Green Economics and “Pollution Assets”
We’re back after a fascinating and busy week which we hoped moved our progress forward in a big way. Part of that time has been figuring out how to integrate our carbon neutral mission as well improve our bottom line in keeping with the philosophy if not practice of “green” economics.
Right now, the actual practice is in its infancy, although the stellar growth of the carbon offset market (globally) with all its pitfalls, oops and frauds tells us (along with World Bank support of the global market) that green finance and economic modeling is here to stay. For starters given the focus in that market now on improving efficient and time saving but accurate metrics, creating transparency and the increasing interoperability of exchanges.
What does that mean to the average person, manager, entrepreneur or tree hugger?
It means that the general public at large (i.e. “the 99%) have a vested interest in cap and trade-like markets and mechanisms (including local exchanges) that are both global and open to all (which is not the case now but we think we signs of the market beginning to open). As traders in the green economy already know, carbon credits are literally an “asset” already worth about $280B a year. RIGHT NOW. Oh, and up in value globally about 400% in the last decade. With lots of room to grow, we say parroting lots o’ traders and VERY IMPORTANT BANKERS and minor players in the energy and utilities world, like say, oh the current head honcho over at Duke (HQ’d here and the nation’s largest electricity company).
Our ideas would democratize a system that has been (rightly) in the past criticized for among other things creating a closed market. We think the time has come when Wall Street, the power industry and the global financial community (if not policy bodies like the UN and even federal U.S. agencies) are lining up on a consensus if not exact standards that this is one of the ways to go to literally both pump energy back into global development but also deal with the undeniable threat of global warming and the associated ticking population bomb.
Now, think out what the passage of cap-and-trade legislation in this country would do for the economy (if not the environment) particularly in light of more and more studies showing a direct link between carbon emission and air standard controls and higher economic activity and greater household disposable income (and there are several now, internationally, and by reasonably authoritative sources - i.e. academic and relatively non politically or trade group/industry influenced government studies) that all seem to say the same thing). And some of those numbers are literally staggering.
Obama, if he had the political clout to actually pass cap and trade (and we are hoping to participate in that debate) is right in his assumptions of “value” that this practice would add to the U.S. economy although we think he is undervaluing it (because he is thinking of it as defined by his thought team (which has many problems including no public participation). And we say this as constructive critics of where the federal debate on this has gone, along with our observations of developing markets (overseas and domestically including RGGI and California).
It is our assumption that in a democratically open carbon market, (think in essence a regulated green E-Trade with an app on your mobile) the every-day public could in fact “earn” money by engaging in activities that can be measured, quantified and assigned value in a way that international markets already do for “traditional” contractually based assets (i.e. stocks, bonds and OTC derivatives). And even carbon credits. Further, there are market pressures which would help prevent say a “green bubble” by implementing control mechanisms into a system that appears to support reasonable regulation (the founder of ICE has testified before Congress on the need and his support for regulated markets and exchanges).
This is not just pie in the sky green talk. The carbon market internationally (the U.S. was the only industrialized country to sit it out to date at major UN and other international efforts to address global warming) is growing like kudzu. We are way behind the rest of the world.
And by the way, not just in the present but the future (i.e. carbon credits are being treated by the banking set as either real time income and as futures contracts just like any other albeit less ethereal commodity such as corn and wheat).
What does this mean? Well for one thing, accessible, democratically “earnable” carbon credit markets (which so far have continued to develop in structure as well as their credibility and weathered tough times under frankly the leadership of ICE) represent an opportunity for income generation in an information society. Not to mention a global economy that looks pretty dire right now. Not to mention polluted.
And that creates economic opportunity for alot of people.
ICE for the uninitiated is the largest energy (including green energy and offset) exchange in the world.
What does this mean?
Well first it creates the opportunity for mechanisms to be created that are both entrepreneurial and are available to the average person to solve what we commonly refer to as the “asset vacuum” created in numerous ways for the average person in the first world (U.S. and EMEA) by thirty years of regressive economic policies and even more so in the results of said policies which seemed to catch up with us in the meltdown of 2007/8. In plain English, our approach and methodology if implemented, means self-generated “green” jobs that help rebuild the economy globally, that can be flexible, regionally appropriate, and put a huge population of people back to work. In the U.S. if not globally.
In other words “GREEN JOBS” that are easily self-created and even more importantly, can be monitored and thus monetized creating “assets” that can be earned, and in surprisingly easy and cheap ways. Not to mention ways that are legit because they can be easily monitored (i.e. creating the structure and activity that forms the carbon “asset.”)
It also starts to bring a real green revolution in terms of “environment” (literally) by creating (excuse the “green” puns) “eco-systems” of of opportunity. Both to earn money if not a decent living wage and clean up the environment. But even more importantly, start to assign value to opportunities and activities in a new “green” paradigm if not economic system (even if it looks like good old regulated capitalism, albeit the 2.0 “green” or maybe triple bottom line version).
We also happen to think that this kind of approach would solve other unbelievably serious (and heretofore unaddressed) issues of bringing stability back to the still stuttering real estate market if not create solutions for the “jobs” problem, help companies reconstitute their underfunded pension plans if not expand sustainability policies in all directions that will be good not only for the company bottom line but for employees and even (amazingly) customers. Not to mention speed up the real transition to a society where the “American Dream” is at least attainable (and sustainable) by the majority.
Wealth disparity or lack thereof, from a purely economic perspective, is one of the benchmarks of a “developed” or “industrialized” vs. “third world” or “developing” nation in say World Bank/IMF/UN economic development geek speak. We as a country are not doing very well right now on that score alone. And if we add aging infrastructure to the component, well, let’s just say China is kicking our tushies right now. And on a level that makes the “managerial fear” so prominent in the eighties of a “Japanese superiority complex” particularly in “management”, look like child’s play. In this case however, the very focused Chinese investment and planning in all things “green” has already, we believe, been one of the factors why for the first time this year, China surpassed the U.S. in terms of GDP.
And not that we are economic nationalists (the global green economy by definition gives the same rights to every human being on the planet), but we think that we have some first world ideas that might work very well globally as well as locally because we’ve used strategies from developing worlds that work in our “first world” company.
I.e. our suggestion that this approach or one similar to it would do much to address the issue of wage disparity between countries and regions and decrease poverty globally. We also think it would start to benchmark labor, frankly. But that’s another topic for another blogpost. Let’s just leave it at that for now.
But to give an example of how this might work in this kind of economy, a normal “middle class” American stay-at-home, perhaps pursuing retraining education dad, for example, could earn money while driving Jr. to softball practice in the team carpool system in the family “green” car (or even on the back of his bike). We have models to monetize that kind of thing and if our conversations and ongoing back-room structuring proceeds as it has to date, we plan to roll out our versions of a model we hope will be improved on not only for our company performance but to spur other ecopreneurial endeavors in this space.
For now, we’re solely focused on company formation and formal launch (which is also rolling on greenly and at great speed). But it is generating opportunities down the road for other projects. In other words, we are creating and incorporating ourselves into an existing and growing green and sustainability focused community (both private and government sector and even individuals in the neighborhood).
So for now, at the end of a month in which California’s Cap and Trade program has moved forward and has become real and thus in the opinion of many very “conservative” evaluators of the business (i.e. the financial and legal community that does this for a living), what happened last week in California begins to give liquidity if not market value to carbon assets in the U.S. as well as adds to the development of the market globally.
- Australia’s Clean Energy Bill To Go Up For Voting In House and Senate; To Put A Price On Carbon (techie-buzz.com)
- California OKs Cap-and-Trade (newser.com)
- Why California’s Cap And Trade Program Is A Big Deal (fastcompany.com)
- California’s big bet on curbing greenhouse gases (sfgate.com)
- Major investors seek new carbon emissions treaty (sfgate.com)
- California Approves Cap and Trade System (news.firedoglake.com)
- Will California’s cap-and-trade experiment catch on? (theneteconomy.wordpress.com)
- Why low carbon means high profit (guardian.co.uk)
- Hog waste producing electricity and carbon offsets (eurekalert.org)