FINANCE

GE to rip up 'climate friendly' credit cards

NEW YORK -- Two major credit card issuers have quietly closed their experiments in "green" rewards programs offering carbon emissions offsetting.

GE Money, the consumer credit division of the industrial heavyweight General Electric Co., confirmed yesterday that it has just finished shutting down the Earth Rewards MasterCard program. A company official said not enough consumers warmed to the climate-friendly credit card. Cardholders were notified over the past few months that the rewards program would be discontinued.

"What we found is that there is such a wide variety of options available with credit card programs and that consumers were selecting cards with more personal rewards," said Dori Abel, a communications officer at GE Money.

The move puts an end to an enterprise less than two years in the making, and raises questions about the future of climate change-linked credit cards. In July 2007, at a packed press conference in New York at a newly constructed tower on the World Trade Center site, GE executives announced the launch of the GE Earth Rewards MasterCard, to much fanfare. The product was widely recognized as the first climate-friendly card introduced into the U.S. market.

Under the program, users could set aside 1 percent of the value of their purchases to greenhouse gas emission reduction projects that produce carbon offsets for the voluntary carbon market. GE promised to pool the money together to purchase a bundle of offsets every year on Earth Day, through its offsetting division, GE-AES Greenhouse Gas Services.

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GE Money had even reportedly teamed up with the nonprofits Pew Center on Global Climate Change and World Resources Institute to help verify that the emission reductions were real. But the company has now apparently decided to shut down the venture.

"Although we believe consumers are still concerned about environmental issues, I think they are just selecting other ways to make a difference, not necessarily through a credit card program," Abel said.

Banks focusing on balance sheets first

GE Money is not alone. Officials at Iowa-based MetaBank say they have also recently stopped issuing their GreenPay MasterCard, citing weak customer interest.

MetaBank's green credit cards had offered cardholders the chance to cut 5 pounds of greenhouse gas emissions for every dollar spent with the card, or 10 pounds' worth if the card was used to fuel up the car or to pay heating and electricity bills. Fintura Corp., the company partnering with MetaBank to issue the card, has stopped accepting new applications on the GreenPay Web site, though it still invites interested customers to register their information, as it has "elected to make some system enhancements." But MetaBank officials say they recently completed their pullout.

"A main reason consumers are showing less interest in offsetting programs is that there is a lack of standards that make it clear what they are getting," said Ryan Schuchard, manager of environmental research at the market research and consulting firm Business for Social Responsibility. "There's a case that lower consumer demand is less a sign of lax interest in climate change by the public and more a sign that consumers have limited attention, and they want to put money in places that they trust."

Both companies stress that their green credit card shutdowns are due to weak demand and are not directly connected to global economic troubles. But the industry has been quiet about its eco-friendly line of consumer credit products lately as it has turned to more pressing matters.

The biggest banks issuing the cards have been racked by the global financial crisis and are investing most resources toward making their balance sheets solid. Their credit card divisions also recently came under fire from Congress and consumer advocates who blasted companies' high interest rates and fee structures. The firms are also faced with increasing levels of outstanding debt as joblessness mounts and many consumers find themselves unable to repay balances.

But some promoters of green credit cards are still smiling, confident that momentum toward action on climate change and the new eco-awareness that it brings bode well for the future.

Though MetaBank and GE Money are now out of the picture, Bank of America's climate-friendly credit card business, Brighter Planet Visa, is still alive. Officials involved in the business say Bank of America has no immediate plans to pull the plug.

"The financial crunch has definitely affected all of us," said Pattie Prairie, CEO of Brighter Planet, a small start-up based in Middlebury, Vt., that markets products said to help combat climate change. Nevertheless, she said, "what we see is that our outreach via the credit and the debit card together is actually strong."

Other climate cards still surviving

In 2007, Brighter Planet teamed up with Bank of America, the nation's second-largest issuer of credit cards, to launch one of the first climate-friendly credit cards to hit the market. The Brighter Planet Visa card is explicitly aimed at consumers eager to find ways to reduce their carbon footprints. Every $1 spent with the card funds the offset of approximately 1 pound of greenhouse gas pollution, through offset credit purchases that help finance clean energy projects, the company says.

As Prairie describes it, consumers using the cards help reduce global warming pollution by accumulating "Earth Smart Points." One dollar spent equals one point earned, and 1,000 points accumulated translates into 1 ton's worth of offsets purchased in the voluntary carbon market. The proceeds to go help build wind, solar and other renewable energy sources. The two companies have followed up with a climate-conscious Visa debit card.

So far, the company says its members have contributed to 120 million pounds' worth of CO2 equivalent emissions cuts, or 60,000 tons.

Meanwhile officials at HSBC, marketer of the ecosmart MasterCard, declined to discuss in more detail the overall health of their global warming-fighting credit card. But that business is also apparently ongoing, and company representatives say they have been satisfied with consumer interest so far. Cardholders earning points after $3,000 of purchases are told they can redeem those points in the form of donations to nonprofits associated with the HSBC Climate Partnership.

"Response to the HSBC ecosmart MasterCard with Plus Rewards card has been very encouraging," said Cindy Savio, a public affairs representative at HSBC North America. "The value proposition of this card highly resonates with ecologically conscious individuals who are looking for more ways to help improve the environment."

Other green credit cards still remain on the market, though they mainly convert points into donations to consumers' favorite environmental charities, like the World Wildlife Fund, Sierra Club or Audubon Society, and are not explicitly devoted to combating global warming.

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