The air we breath may be free, but if we want to keep breathing it we need to put a price on pumping carbon into it was a big takeaway from last month’s Ceres Conference. That is one of the things that Gary Arora, who like myself is a supporter of Interlock Media related to me about the conference.
Ceres Inc according to its Form 990 “works to advance sustainability leadership among investors, companies and capital market influencers”. In 2015, Ceres had gross receipts of over $15 million mostly from contributions. Ceres held its 22nd annual conference in Boston from April 24 to April 26. As noted Gary Arora was there representing Interlock Media, as was Jonathan Schwartz, Interlock’s ED. (As full disclosure, I should mention that Interlock is responsible for the video on my yourtube channel).
Jonathan has attended Ceres conferences in the past and has noted a shift in attendance towards business leaders. Gary commented on the theme of the conference
Scalable solutions & transformational change were few of the motifs that coalesced at the 22nd annual Ceres conference in Boston. The theme for this year’s conference was “Scale-up”; emphasising the need to scale-up action to meet and beat world’s most serious life changing and life threatening sustainability challenges.
On Jonathan’s observation of the change in the mix of attendees Gary remarked:
What I found most intriguing was the increased corporate & private sector representation, which continues to grow every year at such events. Coming from the corporate world myself, this is certainly a positive momentum that reflects a strong business case for sustainability initiatives. The speakers this year included influential company executives, institutional investors, and policy makers.
Here is James Forese of Citi discussing how the financial sector is responding to climate impacts
Putting A Price On Emissions
One of the things that even the most avid devotees of the free market will admit is that there is a problem with externalities. If your activity produces a harm that you don’t have to pay for, you are going to keep harming if you are just looking out for your own bottom line. So the free market solution is to force carbon emitters to price the environmental effect into their products and services. Gary put it this way:
One of the ways governments are effectively curbing carbon emissions is by putting a price on carbon – an actual monetary value – that carbon emitters have to account for in their production costs and consumers in their consumption choices. The essence of carbon pricing is to shift the burden for the damages back to those who are responsible – thereby incentivizing businesses to innovate away from carbon based fuels. Carbon pricing is also one of the key drivers laid out in the Paris Climate Agreement to enable the global transition to a low carbon economy.
In a nutshell, there are two major approaches to carbon pricing: Regulating the quantity of emissions or regulating the price of emissions – also known as Cap-and-Trade or Carbon Tax respectively. Cap-and-Trade limits the amount of emissions by issuing a limited number of permits that companies must buy to emit each ton of carbon, essentially creating a marketplace for trading emission permits. By contrast, carbon tax is a way of applying the “polluter pays” principle, where the cost of emissions, as calculated by the proportion of carbon in fuels, is paid by those who cause it.
This theme came up when Interlock people spoke with Mindy Lubber, CEO and President of Ceres
One of Ceres’ most prominent initiatives is the Ceres Clean Trillion campaign that highlights the need for an additional $1 trillion per year in clean energy investment to limit global temperature rise to below 2°C. The economic losses in the United States from the 16 weather-climate disasters in 2017 were $306 billion, exceeding the previous record by over $100 billion, according to the National Oceanic and Atmospheric Administration. In most cases, these losses were borne by taxpayers and individuals who were directly affected but weren’t involved in the decision making policies behind the production of carbon-intensive goods.
Carbon Tax Versus Cap And Trade
Over 20 countries have enacted carbon taxes, but it is not a concept that has gotten a lot of traction in the United States. The most robust effort has been he California Cap and Trade program which was slated to end in 2020 but has been extended to 2030. I’m thinking it might be that in America we think taxes are bad, but putting public assets in private hands is good. The biggest problem with cap and trade is that it can reward historic polluters and put the money that we pay in higher energy costs in the pockets of those most responsible for the problem. A carbon tax can be more straight forward and ease its burden by rebating on an equitable basis.
Gary is hoping for more people to advocate for carbon pricing efforts at the national level and hopes that Interlock’s film work might help. His answer to concerns about harm that carbon pricing initiatives such as the carbon tax might harm the economy is that the economy can only be as healthy as the planet that it inhabits.