Once upon a time I listened to a radio program on NPR or Pacifica that went further than any other I've heard before or since to describe the aim of 'sustainability'. The big idea was that in order to improve the environment all we have to do is change the way we account for the byproducts of industrial production. That literally means attaching dollar figures to the smoke that goes up the stack. It means changing the asset value of a forested acre of land vs a deforested acre of land. It means taxes and credits for tons of sulfur dioxide emitted per year. It means monetizing the environment. I thought it was brilliant.
These days, the global warming activists are at it again and their battle cry is Carbon! What they will find in their intemperate war is that those targets of their ire, Big Oil, Big Lumber, Big Corporation X, are not perfect accountants, but they are smarter than they are portrayed to be. Any CFO worth his stock options knows how to run the numbers, and what is fudge and what is fact is a wide gray area known to few. If you know exactly how Enron was dangerous, it is because you understand how difficult it is to crack open the accounting practices of a successful business. It's even more difficult when the business model is relatively innovative or novel. This will always be the case as carbon or any environmental asset is newly established as a balance sheet asset or liability.
Let's take a simplified view. Your knucklehead son's job is to mow the lawn. But you've decided to take an environmental interest in your lawn. You don't see enough butterflies in your flowerbed and you do a bit of ecological studying. You find that butterflies need flowers with larger leaves which requires more nitrogen in the soil which requires artificial fertilizers or mulch. Naturally, you take mulch. So how do you incent your lazy boy to make a compost heap and mulch your garden? You monetize the grass clippings. Now instead of paying him $10 to mow the lawn rake the clippings and throw them away, you pay him $7 for the mowing and $3 per bag of clippings delivered to the compost heap. Since a bag of fertilizer costs $5 you figure you're being environmentally friendly and saving money too. Everybody's happy.
Now you know your knucklehead son better than anybody. Tell me how he cheats. Use your imagination and his. If your son is very honest, then think about Huck Finn. If I was the knucklehead son, I'd argue that more clippings are more valuable. I wouldn't rake the clippings on the lawn, I'd get free clippings from the kid next door whose parents could care less about compost and butterflies and industrial fertilizers and sell them in the compost market you have established.
Back in the real world, I want you to imagine a new cluster of multinational corporations 20 years in the future. Environmentalists have successfully lobbied to have all greenhouse gases monetized. Now not only all of the planet's oil, but all the planet's air is a valuable natural resource whose refinement and recycling is a large part of the global economy. We now know exactly how much proven resource there is. We now exactly what contributes to the composition of the breathable atmosphere. We now know exactly how pollutants travel through the atmosphere, how to collect them and remove them. We now know the dangers of cutting down trees and the economy of the paper industry has been turned on its head in subservience to the air industry. That's right, air industry.
If you hate Big Oil, how are you going to fight Big Air?
I don't know if pandora's box is half open or half closed. The idea that we could and should regulate greenhouse gases inevitably means that we are putting a price on air, and that will inevitably spawn an economy. Can we avoid such a future? I hope so.