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Green Business Ideas: Retail Carbon Credits is an Idea whose time has come.

18 Apr

The State of trend of Carbon Market 2011 prepared by the World Bank reads – While the international regulatory environment remains uncertain, national and local initiatives have noticeably picked up and may offer the potential to collectively overcome the international regulatory gap. The most prominent of these initiatives is California’s cap-and-trade scheme, which is expected to begin operating in 2012. Other low-carbon initiatives, including domestic emission reduction targets, clean energy certificate programs, voluntary and pre-compliance domestic offset trading programs, and carbon exchanges, have gained increasing traction in developing economies such as Brazil, China, India, and Mexico. These initiatives signal that, one way or another, solutions that address the climate challenge will emerge.

On April 13th 2012, The Mexican House of Representatives passed a climate law, which – when approved by the Mexican Senate – the government will make rules to phase out fossil fuel subsidies; make renewable power fully competitive with oil, gas and coal; cut dirty carbon emissions 30% by 2020 with international support; and ensure that 35% of Mexico’s electricity will come from clean sources by 2024. A recent article in the Economist – The World turned Upside Down states –“The emerging world, long a source of cheap labour, now rivals the rich countries for business innovation, says Adrian Wooldridge“. The Mexican model is indeed an innovation to be lauded and emulated.

What if India, takes the lead too ? As it has already committed through the National  Action Plan for Climate Change, searching  innovation for reducing its GHG as time passes by would be more of a necessity both in terms of international prestige as well as sound business sense. It is a fact that reverse innovation are already happening and both the BRICS and BASIC groups ( India counts on both) and  in time Mexico would be a part of one of these group is not in doubt.  So adapting what is best and improving upon the Program of Actions to suit domestic needs, is a sound idea.

If one takes the cue from a report by Carbon Finance  which says – Sentiment is more positive in the voluntary carbon markets than in their larger, mandatory equivalents, according to the winners of Environmental Finance and Carbon Finance’s annual survey of the voluntary carbon markets.  And add to that another report from the Economist which says -… Multinationals expect about 70% of the world’s growth over the next few years to come from emerging markets, with 40% coming from just two countries, China and India…. Companies in the Fortune 500 list have 98 R&D facilities in China and 63 in India…Both Western and emerging-country companies have also realised that they need to try harder if they are to prosper in these booming markets. It is not enough to concentrate on the Gucci and Mercedes crowd; they have to learn how to appeal to the billions of people who live outside Shanghai and Bangalore, from the rising middle classes in second-tier cities to the farmers in isolated villages. That means rethinking everything from products to distribution systems…The very nature of innovation is having to be rethought. Most people in the West equate it with technological breakthroughs, embodied in revolutionary new products that are taken up by the elites and eventually trickle down to the masses. But many of the most important innovations consist of incremental improvements to products and processes aimed at the middle or the bottom of the income pyramid…

Then another sobering report was published by PHYS  – In a submission to the UN climate organization, the United States said that its grew by 3.2 percent in 2010 compared with the previous year after two consecutive year-on-year falls…US greenhouse gas emissions hit 6.82 billion metric tons in 2010, up from 6.61 billion in 2009, it said. The total was still below the 7.25 billion recorded in 2007 before the onset of the And then a report on the 16th April’12 in Business Green   –The London School of Economics‘ Grantham Research Institute on Climate Change will today launch a report suggesting green polices can stop the private sector from “squirreling away” record levels of savings into “risk-free” assets, such as solvent sovereign bonds.  Developed countries, including the UK and US, were urged to deliver clear and credible policies for stimulating green investments, as part of a major new report launched just days ahead of a crucial meeting of G20 finance ministers.

Further, a University of Queensland study involving supercomputer models has found that the burden of retail electricity price rises will vary considerably, depending on a household’s location in Australasia; where they are setting the carbon price to $23.  In an analysis by Manipadma Jena,of the Inter Press Service on 27th March’12, it was mentioned that India, like other Asian countries, has focused its climate change adaptation strategies on rural and urban areas while neglecting the urban fringes. The article warns that “Peri-urban” (habitation at the periphery of an Urban centre, the farthest suburb so to say) areas are characterised by haphazard, accelerated expansion and are farthest from basic urban services and infrastructure, according to United Nations-Habitat’s ‘The State of Asian Cities 2010-11′. The analysis  vindicates my articles on Urban development rules and  pollution. It goes on to say –“In India, while the municipality’s administration area is demarcated, responsibility for peri-urban areas is fragmented. Where are the policy levers for peri-urban areas, for example, in India’s policy?” Nassef asks. India is not alone in neglecting peri-urban areas. Last year’s devastating floods in Thailand provided a good example of such neglect.  I had covered in this other article
the reasons.

Although all the article are seemingly unrelated,they are all in fact, going to have a impact on the common person. Framing laws and publishing reports are good but what is most important is to engage the common person by bringing everything to the grass root level, should we want solutions faster. Be it Climate Change or Environmentally Sustainable Business ( is there any other? ). I always believe in common persons, especially because its the common person who does something extra ordinary through trails and tribulations to become the expert.

The most important factor is sustainability in Energy production and delivery. By delivery I mean the methods required to produce the energy in the first place, such as setting up an Oil rig or a Coal power plant etc. It in itself requires a process which is GHG intensive. Although Renewable Energy machinery too requires a process which is not as clean, and a “bridge solution” for now, which I have said in the previous article, it is the only bet. And if Mexico or even India wants to really stand true in there promise of reducing their GHG, innovative approach for delivering Green Energy at the common persons door step must be adopted.

The public must want to go ‘clean and green’ and as one would find in the peri-urban areas people who are economically weak, and even the middle class who live in tier-II & III cities and low income suburban areas, the direct method of influence is monetary gain. It stimulates the rich too, but they do not form the bulk of the population and as pointed in the articles above, the focus is on the middle and bottom of the pyramid. I will address the rich too but more ‘innovatively’ later in the article.

So let us begin with  a Green Business Idea which may be an innovative solution of going Green faster. Giving Carbon credits to polluting Industries was fine with KP1 but how about giving Carbon credit to a common person, in KP2?

What if, say one installs a solar panel on the roof top or a small wind+solar hybrid in wind positive localities. The Banks not only gives them loan but also pays them a carbon offset price ? Be it an individual or a small business. Similar to what we find in this article World’s first personal carbon credit earns $17 cash back.

In the USA, outraged by a threatened 30% price hike by their local electricity provider, the Wilson’s of Harrisburg, Pennsylvania, hired a contractor to install 36 solar panels on their roof. A company in Middlefield, Ohio, Molten Metal Equipment, bought the Wilson’s carbon credit, representing a tonne of carbon dioxide, for $21.50. The website earned $4.30 in commission, and the Wilson took home $17.20.
But this modest cash reward was not the only reason for the Wilson’s solar conversion. The website’s existence suggests that while the US Congress may have given up on creating a national scheme for trading carbon emissions, there are ordinary Americans willing to play the voluntary market. The company says it has signed up 1,800 households since going into business last autumn.

With Indian Oil companies threatening to increase Petrol price to 8 Indian Rupees and coal supply an all time low in many states, especially Maharashtra. The story is simple, we have a huge problem of energy shortage at hand and for India, its best to take the cue now form it and innovate.  While in the above USA story  the carbon credits accrued could be substantial even from small number of house holds (1800) because the per capita carbon foot print stands at 20 tonnes, for India the reverse is true, we have per capita 2 tonnes of emission and can easily have 1800,000 house-holds to sign up !

Question may be raised as how to continue financing this which the banks and private investors may find difficult, especially for rural settings or scattered small requirements. Well, in the Indian scenario it could need a simple ‘innovation’ in the Parliament.  Ask the rich to pay up.

Years ago, when India was opening up to become the financial hub it is today, the then Finance Minister had declared Amnesty to those who would pay-up taxes and convert their ‘black money’ to ‘white’. Now we have a list which tells us that there is enough black money, stashed in foreign Banks, to buy every Indian 1KW worth of solar panel. That their names would be revealed and the money repatriated is a pipe dream at best. But letting them atone for there sins, by making India clean and green is a ‘innovation’ which should be thought upon.

Courtesy: to all the articles and there authors who have helped me make this article.

 

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