While the New York Times doesn’t do so well with Silicon Valley’s solar industry, we’re feeling refreshed after reading ten pages of an excellently written and researched investigative journalism article into carbon footprinting, via New Yorker writer Michael Specter titled “Big Foot: In measuring carbon emissions, it’s easy to confuse morality and science.” Specter brings the morally-minded reader around to look at the economics of carbon emissions. Or better put, the potential economics of carbon emissions, because, as of yet, the vast majority of the globe’s CO2 emissions have no direct economic value.
The important point of the article is without a cost attached to carbon a carbon footprint serves no purpose. The article argues that a market system could provide incentives, allowing entrepreneurs and venture capitalists to make money from polluting less. It won’t be the personal choices of the world’s privileged that mitigate global warming, or even the informed choices of carbon-conscious consumers, because, as the article makes abundantly clear, we don’t yet know how to label products for carbon-cost. A carbon-enlightened Adam Smith would be pleased.
However, the article has a few holes. Namely, Specter doesn’t attempt to put a number value on carbon. Repeatedly he quotes authorities on the benefits of “accurately priced” carbon, but what is that price?
On the CCX carbon is way up at $4.30 while across the pond on the European Climate Exchange carbon has been trading down at about $30.82. Where Specter is willing to dip into the particulars of accurately calculating the carbon footprint of roses flown from Kenya to the UK, gram by gram, he is reluctant to get into the macroeconomics of subjecting the global economy to a mandated carbon cost, billion by billion.
Another shortcoming in Specter’s approach is a thorough discussion of a carbon tax. Just last week the Congressional Budget Office issued a study concluding that a carbon tax would provide five times the environmental bang per buck than the much discuss cap-and-trade alternative.
The article stars Richard Sandor, Chicago Climate Exchange (CCX) CEO and emissions market pioneer, who knows exactly how the market can create new opportunities. And Sandor is confident that the solution he devised to solve acid rain will work for carbon emissions as well. “I absolutely promise that if you design a law and a trading scheme properly you are going to find everyone from professors at M.I.T. to the guys in Silicon Valley coming out of the woodwork.” We’re pretty sure that “the guys” are already out, they’re just waiting for the carbon market to catch up.