Another View -- Julie Gorte: Carbon pricing is a smart approach to climate action
By JULIE GORTE
There are many risks from climate change and smart investors take those risks into account. Currently, the costs of failing to address climate change are estimated to have an average value at risk of $4.2 trillion globally, representing 6 percent of the current market capitalization of all the world’s stock markets.
That’s a lot of risk. As the creator of the first socially responsible mutual fund in America, we are doing our part. We avoid climate change laggards in our portfolios, measure our portfolios’ emissions, invest in climate change solutions, and actively engage companies to reduce their own carbon footprint. Many investors are starting to follow our lead, recognizing the risk of climate change and the demand for action.
While our actions are vital, we need help conveying to everyone that emissions have a cost and that mitigation has value. The largest contributor to greenhouse gas emissions in the U.S. is our everyday burning of dirty fossil fuels to heat our homes, power our devices, and fuel our cars. To have a real impact globally, we need to lead locally, and build toward economy-wide policies that will reduce emissions in all sectors and industries. That’s why we support a statewide price on carbon.
A carbon price is a market-based system that implements the polluter pays principle. A small fee is levied on companies that import or produce dirty fossil fuels. The revenue generated can be used to help offset any higher prices by giving out dividends to businesses and citizens or it can be invested in clean energy development, green infrastructure, or other programs. Some economists agree that a price on carbon is the most efficient and effective way to reduce greenhouse gas emissions. Moreover, it is a business-friendly solution: it is market-based and easy to administer.
With climate action stalled at the federal level, states all over the country have committed to meeting the reduction goals outlined in the Paris agreement, but now, we need to see action. Businesses around the world have led the way in implementing internal carbon prices. The Climate Disclosure Project identified almost 1,400 companies, equaling $7 trillion in annual revenue, that have either implemented or committed to an internal price on carbon. While this makes a huge impact, state policies would help us go further.
New Hampshire is currently considering a carbon price study bill. Our legislators want to know what kind of impact a carbon price will have on our state’s economy, but so far, they have not been able to get enough support. Policymakers need to know that businesses in the state want to see action on climate.
We cannot continue to pay the high costs associated with damage from extreme weather events or lose tourist industry income because of temperature changes and polluted natural resources. We need to transition to a 21st-century economy that creates good jobs without harming our environment. A carbon price study will identify exactly what the market is willing to bear and give us a road map for creating a low-carbon, modern economy right here in New Hampshire.
At our company, we seek to identify forward-thinking companies that are leading their industries and are focused on the long-term. Putting a statewide price on carbon would align those values for our entire economy and show that New Hampshire has a plan for tomorrow.
Julie Gorte is senior vice president, sustainable investing at Impax Asset Management LLC, a sustainable investment firm based in Portsmouth.