How should bike-share services pay for themselves? Up until now, the main model has been sponsorship and advertising. But CityRyde has a bright idea: why not sell carbon offsets?

The idea’s pretty simple: as bike-share use rises, the amount of carbon-emitting vehicle use falls. So bike shares save carbon; CityRyde even has a methodology to determine exactly how much. (One thing I’d like to see, though: virtually all bike-share programs involve trucking bikes from the center of town back into the periphery, not to mention transporting broken bikes to be fixed. So somewhere in the methodology there should be an accounting for the amount of carbon emitted by the bike-share program itself.)

In any case, if the bike-share program sold carbon offsets to companies which want to claim to be carbon-neutral and to individuals wanting to offset their carbon emissions, that could raise some revenue: CityRyde co-founder Jason Meinzer told me his rule of thumb is that you could bring in between $25 and $100 per bike per year that way. For a scheme with 50,000 bikes in New York City, that would equate to between $1.25 million and $5 million per year: hardly chump change.

Meinzer didn’t share with me exactly how he got his numbers, though, so I ran a smell test. Let’s say each bike travels 15 miles per day, 350 days per year: that’s 5,250 miles per year. A lot of bike rides are simply for pleasure, and others—especially in a city like New York—replace walking or taking mass transport. Those are activities with negligible marginal carbon emissions.

But let’s say that 1/3 of bike journeys would otherwise have been taken in a car of some description. That means that each bike saves 1,750 passenger-miles in cars. If one car carries the same number of people as two bikes, on average, then that’s 875 car miles saved. At 1.2 pounds of CO2 per mile (1 pound = 2.2 kilogram - calculate here), that’s basically half a ton of CO2 emissions saved per bike per year. And while the market in carbon offsets is far from transparent, my feeling is that you’d be lucky to get $5 per ton, which would equate to $2.50 per bike per year. That’s a full order of magnitude lower than Meinzer’s lower estimate.

Meinzer’s methodology is a lot more sophisticated than that, and I’ll update this post if he wants to share his own math. But at $5 per ton, selling carbon offsets would gross only about $125,000 a year—which, by the time you subtract the cost of measuring the carbon saved and administering the sales, leaves you with little or nothing in net revenue. So while it’s an intriguing idea, I’m not yet convinced it’s a practical one.

Update: Meinzer says that he does account for the carbon costs of the program, in the “Project Emissions” and “Leakage” sections of his methodology; I don’t see it myself. And he explains that he gets his much higher estimate for total revenues from selling carbon offsets at a much higher price:

Our credits most certainly will be sold at a premium due to the novel co-benefits associated with their generation even outside of the carbon mitigated; e.g. health and social (and remember some credits sold for as high as $111 last year). This has been validated by the carbon brokers we’ve been working with over the years. Moreover, outside of the “price-point” per carbon a key angle we are taking to obtain an even higher premium on our credits is via creative bundling; by lumping the carbon credits w/ the sponsorship and advertising. Case in point – Blue Cross Blue Shield donated $1.5 million to have their name tied to the existing 1,000-bike Minneapolisbike share. Had they been able to purchase the offsets stemming from that program the donation would have been MUCH higher. This argument is reinforced by the fact that this donor in particular clearly has a key interest in health, and so the aforementioned co-benefits of our credits would prove even more attractive given the health-benefits of biking. Most big names companies are already offsetting their carbon emissions each year anyways for a variety of reasons, even outside of a regulatory mandate.