In my previous article “Time to be honest about climate”, I made some simple observations:
We’re consuming more and more, and we’re not willing to leave our comfort zone. We demand that others — governments and companies — take responsibility for doing sustainability work. So many people are shooting the messenger — Greta — and focusing on denying and attacking rather than focusing on ourselves and what we can do. The combined value of the carbon economy and climate change damages is estimated to be over US$ 6 trillion, annually. Insurers are worried that a financial crisis may come from climate risks, and other corporates know the price tag will be hefty. Extreme suggestions like the Green New Deal introduced by Representative Alexandria Ocasio-Cortez and Senator Edward J. Markey are simply not feasible as they require an investment of $52 to 92 trillion USD, in the US alone. And finally, our collective behaviour is the source of climate change, so we must take collective action to reverse it, which will take all (almost) 8 billion of us.
So what can we do about this?
The good news is that we already have a lot of ways to reduce CO2 emissions like improving energy efficiency and recycling more. We have efficient ways to heat and cool our buildings, travel, manufacture things, produce food and communicate sustainably. More technologies are coming onstream all the time, and even more, are being researched all the time. And a lot of people and businesses are making big changes in their daily lives to be more sustainable.
The bad news is that as things stand today, all these combined technologies and activities are not sufficient to make the change- there are important KPIs that prove that we are going the wrong direction, e.g. PPM (particles per million) of CO2 are at their historical height (about 408) Vs. 392 when the Paris Agreement was signed in 2016.
Neither corporations nor individuals are taking sufficient sustainable actions and the main 3 reasons are i. we do not want to leave our comfort zone, ii. we are looking to what others do, or rather don’t do and iii. we are not being rewarded for sustainable behaviour but rather unsustainable behaviour. For example, the oil industry is heavily (in the annual magnitude of trillions of US$) subsidised.
We need to bring the power of money into the sustainability game.
The world is addicted to GDP growth. This addiction demands that our economies keep growing all the time. The problem with this growth is that most of it is based on a linear rather than a circular economy model and we are exhausting natural resources, creating an unbearable quantity of emissions of CO2 and other greenhouse gasses, and adding an enormous amount of disposals. The circular economy is certainly a way to go, but so far only 9% of the world economy is circular.
A new “sustainability economy” is required…
A new “sustainability economy” is required, which harnesses all of these delightful things to change people’s behaviour fast, on a massive scale, and make the human presence on Earth as sustainable as possible.
Looking around, I do not currently see any global financial system suitable to enhance sustainability. The Kyoto Protocol’s carbon credits model didn’t reach its goals — CO2 is far from being prohibitively priced (it currently stands at around US$ 20–25 per metric ton compared to the reasonable target of US$ 120–140 per metric ton), and emissions keep growing.
The Kyoto Protocol is based on a punishment system: if you emit, you have to pay for it. Punishment systems are not a great motivator for change of behaviour and in the case of carbon credits the tax can simply be rolled sown the value chain without reaching any sustainability goals. In contrast, the sustainability economy is based on rewards.
Historically, what’s truly proved to work for changing people’s behaviour is to pay them.
In the sustainability economy, the unit of work is an action that someone or something performs, which reduces carbon emissions compared to not performing the action, or compared to performing the same action in an unsustainable way. And it can be performed equally by everyone around the globe.
For example, producing (and indeed using) a single kWh of solar energy saves about half a kilogram of CO2 compared to coal energy (depending on the specific location and other factors), which powers a dishwasher for a bit less than half an hour.
Riding a bike for 10km saves about 2.5 kilograms of CO2 compared to driving the same distance with an average passengers’ car. Walking for 1km, about 1400 steps, saves about 0.25kg of CO2 compared to driving.
And consuming 1kg of soya can save more than 30kg of CO2, compared to consuming 1kg of beef.
These activities, and many more, will lower CO2 emissions and should therefore be rewarded.
Now that we have a unit of work defined for different actions, we can define an economic unit. A unit that enables all of us to participate in reducing our CO2 footprint, a unit that empowers us and creates an enormous movement of eight billion heroes.
A global (parallel) currency that’s simple, measurable, storable, usable on a daily basis and awarded for every kg of CO2 saved. The value of this currency should dictate the CO2 value at a realistic US$ 130 – 140 per ton. In simple terms, we can see it as a sustainability bonus system.
Where will these units come from? How will they be measured? Who issues them? Based on what? How will they receive their value?
That’s for the next article.
Gilad Regev is the co-founder and CEO of Kora