Carbon Negative, Profit Positive
Some years ago, while channel-surfing, I stumbled upon an interview with the president of the Chicago Stock Exchange, when he was being asked “How would you save the rainforests?” His response was “Ascribe a value of US$1 to each and every tree and trade rainforests on the market”.
In an age, when a child asked to draw a chicken, depicts the frozen variety found in supermarkets; at a time when a wealthy gentleman’s resolution of a water shortage in his residential complex is the purchase of mineral water for bathing, it serves as a disturbing indicator of our disconnect from the workings of the environment.
So, if the entire world has been transformed into nations of shopkeepers, since Napoleon’s observation, then perhaps it is most appropriate to find solutions comprehensible – and profitable - to shopkeepers, by attributing a price to everything from herbs to tigers, lakes to glaciers, bio-diversity sites to the atmosphere!
Global warming is a planet-sized problem. The burning of fossil fuels is a major source of industrial greenhouse gas emissions. With the onset of the industrial revolution, we have been spewing out carbon dioxide into the atmosphere at an unreasonable rate, along with other gases that trap heat from the sun.
The Kyoto Protocol - an international agreement between more than 170 countries formalized the mechanism of carbon credits- a real or implicit price of carbon – that came into existence as a result of the need for controlling greenhouse gas emissions.
In brief, carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air. Emissions are visible on the balance sheet alongside raw materials and other liabilities or assets.
The intangible of global-warming has been transformed into the tangible of carbon emission.
Managing emissions is one of the fastest-growing segments in financial services in the City of London with a market now worth about €30 billion, but which could grow to €1 trillion within a decade. Louis Redshaw, head of environmental markets at Barclays Capital predicts that
"Carbon will be the world's biggest commodity market, and it could become the world's biggest market overall."
If the carbon credit system is efficient at the national level, why not consider its implementation at the individual level? If we all engage directly it could have a groundbreaking impact, as we would all be alerted to our contributions to the problem while attempting to resolve it. Any effective approach to any change will ultimately require changes in our individual behaviour.
We would all have personal carbon accounts that use the technology of credit and debit cards. So, when we purchase fuel or paid utility bills, the units would be deducted.
One of the main attractions of this idea is its equity. The out sized carbon footprints of Messrs. Ambani and Mallya - who fly by private jets and live in McMiniCities - would come with a BIG price tag. So, the penalty would fall on the people most able to afford it, while Jadhav, the Vidarbha cotton farmer contemplating suicide - who generates much lower emissions - could actually turn a profit by selling his surplus.
Before we drive the SUV out of the garage, we might consider taking the bus, or riding a bike. Deciding between driving to Goa and flying to Florida, our holiday options would have to consider the relative carbon impact of driving and flying. To save up carbon units for the trip, you might have to go biking to office for a couple of weeks.
The main advantage of personal carbon trading is that it might most effectively foster "carbon literacy," as we are made aware of the exact cost in carbon for our decisions. It would also send a signal about acceptable levels of personal emissions.
A combination of tradeable carbon credits, carbon taxes and individual carbon offsets has the potential to both drive us towards a much more energy-efficient society and lead us to a world that isn't just carbon-growth neutral, it's carbon-growth negative.
As useful as carbon credits and carbon taxes are for pushing efficiency, in the end, emission credits and taxes can at best be a partial driver for reducing the effects of greenhouse gases. Individuals and organizations will bring their emissions down to an economically comfortable level, but not much more.
India has the potential to lead the world by going "carbon offset". Quite simply we can pay organisations to mitigate our carbon emissions by planting trees in to offset the CO2 we produce by driving a car or taking a flight If carbon offset programs are integrated into a carbon credit or tax regime, individual citizens and consumers would have incentive and means to go beyond lowering the amount of CO2 emitted and actually start reducing the CO2 that's there!
In such a combination, each tree - would have a calculated and standard offset value in terms of both CO2 mitigated and tax refunded. The more offsets an individual provides the greater the refund or credit. Critically, it must be possible to receive more in refund or credit than is spent; the system must hold out the prospect of profit! The more one improves efficiency, the more the offset tons become sources of profit -- and the more atmospheric greenhouse gases could be mitigated.
Regions in India undergoing deforestation for economic survival could instead be the recipients of great amounts of cash specifically for reforestation. Regions in the greatest ecological danger can receive the greatest attention.
Carbon taxes and offsets, working together could provide a double-strength push to reduce greenhouse gas emissions to below net neutral -- to start to make a real dent in the existing carbon load.
Hybrids, wind farms and ‘walkable’ cities would bring emissions down. We would move towards a carbon negative lifestyle, not simply a carbon neutral one - all for a profit!
In an age, when a child asked to draw a chicken, depicts the frozen variety found in supermarkets; at a time when a wealthy gentleman’s resolution of a water shortage in his residential complex is the purchase of mineral water for bathing, it serves as a disturbing indicator of our disconnect from the workings of the environment.
So, if the entire world has been transformed into nations of shopkeepers, since Napoleon’s observation, then perhaps it is most appropriate to find solutions comprehensible – and profitable - to shopkeepers, by attributing a price to everything from herbs to tigers, lakes to glaciers, bio-diversity sites to the atmosphere!
Global warming is a planet-sized problem. The burning of fossil fuels is a major source of industrial greenhouse gas emissions. With the onset of the industrial revolution, we have been spewing out carbon dioxide into the atmosphere at an unreasonable rate, along with other gases that trap heat from the sun.
The Kyoto Protocol - an international agreement between more than 170 countries formalized the mechanism of carbon credits- a real or implicit price of carbon – that came into existence as a result of the need for controlling greenhouse gas emissions.
In brief, carbon credits create a market for reducing greenhouse emissions by giving a monetary value to the cost of polluting the air. Emissions are visible on the balance sheet alongside raw materials and other liabilities or assets.
The intangible of global-warming has been transformed into the tangible of carbon emission.
Managing emissions is one of the fastest-growing segments in financial services in the City of London with a market now worth about €30 billion, but which could grow to €1 trillion within a decade. Louis Redshaw, head of environmental markets at Barclays Capital predicts that
"Carbon will be the world's biggest commodity market, and it could become the world's biggest market overall."
If the carbon credit system is efficient at the national level, why not consider its implementation at the individual level? If we all engage directly it could have a groundbreaking impact, as we would all be alerted to our contributions to the problem while attempting to resolve it. Any effective approach to any change will ultimately require changes in our individual behaviour.
We would all have personal carbon accounts that use the technology of credit and debit cards. So, when we purchase fuel or paid utility bills, the units would be deducted.
One of the main attractions of this idea is its equity. The out sized carbon footprints of Messrs. Ambani and Mallya - who fly by private jets and live in McMiniCities - would come with a BIG price tag. So, the penalty would fall on the people most able to afford it, while Jadhav, the Vidarbha cotton farmer contemplating suicide - who generates much lower emissions - could actually turn a profit by selling his surplus.
Before we drive the SUV out of the garage, we might consider taking the bus, or riding a bike. Deciding between driving to Goa and flying to Florida, our holiday options would have to consider the relative carbon impact of driving and flying. To save up carbon units for the trip, you might have to go biking to office for a couple of weeks.
The main advantage of personal carbon trading is that it might most effectively foster "carbon literacy," as we are made aware of the exact cost in carbon for our decisions. It would also send a signal about acceptable levels of personal emissions.
A combination of tradeable carbon credits, carbon taxes and individual carbon offsets has the potential to both drive us towards a much more energy-efficient society and lead us to a world that isn't just carbon-growth neutral, it's carbon-growth negative.
As useful as carbon credits and carbon taxes are for pushing efficiency, in the end, emission credits and taxes can at best be a partial driver for reducing the effects of greenhouse gases. Individuals and organizations will bring their emissions down to an economically comfortable level, but not much more.
India has the potential to lead the world by going "carbon offset". Quite simply we can pay organisations to mitigate our carbon emissions by planting trees in to offset the CO2 we produce by driving a car or taking a flight If carbon offset programs are integrated into a carbon credit or tax regime, individual citizens and consumers would have incentive and means to go beyond lowering the amount of CO2 emitted and actually start reducing the CO2 that's there!
In such a combination, each tree - would have a calculated and standard offset value in terms of both CO2 mitigated and tax refunded. The more offsets an individual provides the greater the refund or credit. Critically, it must be possible to receive more in refund or credit than is spent; the system must hold out the prospect of profit! The more one improves efficiency, the more the offset tons become sources of profit -- and the more atmospheric greenhouse gases could be mitigated.
Regions in India undergoing deforestation for economic survival could instead be the recipients of great amounts of cash specifically for reforestation. Regions in the greatest ecological danger can receive the greatest attention.
Carbon taxes and offsets, working together could provide a double-strength push to reduce greenhouse gas emissions to below net neutral -- to start to make a real dent in the existing carbon load.
Hybrids, wind farms and ‘walkable’ cities would bring emissions down. We would move towards a carbon negative lifestyle, not simply a carbon neutral one - all for a profit!
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