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The importance of being a drop in the climate bucket – Michael Pollan on personal responsibility

April 19th, 2008 No comments

The New York Times has dubbed its April 20 Magazine edition as “The Green Issue”. The subtitle?  “Some Bold Steps to Make Your Carbon Footprint Smaller”.

I’ve barely taken a look at the issue as a whole, but I have noticed that Michael Pollan, in a piece entitled Why Bother?, has attacked straight on the fundamental issue of why individual consumers – faced with a global issue on which their individual efforts are a drop in the bucket – ought to consider behaving in ways that reflect their personal concerns, even if it means some personal costs and lifestyle changes, instead of just throwing up their hands and waiting for government to take action.

While some might disagree with Pollan’s views on the seriousness of climate change or the role of industrial man in it, Austrians and libertarians ought to find much to agree with (if not embrace) in his argument for personal choice and the role such choices can play in the margin in effectuating broader cultural, social and technological changes.  After all, if one values the atmosphere and one’s climate, and thinks that human activities (release of GHGs and soot, and agricultural and forestry practices) are a factor, then what better way to drive the market and further changes than by acting as if the atmosphere and climate are valuable?

Such voluntary action is precisely what Lockean principles call us to.

Pollan is the author of rather well-received “In Defense of Food: An Eater’s Manifesto”.

Categories: AGW, Austrian, climate, Locke, Pollan, voluntary Tags:

Voluntary action on climate change: Wall Street’s new "Carbon Principles"

February 14th, 2008 2 comments

Voluntary action on climate change continues to grow.  I’m not sure who noticed besides power project sponsors, financiers and regulators, but last week (on February 4) Citi, JPMorgan Chase and Morgan Stanley, three of the world’s leading financial institutions, announced the formation and release of “The Carbon Principles” and an Enhanced Diligence framework – which they describe as “climate change guidelines for advisors and lenders” for “evaluating and addressing carbon risks in the financing of electric power projects” in the United States. 


The banks issued identical releases; Morgan Stanley’s is here: http://www.morganstanley.com/about/press/articles/6017.html


The Principles were developed based on perceptions of “the risks faced by the power industry as utilities, independent producers, regulators, lenders and investors deal with the uncertainties around regional and national climate change policy”, and were the result of a nine-month intensive effort by these Wall Street banks, in consultation with leading power companies American Electric Power, CMS Energy, DTE Energy, NRG Energy, PSEG, Sempra and Southern Company and enviros at Environmental Defense and the Natural Resources Defense Council.  It is probably no coincidence that this announcement follows on the heels of recent rejections by regulators of conventional coal-fired power plants in Kansas, Florida and elsewhere.


 According to the press release:



This effort is the first time a group of banks has come together and consulted with power companies and environmental groups to develop a process for understanding carbon risk around power sector investments needed to meet future economic growth and the needs of consumers for reliable and affordable energy. The consortium has developed an Enhanced Diligence framework to help lenders better understand and evaluate the potential carbon risks associated with coal plant investments.


The Principles recognize the benefits of a portfolio approach to meeting the power needs of consumers, without prescribing how power companies should act to meet these needs. However, if high carbon dioxide-emitting technologies are selected by power companies, the signatory banks have agreed to follow the Enhanced Diligence process and factor these risks and potential mitigants into the final financing decision.


The principles are a shot across the bow of new coal-based power projects.   According to the press release: the effort is intended to “establish a consistent approach among major lenders and advisors in evaluating climate change risks and opportunities in the US electric power industry” and to “provid[e] banks and their power industry clients with a consistent roadmap for reducing the regulatory and financial risks associated with greenhouse gas emissions.”


Here are the principles:



Energy efficiency. An effective way to limit CO2 emissions is to not produce them. The signatory financial institutions will encourage clients to invest in cost-effective demand reduction, taking into consideration the value of avoided CO2 emissions. We will also encourage regulatory and legislative changes that increase efficiency in electricity consumption including the removal of barriers to investment in cost-effective demand reduction. The institutions will consider demand reduction caused by increased energy efficiency (or other means) as part of the Enhanced Diligence Process and assess its impact on proposed financings of certain new fossil fuel generation.


Renewable and low carbon distributed energy technologies. Renewable energy and low carbon distributed energy technologies hold considerable promise for meeting the electricity needs of the US while also leveraging American technology and creating jobs. We will encourage clients to invest in cost-effective renewables and distributed technologies, taking into consideration the value of avoided CO2 emissions. We will also encourage legislative and regulatory changes that remove barriers to, and promote such investments (including related investments in infrastructure and equipment needed to support the connection of renewable sources to the system). We will consider production increases from renewable and low carbon generation as part of the Enhanced Diligence process and assess their impact on proposed financings of certain new fossil fuel generation.


Conventional and advanced generation. In addition to cost effective energy efficiency, renewables and low carbon distributed generation, investments in conventional or advanced generating facilities will be needed to supply reliable electric power to the US market. This may include power from natural gas, coal and nuclear technologies. Due to evolving climate policy, investing in CO2-emitting fossil fuel generation entails uncertain financial, regulatory and certain environmental liability risks. It is the purpose of the Enhanced Diligence process to assess and reflect these risks in the financing considerations for certain fossil fuel generation. We will encourage regulatory and legislative changes that facilitate carbon capture and storage (CCS) to further reduce CO2 emissions from the electric sector.


This is a rather remarkable effort, that appears to reflect not only shared concern about climate change, but also a perceived need to move ahead on a coordinated basis even absent any federal legislation (which is rather naturally called for on several fronts) – both to (i) take steps to mitigate potential climate change – steps that must be made on a coordinated basis across the power sector in order to be effective – and also to (ii) lower risks that (a) expensive projects will not see drastic changes in their cost or revenue structure mid-stream (if climate change prompts regulatory changes) and risks that (b) sponsors and financiers (and their managers) face to their reputations.


Except to the extent that participants are calling for new legislation, one would think that this type of cooperative approach to a shared commons problem is one that would be welcomed by the libertarian community.  Or should market liberals, coal producers, and consumers (and politicians and prosecutors) be upset at what is in effect a shared effort to restrict the use of coal and shift to other, higher-cost energy sources?

Categories: Carbon Principles, climate, voluntary Tags: