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Posted on Oct 26, 2015

Credit Cards and Climate Change

credit cards and climate changeHow much money is in your purse or pocket right now? Probably not very much. Credit cards or an app on our phone can get us just about anything that we want or need. It is fast and easy and we often get rewarded for using these instead of cash. Could we also use these cards and apps to help solve the problem of climate change?

People want to take responsibility for their own carbon footprint. Polls from Yale University and the Washington Post show that the majority of people are willing to pay if something would be done about climate change.

A great deal of money needs to be invested in a clean energy infrastructure to avoid catastrophic damage. The IEA calculate that $44 trillion dollars is required to keep the average global temperature below a 2 degree Celsius rise. That investment has a payback of $115 trillion.

We can combine the use of credit cards, the desire to take measurable action for our own carbon footprint, and the need for investment in clean energy. Similar to credit cards with a cash back options these cards would accumulate cash at the time of purchase and or the time of payment. When the amount equal to the cost of one ton of carbon dioxide is accumulated, a term deposit or CD is created in the cardholder’s name. The CD counteracts their own carbon footprint by one ton. The money from that deposit is dedicated to finance certified clean energy projects.

The largest segment of the population, Millennials; use very little cash, have a stronger desire than older generations to do something measurable and meaningful about climate change, and they have a very low savings rate. These type of cards can allow millennials to increase their savings and do something personal about climate change without having to change their behavior. It can help banks attract and develop loyalties from this large segment of the population.

The average millennial household non-essential spending amount is $13,514. A 2% cash back card would counteract over 6 tons of their footprint with carbon at $40/ton.

This method, developed by Carbon Xprint, ensures that credit card rewards do not sit idle. The rewards are put to work right away financing clean energy and efficiency. It provides an opportunity for an individual or company to counteract their carbon footprint one ton at a time. It does not require a change in behavior and it is still a reward.