Turning Traditional Economics Inside Out

How I arrived at the Carbon IRA (individual retirement Account)

I’m thinking maybe a little more context is necessary for people to “get” the Carbon IRA (individual retirement account) concept and why my book, Carbon IRA + YouTility: How to Address Climate Change and Reduce Carbon Footprint Before Its Too Late, has such salient messages.

A chemical engineering education and electricity industry career pretty much makes you a systems person. You think in terms of systems, boundaries, and surroundings. After several decades in the electricity and energy sectors, and wrestling with the macro-carbon footprint challenge, I finally realized a few things weren’t going to change anytime soon:

• Economic growth is predicated on buying and consuming stuff
• Low cost energy supports economic growth
• Carbon-laden fossil fuels are the backbone of low-cost energy, especially electricity
• Therefore, carbon is the ultimate externality – the environmental impact that isn’t properly reflected on the accounting ledger
• Thus, until carbon-free energy replaces fossil fuels, we are doomed to aggravate carbon-induced climate disruption.

These aren’t immutable “truths” like the laws of thermodynamics. But they sure have been immutable in my lifetime. At least globally. So the “problem statement” is pretty straightforward.

When my two daughters were in high school and college, we had many dinner conversations about dad’s job (electricity industry) and climate change (what my daughters were having nightmares about). I kept saying, until everyone on the planet learns to consume less and we accelerate the transition to renewable energy sources, it will get worse before it gets better. And it has.

So we came up with this slogan. Think:Less! Note the double meaning. Think less, or simplify how you think about global climate change. Think about consuming less stuff. Period. End of Story. We even made a stack of bumper stickers!

Of course, no one really knew what the hell we were talking about. But it led me to the more important challenge. Environmentalists have been preaching the three Rs – reduce, recycle, reuse – in my memory ever since the first Earth Day in 1970.  By the new millennium, that still wasn’t working.

After more dinner conversations, I had an epiphany.

• You have to reverse the growth-at-any-cost economic mantra
• One approach is to reward behavior and consumer choices which result in less carbon
• If you make the behaviors permanent, you can make progress on carbon and climate
• You can’t depend on volatile energy price signals to sustain these behaviors
• Converting the avoided carbon into money is a bona-fide incentive
• Putting the money towards a retirement account encourages a lifetime of better behaviors and choices.

Hence, the carbon IRA concept was born. It turns traditional economics inside out. Since nothing else seems to be working fast enough, maybe it’s time for a radical departure?