Closing the Climate Change Accounting Loophole
Flashy billboards are usually not my thing, but it's hard not to be grabbed by the 67-by-32-foot billboard unveiled today outside New York City's Penn Station. Deutsche Bank has launched the world's first "Carbon Counter," an electronic display that digitally shows the real-time, cumulative pollution - the tons added to the atmosphere every tenth of a second - we are emitting that is causing the planet to heat up. Half a million people will see the billboard daily and millions more can do so on the web at know-the-number.com
The Carbon Counter vividly drives home a vital point not only about climate change -- 800 tons of carbon pollution is going into the atmosphere every second -- but a short-sighted economic system that is burdening our planet like never before: We haven't been honestly accounting for the environmental costs of everything we do. When there were no controls - and costs - for sooty particles belching from our power plants, we literally choked on the results. When companies did not have to pay for controls to stop raw sewage and chemicals pouring into our streams, our fish died. In those instances, we tallied the societal costs, realized they were too high, and put a stop to it.
Now we're facing a less-than-honest tally of our carbon dioxide costs - an accounting mistake that is already having enormous impacts in every corner of the U.S. and world.
The market price of emitting this pollution has long and, quite irrationally, been zero. Those costs have not figured into what we pay to power our factories, drive our cars or heat our homes.
So guess what? We end up using a lot more energy - and polluting a lot more - than we (rationally) ought to, since we don't pay the price of polluting when we buy fuel or turn on our lights. Bad cost accounting distorts decision-making -- I can assure you we'd all be eating more steak if the cost of cattle feed wasn't included in beef prices.
The Carbon Counter places this contradiction out in the open, where everyone can see it: It exposes in plain sight the hidden environmental cost of our energy use by tallying in plain sight the accumulating gases destabilizing our climate.
By doing so it also exploits a key insight about human behavior that's been documented by behavioral economists: When the price of costly activities is no longer hidden from humans we're more likely to pursue those activities prudently. That's why the simple act of placing an electricity consumption meter in plain view can substantially cut a home's energy use, or why installing real-time miles-per-gallon meters in cars changes the way we drive.
So let's ensure honest accounting of our environmental impacts, but let's not stop there. Let's also set new standards for the business world, not just environmentally but in apportioning financial risk. Because durably strong economies are built on the idea that everyone can clearly see the costs and risks of a given path. And that hasn't been happening.
After all, it was wildly overpriced - and miscalculated - employee compensation from Wall Street to Main Street that helped ignite our financial mess. Too many people were reaping rich payoffs up front while offloading all the risks from mortgages and securities they were selling onto society. Heads I win, tails you lose: what incentive was there to NOT be reckless?
That's why the new Carbon Counter's not just a gimmick. By showing us all the day-to-day environmental toll of our actions it will, in one small way, help move decision-makers from Washington to your kitchen table to attach real, honestly-measured prices to those actions. And that type of transparency in turn will inspire a wave of change and innovation that will change the rules of the game, environmentally and economically.
Honest accounting, out in the open - that's what we need. With accurate pricing of risks in place, we can build tomorrow's strong, clean, healthy economy while simultaneously slaying today's scariest environmental and economic threats.
Just because we counted right.