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This is a joint posting with Kevin Ummel
Q: What can we do to save the earth?
Wendell Berry: "Stay put."
Economists are always irritating their colleagues by harping about opportunity cost, but the concept can be useful nonetheless. For example, consider the “carbon account” announced for the Poznan climate change meeting. According to the sponsors, travel and other logistics for the 8,000 conference participants will generate 13,000 tons of greenhouse gas emissions.
Participants have duly announced the purchase of “carbon offsets” as atonement for their logistical sins (which begins to sound like the sale of indulgences by the medieval Church, but that’s another story). The whole thing projects a reassuring aura: By purchasing offsets, the participants can cover the “climate cost” of the meeting.
What a difference a week makes!
On February 4, Reuters reported that Citigroup, JPMorgan Chase and Morgan Stanley had agreed to evaluate the “risks posed by carbon emissions when lending to power companies that seek to build coal-fired power plants.” Yesterday, in his keynote address at the 2008 Emerging Issues Forum, Bank of America CEO Ken Lewis announced that his company will price CO2 emissions when evaluating lending to the utility sector.