logging – because they have no way of identifying and capitalizing on the potential market value of the environmental services their land could provide.  For example, planting trees on riparian farm and ranchland improves the river’s water quality by providing an absorbing buffer for nitrogen and other agricultural nutrients deposited on other parts of the farm; it improves fish and wildlife habitat; finally, the growing trees absorb CO₂ and sequester carbon, providing an important sink to offset CO₂ emissions elsewhere (and to the extent the converted lands were being actively farmed and fertilized, the conversion also reduces GHG emissions in the form of N20, a fertilizer component).  For each of those ecological services, there are potential buyers – point source polluters who need to offset their own emissions into the river, fishing and hunting organizations interested in improving wildlife habitat, and GHG emitters who need to reduce their net emissions through purchased offsets.  ERT is working with landowners to identify and quantify potential ecological services from their lands, to identify prospective purchasers for those ecological services and to structure private-exchange transactions that capitalize on those benefits.
  
  

• How does ERT measure the success of its programs?
  
  We measure our success one transaction at a time.  Every time we get two (or more) private parties together to exchange goods or services in a way that is in the mutual best interests of the parties and in the best interest of the environment, we count a success.  And with each success we add to our own learning and to a smoothly functioning market with wide access to critical information, a functional market mechanism and low transaction costs.  Ultimately, of course, we hope that the private sector, with or without the involvement of public policymakers, will embrace, promote and sustain permanent markets that improve and protect our global environment. 
  
  

• What are ERT's messages?
  
  

  1. ERT believes that with proper regulation, markets are an efficient and cost-effective way to improve the environment
     

     • U.S. EPA’s SO₂ cap and trade system was very successful at curbing acid rain.

     • Fishing permit trading gave marginal fisherman start-up capital to switch occupations. 

     • Lead permit trading allowed the phase out of leaded gasoline without leading to a shortage.
       
       

  2. Because developing environmental markets - creating infrastructure and pioneering transactions - is cost-intensive to early movers, ERT, a not-for-profit, shepherds the private sector through the initial phases of development. ERT currently is focused on providing market-development services in three environmental areas.
     

     • The GHG Registry^SM records validated emissions profiles to help create a market that will enable efficient GHG emissions reductions.

     • The EcoPower^SM Program catalyzes the market for clean energy by substantiating and marketing blocks of clean power that contain new renewable sources of energy and have significantly reduced environmental impacts.

     • ERT’s EcoLands^SM Program enables and encourages landowners to make environmentally beneficial land-use decisions.
       
       

  3. ERT is not an advocacy organization, but it does publicize its successes for the private sector, policy makers and its funders to see. 

     • ERT employs predominantly technical, market-building staff.

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