The silver lining in the global warming cloud

California economists see $60-$74 billion dollars

by Franke James, MFA

California economists have seen the silver lining in the global warming cloud and it could be worth $60-$74 billion dollars in annual Gross State Product (GSP). That’s a lot of motivation for businesses and government to take action on climate change.

The report, “Economic Growth and Greenhouse Gas Mitigation in California,” offers an independent assessment of the economic benefits of The Global Warming Solutions Act. It found that the Global warming cap could actually stimulate the California economy. “Climate action can be profitable,” said David Roland-Holst, UC Berkeley, author of the report.

Separately 60 economists, including three Nobel Laureates, sent an open letter to Governor Schwarzenegger and California Legislators which stated, “Well-designed strategies can stimulate innovation and efficiency, which could help the state become a technological leader in the global marketplace.”

How do the economists suggest fanning the entrepreneurial flame? They advise a combination of ’emission caps, and regulatory market-based implementation mechanisms’ as the most effective ways to ensure that money goes to discovering the most efficient means of reducing emissions. Their bottom line? “The most expensive thing we can do is nothing.”

The Global Warming Solutions bill did not happen in a vacuum. Public opinion in California was heavily weighted in its favor. A recent survey by the Public Policy Institute of California (PPIC) found that the vast majority of Californians (79%) want steps taken immediately to counter the effects of global warming.

“Californians now rank global warming as more important than at any time since we first started asking about it in June of 2000,” says PPIC survey director Mark Baldassare. “They are so concerned that two-thirds actually want the state to address this issue – completely independent of the federal government.”

So it is no surprise to see that Governor Schwarzenegger decided it was in his political ‘best interests’ to fight global warming. The Global Warming Solutions bill passed on August 31st. It is the United States’ first economy-wide cap on global warming emissions.

Fighting global warming is shaping up to be the major challenge of the 21st Century. Anxiety is running high, and not just in California.

“America’s Report Card on the Environment” was recently published by Stanford University, in collaboration with ABC News and Time Magazine. It surveyed a random national sample of 1,002 adults. Did America score well on the report card? Unfortunately it flunked environmental studies big-time. The ‘majority of Americans are pessimistic about the state of the natural environment and want a lot to be done to improve its health.’

Did Canada do any better? Nope. Canada’s Dominion Institute found that 72 per cent of Canadians believe global warming will have become the greatest crisis facing mankind by 2020.

We could spend a lot of time worrying. But clearly it’s more beneficial to take action. As the old saying goes, ‘Necessity is the mother of invention‘. And the world certainly needs a lot of inventive thinking to solve global warming. To reduce greenhouse gases, so many things have to change.

Let’s just count up some of the main offenders: transportation, power generation, fossil fuel industries, emissions from mining and manufacturing, heating and cooling of residential, commercial and industrial buildings� the list goes on. But each one of these problems holds vast opportunity. As Roland-Holst from UC Berkeley said, “Climate action can be profitable.”

What is it going to take for governments globally, and the private sector, to take action on climate change? A recent survey conducted by GlobeScan, asked sustainability experts’ opinions on climate change for the post-2012 period (after Kyoto). Sixty-five percent of the experts predict that the private sector will play an important role in solving climate change, over the next ten years.

“Experts clearly expect the private sector to play an increasingly important role in addressing climate change. Other findings, however, suggest that companies require a clear policy context from governments before investing heavily in developing solutions to climate changes,” says the survey.

Being happy with the status quo just won’t do. As the economists wrote to Gov. Schwarzenegger, “The most expensive thing we can do is nothing.”

Author Thomas Friedman, who is having great success in convincing people that the world is flat, sums up the opportunity nicely with his recent prediction , “Green technology is going to be the industry of the 21st century.”

Is that enough motivation for your family or your company to take action on climate change? You weren’t a late-adopter on the Internet were you?

I’d place a bet that green technology will be the leading industry of the 21st Century (if we survive religious wars that is). Some people believe that the ‘green’ opportunity has already peaked. But I think we’ve hardly begun.

We’re at the starting line for the ‘Carbon-Neutral Race’, and we’re not wearing state-of-the-art gear. What type of car do you drive? And how do you heat your house? If you answered ‘hybrid’ and ‘solar’, good for you. But you’re in the minority. And that virtuous smug feeling will disappear as soon as you think about the infrastructure that underlies our major cities. We have a lot of work to do worldwide. As good as North Americans can be (hoping to reverse the damage done), remember that China and India are on the upswing in terms of energy consumption. Their growth-at-all-cost mantra will only increase the impact of global warming.

We need to be a lot more uncomfortable before radical change happens. The most dire effects of global warming, those that will make people change their lifestyles and force many governments to legislate tough anti-global-warming policies, are still down the road. And that is why I believe that global warming presents us with a great economic opportunity that will touch virtually every industry you can think of.

Ten Global Warming Trend Questions:
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Whether you are a marketer, an entrepreneur or a business person, marketing insights and new product ideas can arise from asking yourself the following questions:

1. How will the Global Warming Trend impact my industry?
2. Will the Global Warming Trend harm me, or help me?
3. What ‘green’ features would I like added to products I use daily? Would I pay more for them?
4. Will increases in fuel and energy costs force me to make changes to my home? (e.g. heating/cooling system, windows, roof)
5. Will I buy an energy-efficient car if gas becomes more expensive? Will my kids want to drive hybrid cars?
6. Should I take personal responsibility and try to offset the negative effects of my lifestyle on global warming?
7. If I’m worried about global warming, how many of my neighbors and friends are too?
8. How will global warming affect the stocks I am invested in?
9. Can I ignore the impact that developing countries, seeking modern conveniences en masse, will have on global warming?
10. If green technology becomes the leading industry of the 21 st century what will I wish I’d done?

Any one of these answers could provide the seed for a profitable green business, and be part of the solution to reducing global warming.

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