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Guest Opinion: Savings Account 

The Carbon IRA: The most rad idea you’ve never heard of to reduce carbon footprint

The latest Inter-Governmental Panel on Climate Change (IGCC) report concludes we have 12 years before global average temperatures rise by 2 degree celsius, the threshold at which irreparable harm is done to tens of millions of people worldwide.

Yet our responses to climate change—individually and at all levels of government and institutions—have been incremental at best, and, these days, regressive. The Trump administration thinks climate change is a hoax perpetrated by China.

Even the "aggressive" policies under the Obama administration didn't achieve a level of urgency commensurate with a 12-year countdown clock.

Current proposals—such as broad new taxes on carbon, more onerous regulatory regimes, and carbon cap and trading schemes—are stalled politically.

The Carbon IRA represents radical new thinking, but is simple in concept: Reward individuals who change their behaviors and consumer practices to reduce carbon footprint by converting the avoided carbon into funds that are deposited into a retirement account similar to an IRA or 401K.

Carbon IRA addresses two societal challenges simultaneously: carbon-induced climate change and the anemic rate of retirement savings among Americans. It also solves what is perhaps the most intractable problem addressing carbon footprint in a capitalist economy: fluctuating energy prices.

Price of gasoline goes up, people buy smaller, fuel-efficient cars and drive less. Prices go down, and we revert to trucks, SUVs, and less efficient vehicles.

Price of electricity goes up, we conserve and use less. Prices go down, and we use more. It's part and parcel of a market economy based on price signals.

Energy consumption is directly correlated to carbon discharges.

Carbon IRA offers a consistent long-term reward for making low-carbon choices. It's a carrot, not a stick.

Politically, it's more libertarian than progressive or conservative. It's about choice.

Carbon IRA requires no new government programs to get started. In fact, the most likely early adopters are the big digital firms (Google, Amazon, Microsoft, Apple). They are already using their size and clout to drive their customers and partners towards a lower-carbon future.

Such profitable firms with high stock valuations, or small innovative firms growing rapidly and seeking to attract and retain talent, can easily add Carbon IRA to the menu of options in the employee compensation package.

Most of their management doesn't believe climate change is a hoax.

Suppose you commute to work by bicycle and avoid vehicle-induced carbon emissions; partook of the vegan diet (which is about one-half the carbon intensity of a meat-lover's diet); equipped your home with as much rooftop solar as practical; drove an electric vehicle in a region in which most of the grid electricity was carbon-free or low carbon; carpooled with fellow employees; or purchased carbon-free (renewable sources, nuclear power) electricity from your utility or third-party supplier?

How bad are retirement savings today? According to one survey from a few years ago, the average American between 55-64 years of age had only $85,000 in retirement wealth. Consider young people burdened by enormous college debt, who struggle to undertake a mortgage!

Carbon IRA is a compound boon for young adults, those least likely to begin saving early and those most concerned about the future of the planet.

This makes Tucson an excellent place to begin pilot testing Carbon IRA. It has a relatively young population distribution—average age is under 33 while the national average is 38. Its economy is anchored by a major university, always associated with innovation, entrepreneurship, and progressive ideals.

We have an abundance of solar energy. Tucson is also water constrained, which makes the transition to electricity production requiring no water (e.g., solar) that much more urgent.

It's also a city that supports and encourages bicycling as transportation, not just recreation. And it's a city that has a nascent rail system which could be expanded if riders were better motivated.

All of the structural elements to implement Carbon IRA as a business or program can be adapted from other contexts. Apps can track pedestrian bicycling mileage, time-stamp it, and upload to the governing authority (company, employer, government agency). Mass transit stubs can be collected.

EVs are equipped with sophisticated computers which monitor and track everything about the car. Rooftop solar monitoring systems can convert KWh into avoided carbon and upload to the proper data repository.

Hundreds of firms manage IRAs and 401Ks on behalf of employers and individuals.

Deeper issues would be what monetary value to assign to the avoided carbon and how to escalate it over time. Program administrators would have to agree which behaviors and choices to include. Verification and validation would be necessary.

Yet facing a 12-year clock, these are relatively minor challenges. We need fresh thinking. Tucson is a city that can do Carbon IRA!

Jason Makansi is an electricity industry consultant with four decades experience in technology and policy deployment, and the author (or co-author) of five books including Lights Out: The Electricity Crisis, the Global Economy, and What It Means To you (John Wiley & Sons, 2007), and Painting By Numbers: How to Sharpen Your Bs Detector and Smoke Out the Experts, available through the Pima County library system and all major booksellers. This article is based in part on a presentation delivered to the TENWEST festival in 2016 and to major energy industry audiences across the country.

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