A Low-Carbon Economy Crossroads

Our country, and the world, stands at a crossroads. The technologies to deliver both sustained economic growth and reduced emissions have all been invented. These technologies now require a path toward mass economies of scale to enable their delivery of lower prices, increased employment, reduced emissions and sustainable economic growth.

Two key steps are required to achieve these mass economies of scale. The first is to accurately price carbon at the cash register, pump and meter by adding carbon’s human health and environmental consequences. The second is to eliminate protectionist barriers that shield carbon-based industries (and states) at the expense of alternative technologies that will deliver lower costs and reduced emissions.

The carbon intense economic growth path is in decline

The 20th century’s path to economic growth was built on mass production of carbon fuels, materials and fertilizers. This path delivered unprecedented economic growth, as well as global warming and an obesity health crisis created through the mass marketing of cheap convenience food that is high in energy (calories) but low in nutrition. This 20th-century economic model is no longer sustainable as its externality costs, measured in terms of human health and planet sustainability, erodes its economic benefits.

The 21st century’s economic growth path

The 21st century is the Information Age. The 21st-century economy achieves growth by increasing the productivity of workers, businesses and consumers. It increases the productivity of things, including the consumption of materials and energy.

Examples abound. Uber is now the world’s largest taxi company, but it owns no taxis. The world’s largest accommodation provider, Airbnb, owns no real estate. Alibaba has displaced Walmart as the world’s largest retailer, but Alibaba owns no inventory. Companies that include General Motors and Dupont are pioneering how to run factories with zero waste and facilities using only renewable energy.

The Information Age is enabling job creation, entrepreneurship and economic growth while at the same time reducing the environmental footprint tied to commerce. This new economy delivers products that cost less while also meaning more in terms of human benefits. Sustained economic growth is now based on technologies in our factories, homes, cars and purses that increase efficiency, connectivity and productivity even while using less carbon and producing less pollution.

California successfully delinks economic growth and emissions

California is leading the U.S. in annual economic growth. It is the seventh largest economy in the world. The state’s list of corporate headquarters define the 21st century with companies that include Google, Apple, Disney, Netflix, Facebook, Twitter, SolarCity and Tesla. It is achieving this economic growth while also reducing emissions.

California has achieved both economic growth and emissions reductions by taking two key steps. One was the state’s adoption of a cap-and-trade system that prices carbon for its emissions. Oil refineries and power plants pay to pollute, and these funds are used to reduce consumer electricity bills and invest in energy efficiency. The real economic value is at the pump and meter, where consumers see a more accurate price that reflects both production costs and the pollution impacts from consuming carbon-based energy.

The second key step was the state’s adoption of public policy that drove key technologies to mass economies of scale. California’s million solar roof program created the economies of scale that have enabled solar to be price-competitive with grid power. California is now pioneering building codes where all new residential buildings will be zero net energy (ZNE) by 2020 and all new commercial buildings will ZNE by 2030. This will accelerate mass economies of scale for smart building controls, LED lighting and onsite batteries that can store electricity produced from onsite solar systems.

California is also pursuing public policy toward having a million electric cars on its roads within the next 10 years. Achieving this milestone would catapult California to an electric vehicle inventory equal to all the electric vehicles sold to date around the world.

Combined, these public policies are increasing the state’s economic competitiveness and growing its economy by moving innovative technologies to mass economies of scale, enabling business startup/growth and creating local jobs. This at the same time carbon-focused states continue to struggle with stagnant or slow-growing economies.

Corporate CEOs are starting to embrace carbon pricing

It is not a surprise when Elon Musk advocates for a carbon price. But it is news when BP, a global oil and natural gas company, lists carbon pricing as one of its five steps toward achieving a low carbon economy.

Increasingly, more CEOs and businesses are embracing the idea of pricing carbon emissions. The ranks of CEOs advocating for carbon pricing now include Brad Smith, president of MicroSoft, Andrew Liveris, president of the Dow Chemical Co., Paul Polman, CEO of Unilever, and Masashi Muromachi, chairman of the board of Toshiba Corp. These executives advocate for a carbon price to accelerate investment in low-carbon technologies that they believe will generate sustained job growth, improved economic competitiveness and increased productivity.

Green builds business and economic growth

A low-carbon economy is good for business. It enhances worker and process efficiency. It reduces costs. Most importantly, delivering products that cost less is a proven path to winning customers. Low-carbon technologies are emerging as the least costly solution, especially when carbon's externality costs are reflected in property damage, increasing healthcare costs and, ideally, at the pump and meter through carbon pricing.

Green does build business, and it is increasingly the propellant of economic growth in the 21st century.

Image credit: Flickr/Jeffrey