THE ECONOMICS OF EMISSIONS OFFSETS TRADING

Investor/securities authority William D. Glubiak says emissions offsets trading is a fulfillment of the potential of Nobel laureate economist Milton Friedman’s free market economics.

Glubiak observes, in what he calls the “green movement,” a move toward social responsibility in individuals’ and corporations’ choice of investments. And he describes how the free market, by moving to fulfill that demand, can serve both wealth and the environment.

Glubiak: “…[H]ow do we blend these two seemingly opposite forces? Carbon trading can play a critical and perhaps earth-changing role.”

The first step in social responsibility is something straight out of the Hippocratic Oath: “First, do no harm.” Be efficient. Generate no unnecessary emissions. How perfect: The planet is running a fever. Every citizen is a doctor charged, first and foremost, to do no further harm.

An active life in a society designed around the generation of fuel by burning things, though, inevitably necessitates some harm. For that, there is the opportunity to invest in businesses that earn money using New Energy or using energy efficient methods. Such investments balance excess emissions by sponsoring reduced emission-activities.

Businesses seeking to balance their excess emissions have the opportunity to sponsor businesses that generate New Energy. Buyers and sellers of such offsetting investments make a marketplace. Nothing could make Milton Friedman happier, Glubniak suggests.

Glubiak sees innovation being driven by the “green movement” seeking investments for the socially responsible emissions trading marketplace. He sees engineers as the providers of the technology: “You can make Friedman proud and still save the planet!”
He also points out, as evidence of the change the emissions trading marketplace has already created, that corporations are beginning to add the company’s carbon footprint and its socially responsible actions into annual reports. He is here describing the further emergence of what award-winning author and economist Hazel Henderson has called the sustainability sector.

It is exciting to see a proponent of emissions offsets trading present an argument for socially responsible investing. Concern must remain about the so-far demonstrated inability of investors to recognize the difference between truly socially responsible investments (wind and solar energies) and those that merely promise it (corn ethanol, carbon capture and storage).

E.F. Schumacher: “The system of nature, of which man is a part, tends to be self-balancing, self-adjusting, self-cleansing. Not so with technology.”

Cap and Share is a socially responsible version of Cap and Trade. (click to enlarge)

Commentary: Carbon credit trading, the green movement and the demise of Milton Friedman
William D. Glubiak, August 25, 2008 (EE Times)

WHO
Milton Friedman, economist, Nobel Laureate; William D. Glubiak, representative, Securities America Inc./member, FINRA/SIPC and Securities America Advisors; Engineers

WHAT
Friedman advocated the most unfettered market activity. Emissions trading could be the free market’s way of controlling greenhouse gas emissions and the global climate change they induce.

Mr. Freidman's most accessible book. (click to enlarge)

WHEN
- Friedman died in 2006. He was one of the most influential economists of the 20th century. - The MOST influential? Well, Keynes has exerted influence for about twice as long. But then there is Keynes’ own remark, “In the long run, we’re all dead.” He and Friedman most certainly are.
- If the most apocalyptic of the Peak Oilers turn out to be right, E.F. Schumacher, author of Small Is Beautiful, may someday to be seen as more influential than Keynes or Friedman.
Chicago Climate Exchange (CCX) was formed in 2003.

WHERE
- The idea of being carbon neutral can be like an “above the line” and “below the line” opposition. Emissions by those “above the line” are balanced by those “below the line.”
- CCX is emerging as the primary arena for trading voluntary emissions offsets.

WHY
- Social responsibility drives investors toward carbon neutrality and toward investments that offset activities that generate emissions.
- Basic premise: Humans pollute and so do corporations.
- Carbon footprint: How much we pollute. A reduced carbon footprint equals less environmental harm.
- Carbon neutrality equals zero environmental impact. (?)
- Keys to carbon neutral practice: Green design, energy efficient technology.
- Investment vehicles, growing in volume, that balance excessive emissions: Alternative energy sources [wind, solar power, geothermal, nuclear energy(?), biofuels (?)]
- Engineers have the key skill set to develop technology at which trading investments aim.

The most important economic text of its time? (click to enlarge)

QUOTES
- Glubniak: “Will carbon credit trading and the green movement lead to the demise of Milton Friedman's philosophy? Not a chance! We have entered into a time of awareness that our Blue Planet faces some serious challenges. But the green movement, combined with advances in technology and some smart investing, offers economic opportunities worldwide. Keep your eyes open. There's a movement afoot, but Friedman's economics will prevail.”
- E.F. Schumacher: “Infinite growth of material consumption in a finite world is an impossibility.”