Cracking the Carbon Code

Smart businesses and investors will now need to crack “The Carbon Code” to figure out the winners and losers – – and just how much to adjust their business plans and portfolios.

In the 1950s, government and industry officials said nuclear
power would be so cheap, there would be no need to meter it. In other words,
electricity would be free. Imagine if that had actually happened (forget for a
moment how much radioactive waste would be lying about) and imagine that
because of the economic downturn the government decided to start charging for
electricity in 2009.



Suddenly, you would look at your company and investment
portfolio with a new lens. Any electricity-hungry businesses would be worth
much less than those that put a premium on efficiency or used renewable energy
like solar and wind power. Stock values would be revised over time as charges
for electricity mounted up. Many previous darlings of Wall Street would be dogs
and vice versa.


Well, we all know that nuclear power was actually too
expensive to continue rather than too cheap to meter, so electricity was never
given away. But in a similar vein, our atmosphere WAS given away – – but is
very soon going to have a price. Smart businesses and investors will now need
to crack “The Carbon Code” to figure out the winners and losers – – and just
how much to adjust their business plans and portfolios.


Companies that are heavily dependent on energy from fossil
fuels will find that a price on carbon, through the cap-and–trade system being
developed in over 30 states and envisioned in the Waxman-Markey bill that’s
making its way through Congress, are worth much less than those with less of a
“carbon footprint”. Energy and resource efficiency will be king.



The Carbon Code has actually been with us awhile, but so far
mostly invisible. Investing in Toyota a few years ago turns out to be smarter
than buying GM stock, in no small measure because Toyota and its Prius were
more efficient than GM and its Hummer. Makers of compact fluorescent light
bulbs are literally turning the lights out on makers of fluorescent bulbs, as
many states and countries ban inefficient lights (watch out – – LEDs will soon
replace those CFLs!).


In one of the most dramatic examples of The Carbon Code already
at work is a company called iGPS, a maker of plastic shipping pallets. Wood
pallets consume vast tracts of forest every year, something unsustainable in a
literal sense as global demand outstrips supply, but also a product constrained
by the worldwide effort to avoid deforestation to prevent more greenhouse gas
pollution. The plastic pallet is 30% lighter than the wooden one, saving fuel
and pollution immediately, and doesn’t require toxic fumigation or extra trips
to the repair station. Bottom line? If you had applied The Carbon Code to these
two businesses a year ago, you would have predicted that iGPS would capture a big/growing
chunk of the market and CHEP, the wooden pallet monopoly, would lose over $3
billion in market cap as customers and retailers shift to plastic pallets – –
exactly what has happened.


So educate yourself about the true carbon footprint and
resource efficiency of your business (or those in your investment portfolio)
and start shifting to the resource-efficient, low-carbon alternatives ASAP. As
the resource that so many have taken for granted starts to cost real money, understanding
The Carbon Code will make you look very smart and very profitable.


About the author

From his youth in Australia to career experiences in Europe, Africa, China and across the United States, Terry has developed expertise in business, farming, education, non-profit, the environment, the arts, and government. A United States Coast Guard-licensed ship captain, Terry has long been drawn to the undersea world, starting in the 1960s with a family-run tropical fish breeding business in Australia and continuing with studies on conch depletion in the Bahamas, manatee populations in Florida coastal waters, and mariculture in the Gulf States with Texas A&M University. On land, Terry managed the largest sheep ranch east of the Mississippi, assisting the University of Minnesota in developing new methods of livestock disease control. Terry also managed a multi-million dollar real estate company, owned a successful recreational services business, and assisted the West African nation of Nigeria with the creation of their first solid waste recycling program. In 1993, Terry founded the Santa Monica BayKeeper and co-founded additional Waterkeeper programs in five California watersheds