Thursday 1 November 2007

The Climate Macroeconomic Megatrend. A Virtuous Carbon Cycle

  1. Public finally recognises quality of life, safe society and an efficient economy trumps status and prejudice. Accepts this personal social responsibility. Acts, Lobbies and Votes low carbon
  2. Government takes this electoral confidence signal. Accepts its leadership responsibility. Strongly regulates, incentivises, hypothecates low carbon
  3. Business sees this clear price signal. Accepts the business responsibility to innovate. Plans long term business around low carbon goods and services
  4. Public consumes more low carbon goods and services. Go back to 1

Dealing with climate starts with the individual. This can be strongly reinforced with leadership from the Government who can then regulate. Following this signal Business can then innovate confident about future fixed, less volatile and regulated price factors. The risk is lower, people can make the big calls with less chance of losing their job over it.

Key is for the public to start this virtuous circle by lobbying and voting for the real climate leaders. They can also lead themselves by creating the demand and by committing to pay the price for low carbon goods and services. This is only the case for an overwhelming minority today.

Presently the public want low carbon goods so they can feel good about it, but they are not willing to pay. Business wants profit so must wait for the early adopters to take the lead. Government leads slightly ahead of the public, slightly behind business. so we are in a stale mate

We all have plenty of carrots. More carrots will not move people as is seen with the price of fuel. Its inelastic. Sticks are now needed to make the change. Public and business will accept stick if it is both reasonable, fair and most of all they trust the leadership whipping them with it. Political levers such as the Conservative IHT promise are really not the right way to win public trust. They merely reinforce public opinion of poor leadership.

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