As things stands right now, the market can’t solve climate change.
Don’t be fooled by Larry Fink’s mid-January letter to the heads of the world’s biggest corporations stating his firm, BlackRock, would exit investments it deems to “present a high sustainability-related risk.”
Don’t get your hopes up because developers of waterfront parcels in Boston are starting to design for a world of higher sea levels and stronger storms.
Right now, most of the major trends in business and finance taking shape in response to climate change are focused on making sure investors and companies don’t lose their shirts when a drought-fueled wildfire sweeps through an exurb.
The hard steps – adapting how we do business to a low-carbon world – aren’t really happening yet, and for good reason. The money isn’t there.
Most market actors look five to seven years out, or less. That’s too short a timeframe for many of the larger drivers of climate change to show up in a balance sheet or a pro forma. Not enough homebuyers, even in famously frugal New England, recognize that the higher up-front cost of a solar-equipped house is balanced by lower life-cycle costs. Not enough investors recognize that a suburban development built with cars in mind is a worse long-term investment if the cost of carbon generated by driving gets priced into gasoline.
That’s why it’s critical the state creates cap-and-trade and cap-and-invest schemes like the Transportation Climate Initiative and others the state Senate has proposed for homeowners and commercial buildings.
Building industry groups say an important provision of the Senate’s bills – passed late last week – which would create a “stretch” net-zero building code that towns could adopt to spur greener building, is currently cost-prohibitive to implement.
Net-zero buildings – those that are so energy efficient they generate effectively zero carbon dioxide or which produce enough of their own energy to compensate for what is generated – are possible but developers and buyers must pay a premium for these features. With construction costs already high and increasing much faster than inflation, new mandates like this could put a damper on the building necessary to address the housing crisis and keep our economy humming.
With a properly designed cap-and-trade program, though, developers and landlords would have an incentive to invest in net-zero features, moving these essential upgrades from a luxury product towards an every-day component of buildings.
As it takes up the Senate’s bill, the House of Representatives should pair net-zero building requirements with incentives or tools that will make sure sustainable building becomes the easy choice.
