Financial markets tend to create the capital for everything societies try to do, but they offer a misleading model for anyone thinking about how businesses can address climate change. A group of activists pushing to cap global carbon emissions at 350 parts per million offers a sounder business model.
I’ll get to reasons for endorsing this 350 project soon, after rehashing the basics of finance. Financial models assume that buyers and sellers find each other through luck and investigation (and trickery and deceit). Whatever you do, somebody does the opposite. But this logic fails because climate change’s chemistry, after a point we passed several years ago, keeps making the weather weirder and harsher. If I keep trading my desire to belch carbon against your desire to avoid widespread malaria, the climate will be weirder by the time we’re done with our deal. I won’t know if what you’re selling works, because the atmosphere all around us keeps changing.
So pure market response to climate change can’t begin and end with a set of trades. It needs to involve scarcity. The 350 project defines that scarcity–and presumes the market will find ways to make it productive.
(Disclosure: the founder of 350.org, writer Bill McKibben, has extended personal kindnesses to me and my family both before and after I took interest in the project. I’m also volunteering to help 350.org promote its New York demonstration.)
Scarcity is sacred to free-market believers. When a stadium can only hold 50,000 people who want to see Hannah Montana, the 50,000th ticket is worth a whole lot more to a desperate tween than the first one is. Likewise, when a company divides up its ownership into shares of stock and releases only a small percentage of shares for public trading, each share draws a higher price because it’s rarer. So applying this logic to climate solutions means that we can make money on innovations that keep world carbon emissions under a cap.
Scientists can disagree about where that cap should sit, but markets don’t like to wait for scientific consensus. So the folks at 350.org have done the markets a service by creating one. According to this worldwide organizing project, global carbon must max out at 350 parts per million. (They’re above that number now, but projects can bring them down.) Voila! If everyone adopts that goal, as the organization hopes to persuade people to do through a series of coordinated demonstrations on October 24, a market can grow.
Too often, thinking of climate change’s global scope leads to dopey narcissism or mealy despair. My buying a bicycle does not offset a new car sale in Hyderabad. But it does make a difference, if not one we can measure easily. And it will make a difference we can price–if we all agree that there’s a maximum allowable carbon quotient to the atmosphere.
The 350 movement is treating the cap as a rallying cry for an upcoming international treaty, not a seed of venture-capital. It can be both. We need global compacts to enforce carbon caps, because emissions change the climate whether or not they come from regulated sources. But we also need ingenious businesses to make those caps meaningful. That’s true because no matter how severely we warp the climate, we have to go on living. And trading and growing and rethinking and so forth.
If we take 350 seriously, we can start affecting the climate in ways that we can account for to ourselves.
Alec Appelbaum
Alec Appelbaum writes about real estate, true-green business and architecture for the New York Times, Fast Company, New York magazine and others. He has also contributed to Architectural Record, the Architect’s Newspaper, Dwell and the Forum For Urban Design and ...
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Matt says:
Respectfully, the 350 target wasn't set by our campaign, rather it was the result of peer-reviewed science by top climate experts. Our part was to encourage them to get it to one number, based on the latest science. James Hansen of NASA wrote the original paper in 2008 (available at http://www.350.org/about/science under "sources") and, more recently, the Nobel-prize winning head of the UN Intergovernmental Panel on Climate Change (IPPC), Rajendra Pachouri, endorsed 350 "as a human being."
On a side note, your description of how 350 actually leads to profits by eliminating significant uncertainties is also intriguing through a nonprofit lens, a field where foundations, NGOs and evaluators have been questing for years to find comparable, quantitative metrics to compare the work of groups in different issue areas as a way of measuring ROI/SROI. I happen to think we found a pretty good one. How about: does it move us toward 350 or not? I wouldn't want to simplify too much but given the hype about finding a social benefit version of profit I think it's worth noting truly useful numbers when we've got them. Anyway, great article and thanks for the support!
Alec Appelbaum says:
I've read other scientists who express confidence with a 450 target, and I read Pachouri's qualification to mean that he endorses 350 not necessarily as a scientific axiom but as a galvanizing number for political action (as do I). For this thought experiment, I meant to say that you can see the economic gain from a constraint even if you set that constraint somewhat higher than the 350 campaign does.