Peter Fusaro knows environmental finance markets.  As Chairman of Global Change Associates, Fusaro is an energetic and tenacious green markets cheerleader with over 34 years of government policy and industry experience.  When he took the stage at his 9th annual Wall Street Green Trading Summit last week in New York City, audience members perked up and paid attention. 

From carbon markets to green energy loans and Property Assessed Clean Energy (PACE) programs, more than 225 professionals gathered at this conference to learn about a variety of innovative financing mechanisms.  “This conference has always been the practitioners’ conference,” said Fusaro.  “This is about people doing things: innovative things, risky things, pushing the envelope and moving forward.”

 Restarting the Green Engine

 If the path to economic development is paved with green technology, some suggest that the car is in neutral.  Unfortunately, for the past few months, the political machine of Washington has been consumed by partisan wrangling over medical insurance.  Now, with the healthcare debate behind us, there seemed to be a renewed sense of optimism among conference participants.

 “The lack of interest in carbon is appalling, but you have to look long term.  Long term, the United States will be re-engaged in this issue of green house gas reductions,” said Fusaro. 

 New Jobs

 This re-engagement provides both environmental and economic benefits.  “This will create long term job opportunities,” said Fusaro, adding “We need engineering and technology professionals along with financial services professionals.  We also need analysts for clean technology and renewables such as biofuels, solar and wind.”

 “The sector is a lot bigger then most people realize.  We’re talking about a $6 trillion dollar business called energy.  It needs more knowledge capital.  We need education at all levels,” said Fusaro.

 Looking Back to Go Forward

 We can learn a great deal from examining the past and what we discover is that our road to energy consumption was paved with the best of intentions.  According to Fusaro, “The reality is the United States economy was built on cheap energy.  It wasn’t madness of engineers.  We had abundant natural resources.  It was just how we did things.”

 Changing our attitudes about energy is a slow process, but one that reveals an extraordinary opportunity to re-engineer the status quo. 

 Said Fusaro, “What is really endemic and needed is a behavioral change.  This has to be part of our DNA.  We have to think differently.  The United States cannot consume 21 percent of the world’s oil anymore.”

 Peter Fusaro’s comments resonated with other market focused sentiments expressed throughout the conference.  We find ourselves in an era of global growth, resource constraints and an ecosystem in peril.  With New York as a backdrop for the Wall Street Green Trading Summit, it’s clear that capital markets will play a central role in driving positive environmental change.

 Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the US Green Building Council, San Diego chapter.  Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology.  He was a delegate at the December 2009 COP15 climate conference in Copenhagen.  You can reach him at 858-350-4215 or lbarken@hwcpa.com.

By GUEST AUTHOR Lee Barken, IT practice leader at Haskell & White, LLP

To meet their renewable standards, California utilities are now able to look outside the state. What happens next should be interesting.

California’s Renewable Portfolio Standard (RPS) mandates minimum renewable energy thresholds in a utility company’s electricity mix. In California, that minimum is 20% by the end of 2010. Utilities can obtain a three-year extension, and most will ask for that, but 2010 is still the official deadline.

Why an RPS?

According to the Public Utilities Code, Section 399.11, an increase in renewable resources “may promote stable electricity prices, protect public health, improve environmental quality, stimulate sustainable economic development, create new employment opportunities, and reduce reliance on imported fuels.”

However, these lofty goals overlooked one important element: execution.  Drafting a law mandating a 20% renewable mix doesn’t create an overnight solar farm. In fact, by the end of 2009, the investor-owned utilities were woefully behind schedule. According to the California Public Utilities Commission (CPUC), the renewable score card looked like this:

Southern California Edison: 16.8%

Pacific Gas & Electric: 14.4%

San Diego Gas & Electric: 10.5%

New Rules to the Rescue

To help utilities reach their 20% goal, the CPUC announced this week that the utilities can now purchase tradable Renewable Energy Credits (RECs) to meet their RPS mandates. This represents a significant departure from the previous CPUC position, which required utilities to purchase the electrons and the RECs together. 

In other words, the utility was required to buy “green power” from large solar and wind farms, and purchase both the electricity and the green attributes of that energy generation simultaneously.  The new ruling effectively allows for the “unbundling” of this transaction.  It separates the “green” and the “power,” such that utilities can purchase the green attributes of renewable generation, even if the actual electrons being generated are consumed elsewhere.

Benefits of Unbundling

The primary benefit of allowing tradable RECs is the flexibility it provides to the utility. By allowing generation outside of California (but within the boundaries of the Western Electric Coordinating Council), this ruling will likely lower the cost and ease the burden of RPS compliance.

According to the CPUC ruling, “REC-only transactions in which the RPS-eligible energy does not serve California load provides to California consumers the general benefits of increased use of renewable energy, such as reduction in the emission of greenhouse gases and downward pressure on natural gas prices.” 

In addition, the ruling mentions the “potential additional revenue streams to developers of renewable generation projects” made available through the use of T-RECs.

A New T-REC Marketplace

The CPUC ruling lays the groundwork for a robust T-REC marketplace. “Although the tradable REC market may be modest in the next two or three years, the market rules put in place in this decision will both allow this new market to develop and provide robust rules as the tradable REC market matures,” said CPUC President Michael Peevey.

Given that most of the utility-scale renewable energy project pipeline in California is already contracted to utilities to meet the RPS requirements, this ruling creates some interesting opportunities to monetize the green attributes of renewable energy projects in ways not previously considered. In particular, rooftop and distributed generation systems could qualify if they registered with the Western Renewable Energy Generation Information System (WREGIS).

T-RECs for Homeowners

Rooftop solar projects deployed under the California Solar Initiative (CSI), the Self Generation Incentive Program (SGIP) and the New Solar Homes Partnership (NSHP) may be granted RPS-eligible status. It is conceivable that RECs could be granted to home owners, commercial property owners or perhaps aggregated under a larger co-op model in order to provide a revenue stream to the owners of distributed generation assets.

In theory, fuel cell devices from companies such as ClearEdge Power or Bloom Energy may qualify for REC generation if their fuel supply comes from biogas or other renewable sources.

Arizona, which has talked about exporting power to the U.S. will love this. Some companies have even talked about bringing power from Mexico. Obviously, this doesn’t help the “green jobs” element of California’s energy program, but it will help the state meet its goals.

Baby Steps

The CPUC ruling does include several safeguards to protect ratepayers. First, the ruling establishes a cap of $50 per REC. In addition, RECs can only be used to meet 25% of a utility’s RPS obligation. Both of these mechanisms, however, expire at the end of 2011.

The ruling “directs Energy Division staff to collect information about the TREC market and the use of TRECs for RPS compliance, and to provide a report with recommendations to the Commission within 16 months of the date of this decision.”  Based on these recommendations, the safeguards may be extended, modified, or allowed to sunset.

Welcome News

Word of the ruling travelled fast and was quickly embraced by several industry and advocacy groups, including the Center for Resource Solutions (CRS), a non-profit that promotes policies and consumer-protection mechanisms for renewable energy, greenhouse gas reduction and energy efficiency programs. 

“This has been a long and contentious issue,” said Arthur O’Donnell, the Executive Director for CRS.  “But it’s been clear for some time that California was unable to meet its short-term 20% [RPS] goals without employing T-RECs.”

While the debate over energy policy rages on in Congress, California has taken a leading position in the clean energy race. With a T-REC pathway in place, utility companies will now have more options to meet RPS requirements.  In addition, demand for T-RECs is expected to increase and provide a stimulus for the emerging REC marketplace.

 Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the US Green Building Council, San Diego chapter.  Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

With southern California in the midst of thunderstorms and tornado warnings, attendees at the 6th Annual Clean-tech Investor Summit listened intently to conference chair Ira Ehrenpreis remind the audience that “we choose Palm Springs as the conference location for the past 6 years because of the wonderful weather here.” 

Despite the cancellation of 3 speakers due to weather related travel problems, the January 19-21 summit convened over 400 industry professionals to reflect on 2009, opine on 2010 and network with piers.

Networking, as it turns out, was a major attraction for attendees.  As one Private Equity managing partner said to me: “I’m here to meet up with colleagues and see old friends.”  Another popular theme, as shared by one clean tech company exec I met: “We’re here to look for funding.”

Flipping through the conference attendee list (provided to all participants) reveals an eclectic mix with concentrations in two communities: Capital Providers (Venture Capital, Private Equity) and Entrepreneurs.  The other notable presence: attorneys.  Lots of attorneys.  Now, imagine adding cocktails, a few hors d’oeuvres and then swirling them all together in one big room.  It’s party time.

In addition to networking, a major attraction of the summit is to provide a forum for presentations by industry luminaries and thought leaders.  Let’s just call them the “rock stars”.  From senators to CEOs, numerous presenters took the microphone and shared their vision and expertise with the audience.  Two particularly notable presentations provided unique insights:  Ray Andersen, Chairman, Interface Corporation and Amory Lovins, Chairman, Rocky Mountain Institute.

The Most Interesting Person in the Room

Ray Andersen is the author of “Confessions of a Radical Industrialist” and Chairman of Interface, Inc., the worlds largest manufacturer of modular carpet.  Carpet manufacturing is one of the most petro-chemical and resource intensive industries out there, yet Andersen – who introduced a sweeping sustainability vision in August 1994 – is committed to a company goal of zero environmental impact by the year 2020.

Andersen speaks with a calm and dry southern accent as he describes his own personal journey reconciling environmental and business issues through an ethical lens.  At times, the presentation drifts from instructive to poetic, as Andersen breaks into prose with the intelligence and artistry of a spoken word poet.

“The earth is finite,” Andersen said.  You can see it from space.  That’s all there is.”  He adds, “Nature is the goose that lays the golden eggs.  We must not squeeze the golden goose to death.”

What’s striking about Andersen is that he delivers his presentation without any of the granola persona or smugness that you might expect to be attached to his message.  Andersen cares about the environment.  He also cares about business.  Interface Global has revenues exceeding a Billion dollars and Andersen is the first to remind the audience that “I am every bit as competitive as any corporate executive you will meet.” 

To Andersen, sustainability is a war on waste.  As such, he views sustainability as a competitive advantage, not a burden or a diversionary marketing exercise.  Said Andersen, “This turns out to be a better business model.  We make a better profit.”

The Smartest Person in the Room

 Amory Lovins is the cofounder, Chairman, and Chief Scientist at the Rocky Mountain Institute (RMI), a self described independent and entrepreneurial non-profit “think and do tank” with a staff of 90 and annual budget of $15 million.

Lovins’ intellect is matched only by his humble and down to earth demeanor.  Following a lengthy and elaborate speaker introduction, Lovins begins his presentation with a smile and an unassuming quip: “With an introduction like that, I can’t wait to hear what I have to say.” 

After some laughter, he engaged the audience with a simple multiple choice question:  “Do you prefer to die of:  A. Climate Change, B. Oil Wars, or C. Nuclear Holocaust.”  The answer, he suggests, is: “D. None of the Above.” 

For Lovins, environmental change is all about reengineering energy generation and consumption, or as he puts it, “Reinventing fire”.  When done properly, he suggests, this concept of freeing the world from our dependence on fossil fuels comes with significant financial benefits.  “Problems go away, not at a cost, but at a profit,” says Lovins.

In a series of engineering vignettes, from redesigning how water flows through pipes to data center optimizations, Lovins demonstrates how thoughtful engineering and asking the right design questions can produce spectacular efficiency results.  In fact, Lovins has a website dedicated to this topic, called the Factor 10 Engineering project.  (www.10xe.org)

According to Lovins, “The notion that climate protection is costly is simply false.”  He adds, “Saving energy is cheaper then buying it, so smart firms are rapidly investing in energy efficiency—whether they worry about climate issues or not.”

Singing in the Rain

Amidst the torrential downpour in Palm Springs, the Clean-tech Investor Summit proves that the clean tech movement is producing both environmental benefits and economic profits. 

Leaders like Ray Andersen and Amory Lovins are shining examples of how to make this model work.  The economic recovery, much like my trip home to San Diego after the conference, is demonstrating that eventually the rains stop and the clouds fade away.  The year ahead holds great promise.  Are you ready for some sunshine?

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the US Green Building Council, San Diego chapter.  Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

While President Obama drew 48 million viewers for his State of the Union address, another noteworthy – albeit quieter – presentation was being made across town at the Securities and Exchange Commission (SEC).  The SEC, not particularly known for its marketing prowess, used the same day that Obama took the podium to announce that the SEC commissioners had voted to approve the release of interpretive guidance on financial disclosures related to climate change.  

In what might be characterized as the pin drop heard around the world, the SEC highlighted four areas where climate related disclosures may be required:

• Impact of Legislation and Regulation
• Impact of International Accords
• Indirect Consequences of Regulation or Business Trends
• Physical Impacts of Climate Change 

Science and Environment Commission?

 SEC Chair Mary Shapiro was quick to point out that the interpretive guidance is not an official position on climate change.  “We are not opining on whether the world’s climate is changing, at what pace it might be changing, or due to what causes. Nothing that the Commission does today should be construed as weighing in on those topics,” said Schapiro.

 In addition, it was noted that a guidance document does not create new laws or requirements, but rather provides direction on how existing laws should be interpreted in light of an emerging issue.  Guidance documents, similar to the one issued in 1998 related to Y2K disclosures, are intended to promote consistency between company reports and provide decision useful information to investors related to company risks.

Serious Pressure 

According to CERES (pronounced “Series”), a coalition of over 80 institutional investors with over $8 trillion under management, “The lack of specific guidance until now has resulted in weak and inconsistent climate-related disclosure by public companies.”  CERES had been petitioning the SEC to promote climate disclosures since 2007. 

 One CERES member, the California Public Employees Retirement System (CalPERS) publicly praised the move.  “We’re glad the SEC is stepping up to the plate to protect investors,” said Anne Stausboll, CEO of CalPERS. “Ensuring that investors are getting timely, material information on climate-related impacts, including regulatory and physical impacts, is absolutely essential. Investors have a fundamental right to know which companies are well positioned for the future and which are not.”

 A Partisan Divide

 Support for releasing the guidance was far from unanimous.  The 3-2 vote fell squarely along party lines, with 3 democratic commissioners voting in favor and 2 republican commissioners opposed.  According to Commissioner Kathleen Casey, “I do not believe that interpretive guidance relating to disclosure of the effects of legal requirements and reputational pressures on registrants in the context of climate change is necessary or appropriate.”

 Another concern, expressed by Commission Troy Paredes, was the potential for confusion.  Said Paredes, “What triggers a ‘reputational damage’ or ‘physical effects’ disclosure is far from certain, as is the scope of any such disclosure if and when required.”

 Climate Disclosure Standards Board

 For most companies, climate change disclosures are not a new phenomenon.  For years, shareholders have been putting pressure on companies to provide more transparency regarding Corporate Social Responsibility (CSR).  A number of resources exist to provide assistance to companies trying to address these issues. 

 Most notably, a consortium of business, environmental and accounting groups have come together to form the Climate Disclosure Standards Board (CDSB).  In 2009, the CDSB published an extensive guide to help companies develop climate change disclosures.  The “CDSB Reporting Framework” report, along with accompanying Reporting Templates, focuses on how to make disclosures that provide investors with decision useful information related to climate change.

 Let the Sun Shine In

 There’s an old saying that sunshine is the best disinfectant.  By encouraging companies to provide greater transparency, the SEC ruling will result in better disclosures.  These disclosures, in turn, will help investors make better capital allocation decisions.  As companies adjust to the new guidelines, efforts such as the CDSB can help ease the transition.

 Reporting climate change disclosures will provide incentives for companies to monitor and manage their sustainability efforts.  It also provides an opportunity for companies to publicly highlight their ongoing activities and leadership positions.  While this may be one small step for the SEC, the move is one giant leap forward in recognizing that business and environmental issues are deeply interconnected.

 Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the US Green Building Council, San Diego chapter.  Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

It’s a balmy 67 degrees in San Diego and I’m back home at my local coffee shop, sipping Chai Tea Latte.  A short 24 hours ago, I was in the snow and bitter cold of Copenhagen, Denmark, attending the 15th meeting of the Conference of Parties (COP15) climate summit.

For two brief weeks, people from around the world had been gathered to discuss how carbon emissions are affecting our environment.  Despite a failure to sign a major agreement, the victory of the conference has been its ability to focus world attention on climate change issues.  COP-15 has captured the public’s interest, raised awareness and energized ordinary citizens into action.

Acknowledging the gravity of climate change is a difficult task to consider as I sip a tasty beverage in the comfort of my shorts and t-shirt.  Perhaps the single largest challenge for reducing carbon emissions is to convey a sense of urgency to those who are the least affected.  Has our own comfortable condition lulled us into a sense of complacency?

What, Me Worry?

As Americans, we have enjoyed a cultural bias towards short term gratification.  This attitude is demonstrated by our invention of the credit card and its widespread use.  It can also be found in our cultural icons, such as the famous Popeye comic strip character Wimpy, who proclaimed “I would gladly pay you Tuesday for a hamburger today.”

Americans have also demonstrated that they are among the most generous in the world to respond to international relief efforts following natural disasters such as tsunamis, earthquakes and floods.  Unfortunately, we wait until after the disaster occurs to spring into action.

Climate Refugees?

At the COP-15 climate summit this week in Copenhagen, I took particular note of a group of seven countries that made desperate pleas to save their tiny island nations.  Most countries at these international treaty negotiations have established 2 degrees as the maximum allowable increase in global temperature that the planet can sustain, before catastrophic effects are felt.  However, countries such as Tuvalu and Maldives are now insisting that any increases greater then 1.5 degrees would mean the complete destruction of their countries and require entire populations to relocate to higher ground.

The speeches from these countries were passionate and thought provoking.  Can you imagine being sent to Copenhagen as your country’s representative with the task of saving your homeland?  A few years ago we sent my hometown San Diego Chargers to the playoffs.  When they failed their task and come home empty handed, we still gave them a parade downtown.  I hope the other countries are as generous to their delegations.

“The entire population of Tuvalu lives below two meters above sea level,” said Ian Fry, a delegate from Tuvalu.  In a plenary session in front of hundreds of dignitaries, he ended his presentation by saying “I woke this morning, and I was crying, and that’s not easy for a grown man to admit. The fate of my country rests in your hands.”  You can watch the entire presentation here: http://www.youtube.com/watch?v=oUyZOgcHn-Q

I’d Like to Teach the World to Sing…

If you’ve ever seen the famous 1971 TV commercial, you might think that the solution to world happiness is just giving everybody a Coke and teaching them to sing together.  The problem with this approach, of course, is the consequences of proliferating emissions associated with carbon intensive lifestyles.

If the United States represents 5% of the world population, but is responsible for 25% of its emissions, what happens when every person in China or India decides that they’d like to live the good life, too?  What happens to the environment when everybody in the world wants to drive a Hummer, live in a McMansion and enjoy a standard of living like the one experienced in the US?

It’s not that developing countries want a Starbucks on every corner. Many just want running water and electricity that actually works 24 hours a day.  One tool, putting a price on carbon through cap and trade, creates incentives for companies to reduce emissions.  This stimulates innovation, creates a marketplace around low carbon solutions and provides a pathway for developing countries to grow in a way that minimizes environmental harm.

In other words, the goal is to “de-couple” economic development and environmental damage.  Leveraging the innovation from industrial countries would allow developing nations to enjoy modern conveniences and build out their energy, transportation and construction sectors in a cleaner way than developed countries have historically achieved.

Home Sweet Home

Having returned home to San Diego, it’s easy to sink back into the daily routines of going to work, running errands and living life.  San Diego may not be currently feeling the affects of climate change, however, the indulgence of inaction is no longer affordable.  If there’s anything I’ve learned from my experience at COP15, it’s that the world is interconnected on many levels and our actions (or inactions) can have global consequences.

Interacting with delegates from nearly 200 countries from around the world has highlighted the importance of recognizing common goals.  However, achieving these goals will require a delicate balance of policy and fiscal responsibility in the months and years ahead.  The challenges are great, but we’re a great nation.  With sensible, business-focused objectives, we can protect the planet and the pocketbook.

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the U.S. Green Building Council – San Diego chapter. Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. He was recently in Copenhagen attending the COP15 conference. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

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As we begin the final day of the Conference of Parties (Cop15) climate change conference in Copenhagen, Denmark, the grueling hours and stressful conditions are surely taking their toll on official delegates. It is, however, extremely impressive to see how tactful and diplomatic the country representatives are, even when speaking with observers and civil society participants.

After one particularly late night at the Bella Center, home of Cop15, I waited at the Metro station at 1:30 a.m. in the snow and freezing temperatures and happened to engage in conversation with a negotiator from Bolivia.

The position of Bolivia and others in the region is that the atmosphere is polluted with emissions lingering from the dawn of the industrial era. In other words, developed countries spewed all these gasses into the air and now the developing world is suffering the consequences. This is sometimes called the “equity” or “fairness” argument. What is our responsibility to pay for the “sins of the past”?

I suggested to my new Bolivian friend that the Carbon Debt argument reminded me a little bit of the cigarette lawsuits. Sure, we all know now about the dangers of cigarettes and the link between smoking and cancer. However, the demands for reparations only made sense when it could be demonstrated that cigarette companies intentionally and knowingly caused this harm.

Did he really believe that we’ve been polluting for the last 200 years knowing that undeveloped countries would later suffer? He conceded that while we may not have known 200 years ago, we should have known in the last 20 years about the effects of carbon emissions.

Still, the 500 gigatons or so of carbon that he claims is floating around in the atmosphere certainly didn’t all appear in the last two decades. In addition, since CO2 molecules don’t have country of origin labels attached, it will be very difficult to assign responsibility.

Coming to Copenhagen has been a remarkable experience. Although metro station exchanges at 1:30 a.m. may not change the world, my hat’s off to the organizers for creating this two-week conference where conversations can take place between participants from over 190 countries. Interactions with other delegates have been extremely positive and provide hope that constructive dialogue can lead to meaningful progress.

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the U.S. Green Building Council – San Diego chapter. Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. He is currently in Copenhagen attending the COP-15 conference. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

With the gathering of more than 130 world leaders in Copenhagen this week, the issue of greenhouse gas (GHG) emissions is taking center stage.  GHG has become the burden that no one country can unilaterally cure, but every person on the planet has a vested interest in addressing.

Cap and trade, along with other policy measures, have stirred a great deal of controversy–as they should.  Decisions to significantly alter the fabric of commerce and daily life should not be taken lightly.  Rigorous debate is essential and should be welcomed.

However, even the most ardent climate skeptic acknowledges that finite resources such as oil and other fossil fuels won’t last forever.  As such, the debate seems to be evolving into a question of when and not if.  In other words, is this a problem that needs to be tackled in the next five years?  Or, do we have 100 years to figure it out?

Bold Action

The lengthy negotiating sessions in Copenhagen demonstrate that the task of reducing carbon emissions is easier said than done.  Two things are certain: It won’t be cheap and it won’t be easy.

Beyond the politics and rhetoric of “saving the planet,” a larger question is emerging.  How do we take something that is free and start charging for it?  This debate is really about putting a price on carbon emissions and ending the free ride of pollution.

Carbon Emancipation

This wouldn’t be the first time that the world has done something to take a “free” resource and associate a price with it.  In the United States, this happened when we ended slavery.  At one point in our country’s history, paying slaves for their labor was considered a radical idea.  However, in 1862, President Abraham Lincoln signed the Emancipation Proclamation and declared that “all persons held as slaves are, and henceforth shall be free.”

The decision to free slaves was a monumental step forward for human rights.  In addition, it changed the underlying economic dynamics.  The emancipation proclamation associated a price with something that used to be free.

Of course, this move did not come without resistance or conflict.  Opponents to freeing the slaves were even more confrontational then the current group of climate skeptics.  In fact, it led to a civil war.  Thankfully, the climate debate has more peaceful participants.

Economic Disruptions

Without question, freeing slaves caused an economic shockwave.  The inevitable financial burdens may have even led to the closure of some plantations.  However, the economic adjustment eventually normalized under a new model where all people were paid for their labor and the practice of slavery ended.

Can you imagine having to pay for your own pollution?  I know…it will be hard.  I’m sure it was also hard for the slave owners to clean their own houses and do their own laundry, at first.  However, ending slavery was the right thing to do.  Sure, it may have taken some getting used to for the slave owners and it will take some getting used to for us carbon emitters.

The good news is that over time, not only will we adapt to these changes, but we can expect them to create a fertile environment for innovation.  In the post slavery era, new incentives were created because the true cost of labor became properly allocated.  New products and technologies were invented that made us less dependent on back breaking manual labor.  Many of these inventions came in the form of agriculture automation and household tools, both of which made life more efficient and convenient.

To put it another way, if the marginal cost of labor is zero, then there is no incentive to be efficient or use it wisely.  Natural resources are no different.

Are Climate Skeptics Modern Day Slave Owners?

Nearly 150 years ago, slave owners believed that they could abuse human beings and cloaked themselves in a variety of arguments to justify their actions.  Some even misquoted the bible to support their racist views.  Other took a blind eye and said “That’s just the way it is.”  It could also be suggested that some found it difficult to acknowledge the fundamental inequities of slavery because they feared the financial consequences to their plantations and businesses.

Today, climate skeptics believe that we can continue to abuse our planet without regard to the consequences.  Not surprisingly, this view is particularly popular among those individuals and corporations that have the most to lose in a world where the true cost is allocated to carbon emissions.

In this regard, it’s important not to label climate skeptics as evil or ignorant.  Rather, we should acknowledge that climate change legislation will involve some short term sacrifice for everybody.  However, in the long run, the effects of cap and trade will be normalized in much the same way that our labor markets now function just fine without slavery.

Ethics and Ethos

In looking back, it’s clear that taking a stand for human liberty was the right thing to do.  We are proud of our history and the actions taken by our leaders nearly 150 year ago.  Hopefully we can say the same thing about today’s leaders when future generations look back at what we did in Copenhagen and successive climate summits.

Will they think we were barbaric in the way we treated our environment, in much the same way our modern society views the barbaric treatment of slaves?  How would you have reacted to a slave owner if they claimed that they could not “afford” to free the slaves and pay people a fair wage for their labor?

While the climate debate rages on, let’s consider not only the environmental conditions we leave for our future generations, but also the moral compass we leave as our legacy.  Freedom isn’t free.  Neither is carbon.  Ending free carbon emissions, like ending slavery is a legacy that we can all be proud of.

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the U.S. Green Building Council – San Diego chapter. Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology. He is currently in Copenhagen attending the COP-15 conference. You can reach him at 858-350-4215 or lbarken@hwcpa.com.

The COP15 corridor dance: A yellow badge-wearer chats up a pink badge-wearer.

By Lee Barken, IT practice leader at Haskell & White, LLP

Wish you were here? Allow me to draw a picture.

We’re now well into week two of the COP-15 Climate Summit in Copenhagen and the diplomats, activists and media representatives are fully engulfed in a whirlwind of activity.  Beyond the maze of the Bella Center’s million square feet, 60 meeting rooms and winding pathways lies another maze comprised of diplomatic maneuvering, backroom gamesmanship and good old-fashioned guerrilla marketing.  Knowing where to go and what to do depends mostly on who you are and why you are here.

In a nutshell, COP-15 is an oversized bundle of energy that can best be described as “organized chaos.”  It’s helpful if you think of it as two different conferences wrapped up in one.  The first conference is for the people who make decisions.  The other is for people who are trying to influence the people who are making the decisions.

What Color Is Your Parachute?

The first strategy to understand at COP-15 is the game of name badge color-coding.  Yellow badges belong to members of non-governmental organizations (NGOs), such as a non-profit forestry alliance, a youth organization or some other kind of other advocacy group. These folks number in the thousands—22,000 have registered. They spend each day running around the halls trying to make sure their presence is felt and their message is heard.  An entire pavilion is dedicated to NGOs who each have their own booth and literature which they distribute.  On the outer perimeter of the NGO pavilion is a series of large conference rooms where these groups give presentations that are open to anyone and everyone who will listen.

The NGOs have come to Copenhagen with a wide range of group sizes and political savvy.  Some are small and disorganized.  However, others are coordinated, hold twice daily status meetings and mobilize hundreds of people who roam the halls in matching T-Shirts and marketing literature.  As you might imagine, many of the participants at the foot-soldier level are college age or younger.

Pink badges are issued to those within a “party to an agreement”, a.k.a. an official country delegation. Pink badge-holders are in a separate wing, holding dozens of simultaneous meetings in various meeting rooms.  Some rooms are small and hold a few dozen, while other rooms are enormous, holding several hundred.

Most rooms are equipped with individual “push to talk” microphones at each station.  The pink badges hold closed meetings that are only open to other pink badges. Sometimes there are subgroup closed meetings that are only open to certain groups of pink badges.  For example, closed meetings are held by “AOSIS,” the Alliance of Small Island States” and the “G77 + China.”  These are essentially lobbying groups that have figured out that they will have more impact as a team and then band together to improve their chances of moving forward a shared agenda.  This is also known as strength in numbers.

Finally, members of the media are issued an orange pass.  COP-15 closed the press registration when it hit 5,000 people and it is rumored that a wait list includes another 10,000 who would like to run around with an orange badge.  Press organizations from around the world have converged on the scene to report news and provide updates to their readers and viewers.

All the World’s a Stage…

Here’s how the COP-15 dynamic works: Pink badges try to get work done, move their agendas forward and lobby each other for changes to document language.  Orange badges try to find something interesting or salacious to report on.  Yellow badges run around trying to get attention from both groups.

In one particularly enlightening conversation with a college-age NGO volunteer, I learned that her goal was to intercept pink badges walking around the Bella Center, sitting for lunch or just waiting in a line and then present them with a pamphlet and share the story of the NGO.

Other yellow badges are focused on media attention and utilize every opportunity to descend upon the orange badges with a story pitch or other promotional activity.  A popular strategy is for yellow badges to position themselves directly outside the press room (which they are not allowed to enter) and try to catch media folks entering or exiting.

In the connecting corridor between the NGO pavilion and the Publication Distribution Center (the first place you go each morning to pick up your copy of the “Daily Programme”) is an area designated specifically for publicity stunts.  Listed simply in the Daily Programme under “Other Events,” the NGOs schedule mini-presentations where they stage skits with dramatic flair.

These productions always draw a crowd of curious onlookers who take photographs with their mobile phones and camcorders.  As you can imagine, they are usually quite entertaining and include elaborate, costumes, props and antics such as a team of performers dressed up as doctors trying to save 10 foot half-inflated earth.  One person shouts “Clear,” while charging up the defibrillator paddles and attaching them to the limp planet.  Another person holds up a sign advocating a particular climate change strategy.

A large number of yellow badges think they’re on some kind of altruistic Disneyland vacation.  It’s like spring break for people trying to save the planet.  While you may question their effectiveness, you have to admire their passion.

On the other end of the spectrum, the tactics of the more politically sophisticated NGOs are impressive.  Many are well connected and can frequently be seen in conversation with pink badges and reviewing or marking up pages of texts.

Center of Attention

All of this hyper-attention seeking is a major cause of the chaos.  Imagine a sprawling convention center with 15,000 people all running around shouting “Look at me!”  Is all of this advocacy work really improving or hindering the process?  Is it working?  On a bus ride at the end of a long day of activities, I happened to sit next to a member of the UN support staff (blue badges) who was serving as an interpreter.  I asked him if these NGOs were making any difference.  After all, if the pink badges are top notch attorneys and skilled negotiators, did he really think that some college kid waving a flyer around was really going to change anybody’s position?

His response surprised me.  While most advanced countries are sending top notch negotiators, there are some less wealthy countries in attendance that simply lack the resources and talent to mount a strong policy agenda.  Some of these countries have populations of 10,000 or fewer people, so you have to imagine that their “best of the best” pole vaulter, chess player or climate change negotiator may feel like a small fish in a big pond.

At the end of the day, it’s hard to say if the activities of the NGOs are having an impact.  While some smaller countries may be influenced, it’s unlikely that the negotiating positions of the large industrial countries are being shaped by sideshow antics.

On the other hand, since there are so many reputable media outlets in one location, it’s an alluring opportunity to reach the masses and get your message “out there.”  The issue is that so many people are competing for attention from the orange badges that you end up with a high noise ratio and breaking through the clutter becomes a real challenge.

False Alarms

The other problem, as observed during the first few days of the conference, is that not having something newsworthy to write about is a recipe for disaster.  On a slow news day, writers and producers get tense and trigger happy.  On day 3, the news was flowing about details of a “secret agreement” circulating called the Danish Text.  This “closed door agreement” included terms very unfavorable to less wealthy countries and a suggestion to link the process more closely with the world bank and break away from the United Nations.

As it turned out, the story was a non-story as the text was one of many drafts that had been made public over a week ago.  There were no secret meetings and nothing new in the text that hadn’t already been disclosed.  Reports of a “leak” were overblown and suggest that with nothing sensational to report, the risk of misinformation wildfires will always go up a couple notches.

Closed Meetings and Open Content

It’s interesting to note that although the yellow badges cannot attend the pink badge or orange badge closed meetings, many of those sessions are webcast and archived.  You have to wonder why these meeting are closed if the content is later made public and open to the world?  I can only imagine what kind of disruptive “episode” occurred in the past that resulted in the decision to exclude yellow badges from negotiating sessions and press conferences.

In addition, as the conference begins to wind down, the number of yellow badges will be restricted.  On Tuesday of the 2nd week, yellow badge allowances were cut in half.  On Thursday, only 1,000 will be allowed.  By Friday, that number will drop to 90.

World Leaders Arrive

Starting Tuesday evening, world leaders will begin arriving in Copenhagen.  Of the nearly 200 participating countries, over 130 have their heads of state in attendance.  While the news from Copenhagen has been largely disappointing, one has to wonder if the arrival of world leaders will have a positive influence on the momentum of the climate talks.

After all, world leaders like to be associated with successes.  Coming to Copenhagen and being branded with a failure will not play well on the world stage. As the number of dignitaries in the Bella Center slowly increases, the hopes are high and the stakes are higher.

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the U.S. Green Building Council – San Diego chapter. Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology.  He is currently in Copenhagen attending the COP-15 conference.  You can reach him at 858-350-4215 or lbarken@hwcpa.com

A royal panel (left to right): Royal Prince Haakon of Norway, Crown Princess Victoria of Sweden, Crown Prince Frederik of Denmark

Up the road from the COP15 Climate Conference and just outside of downtown Copenhagen, 170 exhibitors gathered this weekend for the 2-day Bright Green conference, to demonstrate that climate change is both a dangerous peril and a pathway to profits. Bright Green, a showcase organized by the Confederation of Danish Industry, aims to show that the emission reductions currently being negotiated at COP15 will require a myriad of new industry solutions.

Judging by the turnout, it would appear that industry is more then ready to step up to the challenge and that the 10,000 attendees were not deterred by silent protest messages, such as “our climate is not your business” and “greenwashing,”, etched in chalk on adjacent sidewalks and walls leading to the Copenhagen Forum Center.

Inside the building, a maze of trade show booths greeted the curious and energetic crowd.  The eclectic mix of exhibitors included alternative energy companies, consultants, solution providers, product manufacturers and trade delegations from countries such as Canada, Finland, Denmark, France and the United States.

To kick off the conference, a keynote presentation was delivered by a trio of royalty.  The Crown Princes of Denmark and Norway, along with the Princess of Sweden all shared their thoughts on the changing climate and provided a recap of their experiences on a recent polar expedition. Sarah Palin may look out her window to Russia, but these three royals look out their windows to an ever-changing arctic.  “All three countries border arctic regions,” said Crown Prince Frederik of Denmark, adding “We’re all very concerned.”

The good news is that more people now seem to be engaged in the discussion “My father has been talking about this for 30 years.  At first he was lonely.  Now he feels that nobody is listening to him because everybody is already talking about it,” remarked Crown Princess Victoria of Sweden.

Royal Prince Haakon of Norway seemed particularly concerned about the linkages between climate change and the plight of the poor.  “We need a stable climate to tackle poverty.  We are connected as a human family.  We’re all in this together,” said Prince Haakon, who in 2008, along with Crown Princess Victoria of Sweden and Crown Prince Frederik of Denmark, toured regions of the arctic were ice has significantly retreated.

As an American, I’ve never fully understood the allure of royalty.  Nevertheless, the crowd seemed particularly pleased with the comments from the well-spoken young leaders.

Following their remarks was a presentation from Danish Prime Minister Lars Lokke Rasmussen, who added a sense of urgency to the conversation.  “Make no mistake.  Climate change is a reality.  It is taking place everywhere.  The challenge before us is clear,” said Rasmussen.

The delight of the afternoon, however, was an impassioned speech from renown inventor, Dean Kaman.  Following a biographical sketch of his career, including insulin pumps, prosthetic arms and other medical devices, Kaman covered some of his “green” inventions, including a device that cleans drinking water, along with a matching solar power device.  The products are designed to deploy quickly and easily in developing countries that lack access to safe drinking water.  According to Dean, the technology is there, the only thing missing is the political will.  Said Kaman, “I’ve invested 10 years and $50 million dollars.  It’s ready to go.” 

Graffiti protests may have covered the walls around the Copenhagen Forum Center, but it didn’t seem to put a damper on any of the activities inside.  The business community sees a clear path ahead.  It’s bright and green. 

Lee Barken, CPA, LEED-AP is the IT practice leader at Haskell & White, LLP and serves on the board of directors of CleanTECH San Diego and the U.S. Green Building Council – San Diego chapter. Lee writes and speaks on the topics of carbon accounting, green building, IT audit compliance, enterprise security and wireless LAN technology.  He is currently in Copenhagen attending the COP-15 conference.  You can reach him at 858-350-4215 or lbarken@hwcpa.com.