Yesterday, the U.N. Intergovernmental Panel on Climate Change (IPCC) released its report on the state of our world with respect to global warming. The IPCC issued what was called a “code red” for humanity, saying our race has “nowhere to run; nowhere to hide.” Each ton of carbon dioxide emitted can now be calculated as to its impact on warming our planet.
I have not thought much about how moral capitalism would “solve” the problem of global warming and a human civilization needing energy like a newborn needs its mother’s milk. But the other week, we convened a round table here in Minnesota for participants to contribute ideas, concerns and observations about global warming. Great wildfires and high temperatures in our western states made the dialogue timely. Listening to the comments took my thinking in a new direction, which I would like to sketch out for you here.
Roughly, if a ton of C02 emitted increases global temperatures, then a ton of CO2 withdrawn from the atmosphere would act to lower global temperatures.
First, I have been comfortable in the flow of stakeholder analysis that a moral capitalism manages its impacts on its stakeholders with a concern to limit negative externalities and enhance positive externalities.
But what is the relationship of a firm to our atmosphere?
Capitalist firms exist to provide private goods and services for individual customers through markets. They are not designed to provide public goods. That, we have thought, is the function of governments and, to some extent, of charitable non-profits and norm-maintaining institutions, like churches and schools.
Economists tell us that the difference between private and public goods is “rivalry.” We can be rivals over private goods because if I have the hamburger, you do not. We are rivals for enjoyment of the good. Public goods are different. In theory, both you and I can use the same air or bridge. My usage does not prevent you from also enjoying the good.
Global warming is a public “bad” – both you, I and many more suffer simultaneously from its effects. We are all “owners,” in some sense, of the conditions created by global warming, but our ownership interests are losing value as the “bad” crowds out the “good.”
Global warming is, therefore, a “condition,” not a good or a service which can be held against the claims of rivals.
Accordingly, capitalism, even a very moral one, is not designed to trade in conditions. Firms may impact conditions in how they produce goods and services and the goods and services which they produce impact conditions.
Capitalism does not have an efficient means to remedy the accumulation of CO2 in our atmosphere.
But if CO2 was a “thing” – a good or service which could be bought and sold – then capitalism and markets could easily take direct action.
Actually, CO2 indeed is a “thing.” It is a chemical compound. In the air, it is a gas. In coal and diamonds, it is a solid. We can also liquify CO2.
Suppose we had technology which could extract CO2 from the air and turn it into a commodity. Then, some companies could invent the technology and go into the business of extracting a natural resource from our atmosphere. Others could then process and sell the CO2 to end users in forms which would not allow it to gasify and return to the atmosphere.
The market problem then becomes one of finding customers for CO2. This is what cap and trade laws attempt to do. Someone makes money by reducing the off-gassing of CO2 and selling the right to off-gas to another. But that market does nothing to extract CO2, which has built up in the atmosphere during the last 100 years of industrialization using coal and oil/gas hydrocarbons as sources of humanized energy.
Now, governments are consumers, as well as individuals. Why not have governments budget to buy CO2 extracted from the atmosphere? They would immediately create a market into which firms could step and make money, if the pricing were right.
The government would then pay other companies to sequester the extracted CO2. The public “bad’ of global warming would be gradually eliminated and all of humanity would benefit. Accordingly, the public should pay for gaining the good of reducing the bad. Governments would finance the purchase of extracted CO2 and the sequestering of such an extracted chemical compound through the collection of taxes.
Thus, would moral government work synchronistically with moral capitalism to reduce the “bad” of global warming, while the world awaits the invention of new technology to generate electricity by means other than consumption of hydrocarbons.