The UNC Kenan-Flagler blog provides a behind-the-scenes look at the UNC Kenan-Flagler MBA program. In the blog post highlighted below, Jeff Glade, associate director of BSBA Global Programs provides an inside look at a Global Innovations in Energy Conference panel discussion.
Spending the next decade arguing because half the populace doesn’t believe that climate change is a problem could be devastating.
That was the assertion of a panel who spoke during the UNC Kenan-Flagler Innovations in Energy Conference this month. They agreed that environmental damage from carbon must stop now and the effects reversed as soon as possible.
Debating the options for managing carbon were Jay Carlis (MBA ‘07), vice president of Community Energy and president of the Renewable Energy Markets Association; Ben Henneke, founder of TIST (a sustainable development and community reforestation program) and president of Clean Air Action Corp.; Ramesh Srinivasan, CEO of VitalChain, which helps companies decide how much to spend on carbon credits; and Kristel Dorion ’08 EMBA, principal of EnergetixClimate, providing educational and consulting services and offset development.
In the carbon market, the government sets a cap on the amount of carbon a business can emit. Companies exceeding their specific cap must buy credits on the open market. Or they can invest in an offset, a green project unrelated to their own company.
The carbon market is a failure, said debate moderator Peter Brews, associate dean of the OneMBA program and associate professor of strategy and entrepreneurship. Henneke, who helped create the carbon market 20 years ago, said he is disappointed that cap and trade has been unsuccessful in ratcheting down carbon emissions. When the carbon credits system was set up, it was in businesses’ best interest to report their highest amount of emissions, resulting in the government printing too many carbon credits. “Tax and trade is the best solution,” he said. A tax raises the cost of doing bad, an added incentive to reduce emissions.
To dry up market “leakage” — businesses buying from a lower-priced market as the cost of their carbon use rises — Dorion recommends that markets be linked. “You have to have interconnected grids,” she said, “and cap and trade markets have to be linked internationally.”
Offset projects, Srinivasan and Dorion concurred, emphasize the carrot over the stick by figuring out how to make energy efficiency profitable enough that companies can make money by doing good.
Carlis stressed the importance of consumer choice. “Our customers believe that federal and state policies don’t go far enough in promoting carbon-free technologies. We think they should have the choice to do more,” he said. Understanding consumer behavior and motivation can help convince people to do what is in their best interest — caring for the environment — by reducing their carbon footprint through purchasing renewable energy certificates (RECs). This voluntary REC market, though, is separate from and in addition to the compliance market for credits and offsets.
All panelists would like to see Congress pass an energy bill in the next couple of years, though they disagreed on the likelihood of that happening. If businesses are regulated by the Environmental Protection Agency instead of law, those regulations can be litigated, effectively buying years of bad behavior while the issue makes its way through the court system.
“Businesses know it’s just a matter of time before they’ll be subject to carbon regulation,” Srinivasan said, “and they’re preparing for it.”