Papal White Paper

Papal  encyclicals don’t normally hit my radar.  But this summer, when the Vatican released what some called a papal white paper on globalization and ethics, I took note for two reasons.  First, the subject is one of my favorites, and second, because so many people ask me “What’s a white paper?”

Since so few white papers garner any publicity, I’m commenting on this one, timed perfectly to coincide with the G8 meeting in Italy.

Please note that my comments intend no disrespect to the church — centuries of papal correspondence dictate the form this encyclical takes.  My intent is educating business communicators on the places where a business white paper will align and diverge from the style perpetuated by Pope Benedict XVI.

Telegraph with a great title

The official title of the work is Latin, CARITAS IN VERITATE (”Charity in Truth”).  I can’t criticize the church for using its official language, but I can advise business communicators to go with something catchier.

Define the audience and focus on its needs

The pope addressed this message to “the bishops, priests and deacons, men and women religious, the lay faithful and all people of good will.”

Business communicators, don’t ever try to write this broadly.  If you want to reach everyone from Bible scholars to faithful illiterates, do so with different versions for each audience.

State your objective and stick to it

Straightaway, the pope diffuses any notions or potential criticisms of interfering in politics while staking a claim in perpetuating the “mission of truth.”  I’d grade this objective a solid C+:

The Church does not have technical solutions to offer and does not claim “to interfere in any way in the politics of States.”  She does, however, have a mission of truth to accomplish, in every time and circumstance, for a society that is attuned to man, to his dignity, to his vocation.

More clearly stated, I might suggest: The Church maintains its distance from the politics of States (”Render unto Caesar that which is Caesar’s).  At the same time, She speaks directly to individuals in all walks of life,  including statecraft, to apply Christ’s teachings to their daily lives and decisions in all matters, including business, economics and the proper use of modern technologies.

Follow a logical outline

In Chapter One we learn that CARITAS IN VERITATE is an update of a forty-year-old encyclical by Pope Paul VI and we get a recap of that earlier work .

Chapter Two’s first paragraph tells us why the world needs an update:

The economic development that Paul VI hoped to see was meant to produce real growth, of benefit to everyone and genuinely sustainable. It is true that growth has taken place, and it continues to be a positive factor that has lifted billions of people out of misery — recently it has given many countries the possibility of becoming effective players in international politics. Yet it must be acknowledged that this same economic growth has been and continues to be weighed down by malfunctions and dramatic problems, highlighted even further by the current crisis.

Chapter Three diffuses mis-perceptions about “moral interference” with the economy:

(T)he conviction that the economy must be autonomous, that it must be shielded from “influences” of a moral character, has led man to abuse the economic process in a thoroughly destructive way. In the long term, these convictions have led to economic, social and political systems that trample upon personal and social freedom, and are therefore unable to deliver the justice that they promise.

Chapter Four brings it home to individuals with:

Many people today would claim that they owe nothing to anyone, except to themselves. They are concerned only with their rights, and they often have great difficulty in taking responsibility for their own and other people’s integral development. Hence it is important to call for a renewed reflection on how rights presuppose duties, if they are not to become mere licence.

Chapter Five works its way up from the individual to the family and finally, to the entire race:

The development of peoples depends, above all, on a recognition that the human race is a single family working together in true communion, not simply a group of subjects who happen to live side by side.

Chapter Six discusses the proper use of technology, from financial to communications and bioethics:

By analogy, the development of peoples goes awry if humanity thinks it can re-create itself through the “wonders” of technology, just as economic development is exposed as a destructive sham if it relies on the “wonders” of finance in order to sustain unnatural and consumerist growth.

The Conclusion states:

Development needs Christians with their arms raised towards God in prayer, Christians moved by the knowledge that truth-filled love, caritas in veritate, from which authentic development proceeds, is not produced by us, but given to us.

Grade for following a logical outline: A+.

Research & interviews

White papers are not editorials or essays.  You must back your claims with research and quotes.

In the church’s case, the pope handled that through scripture and footnotes of earlier papal works.

Business writers need to be careful that the sources they cite are credible to the intended audience of the piece.  For example, when I write for financial clients, I won’t include a news story from USAToday when I can find it in the WSJ.

Hone and polish

Again, centuries of custom allow (perhaps even dictate)  using passive voice, but centuries of custom don’t make the papal white paper easy to understand. Business communicators, place your subjects and verbs as close to each other as possible.  Visual cues like bulleted lists and call-out boxes are a godsend (couldn’t resist that).

As I said in another post, good writing requires that you “kill your darlings“  and I have to grade the Vatican harshly on this point.  By including too broad an audience, the encyclical went waaaaay over the heads of most everyone but the scholars faaaaaar too often.

Focus, writers, focus!

Green Tax Code?

Thanks to The Atlantic’s July-August edition, I took a brief walk through the US political-environmental history of my adult life.

For me, it started with President Carter’s much-derided “sweater address” to the nation, in which he suggested we lower our thermostats.  I recall vaguely the buzz about the White House’s unsightly solar panels. Even as a high schooler I paid attention to the news.

What I didn’t understand at the time was how much reliance this country puts on the tax code to affect behavior — individual,  corporate and regulatory.   Hence today’s post and writing prompts for bloggers & newsletter publishers.

Saw-blade growth

Quoting the article: “Plotted on a graph, the history of clean-energy production in the United States resembles the blade of a saw, rising and falling each time subsidies came and went. Japan, Germany, Spain, and Denmark show smooth, upward-sloping yield curves, a reflection of consistent government policy.”

Reliance on venture capital

Long excerpt:

The nature of venture-capital investing, which involves placing many bets in the hope that a few pay off, helped create today’s array of clean technologies. But venture capitalists have been unable to replicate the explosion of growth in the Internet sector, because they aren’t big enough to compete in the $5 trillion U.S. energy market. Google required only $25 million in venture capital to become the company it is today. A large wind or solar facility can cost upwards of $500 million just to get started. “When you’re talking power infrastructure, you’re talking thousands of tons of steel and glass and giant turbines,” says Peter Le Lièvre, the co-founder of Ausra. “All the investors in Silicon Valley combined cannot put $500 million into a project.”

This poses a problem. Venture capitalists can bring an idea from the lab to pilot scale. But sooner or later the limitations of their balance sheets kick in. Many start-ups have made it this far only to die searching for additional financing. Venture capitalists have a term for this. They call it the “Valley of Death.”

The nut of the problem traces all the way back to Jimmy Carter’s choice of tax credits as the vehicle for subsidizing renewable energy. Direct grants would have been simpler. But Congress had recently changed the federal-budget process to keep closer track of how much money was being spent. It suddenly became easier to spend indirectly, by manipulating the tax code. Although no one realized it at the time, Carter’s decision to use tax credits lit the very long fuse on a bomb that detonated last fall and nearly took down the entire renewable-energy industry in America.

The trouble with tax credits (my emphasis added) is that in order to make use of them, you must owe taxes, and most start-ups struggling toward profitability do not. So while a company looking to build a wind or solar facility would qualify for valuable benefits, it had no means of realizing this “tax equity.” The work-around was to partner with someone who did, someone large enough to finance a $500 million facility and profitable enough to incur a large tax bill. Having witnessed two decades of busts and bankruptcies, traditional U.S. banks wanted no part of this. European banks, going by their more positive experience, were comfortable funding large renewable projects, but didn’t qualify for U.S. tax credits. The perversity of the government’s incentives demanded a big balance sheet, huge profits, and an indifference to risk. Enter Wall Street.

Investment banks and hedge funds stepped in to fill the void, engineering tax-equity vehicles with suspiciously complicated-sounding names, like “partnership flip structure” and “inverted passthrough lease,” to exploit the tax benefits. These deals amounted to financing agreements for large infrastructure projects, given in exchange for tax credits, often worth hundreds of millions of dollars, that could be applied against profits earned primarily on other investments (like mortgage-backed securities). For renewable-energy companies, tax-equity deals meant life or death: the combination of credits could offset two-thirds of the capital cost of a project. Companies like Lehman Brothers, Wachovia, and AIG became an integral part—even the integral part—of the renewables industry, because the utility-scale projects they financed produce the overwhelming majority of clean energy in the United States.

Basing the entire system of federal incentives on tax equity had two weaknesses, one that has always been clear and another that became clear only recently. Forcing renewables companies to route government support through Wall Street, thereby sacrificing a portion of it, was needless and inefficient. But it also tied the industry’s fate to that of the financial world’s most aggressive players. Just as Wall Street bankers bet that housing prices could never fall and got wiped out when proved wrong, Congress seems never to have imagined that Wall Street might someday have no profits and need no tax equity. Early last year, the multibillion-dollar tax-equity universe consisted of 18 providers. After September’s record carnage, the number dropped to four. Credit froze, and most projects ground to a halt. All of a sudden, not just a few start-ups but the entire renewable-energy industry was staring into the Valley of Death.

Financial and Environmental Writing Prompts

• Do you agree with Raj Atluru, managing director of the venture-capital firm Draper Fisher Jurvetson, when he claims that the stimulus bill save renewables?  Here’s The Atlantic:

“To fill the tax-equity gap, the stimulus provides $32.7 billion in direct grants and another $134 billion in loan guarantees to attract new investors to large projects. To impose stability, it extends a variety of tax credits by anywhere from three to eight years. Most striking of all, it instructs the Department of Energy to invest directly in promising cleantech companies (though the payoff comes in jobs and environmental gains, not equity). By a stroke of his pen, President Obama made a federal agency the world’s largest venture capitalist. When the official in charge of the program appeared at a Santa Barbara energy conference in March, he was mobbed by eager CEOs.”

• Is it inefficient to force renewable companies to route government support through Wall St?
• What do you think about the Department of Energy now essentially becoming the world’s largest venture capitalist?
• Comment on this claim: “American capitalism—even when it’s working—is not without its limitations, one being that promising ideas rarely get funding if their commercial potential lies beyond venture capitalists’ 10-year investment horizon.”
• Do you agree that The Energy Department research budget has never recovered from Reagan’s cuts?
• Do you have statistics to back up or dispute this claim? “People in cleantech circles often point out that the electric utilities spend a smaller portion of revenue on research and development than pet-food companies do. “

Greenfinger?

With the G8 coming to agreement on climate change, The Atlantic’s article “Moving Heaven and Earth” is timely.  In it, I learned a new vocab word, “Anthropocene,” coined in 2000 to describe the period of time when humans began changing the world’s climate and ecosystems.

I also learned about large-scale projects that are designed to “deform the Earth intentionally, as a way to engineer the planet either back to its pre-industrial state, or to some improved third state.”  These projects fall under the term “geo-engineering”and give me the creeps.

Following is a brief overview of the strategies followed by writing prompts for bloggers and newsletter publishers (but they can also be used for conversation starters at the neighborhood pool party).

Gas the planet

For those who saw Blade Runner, the red skies envisioned by this strategy will be familiar.  Imagine factories whose sole occupation is pumping out sulfur dioxide.  During the day all that aerosolized pollutant would shield the planet from the full blast of the sun and would often redden the sunsets.  Cost estimate: $100billion compared to an estimated annual $1t to cut carbon emissions through traditional means.

Churn the seas

The National Center for Atmospheric Research’s plan calls for a fleet of 1500 ships constantly churning sea water and spraying it high enough for the wind to carry it to the clouds, making them whiter and fluffier, which in turn enables them to better reflect the sunlight. Cost: $600m up front plus $100m annually.

Frisbees

An astronomy and optics professor at the University of Arizona proposes shooting Frisbee-sized ceramic disks at the gravitational midpoint between Earth and Sun to provide a huge sunshade and keep the planet in a perpetual state of annular eclipse.  Cost: Several trillion (the technology doesn’t exist).

No international treaty needed

The trouble with treaties is the incentive to cheat, but with geo-engineering any one country could act alone.  “Instead of a situation where any one country can foil efforts to curb global warming, any one country can curb global warming on its own.  Pumping sulfur into the amosphere is a lot easier than trying to orchestrate the actions of 200 countries  — or for that matter, 7 billion individuals…”

The article contemplates a possible “Greenfinger” who might implement geo-engineering with the single minded focus of  the James Bond villain, Goldfinger. “There are now 38 people in the world with $10b or more in private assets…theoretically, one of these people could reverse climate change all alone.”  Even a poor country like Bangladesh could afford to take unilateral action to reduce the chance their low-elevation coastal zones would wash away in global-warming-induced rising seas by pumping out sulfur dioxide.

Cut carbon emissions

There is almost universal agreement by climate scientists that we’re better off reducing carbon emissions than going into geo-engineering.  Lots of ideas there too, including capturing emissions in giant cooling towers, but the problem is where to put all that captured carbon.  One idea is to inject it into the “right kind of geological structure” that would be deep enough to keep it there.

Another reduction strategy for reducing the carbon dioxide we currently produce is blooming plankton, which thrives on it.  Some envision offshore plankton forests to replace those no longer on land.  Problem is, the dead algae would produce methane, a greenhouse gas that’s 20 times stronger than carbon dioxide.

The article concludes with the suggestion that we “keep investigating geo-engineering solutions but make quite clear to the public that most of them are so dreadful that they should scare the living daylights out of even a Greenfinger.”

A note on language

As I wrote in May, people don’t respond as well to negative as they do positive language.  For example, the founder of ecoAmerica observed “When someone thinks of global warming, they think of a politicized, polarized argument. When you say ‘global warming,’ a certain group of Americans think that’s a code word for progressive liberals, gay marriage and other such issues.”

Further, in another Atlantic Monthly article by Yale psychologist Paul Bloom, “Although it might be hard to think about the person who will occupy your body tomorrow morning as someone other than you, it is not hard at all to think that way about the person who will occupy your body 20 years from now. This may be one reason why many young people are indifferent about saving for retirement; they feel as if they would be giving up their money to an elderly stranger.”

Bottom line for environmental communicators: find a way to couch messages in positive language; ground them firmly in the present.

Environmental and Financial Writing Prompts

• If you have working knowledge of these or other geo-engineering strategies, please leave a comment with links.  You might consider comparing and contrasting those you know with those in The Atlantic’s article.
• Refer to the post I wrote about Prince Charles’ Rainforest Bond proposal. Given what one rogue nation could do to gas the planet with sulfur dioxide, perhaps it makes sense to pay rainforest countries for the services their natural resources offer to the health of the planet and every living being.
• Given the state of venture capital, by what means can environmental entrepreneurs fund their work?  Is there something between governmental support and venture capital?  With so many unemployed financial mathemeticians looking for something to do, this seems a worthwhile problem to ponder.
• How can funding and regulation work together to protect the entire world from a Greenfinger or rogue state?

Global Defense Bonds?

I’m no weenie peacenik.  Thugs must be taken out. But please, let’s rethink our military expenditures.

What if we killed two birds with one stone?   First bird, the precarious US treasury.  Second bird, the unsustainable global arms race.  The stone?  A global peacekeeping collective powered with the existing world’s arsenal, most of which the US built.

 

We built it, so I’m in favor of being compensated for it

The world needs a police force.  But I’m not in favor of the ever-escalating arms race or the US being the de facto world’s police force.

What if we paid down our massive foreign debt by selling our portfolio of defense weapons to a global defense bond fund?  I got the idea from a white paper published by the Prince’s Rainforest Project which I covered in the May blog.  The basic logic of the proposed Rainforest bonds and my proposed global defense bonds is the same: those who add value must be compensated for what they bring to the table.

Rainforest bonds, hence global defense bonds

Here’s what I said about Rainforest bonds: Rainforests cool the planet, regulate the water cycle and provide a home to countless species.  To preserve the world’s ecosystem functions and avoid catastrophic climate change, we must reduce tropical deforestation. The world should provide funding to Rainforest nations to help them address the drivers of deforestation and embark on alternative economic development paths.  Since the rainforests provide “services” essential to planetary life, justice dictates that those services be compensated.

Similar argument for global defense bonds: The world needs the threat and capability to enforce swift justice to keep the wolves from devouring the lambs.  The countries that have sacrificed mightily to build armaments (see graphic above) should be compensated by the beneficiaries — the entire world.

OK, maybe the bond mechanism isn’t ideal, but isn’t this a great conversation starter/brainstorming prompt?

Writing prompts for all professions:

I don’t claim to have the answers, but I thoroughly enjoy seeding the wellspring for your blogs, articles and newsletters:

• Financial analysts:  what’s a fundamental analysis say about the efficiency a dollar invested in defense compared to other sectors?   How would this change if there were a different marketplace for weaponry?
• Consultants: Technology transfers from weapons to medicine and IT (and visa versa).  Do you know of any breakthroughs in medicine or elsewhere that would have come to light sooner if the threat of national security hadn’t kept a weapons technology classified?
• Finance professionals/venture capitalists:  Speculate on what might happen if weapons technology was a global defense asset that followed the model in place with universities’ technology transfer programs. Is there a parallel?
• Environmental:  Weapons sites decomissioned so far require  significant environmental cleanup. Anticipate the impact to the environment of having fewer global weapons sites.
• Services: Reflect on how military bases and weapons plants have been repurposed so far what that portends on a global scale.
• EVERYONE:  1.26b is a lot of money.  How would you reallocate it?

Clean Energy and National Security

 

I’m in a few LinkedIn groups, as I think all LinkedIn users are by now.  One of them is for Duke alumni and students interested in Solar Energy and Solar startups.  A fellow member posted an interesting request that I decided to help cast a wide net for answers to by posting here and tweeting several of my Twitter followers.   A novel approach for me — let’s see where it goes.

From Ian Thomson, Co-founder of CleanTechies.com

“I’m looking for existing data, contacts, leads or reference material that demonstrate a strong correlation between clean/domestic energy and global security. Any help during this data gathering would be greatly appreciated; probably on both sides – if they are looking for recognition for their perspective I’ll give them ample credit for any data they can provide that supports the thesis.

“I’ve taken on the task of integrating the positive national security implications surrounding energy policy that targets reducing CO2 for a project called “GigaTon Throwdown.” My portion of the project is presenting a compelling national security argument for reducing oil consumption, using distributed generation assets, and increasing the efficacy of our budget through energy efficiency. The bulk of the heavy lifting of the 250 page book is done, it has been written by some serious academics, energy analysts and professionals, but it neglects to address these core concerns that will give it that much more attention when it is launched with support from some congressional leaders from both sides of the political spectrum. Doing my task right will assure broader buy in. “

Any help for the Gigaton Throwdown?

The Gigaton Throwdown

The Gigaton Throwdown Study was launched as a Clinton Global Initiative in 2007. It is a project to educate and inspire entrepreneurs, investors, and policy makers to think big about solving the climate crisis. It began as an effort to answer the question, “What does it take to make a difference with clean energy technology?” A unique team of entrepreneurs, investors, and business leaders teamed up with leading academics to answer this question. Specifically, we asked how could any one of nine technologies groupings, “pathways,” scale up so each one could avoid one billion tons – a gigaton — of greenhouse gas emissions per year and do it by 2020. We call this “Gigaton Scale.”

How ’bout it, Readers?  Any help for Ian out there?  Feel free to post a comment below or reach out to me on my Contact page.  I’ll close the feedback loop with Ian.

Royal Whitepaper

When people take the time to read my b-card they’ll sometimes ask “What’s a whitepaper?”  I quote the verbiage on my site, which turns on the lights for about 2% of people.

With Google-driven marketing everyone should know what a white paper is and how they can use one.

I had an “aha moment” this morning.  I decided to build a repository of white papers I like in different categories for general perusal.   First up, The Prince’s Rainforests Project Report, which I thank my Twitter follower, Dan Tefft for bringing to my attention.

Three-purpose post

This post suggests changes to the paper that would make it more engaging, discusses its core idea of Rainforest Bonds, and then offers writing prompts for professionals in environmental and financial services.

Reading like an editor

Professionally, I prefer minimizing passive voice and maximizing design to help the reader navigate a dense document such as this (52 pages).  Certain professions prefer passive voice (government and academia top the list) so I suppose a report on behalf of  a Cambridge-educated Royal conforms to expectations.

The summary as written: “Reducing tropical deforestation will be vital if the world is to avoid catastrophic climate change and preserve important ecosystem functions. An Emergency Package is needed to provide substantial funding to Rainforest Nations to help them address the drivers of deforestation and embark on alternative economic development paths. Rainforests cool the planet, regulate the water cycle and provide a home to countless species; it is right and essential that the world pays for these services.”

I’d rewrite: Rainforests cool the planet, regulate the water cycle and provide a home to countless species.  To preserve the world’s ecosystem functions and avoid catastrophic climate change, we must reduce tropical deforestation. The world should provide funding to Rainforest nations to help them address the drivers of deforestation and embark on alternative economic development paths.  Since the rainforests provide “services” essential to planetary life, justice dictates that those services be compensated.

Writing Prompts for Environmental, Financial Services

The Prince’s Report outlines a plan for “Rainforest Bonds,” a fixed-income security, issued in private capital markets.  Such bonds typically offer investors a fixed rate of return, normally an annual coupon, together with the repayment of the principal on maturity. Over US$400 billion of Sovereign, Supranational and Agency Bonds were issued in 2008. The Project has held discussions with pension funds and the insurance sector (through The Prince of Wales’ P8 and ClimateWise initiatives) which indicate that there would be significant demand for AAA-rated bonds with long-term maturities.

“Rainforest Bonds could be issued by the World Bank, or by an independent entity with support from the World Bank. The bonds would be guaranteed by developed country governments, which would be responsible for payment of the coupon and repayment of the principal.

“However, it may be possible to mitigate the financial calls on these governments, for example by channelling some of the money into green investments that would generate financial returns – this would have the added benefit of supporting broader clean development goals. Private sector bonds provide a way to raise large amounts of finance for tropical forests in the nearterm, while allowing underwriting governments the time to generate revenues for repayment from clean development investments, domestic carbon permit auctions or other schemes. The Prince’s Rainforests Project is working with the World Bank to develop this bond concept further.”

• Is the World Bank the right entity?  Or the only entity?
• In light of current global financial priorities, how would these bonds perform financially?
• Environmentally, are these bonds a powerful incentive to change economic development and human behavior?
• Any better options on the table?

“Cap and Cash Back”: The Power of Positive Language

We can thank ecoAmerica for the “Cap and Cash Back” headline, which I gleaned from this weekend’s NYT story about how environmental communications are being framed by both “sides” of each environmental debate, from “clean coal” to “safe nuclear power.”

It certainly is catchier than “Cap and Trade” and coming from a jargon-jammed business background, I’m grateful when people use words that both insiders and outsiders readily grasp.  Your politics will determine whether you agree with the substitution of “cap and cash back” for “cap and trade” but my point about the need for clear communications stands.

Environmental and Financial Services Writing Prompts:

• The NYT article quotedRobert J. Brulle of Drexel University, an expert on environmental communications,  as saying “ecoAmerica’s campaign was a mirror image of what industry and political conservatives were doing. “The form is the same; the message is just flipped,” he said. “You want to sell toothpaste, we’ll sell it. You want to sell global warming, we’ll sell that. It’s the use of advertising techniques to manipulate public opinion.” Do you have evidence that either side is entirely in command of the facts about global warming/climate change?   Or is this simply a war of words driven by savvy PR pros?
• Mr. Perkowitz, who started ecoAmerica, said the reason environmental issues consistently trail issues like addressing moral decline and reducing the influence of lobbyists, is “When someone thinks of global warming, they think of a politicized, polarized argument. When you say ‘global warming,’ a certain group of Americans think that’s a code word for progressive liberals, gay marriage and other such issues.” Do you have reason to agree or disagree with Mr. Perkowitz?  Support your view with an anecdote or case study.
• A summary of ecoAmerica’s latest findings and recommendations was accidentally e-mailed to a number of news organizations before the formal paper was published, which raises the question, Have you or your organization authorized talking points or key words for use in environmental communications? If so, can you speak to the immediate and longer-term effects of using prescribed language (or avoiding proscribed langugage) on your organization’s objectives?

Krugman v Samuelson on Green

In today’s NYT, Nobel Laureate Paul Krugman weighs in on climate change with the terse observation that “just as denials that climate change is happening are junk science, predictions of economic disaster if we try to do anything about climate change are junk economics.”

“Right now, the biggest problem facing our economy is plunging business investment. Businesses see no reason to invest, since they’re awash in excess capacity, thanks to the housing bust and weak consumer demand.”  Krugman outlines how a commitment to greenhouse gas reduction would give businesses a reason to invest in new equipment and facilities even in the face of excess capacity.

He concludes, “given the current state of the economy, that’s just what the doctor ordered.”

On the other side, reporter, author and Washington Post columnist Robert Samuelson says “The trouble is that these models embody wildly unrealistic assumptions: There are no business cycles; the economy is always at “full employment”; strong growth is assumed, based on past growth rates; the economy automatically accommodates major changes — if fossil fuel prices rise (as they would under anti-global-warming laws), consumers quickly use less and new supplies of “clean energy” magically materialize.”

Writing Prompts:  Financial Services, Environmental

• What’s more important, getting started on a global climate change or getting the right global environmental policy in place?
• Krugman admits “Yes, limiting emissions would have its costs. As a card-carrying economist, I cringe when “green economy” enthusiasts insist that protecting the environment would be all gain, no pain.”  Do green enthusiasts over-state their case?
• What about Krugman’s claims on overcapacity?

Green Investments and the US Labor Market

A new white paper released by the Economic Policy Institute (EPI) reminds that the U.S. economy lost 5.1 million jobs over the past 15 months.

With a nod to the Obama administration’s commitment to a cap and trade plan for carbon emissions, the paper warns that, nevertheless, new federal investments are needed to provide economic benefits that “go beyond the primary one of emissions reduction.”

Promising Conclusions

The EPI concludes  that a commitment of $100 billion annually in new public investments over the next decade would yield:

• Approximately $160 billion in additional output annually for the next two years, which translates  into approximately1.1 million net new jobs created.

• An increase in the relative wages of those 70% of U.S. workers without a four-year college degree by almost 0.5% each year that the increased commitment to green investments persists. While modest, this amount does represent a wage increase for high school graduates that is roughly 40% as large as the entire increase this group has seen since 1979.

• An increase of approximately 100,000 in the number of unionized jobs in the United States (even in the unlikely case that all of the jobs supported through this new spending merely displaced currently existing jobs).

Writing Prompts:  Financial, Environmental, Services, Consulting

• Respond to this EPI conclusion based on your own data and experience:  “In the short run, any investment that can be done quickly to help meet the challenges of undertaking serious carbon emissions abatement will have welcome near-term macroeconomic impacts. And over the longer-term, these investments will provide a payoff in the form of climate change mitigation, energy independence, and economic gains from energy efficiency.  In the longer run, dedicating more resources to ameliorating global climate change will actually lead to a mix of industry employment that nudges back against the forces that have generated ever-greater wage inequality for most of the past 30 years.”
• Support or refute this EPI claim: “Each dollar of infrastructure investment—broadly defined—provides on net about $1.59 in additional economic growth, making it about 33% more effective than generic tax cuts and literally 10-15 times more effective than most business tax cuts. In short, infrastructure spending, including ‘green’ investments, is about as good economic stimulus as there is.”
• This week the cap and trade debate drew comparisons to the earlier Acid Rain Trading Program, which was established in 1990 under the Clean Air Act.  The administration said it “delivered huge benefits—to the tune of $120 billion a year—with an annual cost of only $3 billion a year. The acid rain program is a trading system comparable to a carbon cap-and-trade program.”  If you were in business during that time, reflect on the similarities and differences between the Acid Rain Trading Program and cap and trade.
• A new project of the Sierra Club, National Resource Defense Council and others, called “The Reality Coalition,” takes on the premise that there is such a thing as clean coal.  Is there such a thing as “clean coal”?
• Reflect on how the administration’s proposed Green Investments and cap and trade plans would directly affect your business or that of your customers.

Disassembly Line

The April, 2009 edition of  The Atlantic featured a two-page schematic on “The unbuilding of an auto plant” near the Hartsfield-Jackson airport in GA.

The story says, “Closing an auto plant is neither quick nor simple, and for a time, the very process of closure creates its own small economy; ultimately, closures can make way for new beginnings. Immediately after the Hapeville plant was formally idled, about 250 workers returned to begin deconstructing the site; more than two years later, demolition and environmental cleanup are still continuing.”

Don’t I know it.  The story of course ties into raging headlines about the shrinking US automotive sector, but it also took me back to my recent past as an owner of an environmental cleaning company where I earned “blood money” closing down Carolinas-based textile plants.  Blood money?  Yes, according to dictionary.com it’s defined as “Money gained at the cost of another’s life or livelihood.”

I have to say, sometimes plants were at their most environmentally compliant during their final shutdowns.  They often skimped on compliance when they were running full bore, but in order to get certificates of occupancy for the next tenants they had wind down the right way.

Writing Prompts:  Financial, Consulting, Environmental, Services

• With uneven environmental regulations around the world, reflect on operations you’ve seen move to a less-regulated environment and the environmental degradation that ensued.
• If you are involved in any winding down operations now, how are prices holding up for machinery, equipment and scrap?  Do the locations of the buyers say anything surprising about shifting capital across the globe?
• The Ford plant in this story will be replaced by a mix of retail and office space, with some airport parking and hotels.  Is this usually the type of development that moves in?  Should it be?
• What do you observe about the role of local tax and zoning incentives on 1) retaining businesses and                     2) influencing re-development that occurs in situations like this in GA?

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