Why the government’s climate change efforts won’t work: Opinion | Business & Energy

If we want to solve the climate change crisis, we have to get politics and government out of the way.

The failure of the UN conferences on climate change, in particular the total failure of the COP26 (Conference of Parties) in Glasgow showed that world leaders could not agree on a unified strategy or tactics to mitigate the impacts of climate change.

We also need to decouple climate change solutions from ESG (environment, social and governance). ESG is a set of standards for corporate behavior, used by socially responsible investors to screen potential investments.

The concept of ESG is far too complicated to understand. There is no standardized measure for ESG. We cannot paint all societies with the same wide brush.

With a company’s measurement of how well it is perceived to be performing on a wide range of environmental, social and governance topics, there is often a gap between perception and reality.

We even need to decouple climate change issues from other environmental issues measured by ESG. Climate change is a huge issue, rarely understood by most people, while ESG further complicates and creates a much larger issue rarely understood by anyone.

But if we were to allow capitalism to solve climate change, we would develop a market-based solution to climate change, such as ICEMAN (International Carbon Equivalent Attributed Neutrality Mechanism). This is a methodology I developed to solve climate change using a globally standardized measurement system known as Greenhouse Gas Protocolwhich was developed by the World Resources Institute (WRI).

With ICEMAN, companies can get an accurate snapshot of their products’ carbon emissions on a standardized scale. ICEMAN applies established science and protocols to calculate the sum of greenhouse gases emitted at each stage of the supply chain – for the product itself and for all materials and components it contains. The result is a carbon neutral percentage applied to each product so that consumers can make the most informed and climate-friendly decision possible.

Taxes, royalties and redistribution of wealth

For decades, governments around the world — including the United States — have struggled to pass laws to address climate change. World leaders have come together at international summits and conventions, negotiating treaties and protocols. But when it comes to implementing measures to meet greenhouse gas reduction targets, many countries — including the United States — have failed miserably.

History has proven that governments’ climate change efforts simply don’t work – and won’t work. Why?

For starters, every solution presented so far includes some sort of government-imposed tax, levy, or redistribution of wealth. Take the solution included in the Kyoto Protocol: Cap and Trade.

In this system, the government sets a cap on the amount of greenhouse gas emissions allowed across an industry. Then, companies in that industry trade on a market, buying and selling carbon offsets that allow them to emit a certain amount of greenhouse gases. Because they have to pay for carbon offsets and because they can sell offsets they don’t use, companies have a strong incentive to reduce their emissions.

Meanwhile, the government is reducing the cap over time, encouraging companies to reduce their emissions further. The government also sets penalties for violations of the cap. This is a carrot and stick approach: the costs of purchasing carbon offsets and penalties for breaching caps are passed on to the consumer, creating a carbon tax that increases the cost of products.

Cap and trade is not the only system mandated by the government. Another is Carbon fee and dividend, in which the government imposes a tax on fossil fuel emissions. This tax increases steadily over time. This will increase the cost of products for businesses, which will then increase the cost of those products for consumers. The fees collected are placed in a trust fund, and the dividends from this trust fund are paid directly to consumer households each month. The argument is that a majority of consumers would receive more in dividends than they would pay in higher prices.

The carbon charge and dividend is essentially a wealth distribution system. The Kyoto Protocol also included an explicit system of wealth distribution aimed at eradicating poverty, in which rich countries with high carbon footprints per capita – such as the United States – would pay fines, which would go to developing countries so that they can start building renewable energy infrastructure. .

Market forces can bring change

However, in many countries, particularly in Europe, such systems have already been put in place. This is because these countries – including my native Norway – are social democracies, which means they are governed from the top down. And for the most part, the citizens of these countries trust that government officials, with their experience and expertise, know what is best for the country. So when a government adopts a mandate, people are usually ready to accept it.

But countries like the United States are different. In the United States, power comes from the bottom up: from us, the people. This is how all of our founding documents have been written, since the Declaration of Independence. Power has always belonged to the people. So top-down government mandates rub us the wrong way – especially when they impact our capitalist, liberal way of thinking and running our economy.

Government-mandated efforts on climate change can operate in a limited capacity within a top-down social democracy, as there is a limit to the terms elected officials can implement. However, that simply won’t bring about the kind of real, rapid change we need to avert a climate crisis.

But in a rising market economy, we understand that market forces can be brutal and have an unlimited capacity to cause meaningful change in real ways. We saw the negative effects of market forces during the economic meltdown of 2008, when “too big to fail” companies went bankrupt until the government bailed them out with capital injections.

Imagine a system that can harness market forces in powerful and positive ways that will work in every country to ultimately solve the climate crisis.

About the Author: Frank Dalene, author of Decarbonizing the World: Solving the Climate Crisis While Increasing Your Company’s Profits (www.frankdalene.com), is President and CEO of Telemark Inc., a construction services company he co-founded with his brother Roy in 1978. Over the past four decades, Telemark has grown into a national leader, embracing the latest innovations in energy efficiency. Dalene innovates in the way companies can assess their carbon footprint. Thanks to its ICEMAN (International Carbon Equivalent Mechanism Attributed to Neutrality) methodology, companies can obtain an accurate snapshot of the carbon emissions of their products on a standardized scale. Dalene has presented keynote speeches around the world on sustainable construction, carbon neutrality and ICEMAN. He has also been quoted or his work has been published in publications such as The New York Times, New York Post, Architectural Digest and The Wall Street Journal. Editor’s note: Pat McGuigan of The Oklahoma City Sentinel prepared this for posting, using a press release received from Advantage Media of Charleston, SC.

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