by Marc Gunther
January 17 2008: 11:08 AM EST
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Renting 'green'? Not so easy

Enterprise-Rent-A-Car wants to do its part to save Mother Earth. But there's only so much it can do.

By Marc Gunther, senior writer

Enterprise's "flex-fuel" cars can run on hard-to-find E85 gasoline, a mix of ethanol and gasoline.

(Fortune) -- Enterprise Rent-A-Car, the nation's largest rental car company, wants to become a better steward of the environment. Its efforts demonstrate the limits to how much - and how little - one company can do.

To its credit, Enterprise offers the world's largest fleet of fuel- efficient cars, including more than 440,000 vehicles that get better than 28 miles per gallon on the highway. About 5,000 of those are hybrid electric cars and another 73,000 are "flex-fuel" vehicles that can run on E85, a blend of 85 percent ethanol and 15 percent gas. The company has also pledged to plant 50 million trees in America's national forests and this month began inviting customers to offset the carbon emissions of their rental cars.

As a family-owned company that expects to generate revenues this year of more than $12 billion, Enterprise is well positioned to have an impact. It's got a strong commitment, ample scale - its tree planting initiative is the equivalent of planting the trees in New York's Central Park every 10 days for the next 50 years - and plenty of patience.

"We're not going to be able to save the world," says Andy Taylor, Enterprise's chief executive, "but we think we can have an effect on the space where we play every day as a business. And we think that's what our customers and especially our employees want us to do."

But - and you knew there would be a "but" - Enterprise can only do so much. Its customers, and those of sister brands Alamo and National, aren't guaranteed a hybrid rental car because there aren't enough of them for the company to buy. Most of its flex-fuel cars never run on ethanol because E85 filling stations are scarce. And fewer than one in 10 customers so far are paying the extra $1.25 per rental to offset their carbon emissions.

Green is a popular theme in the rental car business these days. Hertz, for instance, markets its "Green Collection" and offers hybrids at 50 U.S. airports. Avis rents hybrids too. Hybrids generally cost more per day than standard cars, but people who drive long distances save gas money.

The Taylor family, which owns Enterprise, has a long history of supporting environmental causes. In 2002, the family donated $30 million to the Missouri Botanical Garden, which was the largest private gift ever to a botanical garden (its director, Dr. Peter Raven, is one of the world's preeminent experts on biodiversity.) Last year, the Taylors gave $25 million to create the Enterprise Rent-a-Car Institute for Renewable Fuels, which will research biofuels.

But it wasn't until last year that the Taylors got serious about sustainability. As a first step, the company made its 50-million tree pledge, working with the U.S. Forest Service. Pat Farrell, Enterprise's vice president for corporate responsibility, estimates that the company funded one-seventh of all trees planted in national forests in 2007.

Donating money, of course, is easier than embracing an environmentally-friendly business model. After all, Enterprise doesn't develop cleaner cars or renewable fuels. Take hybrids: "We've told our manufacturing partners that we want many, many more," Farrell says. "You just can't get them." Enterprise's fleet currently includes hybrids made by Toyota, Saturn and Ford.

The problem facing the company and its 70,000 flex-fuel vehicles is even more daunting. Only about 1,400 of the nation's 170,000 filling stations currently sell E85. It took months of work and a promise to buy fuel before Enterprise could get a single, independent fuel dealer to open an E85 pump in its hometown of St. Louis. "We would really like to see this flex-fuel initiative blossom, but it's complicated," says Farrell. He estimates that only a few thousand Enterprise cars use E85 on any given day - a fraction of the company's fleet of 1.2 million vehicles.

As for Enterprise's carbon offset program, it's still very new but the company says it has been selling about 1,000 carbon offsets a day, a fraction of its total rentals. The company will match every $1.25 paid for offsets by customers, up to $1 million a year.

None of this has discouraged Taylor, who is only the second CEO in the firm's 50-year-history (his father, Jack, was the first). He says the response to the company's environmental programs from its 75,000 employees has been extraordinary (swamped by e-mail; when launched tree planting plan). Enterprise hires more college graduates than any other private employer in America and he says they care about the earth. He also knows that industries can't remake themselves overnight.

"One of the few benefits of being 60 years old is that you've seen things change over time," Taylor says. He recently drove a 1957 Chevrolet Bel Air that Enterprise employees gave him for the company's 50th anniversary celebration last year, and was amazed at how much pollution it spewed. "There's going to be a lot more progress," he says, "and it's going to be fun to watch." To top of page

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