It is a truth universally acknowledged (at least by economists) that conventional measures of economic growth are insufficient at best. Gross domestic product (GDP), and related metrics, primarily measure goods and services traded in markets. Health or child care provided at no charge by a family member is not recognized as a contribution to GDP, but payments to professional child care or home health care providers are included. The ecological and public health costs resulting from an oil spill go unaccounted for, while the costs of efforts to repair those damages are counted as a contribution to economic growth. A standing forest is not recognized as an asset but if cut down and sold for lumber, the monetary value of the lumber is recognized as income with no offsetting entry made for the lost value of the forest. Obviously, GDP is an inadequate metric for measuring changes in national income and well-being, nevertheless, economic growth as measured by GDP, or other similarly flawed metrics, remains the primary objective of economic policy.
I will have more to say later about the deficiencies of conventional measures of economic growth. For now, let’s start with a few common sense observations about growth and sustainability, and then follow that trail for a bit to see where it leads us.
Economic growth can be separated, at least conceptually, into increases in the value of goods and services resulting from changes in quantity versus those stemming from changes in quality. Growth achieved purely through an increase in quantity (i.e. the production and sale of 105 cars this year versus 100 identical ones last year), cannot continue forever without eventually overstepping ecological limits. However, growth realized through an increase in quality --- which I will define quite broadly to include enhancements in the performance, aesthetics, durability or other desirable features of a product, invention of improved substitutes, and development of more efficient or environmentally benign, production, distribution, and disposal practices, --- could conceivably continue without limit.
Historically, economic growth has always involved some combination of quantity and quality increases, but there is no reason to believe a trend of increasing quantity must or should continue indefinitely. It is possible to conceive of a growing economy that produces the same quantity of goods and services each year but where quality, as broadly defined above, continues to increase. Assuming a stable population, the inhabitants of that world would, by any sensible definition, be growing richer.
We can also envision a world where improvements in production processes and recycling, have almost eliminated the need to utilize virgin raw materials to produce a given quantity of goods. We are still a long way away from that world but that unfortunate fact is also an opportunity. If the proportion of materials being recycled can be steadily increased, it is possible to realize a significant increase in quantity based economic growth with a proportionately much smaller increase in the use of raw materials. If the rate of recycling approaches 100%, and the value of goods and services produced is increasing due to increases in quality not quantity, we would have a growing economy with very little need to utilize any unrecycled materials.
We can make similar observations about a world where products were of such high quality that they were passed on from one generation to another rather than discarded. A product that lasts ten years instead of one, requires only one tenth the level of production to satisfy the same level of demand. In our current economic system, planned obsolescence, both physical and fad driven, is generally viewed as a source of profits, and lasting value is either an accident or an afterthought. Nevertheless, it is possible to conceive of a society where durability and lasting value are prized and pursued, and in which a reduction in the time and resources spent merely replacing things that have worn out is recognized as an increase in wealth.
It is worth noting here that there are certain goods, referred to by economists as public goods, which naturally come with the potential for unlimited use and reuse: parks and wilderness; art, music, and literature; information and knowledge. Enjoyment of these goods by one person does not prevent their use and enjoyment by others. In fact, the argument can be made that their use value only increases with the ability to share and discuss the experience with a community of others who have experienced it.
Of course, not all things can be completely recycled or indefinitely reused. Energy eventually turns to entropy. The second law of thermodynamics cannot be avoided: but it can be accommodated. Vast amounts of solar, tidal and geothermal energy are released into the earth’s ecosystem every day and are eventually radiated into space as light or heat. Making productive use of this energy results in no net increase in entropy and it follows that these “entropy neutral” energy sources can be used to minimize waste and degradation of resources resulting from economic activity.
The moral of this fable is that economic growth and increases in material consumption are not inextricably linked. We can have sustainable, economic growth by building products of lasting value, emphasizing recycling and reuse, deriving an increasing proportion of our enjoyment from public goods (nature, art, music, knowledge, literature, etc.), and basing our economy on renewable, natural flow energy sources rather than fossil fueled entropy. It is possible to have a large, modern economy in which income and wealth are continuing to increase while the physical quantity of goods remains constant, and the demand for virgin raw materials and non-renewable energy is minimal.
Globally, there will still be a need for continued increases in the quantity of goods and services produced until population stabilizes and the majority of people are able to enjoy the basic economic requirements for a dignified, fulfilling life. But in the U.S. and other high income countries, an economy based on quality growth is not only feasible, but desirable, and, in the long run, essential. If the world’s more advanced economies can make that transition, it will also define a new paradigm likely to be followed by many rapidly developing countries.
The question is; how can we make the transition to quality-led growth. In our current economic system, if we consume less and enjoy more, we run the risk of increased unemployment and falling (monetary) income. To avoid those pitfalls while transitioning to a quality growth economy will require a coordinated mix of actions, guided by a more sophisticated understanding of economic value creation, and motivated by greater activism from voters, consumers, and investors.
Here’s a quick summary of what we need to see business and government.
· A more useful yardstick –- National income accounting systems that recognize the value of natural capital, non-market goods and services, and voluntary leisure time need to move from academic exercise to standard governmental practice. We will never know if we are getting richer or poorer, and what policy adjustments are needed by track only a fraction of the assets and activities that create value.
· Targeted fiscal policy --- Major economies have yet to fully recover from the Great Recession, and some prominent economists are suggesting that sluggish aggregate demand may be the new normal. A fiscal policy that simply injects funds into the economy in the hopes of jumpstarting growth of any kind is no longer an acceptable response. We need a targeted fiscal policy designed to shift the economy toward quality growth by investing in research and development for renewable energy, environmental protection and public health, improving education at all levels, investing in infrastructure designed to conserve energy and protect natural resources, expanding land and water conservation programs, and providing funding for the arts and humanities.
· An efficient tax code --- Shift the tax burden away from the inputs and results of productive activities such as income, employment and investment returns, towards excess consumption, resource depletion, and pollution taxes.
· An equitable distribution of work --- Due to automation and other productivity improvements, we can increasingly produce the same quantity of goods with a smaller and smaller input of labor. A state of affairs in which two thirds of the population is leisure deprived and the other third is underemployed or out of work, is not acceptable. For a quality growth economy to be socially and politically sustainable, it’s imperative to realize a more equitable distribution of work and (voluntary) leisure through stronger policies to promote a reduced work week, increased vacation and family leave time, part-time employment with pro-rated benefits, job sharing, and other flexible employment models.
· Sustainable results. - As I highlighted in my post on the State of Green Business 2013, the rhetoric of corporate sustainability is impressive, but so far the accomplishments are not. The modern corporation is one of the most effective means yet devised for putting talent and technology to productive use. More of that productive capability needs to be directed toward rapidly reducing the use of raw materials and non-renewable energy in corporate supply chains, designing cradle to cradle supply, production and product recycling systems, and finding ways to boost profits by focusing on improving quality and durability.
· A lower cost of entry --- It’s possible, although still not easy, for the top 10% of the income spectrum to live a high quality, low environmental impact lifestyle. That option needs to be equally accessible to low and moderate income households. – Design and production of housing, transport, food, and clothing need to be rethought to make it desirable and affordable to be green.
· A new social contract --- There is much that sound public policy, shareholder activism and a consumer preference for sustainability can do to move the economy toward quality growth. However, more systemic change will be needed to complete the transition. The highly dispersed, absentee ownership, hell bent on profit and not much else, corporate structure that is central to our current economic system, needs to refreshed for the 21st century. Leaving the rhetoric of corporate social responsibility aside, the ownership structure, governance, and incentive systems of publicly traded for-profit corporations have the effect of pushing all other objectives to the margins. Benefit corporations, cooperatives, social enterprises and other corporate structures explicitly designed to pursue objectives beyond financial profit should be given greater support and scope for action. If consumers, workers and investors were more frequently given the option to buy from, work for, or invest in companies that are not primarily focused on financial profits, I think we would all be surprised at how quickly the structure and operation of our economic system would change.
Steady pressure for change will be needed to transition to an economy based on quality growth. That pressure needs to be applied by us. As I argued in my post on the political economy of sustainability, as citizen/consumer/investors we have tremendous potential power. It is time to put that potential to work. – Think of every purchase you make, or decide to forego, as a chance to cast a vote or send a message regarding the type of economy you want private and public sector decision makers to create. Cast your purchasing power votes in favor of companies that are leaders in reducing pollution and non-renewable resource use. Vote for a local economy where energy isn’t wasted transporting products long distances and where the environmental performance of firms can be more easily monitored and influenced. Vote for things made to last. Vote for reuse and recycling. Send a message by making your home more energy efficient and less reliant on fossil fuels. Make your next car an electric vehicle and install a photovoltaic array on your roof to charge it, or sign-up through your utility to have the electricity you use supplied from renewable energy.
If we use our electoral and purchasing power votes to instigate for a sustainable growth economy, we can expect business executives and politicians to take notice. To generate a self-reinforcing process of change, we’ll need at least a few business and political leaders to respond with the type of innovative products, policies and business models outlined above. That’s not too much to ask.
The International Panel on Climate Change recently issued an unequivocal assessment: the earth’s climate is warming as a result of human activities, primarily the burning of fossil fuels. The IPCC report also defined the total amount of additional CO2 that can be released into the atmosphere before the earth’s climate crosses into the danger zone that lies beyond a 2ᵒC temperature increase. At current rates of fossil fuel combustion we will have pumped enough CO2 into the atmosphere by 2035 to crash through the 2ᵒC warming threshold. This is, or should be, alarming. But the report seems to have been met with a shrug and a sense of weary resignation, buried under an avalanche of more immediate concerns like the war in Syria and the shutdown of the U.S. federal government.
We need not, and should not, resign ourselves to a much warmer, dangerously unpredictable climate. There is still time to reduce CO2 emissions sufficiently to stabilize the climate at an acceptable level. We have the technology to move to a renewable energy economy and the economics of doing so are looking more favorable all the time. In every region of the globe, a mix of solar, wind, hydro, tidal, and geothermal resources together with sustainably produced biofuels could supply enough energy to meet any conceivable future demand. Hydropower has always been less expensive than fossil fuels as a means of producing electricity. The good news is that on shore wind is also now less expensive than coal or natural gas, the cost of solar photovoltaics is nearing parity with fossil fuels and dropping fast, and economically competitive biofuels that do not compete with food crops are moving out of the lab and into production.
As highlighted in my previous post, renewable energy sources have been, and are projected to remain, the fastest growing sources of energy supply in the U.S. and globally. The only thing keeping wind and solar from quite rapidly displacing fossil fuels is their intermittent nature. It’s possible to produce much more energy from wind and sunlight than we could ever use, but that energy needs to be delivered at the right time and place. The sun doesn’t shine at night, and on some days the wind doesn’t blow. Using a mix of solar, wind, hydro, and geothermal energy can minimize time dependent differences between supply and demand, but to ensure there is always enough carbon free energy readily available, we need a revolution in energy storage. Fortunately, the rumblings of that revolution are already audible.
The rapidly increasing market for hybrid and electric vehicles is providing the first wave of scale driven cost reductions in energy storage. A Navigant Research report projects that by 2017 almost 14 million electric and hybrid vehicles are projected to be on the road and the cost of lithium ion batteries is expected to decline by more than 40%. Further cost reductions can be anticipated as the electric vehicle market continues to expand. Incentives for innovation and opportunities for scale based cost reductions are also emerging in the residential, utility scale, and commercial energy storage markets.
Germany’s feed-in tariff system which requires utilities to pay solar power producers for excess electricity fed into the grid, was one of the original drivers of the global investment boom that triggered a rapid reduction in the cost of solar energy. Now Germany is leading the way in creating a market for low cost energy storage, by instituting a 30% subsidy for residential energy storage systems, while simultaneously reducing feed-in tariffs. The result is increased incentives to store excess energy produced during peak sunlight hours and use it later rather than simply sell it back to the grid when produced.
Utilities in Europe and the U.S. are also experimenting with large scale energy storage systems specifically designed to store solar and wind generated energy during periods of excess supply and release it when there is excess demand. A Navigant analysis predicts that over 20 GW of wind and solar associated energy storage capacity will be installed over the next ten years. Utility operators are beginning to see these energy storage investments as an alternative to other means of balancing supply and demand, such as gas fired peak generating plants or additional transmission lines.
Installed photovoltaic capacity in the commercial sector has been increasing rapidly and due to peak and time of day electricity pricing, commercial users are increasingly complementing their solar PV investments with energy storage capacity. A recent reportfrom IHS forecasts that commercial energy storage installations will exceed 2.3GW by 2017 surpassing both residential and utility scale energy storage capacity.
The revolution that’s brewing in energy storage isn’t likely to be shallow or short lived either. Advances in energy storage technologies including next generation batteries, high performing super-capacitors, and more efficient methods for producing hydrogen are emerging from the lab and moving into production.
Hydrogen is perhaps the ultimate energy storage technology. It can be extracted from water leaving behind only pure oxygen. Hydrogen combustion reunites hydrogen and oxygen releasing copious amounts of energy with pure water the only “waste” product. If wind, solar or other renewable energy sources are used to produce hydrogen from water, the resulting hydrogen fuel can be used in fuel cells to power cars, factories and electric generating stations, with no harmful emissions to be concerned about. In sum, hydrogen is a highly versatile, potentially pollution free form of energy storage.
It is true that prophets of the hydrogen economy have been heralding its arrival for some time. But with the rapid drop in the cost of producing electricity from wind and solar, and continuing advances in fuel cell technology, the age of hydrogen may finally be dawning. Toyota, Honda, Hyundai and Suzuki have all announced they will begin producing commercially available hydrogen powered cars as early as 2015. Most other major automakers including Ford, GM and Daimler have plans to introduce hydrogen powered vehicles a year or two after that. Hydrogen fuel cell technology is well understood and the automakers with active programs are confident that hydrogen powered vehicles can be produced at a cost that compares favorably with gas, diesel and hybrid electric internal vehicles
The most significant impediment to widespread commercialization of hydrogen vehicles is the current lack of infrastructure for refueling. It Is not clear that private firms acting on their own will be able to remove this stumbling block. However, Japan, South Korea, Germany, the UK, Belgium and California have launched programs to promote hydrogen fueled vehicles in part by building networks of hydrogen refueling stations. It’s reasonable to assume that these programs as well as private sector initiatives will gain momentum as major automakers signal readiness to mass produce hydrogen powered vehicles.
The UK hydrogen vehicle initiative known as UK H2 Mobility, includes the participation of Toyota, Nissan, Daimler Benz, and Hyundai, as well as major companies involved in the production of hydrogen generating equipment, fuel cells, and fueling stations. The detailed market and economic analysis that was produced after the first phase of the initiative, estimates that hydrogen vehicles will be equivalent in cost to highly fuel efficient diesel vehicles by 2025. The initiative also envisions a comprehensive network of hydrogen refueling stations in the UK with half of the hydrogen produced from renewably generated electricity.
It is no longer an exercise in wishful thinking to conceive of a world where all of our energy is produced from renewable, carbon neutral sources. Wind energy is already less expensive than fossil fuels, solar energy is fast approaching that economic turning point, and investors continue to plow money into even lower cost, higher efficiency renewable energy technologies. The remaining hurdle to clear is energy storage. Reports of technical and commercial breakthroughs on that front are starting to pile up but there is still work to be done. Continued government support for energy storage R&D and commercial demonstration projects is needed to ensure we make the transition to a post-carbon economy in time to keep the earth’s climate from heading into uncharted territory.
An article by Eduardo Porter published in the August 26, 2013 edition of the New York Times, entitled “Coming Full Circle in Energy, to Nuclear”, depicted nuclear energy as the only real hope for saving earth’s climactic balance and portrayed solar and wind energy as little more than dreams and fantasies. Mr Porter suggests that “Three decades’ worth of renewable energy dreams have yielded too little to entrust them with the job of replacing fossil fuels.”. He later lauds Michael Shellenberger as a recognized environmental hero in the same sentence in which he mentions that Shellenberger views beliefs that solar and wind power can displace fossil fuels as “hallucinatory delusions. If Mr Porter had reviewed the data on the actual market performance of nuclear, wind and solar energy he would have realized that renewable energy “dreams” and “hallucinations” are quite rapidly becoming reality while nuclear energy is in rapid retreat.
Since 2000, electric generating capacity of onshore wind energy and solar photovoltaics have grown 27% and 42% per year respectively, In 2012 45 GW of wind and 32 GW of solar electric generating capacity were installed, compared to only 1.2 GW of net capacity addition to the nuclear industry. These trends favoring solar and wind over nuclear energy are even more lopsided when viewed from the perspective of changes in electricity production. In 2012, almost 500 TWh more electricity was produced from wind energy and 100 TWh more from solar energy than in 2000. On the other hand, electricity generated from nuclear power was 100 TWh less in 2012 than in 2000.
The 2013 US Energy Information Administration (EIA) report that Mr. Porter cites and provides a link to in his article contains a very clear graph showing that renewable energy sources (excluding biofuels) supplied 11% of global energy consumption in 2010 while nuclear energy accounted for only 5%. The same graph clearly shows that by 2040, due to increased use of wind and solar energy, contributions of renewable energy sources are projected to increase to 15% with nuclear contributing only 7%.
The International Energy Administration (IEA) is even more bullish about wind and solar energy. In the 2012 World Energy Outlook, the IEA projects that renewables will become the second largest source of electricity generation by 2015 and by 2035 will rival coal as the largest source of electricity, with solar growing more rapidly than any other renewable energy technology.
Ignoring the energy market projections of US and international energy information agencies, Mr. Porter proceeds to offer the following sweeping opinion.
“Neither the warm glow of the sun nor the restless power of the wind is going to do the trick (of replacing coal), at least not soon enough to make a difference in the battle to prevent climate change……. A new generation of nuclear power, by contrast, is potentially the cheapest energy source of all.”
Mr. Porter fails to mention that the report he cites as the basis for this conclusion was prepared by the Nuclear Energy Agency (NEA). The NEA report, which was published in 2010 is at odds with a 2013 analysis conducted by the US Energy Information Administration (EIA). The EIA analysis found the levelized cost of nuclear energy to be higher than conventional coal plants and significantly above the cost of combined cycle natural gas fired power plants with or without carbon capture. In contrast, the 2013 EIA analysis indicates that wind generated electricity is significantly less expensive than either coal or nuclear, and only slightly more expensive than gas fired power plants. Add carbon capture to the cost of generating electricity from natural gas, and wind emerges as by far the least expensive option for carbon neutral electricity generation.
From 2001 to 2011 wind electricity generating capacity in the U.S. and EU increased by more than all other sources of electricity generation except natural gas. During that period, combined nuclear generating capacity in the U.S. and EU was essentially flat while coal fired electricity generating capacity actually declined. It appears that the restless power of the wind is already “doing the trick” and is contributing to the phasing out of coal fired power plants in the US and EU.
Mr Porter does acknowledge the favorable economics of wind energy but then promptly dismisses it as an option for combatting global warming due to “limits on how much it can be scaled up”. Here again if he had done his homework he might have reached a different, more accurate conclusion. A recent, comprehensive wind mapping analysis conducted by the Department of Energy’s National Renewable Energy Laboratory found that the contiguous 48 states have the potential to generate 37 million gigawatt hours of electricity per year. By comparison, the total electricity generated from all sources in the US, was only 4 million gigawatt hours in 2011. Contrary to Mr. Porter’s assertions, there is effectively no limit on how much we can scale up wind energy in the US to provide carbon free electricity at a very competitive price.
The economics of solar energy and its potential to limit use of fossil fuels are also much more favorable than depicted by Mr. Porter. Over the past two and a half years, worldwide solar photovoltaic (PV) capacity has more than doubled to over 100 GW and industry analysts like GTM Research are projecting that installed PV capacity in the US and worldwide will more than double again by 2015. Rapidly increasing demand and output by the solar industry has led to significant and still acclerating cost reductions. Total installed costs of PV systems have declined by nearly 40% from 2009 through the end of 2012, and costs have continued to fall at double digit rates in 2013. The most recent US Solar Market Insight Report from GTM Research documents that in the first quarter of 2013, average installed costs of utility scale PV systems declined to $2.14/W, a reduction of more than 25% versus the first quarter of 2012.
Costs of solar PV systems are already economically competitive with fossil fueled peak load generating systems. It seems highly likely that the virtuous circle of increased demand for PV systems driving increased industry output, leading to lower costs and further increases in demand will continue. If the solar industry is able to continue to reduce costs at even half the rate it has since 2009, we will very shortly cross the $1/W benchmark that the Department of Energy estimates would make solar energy fully competitive with baseload coal, nuclear, and natural gas fired electric power plants.
Advances in nuclear reactor design as well as recycling and disposal of nuclear waste may someday enable nuclear power to provide a safe, environmentally benign alternative to coal. But that day is not here yet, and it’s not clear if and when it might arrive. Meanwhile, investors, industry analysts, policy makers, and consumers are all realizing that wind and solar energy are already “doing the trick” of replacing fossil fuels at a competitive price. Renewable energy has made the transition from the stuff of dreams to the most economical and reliable option for combatting global climate change.
President Obama finally returned to the issue of climate change, delivering what was billed as a major policy speech on the issue at Georgetown University on June 25th It’s easy to be cynical and dismiss this as an effort by the president to change the topic: from spy scandals, budget gridlock and a limping economic recovery to almost anything else. Although cynicism generally isn’t part of my emotional repertoire, I can only muster one cheer for Obama’s new climate change initiative.
Given the opposition of Congressional Republicans to any action on climate change, it’s understandable why Obama has backed away from introducing significant climate change legislation. It’s also important to acknowledge that the Obama administration has used executive orders and the regulatory authority of the executive branch to bypass Congress and make some progress on climate change. Unfortunately, the new initiatives outlined in Obama’s Georgetown speech are in fact not new, and the only thing major about the speech is that it marks a major retreat from the CO2 reduction goals Obama set for his administration at the start of his first term.
In Obama’s first inaugural address he pledged to reduce U.S. CO2 emissions by 2050 by 80% versus 1990 levels. Even if fully implemented, the initiatives Obama announced at Georgetown would reduce CO2 emissions by less than 20% versus 2005 emission levels, and neither the speech nor the accompanying 21 page policy document that was released by the White House outlined any long term plan for achieving the additional CO2 emission reductions that are needed to stabilize the climate. The hard truth is that the White House document is essentially a laundry list of actions that have already been taken, were already in process, or had been stalled due to the Obama administration’s own indecisiveness. There is very little that is new and nothing that is game changing.
The centerpiece of Obama’s speech, regulatory guidelines requiring CO2 emission reductions from existing power plants has been stuck in the EPA’s rulemaking process for several years. The administration had already missed several court ordered deadlines for issuing CO2 emissions guidelines that the courts had concluded were required by the Clean Air Act. Given that history, Obama’s commitment that the EPA will propose power plant CO2 rules by June of 2014 can hardly be viewed as a bold new move to combat climate change.
It is also important to note that all of Obama’s climate change mitigation efforts are reliant on executive orders and regulatory rulemaking. Given the political situation in Congress, the use of executive orders is an understandable action of last resort. However, it’s important to remember that executive orders are much more easily reversed than new legislation. All it takes is for the next president to issue new orders rescinding those issued by Obama. That would be very likely to happen if the Republicans capture the White House in 2016. Regulatory requirements based on existing legislation can also be revised by a new administration without requiring Congressional approval. So Obama’s executive branch climate change initiatives, while expedient, are also highly vulnerable.
So was Obama’s speech a non-event? No. Some action is better than none, particularly when that action is loudly publicized and involves a country with the largest economy in the world. If the Georgetown speech signals a much more activist stance by the Obama administration on climate change policy, not only domestically but also in international negotiations, it might mark the start of a long march toward an effective global commitment to combat climate change. But that will require continued, well publicized action by Obama and his administration.
Here’s a few things that the Obama administration needs to do.
Recent analyses of GHG emissions trajectories, carbon forcing, and atmospheric carbon budgets indicate the need to reduce CO2 emissions to almost zero within a few decades in order to avoid risking serious disruptions to the earth’s climate. Fairness would suggest that developed countries should be required to begin to significantly reduce their emissions in the near term, while developing countries might be allowed a longer period of time to make the transition to a zero net carbon economy. But determining how to allocate the remaining CO2 absorbing capacity of the atmosphere is not the focus of this post. The only point I want to make here is that the challenge ahead is not just to reduce CO2 emissions, not even to reduce them significantly, but rather to virtually eliminate them. The question is, can we do it? I think we can. In several of my previous posts, I’ve outlined initial steps we can take at the national and international level. In this post, I want to get personal.
I bought a house in Gloucester, Massachusetts this past Summer. It’s a bigger place than my wife and I really need right now, but the price and location were too good to pass up. It’s a traditional center entrance colonial that sits up on one of the granite hills of Cape Anne, with the eastern side of the house looking out over a century old golf course and the ocean beyond. A few blocks walk down the hill brings you to a wide, sandy beach framed by rocky promontories at either end, and a rocky island offshore that’s accessible by foot at low tide.
In terms of energy efficiency, the house, at the time of purchase, was a curious mix of the very good and the very bad. I was pleased to learn it had six inch fully insulated outer walls, and a thick layer of insulation above and around the finished third floor walk-up. The circa 1985 double pane windows are in very good shape, and the wall of south facing windows off the family room are a great source of passive solar in the winter. The oil burner is relatively new and clocked in at close to 85% efficiency. Unfortunately the oil fired boiler was also the source of hot water for the house; no hot water tank, just a coil inside the boiler. It has to be one of the least efficient means of heating small quantities of hot water imaginable. A hot shave in the morning would bring the entire boiler rumbling into action. Washing the dishes at night meant another burst of carbon fueled combustion. Obviously that was one thing that had to change.
What got me excited was the large south, southwest facing roof. eexcept for a bit of shade which the trees further up the hill cast on the eaves of the house in the late afternoon, the roof receives full sun almost all day in Summer and Winter. I’ve been wanting to put in a photovoltaic system and get a plug-in hybrid vehicle for several years and I knew when I bought the house that I would finally get my chance. So I started looking around for a solar installer that was experienced with photovoltaics, and solar hot water systems. I found a few, and they confirmed what I already knew, the back roof was a near perfect site for solar.
Then came a slew of choices about system size and design. Did I want to keep the up-front cost down, or go with higher cost, higher efficiency panels that would enable me to maximize the electric generating capacity of the roof? Should I install solar thermal hot water (HW) panels or simply increase the size of the photovoltaic (PV) system and use an electric heat pump to heat hot water?
After exploring a number of options, I decided to use the highest efficiency panels available, which are produced by U.S. based SunPower, and were available from a Massachusetts based solar installer called SunBug. The up-front cost of the SunPower panels was higher, but the rate of return over the life of the system was a bit better than if I had used cheaper, lower efficiency panels. The deciding factor for me was that the SunPower panels would cover about 40% less roof space compared with a lower efficiency system with equivalent output. I didn’t want to oversize the system, but I also didn’t want to find myself with a roof full of panels and still drawing power from the grid for a significant portion of my electricity use. If I were a patient man, I would have purchased my plug-in hybrid, lived in the house for year, and then decided what size PV system to install. But patience is not my strongest suit. The SunPower panels gave me the option of installing a system now that was sized using reasonable estimate of my energy use and which covered only the upper half of the roof . If needed, I could install additional panels on the lower portion of the roof in the future.
SunBug was very helpful in working with me to design a system that met my current needs and enabled future expansion. The final system design consisted of 20 SunPower 327 watt PV panels plus three Schuco solar thermal hot water panels connected to a 75 gallon super-insulated hot water tank with electric assist/back-up. After the design decisions had been made, it took another a month to get the rebate and tax incentive paperwork approved by the state and the net metering approved by the utility. SunBug was very efficient in getting the paperwork filed but they and all of the other solar contractors I had contacted were backlogged weeks or more with new project installations, which is a promising sign for solar generation in Massachusetts. Once my turn for installation arrived, SunBug had the system up and ready to run within a week.I was anxious to turn the switch and watch the solar electric production meter start turning, but I had to wait a bit longer until the utility got the net meter installed. When I did finally flip the switch, the system fired up, lights blinking and solar production meter turning; the digital power display fluctuating up and down as clouds drifted by overhead. By early afternoon on a winter’s day, the PV system is kicking out about 5.5 KW an hour of clean energy. And even on a bitter cold day in Massachusetts, as long as the sun is shining, the glycol in the HW panels on the roof gets up over 130°F, delivering more than enough thermal energy to the hot water tank in the basement. Taking a shower now feels like standing in liquid sunshine.
Now is this just another feel-good, clean energy story, or do the economics really make sense? To answer that question, I completed two separate, financial analyses for the PV system: one that includes all state and federal tax credits, rebates and other incentives; and another that considers the return on investment in the system if none of these incentives were available.
Taking into account all available incentives, the annual rate of return on my investment in the PV system is a quite impressive 23%. That’s well above, and a good deal more certain, than the returns available from the stock market, real estate, or just about any other competing investment. It’s quite true that a significant portion of this impressive return is due to state and federal incentive expressly designed to promote solar and other renewable energy sources. The tax credits and rebates reduced the net cost of my PV system by approximately 37%. Additional financial incentives are provided by Massachusetts’ Solar Renewable Energy Credit (SREC) program, which is designed to ensure utilities achieve specified targets for electricity generation from solar energy. 
What if none of these incentives were available, and the financial analysis were performed looking only at the electricity cost savings? Again assuming a 30 year system life, avoided electric costs of $0.15 per kwh increasing at 5% per year, and 10,000 kwh per year of solar electric production from the system declining at 0.5% per year due to system degradation, the rate of return is 5.6%. Not as compelling as the after incentives rate of return, but still higher, and a good deal more secure, than returns currently available from government or corporate bonds.
The moral of this financial story is that a solar powered future is on its way. Even in a relatively cloudy, northern climate like Massachusetts, the unsubsidized cost of solar energy is arguably already at parity with fossil fuel generated electricity. In solar advantaged regions like the Southwest, the unsubsidized economics of solar energy versus fossil fuels look even better. The economics shift even further in favor of solar energy if the significant environmental costs of fossil fuels are taken into account. Considering that the price of photovoltaic panels dropped by nearly 50% last year alone, and the rapid growth of the solar industry is also lowering permitting, installation, and other “balance of system” costs, we can expect the unsubsidized costs of solar energy to fall further and further below that of fossil fuels in the years ahead. So the next time you run across a claim that switching to solar and other renewable energy sources will ruin the economy, you can rest assured that this is scare-mongering nonsense.
 Michael E. Schlesinger succinctly summarizes the scientific basis for impending atmospheric CO2 constraints and offers a simple but perhaps overly simplistic allocation plan in Revised Plan to Safeguard the Earth's Climate Journal of Environmental Protection, 2012, 3, 1330-1335 doi:10.4236/jep.2012.310151 Published Online October 2012. For a less technical summary of atmospheric CO2 budgets and a more nuanced approach to allocating CO2 emissions and control measures see The North-South divide, equity and development – The need for trustbuilding for emergency mobilisation by Sivan Kartha, Tom Athanasiou and Paul Baer
 I am defining my direct carbon emissions as those resulting from personal transportation and home energy use.
 I didn’t include an analysis of the solar thermal HW system since I didn’t have an estimate of the cost of the HW panels separate from the costs of the hot water tank, which I would have had to buy and install to bring the hot water system up to acceptable standards even if I continued to use oil or switched to a purely grid powered electric hot water system.
 The analysis assumes a 30 year useful life for the system, with 0.5% degradation in output annually as per the manufacturer’s warranty, replacement of the inverter after 15 years, and savings for avoided electricity costs of $0.15/kwh increasing at 5% per year
 Under the SREC program I will be able to put my solar generated electric output up for sale in quarterly auctions where the ultimate buyers are the state’s electric utilities. The price floor established by the state is $300 per MWH and the maximum price is effectively set by the $550 penalty that utilities would have to pay for each MWH that they fall short of the renewable energy generation target. The 23% annual rate of return assumes that I receive the minimum $300/MWH payment over the next ten years during which the program has been legislatively authorized.
 A reasonable case could be made that the discount rate applied to an investment like residential photovoltaics, where the only uncertainty about the rate of return is whether and how rapidly future electricity costs will rise, and which provides a hedge against inflation since inflation and energy costs are highly correlated, should not be much above the yield on inflation protected 30 year Treasury bonds, which is currently hovering around 0.5%. If you accept that argument, the 5.6% unsubsidized rate of return on my PV system indicates going solar is a more economical choice than continuing to purchase electricity from the grid.
Earlier this month a comprehensive survey of business sustainability programs, State of Green Business 2013, was published by Green Biz, an association of business sustainability professionals, in collaboration with Trucost, which specializes in quantifying corporate environmental impacts. The report makes for depressing reading. The dirty truth is that business just isn’t making much progress reducing its overall resource demands and environmental impacts. The lead authors of the report, Joel Makower, Chairman of Green Biz and Richard Mattison, CEO of Trucost, acknowledge that the state of green business is clouded at best, but since green business is their business, they have tried to provide reasons to be optimistic. In the first ten chapters they present a series of entertaining, but largely data free, vignettes about cultural and technological trends that may one day enable or compel business to be seriously green. When the authors do finally report on the data, the big picture isn’t pretty. None of the aggregate numbers on private sector environmental impacts are headed in the right direction, not the total pollutants emitted , not the total resources consumed, not the total environmental damages incurred. The authors acknowledge this, but water down the message by focusing most of the text and graphics to a few intensity measures (resource or environmental impact/economic output) that might suggest some progress is being made. Since I am under no compunction to provide applause where it is not due, this post will take a bit more critical look at what’s been accomplished, what progress we should expect, and what it will take to achieve the changes that we need.
A quick review of the performance data presented on pages 42 through 49 of State of Green Business 2013, indicates that over the past five years, the business sustainability movement has accomplished very little beyond what might be expected from long term historical trends. In other words, it’s been business as usual. On page 42 of the report we see total US and Global environmental costs resulting from the activities of 500 US based and 1600 ex-US companies increased over the four year period 2007 through 2011. Even worse, the trend seems to be heading in the wrong direction. Starting in 2010, as the US and global economies have emerged from recession, the increase in business generated environmental damages has been accelerating.
The authors do their best to highlight what they refer to as “a few areas of encouragement amid a troubling background of business as usual.” For example, they prominently display a series of simple, colorful graphs showing that energy use or pollutant emissions per dollar of output (pollution intensity) have declined in the US and to a lesser extent globally. But in every case, from energy and water use to greenhouse gas emissions, other air pollutants, and solid wastes, aggregate business sector environmental impacts have increased both globally and in the U.S. To their credit, the State of Green Business authors acknowledge that “the climate doesn’t care about intensity — it responds only to absolute emissions, which continue to grow”. Nevertheless, it would have been helpful if they had followed up that comment with graphs and data on total resource consumption, similar to those they prominently display for intensity.
All of this begs the question of just what we can and should expect from business and the business sustainability movement. If left to its own without the external impetus provided by consumer and shareholder activists, I would say not much. We should expect profit-seeking businesses to implement energy efficiency & waste reduction measures that will result in increased profits. Nothing wrong with that, but what is generally glossed over in discussions of business sustainability, is that the prices firms pay for energy, GHG emissions, or waste disposal generally do not take into account what economists refer to as externalities, i.e. costs that are borne by society as a whole . As a result, there is often a significant divergence between the profit maximizing level of waste reduction and the socially optimal level. This is basic economics. Yet, given all the hoopla surrounding business sustainability, the general public might be forgiven for thinking that business had undergone some type of conversion experience and would suddenly be willing to reduce pollution and waste even if it meant reduced, or even less rapidly increasing, profits. The simple statistics presented in State of Green Business 2013 indicate that no such conversion experience has occurred. Companies are using slightly fewer resources per unit of output, but this is consistent with long term trends and short-term profit maximizing behavior focused on improving productivity and cutting costs.
Nothing wrong with cutting costs or minimizing business risks. Unfortunately, the rate of improvement in resource use or pollution emissions per unit of output has not been sufficient to stay ahead of population and economic growth. Total pollution emissions and resource use are still increasing. It is clear that in a world where net CO2 emissions will need to decline to close to zero within a few decades to avoid serious climate disruption, the business sustainability movement needs to be jolted out of it somnambulism.
It could be argued, and the authors of State of Green Business 2013 clearly would like to give the impression, that the decade or so since sustainability became a business buzzword is too short a time to judge what can and will be accomplished. There is no doubt that one of the strengths of big business is the machinery of continuous improvement. Major corporations do not transform themselves overnight, but once an objective has been defined and the slow grinding machinery of operational, financial, information, and compensation systems begins to pivot in the desired direction, significant change can occur if given enough time. The systematic search for more efficient ways to use resources, should lead companies to identify additional, more significant sustainability measures that would be profitable for them to implement. Still, we should not expect business innovation and attention to completely close the gap between private and social costs of pollution and resource consumption. Consumers, investors and governments need to force business leaders to define sustainability in much more rigorous terms.
The data presented in State of Green Business 2013 indicates that consumer and investor interest in green products and production processes has not yet been sufficient to generate significant economy-wide changes in how business does business. Although, there are a growing number of green report cards rating the environmental impacts of products and the environmental records of companies, the standards of sustainability on which these ratings are based are rather weak. Modest improvements relative to product category or industry norms are enough to garner high scores in “Green Guide” or various investor focused sustainability indexes. The consequence is that we are giving consumers who purchase these supposedly green products and investors who purchase the stock of “socially responsible” companies a false sense of complacency. We simply are not holding companies to a high enough standard. We need to shift from opaque relative rankings to serious absolute standards. We can still show which products and firms are doing relatively well in terms of resource use or pollution generation, but sustainability scorecards need to be clear about how far those firms are from technically feasible or socially optimal performance on key environmental criteria like GHG emissions.
More demanding standards for evaluating business activities and supposedly “green” products would give consumer and investors greater ability to vote with their dollars, which would in turn put more pressure on companies to get serious about sustainability. But it’s too much to expect that tougher consumer or investor scorecards will completely bridge the gap between the private and public benefits of going green. Consumers still need to buy clothes, groceries and cars at affordable prices. Big investors like public pension funds and endowments, need to put their money somewhere and their fiduciary responsibilities require them to maintain a diversified mix of investments. So the sad truth is; major corporations can make modest progress toward sustainability goals and still expect to attract investors and find paying customers.
It is quite clear from State of Green Business 2013 that governments need to send a message to the business community to pick up the pace. Where markets for scarce environmental resources, like the CO2 absorbing capacity of the atmosphere, or the nitrogen absorbing capacity of major estuaries, do not exist, governments must set the “price” by providing the private sector with regulatory requirements or emissions fees that reflect the full cost of business activities that utilize these resources.
Consumer and investor watchdog groups need to become more demanding and governments need to require companies to take responsibility for the environmental costs of producing their products. But we also need bolder leadership from business. The examples in State of Green Business 2013 of companies that have met their sustainability goals highlight how low the bar has been set. On page …of the report we are informed that:
“SC Johnson polished off its goal to reduce total greenhouse gas emissions by 8 percent from 2005 levels. Supermarket chain Safeway cracked its goal set in 2010 to increase cage-free egg sales from 6 to 12 percent within two years; more than 15 percent of eggs sales are now cage-free. …….Darden Restaurants, parent to Red Lobster, clawed its way past its 2015 goal of reducing restaurant-wide water consumption by 15 percent. And British consumer packaged goods giant Reckitt Benckiser reported in 2012 that it had scrubbed 20 percent off its total carbon footprint per use, eight years ahead of its goal. “
It is instructive to contrast these modest accomplishments with some of the leaders in sustainable business practices.
Interface, a global carpet manufacturer with ten factories on four continents, hundreds of showrooms and dozens of office facilities around the world, was one of the pioneers of business sustainability and their CEO, Ray Anderson has been one of the movement’s most persistent prophets; calling on his colleagues to change their profligate ways. Eight of Interface’s ten factories are fully powered by renewable energy sources, and the company has committed to be 100% powered by renewables at all facilities by 2020. Interface has also reduced the solid waste it generates by more than 80%, from 15 million pounds of waste sent to landfills in 1996 to 2.5 million in 2011.
Outdoor apparel and gear manufacturer Patagonia was founded, nurtured and is still directed by rock climber, outdoor enthusiast, and environmental activist Yvon Chouinard . Under Chouinard’s leadership, Patagonia has been purchasing only renewably generated energy for its 13 California facilities since 1998, obtained gold LEED certification for the renovation and expansion of its main distribution facility in Reno Nevada, and utilized over 98% recycled materials in its renovation of a turn of 19th century firehouse that serves as an addition to its headquarters campus.
Patagonia is also working hard to green its supply chain, which is referred to in the jargon of business sustainability as a Stage 2 goal. It has a long term partnership with Swiss environmental standards company Bluesign to audit and help reduce the environmental impact of Patagonia’s supply chain and production processes. Bluesign’s certification process is widely regarded as the most rigorous and demanding in the apparel industry, and Patagonia has made the commitment to achieve Bluesign certification for all of its products by 2015.
Diageo a $15B beer and spirits company that produces iconic brands like Johnny Walker Scotch, Smirnoff Vodka and Guinness has reduced its total carbon emissions by 22% since 2009 and is on track to meet its goal of a 50% reduction by 2015. It has also set a goal to eliminate all solid waste sent to landfills by 2015 and is already more than halfway there.
Then there’s the consumer products giant, Unilever. Since 1996 it has increased revenues by more than 50% while reducing total energy use by 50%, CO2 emissions by 60%, and solid waste generation by 80%. In 2010, Unilever has committed to reduce CO2 emissions an additional 50% by 2020, including emissions from the supply chains of its products and emissions from consumer use. All senior executives and many mid-level managers at Unilever, have sustainability goals as part of the performance objectives that affect their compensation. Sustainability champions have been established in every key function, product category and country.
These examples make clear that it’s possible to make very significant reductions in energy use, carbon emissions, and waste disposal without detriment to the company or its shareholders. So why aren’t more companies doing this. Why all the pious pronouncements and increasingly exhaustive reporting about corporate sustainability with so little to show for it. In addition to the need for stronger external goads to action from consumers, investors, and governments which I have already spoken about, the additional, often missing ingredient is individual leadership. In all of the examples above the founder, CEO, or board of directors made a commitment to sustainable business practices and assumed leadership in implementing them.We have been so wasteful of resources for so long, that almost anywhere you look there are easy opportunities to significantly reduce energy use, cut pollution, recycle more and throw away less. This makes the near total lack of progress by business in reducing resource use and pollution that is documented in the State of Green Business 2013 all the more damning and disheartening. It’s time for consumers and investors to set the bar higher, much higher. It’s time for governments to use carbon taxes and pollution fees to make businesses pay the full costs of doing business. But it’s also time for business leader
 The methodology Trucost uses to derive these estimates of environmental costs starts with an estimate of total resource demand and pollution emissions derived from a global input-output model, supplemented by company data and reports. The resulting estimates of environmental impacts are then monetized using data from the environmental economics literature. But the analysis does not seem to take into account the location of environmental discharges. With the exception of CO2 and a few other globally dispersed pollutants, the economic damage caused by a unit of pollution is highly dependent on where the pollution is emitted. For this reason Trucost environmental damage estimates are useful when evaluating trends in environmental impacts over time, but cannot be considered accurate in any absolute sense, and should be used with caution when comparing them with other financial metrics like industry revenues, profits, or even abatement costs.
 GHG emissions have declined slightly in the U.S. , but this has little to do with business sustainability efforts but instead is largely the result of the “fracking” boom which has increased the supply and greatly reduced the price of domestic natural gas and caused a nationwide shift away from coal. See my post Risks of Cracking Open the Fracking Market. for discussion of the environmental dilemmas and land use management abuses posed by fracking.
Our business plan includes early entry into market segments, where lightweight, flexible, ultra-thin solar cells have obvious advantages and appeal including photovoltaic coatings and covers for mobile phones, tablet and notebook computers, and electric vehicles as well as a wide range of off-grid uses in the developing world. We plan to utilize partnership opportunities to develop and market these initial applications while we continue to improve cell design and expand manufacturing capabilities to become the most cost effective option for residential, commercial and utility scale solar electricity generation.
Name of the project
High efficiency printable photovoltaics
Provide one sentence describing your core technology
A high-efficiency, flexible and ultra-light organic solar cell; made of cheap, earth abundant materials using the low-energy low-cost manufacturing process of ultra-high resolution inkjet printing.
Short description of your technology
We are developing a novel organic photovoltaic device architecture that increases the practical efficiency limit of organic solar cells by nearly 100%, and allows their mass production using solely ultra-high resolution inkjet printing. The outcome is a solar technology that makes a cost of 0.5$/W achievable in the near future. Our flexible solar cells will be easy to mount anywhere with minimal installation costs and hardware. Additionally, the new, flexible panels will be easily recyclable and will be produced at a low enough cost to make regular upgrades a cost-effective option. Instead of having bulky, rigid solar cells that, due to production and installation costs, must be left in place 20 plus years with steadily declining efficiency, our project will bring to market high efficiency, low cost ultra-thin solar panels that can be recycled and cost-effectively upgraded with increasingly efficient cells every three to four years.
The technology that we are proposing is a reinvention of solar cells based on advances in nano-fabrication technologies and photonics design. This breakthrough technology will quickly become the leading approach to solar photovoltaic generation in existing markets like rooftop panels and utility scale power plants, and it will also expand the market into entirely new mobile and building integrated applications.
What is the key element of your technology that differentiates it from existing solutions
Evaluating existing solar technologies with long term sustainability in mind yield some very interesting insights. For example, Cadmium telluride (CdTe) based solar cells do not provide a sustainable basis for the explosive growth in the solar industry due to the extreme rarity of tellurium, the main element used in their manufacture. Copper-indium-gallium-selenide based solar cells (CIGS) suffer from the same problem; indium and gallium are not abundant minerals. Silicon is abundant, and although the price of silicon wafers has declined, there has been no significant advance in the efficiency of silicon-based photovoltaics over the past few years. Moreover, silicon cell manufacturing techniques require several high temperature and vacuum stages which demand substantial energy inputs. In addition, silicon cells are rigid and heavy, which significantly increases installation costs and makes them unsuitable for a wide range of applications.
By contrast the materials used to produce organic photovoltaics (OPV) are highly abundant, readily available, and inexpensive. They are easy to manipulate in manufacturing processes and can be readily dissolved in a wide variety of liquids, making the manufacture of solar cells potentially as easy as printing out a file from a computer. In addition the materials used in OPV cells and the substrates on which they can be applied are malleable and light, enabling them to be used in completely new solar energy applications. However, sunlight to electricity conversion efficiency of OPV cells, while steadily increasing, are still relatively low. In addition, OPV cells do not have the multi-decade durability of other solar PV technologies.
So far, advances in organic photovoltaics relied on developing better materials, with very little attention being given to the structure of the devices. Our project focuses on developing better structures, taking advantage of very recent advancements in the field of inkjet printing allow inexpensive manufacturing of cell architectures that can eliminate a great deal of the structural inefficiencies. Our invention is a novel compound device that will exploit the new potential of ultra-high resolution inkjet printing and the solubility and flexibility of organic semiconductors.
Our project overcomes the OPV efficiency gap through a novel cell architecture that exploits the most recent advances in ultra-fine inkjet printing. It also transforms the shorter useful life of OPV’s into a competitive advantage. Instead of buying expensive solar cells that are difficult to install and whose efficiency will degrade slowly over 20 years, we propose to commercialize solar cells with a high efficiency to price ratio and which can easily be recycled and upgraded with increasingly efficient cells every three to four years. The combined result will be a substantial improvement in price per kilowatt hour, breadth of applications, and sustainability of solar photovoltaic generation.
It seems that Hobbes was right. Human life in a state of nature can indeed be nasty, brutish and short. Look at any of the failed states or regions of the world where government control is ineffective or non-existent, the mountainous borderlands of Pakistan and Afghanistan, northern Nigeria, the Southern Sahara; what you see is continuous violent conflict.
But Hobbes lived in a world where human influence and control was still circumscribed and confined. If he were alive today, he might observe that a state of nature is precarious not only for humanity but for nature as well. In a world where global markets, profit incentives, and advanced technology exist alongside unmanaged, open access resources, the resulting destruction of nature is often nasty, brutish and swift. Central Africa offers the most horrendous recent example. In areas where government control has broken down, horrifying crimes against humanity have now been joined by the slaughter of tens of thousands of elephants by heavily armed poachers seeking ivory.
Where effective national governments do exist, a Hobbesian state of nature still reigns just beyond the border; dead zones forming each year in estuaries around the world from urban and agricultural waste spilling off the land; great gyres of plastic debris spinning in every ocean, the petrochemical detritus of modern civilization collected and on permanent display; atmospheric concentrations of CO2 at twice their pre-industrial state and rising rapidly, fueled by furnaces and engines around the world.
To anyone familiar with Hardin’s famous essay on the tragedy of the commons, none of this should come as a surprise. Numerous international treaties and conventions notwithstanding, much of the global environmental commons remains in a state of unmanaged open access. The question is what’s to be done. The academic literature points toward three principal resource management options
If we look at climate change, it is the last two policy options that have been the primary focus of policy discussions. Binding international limits on CO2 emissions and carbon taxes are variations of public ownership and regulation. Cap and trade mechanisms that defineCO2 emission rights and the rules by which they can be bought and sold, are essentially a subdivision of the atmospheric commons.
Taxes are never popular and emissions trading schemes are never simple, which may explain why these two policy options have had difficulty gaining acceptance as a response to climate change. This brings us back to the first option, communally reinforced behavioral norms. At the local level, it is often the general acceptance of a code of conduct, combined with fear of ostracism that enforces sustainable management practices. Of course ostracism is an effective deterrent only if there are clear well understood behavioral norms and the benefits of remaining a community member in good standing significantly outweigh the benefits to be realized by operating as a renegade. Those basic requirements are not yet in place with regard to climate change agreements and use of the atmospheric commons.
In international affairs the favored tools of ostracism are trade sanctions, and in severe cases, freezing of financial assets. These have historically been employed in cases of military or terrorist threats. With climate change gaining recognition as a serious risk to international security, the question naturally arises whether trade sanctions and other mechanisms could and should be employed as a tool for promoting and enforcing international climate agreements. I believe the answer is yes, but some difficult preparatory work must be completed before that can happen.
In the case of trade sanctions brought against regimes that have invaded neighboring countries or slaughtered their own citizens, there is generally strong, although not always complete, consensus in the international community on what constitutes acceptable and unacceptable behavior. This is not the case with CO2 emissions. Even among those who acknowledge that anthropogenic climate change is underway, there is no consensus on what specific actions must be taken and when by developed and developing countries.
In my view, continued efforts to reach a binding, long term global
agreement on GHG emissions trajectories are for the moment counter-productive. Climate
change negotiations have been ongoing for several decades, and the closest the
international community has come to a consensus agreement is the Kyoto
Protocol, which was never ratified by the US, has not been enforced, and is now
being abandoned. Even assuming agreement can be reached on basic ethical obligations,
there are still too many scientific, technological, and economic variables to
expect consensus between developed and developing countries on GHG emission trajectories
over a 30 - 40 time horizon.
A more productive strategy, at least for now, would be to focus international attention on near term actions rather than long term outcomes. Agreeing upon and implementing even an admittedly inadequate set of concrete measures would build momentum, trust and a sense of shared commitment on climate change mitigation. The agreed upon actions should be commensurate with the differentiated circumstances and capabilities of developed and developing countries. Here are a few ideas to get started.
The United States has already committed to substantially improved vehicle efficiency standards and is rapidly shifting its energy mix away from higher carbon coal to lower carbon natural gas. Committing itself to a significant expansion of investment in clean energy technologies, both R&D and implementation, combined with increased taxes on carbon fuels (federal and state gas taxes are after all carbon taxes) would be appropriate and meaningful next steps.
The EU has already implemented a GHG cap and trade program but prices on emission permits are too low to provide much incentive for reducing CO2 emissions. Germany, Italy and Spain have also made substantial strides in moving toward wind and solar energy but public support is flagging in the face of national budget constraints and debt crises. A possible response from the EU would therefore be to tighten the carbon emissions limits on its cap and trade program, auction the emission permits, and direct the proceeds toward maintaining wind and solar investment incentives.
For China and other rapidly industrializing countries, firm commitments on improving energy intensity, reducing black carbon emissions and increasing the percentage of new energy capacity derived from renewables, would be both manageable and immediately beneficial.
Once these or other meaningful measures have been agreed upon and implementation is underway, the stage would be set to determine when and how trade sanctions might be used to provide additional incentives for action.
In the Hobbesian political sense, we are still not very far from a state of nature in our management of the global environmental commons, and as both Hobbes and Hardin knew, that is not a very good state to be in. To extricate ourselves from an international tragedy of the commons, the international community must begin to act like a community, which implies reaching agreement on behavioral norms for use of communal assets and effective means of sanctioning those who refuse to abide by those norms. In the case of climate change and the global atmospheric commons, it has become painfully clear that we cannot expect to leap in a single bound to a complete and enforceable long term solution. However, if we can agree on and begin to implement a mix of meaningful GHG emission reduction measures, we would start to rebuild trust and momentum, and lay the foundation for continued progress.
 These three policy categories are not mutually exclusive. Communal norms are often supported by formal or informal public ownership and regulatory measures. Regulation and enforcement are essential if private property rights are to be recognized and protected.
 The Greenhouse Development Rights framework summarized in The North-South divide, equity and development– The need for trustbuilding for emergency mobilisation by Sivan Kartha, Tom Athanasiou and Paul Baer. is one of the more creative approaches for allocating the remaining atmospheric CO2 absorption capacity across the global community. But the authors highlight the need for a period of trust building based on concrete actions before theirs or any other comprehensive agreement on long term CO2 emission rights could be successfully negotiated and enforced.
There are four reasons normally offered to explain why the climate change debates have become so contentious.
1. The science is complicated -- Deciphering the historical data and building accurate predictive models is difficult esoteric work. But so is quantum physics and there isn’t a raging blogosphere debate about Heisenberg’s uncertainty principle.
2. The costs could be substantial -- There’s no doubt substantial investment will be required to reduce CO2 emissions. But the costs of inaction are likely to be quite high as well. In most other domains of public policy involving significant costs and difficult to quantify benefits, national security for example, we seem to be able to settle upon a reasonable course of action. Why not for climate change?
3. The international politics are a nightmare --- Yes, but if the US and Europe joined forces and were willing to use their combined economic and political clout to press for global action, a lot could get done, quite quickly.
4. Vested interests are playing dirty – There is evidence that Big Oil, King Coal, and others who stand to lose from a shift away from fossil fuels have financed campaigns to cast doubt on the science and exaggerate the cost of reducing CO2 emissions. But the emotional intensity of rank and file climate change skeptics indicates that there is something deeper and more fundamental at work.
Together these four factors go a long way toward explaining why agreeing on a policy response to climate change has been so difficult. But there is a fifth, and more fundamental element; namely competing worldviews, is injecting an extra level of contentiousness into the debate and making it even more difficult to reach agreement..
Environmentalists often use climate change as evidence that we are now bumping up against binding limits to growth, that we need to accept limits on consumption and that government policies and international agreements are needed to enforce those limits. It’s no wonder political conservatives are reluctant to accept the scientific findings on climate change. If they do, they are being told they must also accept a world of lowered expectations and greater government intervention. Interest groups opposed to action on climate change have been more than happy to pick up this argument and make a caricature of it.
We need to decouple the “limits to growth” discussion from the climate change policy debate. While there does appear to be a limit on how much GHG emissions the earth’s climate system can absorb without causing significant ecological changes and serious damage to the human economy, that doesn’t necessarily translate into limits to economic growth or even a need to change developed country lifestyles. We all might be happier if we adopted a simpler lifestyle, but redefining the American Dream and reconsidering what the “good life” consists of, are not essential for making significant reductions in GHG emissions. Continued innovation is rapidly driving down the cost of energy efficiency, photovoltaics and other carbon neutral energy sources. The question then is how to modify the story line about climate change to make it sound less like an enforced austerity program, create aan opening too conservatives, and ultimately create the political momentum to take action. Here’s my proposal.
First, start with property rights. They are a foundation for individual liberty, a prerequisite for efficient markets, and should be protected with the full power of the state. Climate change may be the most serious threat to private property since the Bolsheviks seized power in Russia in 1917. If you live in a low lying coastal area, most scientists believe your property is being endangered by the carbon fueled actions of society. If you own a farm in the Midwest, most scientific studies indicate that its value and your livelihood are being threatened from more frequent and severe droughts brought on by climate change. If you own forest land in the western U.S., most of the valuable timber on your land may have already been destroyed by epidemic insect infestations made possible by warmer winters. If similarly grave and widespread assaults on private property were being perpetrated by almost any other cause, conservatives would quite rightly be calling for swift and decisive action.
Next, add in national security. Protecting citizens from external
threats is one of the most basic functions of any government, a function that
is supported by even the most ardent conservatives and libertarians. Although climate
change is increasingly recognized as a serious threat to national security, we
invest comparatively little to combat that threat. After a very brief surge in energy conservation and renewable energy spending was included in Obama’s initial economic stimulus program, federal spending on climate change has leveled off . The 2011 federal budget allocated $40 to military preparedness for every dollar spent on programs to assess and combat climate change.
Third, highlight the importance of markets and market-driven innovation. --- Entrepreneurs and corporations seeking to increase profits, and consumers seeking to reduce costs are the most effective allies we have in responding to climate change. Continued technological innovation in energy efficiency and carbon neutral energy sources will eventually neutralize any remaining opposition to reducing CO2 emissions. How to accelerate the discovery and adoption of those innovations should be the focus of climate change policy discussions.
Finally, don’t be afraid to talk about religion. – Many socially and politically conservative individuals also hold strong religious beliefs and all major religions view the natural world as a holy creation and enjoin the faithful to be concerned for one’s “neighbor”. In the Bible, God steps back on the seventh day to consider his work of creation and declares it good. Adam and Eve are placed in the Garden of Eden “to tend it and to keep it”, and we are asked to love our neighbors as ourselves.. It’s possible that we are not altering the climate. But it’s also possible, and, most scientists would say, it’s quite likely that human induced climate change is already happening. If it continues unabated it will harm the poor the most and set in motion environmental changes that we can hardly predict. Taking those risks is pretty hard to square with Christian ethics.
We may someday bump up against binding limits to growth, but not any day soon. Nevertheless we can and should take action to permanently reduce global GHG emissions. Minimizing the risk of significant climate change will safeguard private property, enhance national security, and protect the poor and powerless from underserved harms. We have the means at our disposal do this. It is only misguided pessimism on the part of both climate change skeptics and activists that is holding us back.
 The earth receives more than enough solar energy to power growth in the global economy for centuries to come. Every day 27 times more solar energy falls to the Earth than the total annual energy use of the global economy (http://www.nrel.gov/learning/re_solar.html.) There are, of course, challenges involved in supplying renewable energy when and where it’s needed, but these are not insurmountable. The simple point is that we are not bumping up against immoveable limits to growth.