The University Carbon Fund

Two years ago, I imposed a Carbon Tax on Me. It was a very simple idea needing no government intervention, regulation or political posturing. And it worked!  The concept has a certain attraction in today's post-election climate and energy world. How else might it be applied?

Let's start with some places where interest in climate change is very high and people are searching for constructive solutions to meet the world's energy needs while lowering CO2 - our colleges and universities.  Outlined below is a proposal for The University Carbon Fund - a simple way for universities to reduce CO2 emissions, save energy and money, and spur investments in clean energy. The University Carbon Fund can be implemented now, is designed to be revenue neutral, and can be tailored to each university. The beneficiaries are students, faculty, administration, researchers, clean energy companies and the planet.

How the University Carbon Fund works:

• The University, with student and faculty input, establishes baselines for energy use and CO2 emissions and proposes reduction targets. 
• The University saves energy (and importantly) money, while helping achieve the CO2 targets through energy efficiency, conservation measures, and implementation of new technologies, products and services. 
• The University implements a staged Carbon Tax and establishes a University Carbon Fund with the revenues received. 
• The Fund is retained and managed  by the University, with student and faculty input. 
• The energy cost savings offset the Carbon Tax. 
• The University Carbon Fund is invested in in clean energy companies, services, efficiency measures, products and research and development.

How your University can do it:

Step 1: Determine current CO2 output

Many universities and colleges have some form of a Sustainability Office and can provide an estimate of the institution's energy consumption and CO2 footprint, often broken down to a department or school level, as a baseline. For those universities yet to take this step, a student-led task force might accomplish the task to sufficient accuracy using financial and operations data and a number of available online calculators in a matter of months. It's a great semester class project.

Step 2: Establish and implement a carbon reduction target

Again, many Universities have already taken this important step. For those that haven't, consider cutting your emissions by 25 percent over the next 5 years, and an additional 10 percent before 2025.


Step 3: Establish an energy cost saving target:

Actual energy cost and emissions reduction is the crux of the challenge. It's much easier to set the targets than achieve them. There are many ways for Universities to achieve a reduction in their energy costs and CO2 emissions: conservation and efficiency measures,  choosing lower carbon alternatives to travel, renewable energy options for electricitY, innovative building design and retrofitting, choices in diet, recycling and vehicles.

Step 4: Apply a price for carbon to the university CO2 output and determine a carbon tax.

Universities might consider a staged approach to a carbon price as they work out kinks in their program, for example starting at $10 per ton CO2 in 2017 rising by $5 per ton per year to $30 per ton CO2 in 2021 and $40 per ton in 2026.  Universities may of course reserve the right to set a more or less aggressive target and to review their carbon price targets annually. For example, a university might consider simply capping the carbon price at a level that produces a tax equal to their projected energy cost savings.

Step 5: Save and invest the carbon tax proceeds in the University Carbon Fund

What can your university do with their University Carbon Fund?
Invest in clean energy companies and deployment of new cleaner energy technologies. Invest in research and development, in efficiency measures and in low carbon products and services. The University Carbon Fund grows in value through time, spurs economic growth and create jobs. Three different investment options are provided below - there are of course others.

• Investment Option 1: Invest in and build a portfolio of companies that develop, produce and deploy technologies and products to reduce CO2 or improve energy efficiency. Be pragmatic - invest in companies making a difference now.
• Investment Option 2: Invest directly in products, services and efficiency measures that reduce the university carbon footprint and can save energy costs. Take advantage of renewable energy options from existing utilities, participate in distributed energy systems, purchase solar panels, insulation and high efficiency appliances and lighting, build a high MPGe vehicle fleet, support local foods, install efficient lighting: there are many options.
• Investment Option 3: invest in  basic and applied research in science and engineering directly related to energy. Consider this investment seed money, providing your university and the world with ideas for future investment options. Pursue partnerships with matching funds from industry. Investment helps bridge the gap between innovation and deployment.

Let's put some numbers to all this to illustrate how it can work in practice
A university with 18,000 students emits around 90,000 tons CO2 per year and has all inclusive
(heating, cooling, lighting, lab, physical plant, operations, transportation & commuting, air travel, operations) energy costs of about $18 million dollars per year.

The university targets a 5 percent  CO2 reduction each year through the end of 2021.

The university establishes a carbon price of $5 per ton CO2 for 2017 (purposefully low to work the kinks out of the process) rising to $15 per ton in 2018, and then increasing by $5 per ton each year  until the goal of $30 per ton CO2 is reached in 2021.

The University targets a 3 percent reduction in energy costs year on year, measured against its 2016 baseline costs.

In this example, the carbon tax, including targeted emissions reductions, would total $7.1 mln for the 2017-2021 time period, rising from $430,000 in 2017 to almost $2.3 mln in 2021. CO2 savings would be over 60,000 tons.

Cumulative total energy cost savings for this same period against the 2016 baseline would be $7.8 mln, creating a surplus (above the carbon tax) of $700,000 for the university to use as it sees fit. In any year that the actual cost savings turn out to be less than the carbon tax, the university could retain the option to cap the tax to retain cost neutrality. Alternatively, some universities have suggested that alumni challenge grants based on beating energy and CO2 targets might provide an additional funding source.

A sample portfolio for the University Carbon Fund might work as follows: 50% invested into a University Clean Energy Investment Fund, 20% into a Products, Services and Efficiency Fund, 25% into University Energy and Climate R&D, and 5% into Administrative Fees to run the program.

With this portfolio, over the 2017-2021 time period, the University Clean Energy Investment Fund would grow to $3.6 million (conservatively, without including any interest, dividends or capital gains). The Product, Services and Efficiency Fund would total $1.4 million, and almost $1.8 million dollars would be available for university energy and climate R&D.

Your university can take a leading role. Take action now and establish a (Your University Name Here) Carbon Fund.

#myuniversitycutscarbon

The Carbon Price Challenge

This week, let's kick off the Carbon Price Challenge.  Together, we'll cut our emissions of CO2, save energy and money, invest in cleaner energy for our future and help end energy poverty. 

For the next month, each day I'll invite one or two people of influence and impact in climate and energy to join me in this challenge and we'll track our progress. I invite you to do the same and also welcome your nominees - the only stipulation is that one of the nominees has to be you. So, I'll  begin with me - and invite former Vice President Al Gore and Richard Branson to take the challenge.

How the Carbon Price Challenge works:

• Decide how much you want to reduce your own CO2 emissions.

• Tax yourself with a self-imposed price on carbon.

• Save money through energy saving and efficiency measures to offset the tax.

• Invest your tax and savings in clean energy solutions.

• Contribute a portion of your tax and savings to help reduce energy poverty.

• Challenge two colleagues, family members or friends to join you in the challenge. 

There are many practical benefits to the Carbon Price Challenge.  It's simple and we can do it now.  We choose our own personal carbon price as a strong motivator to reduce emissions of CO2. We tax ourselves using that carbon price and our carbon tax and energy cost savings are returned to us to reinvest in cleaner energy investments of our choice. And thoughtful investment of the proceeds in cleaner energy solutions will be good for people, good for the planet, good for the economy and good for our portfolios. 

Some background. The gap between what we say and what we do in climate and energy has never been greater. And while this is apparent at a global and national level, it is equally evident for many of us as individuals.  After all, even some of the staunchest climate advocates live a fairly carbon intensive life (we know who we are). We crave our energy, but look to others for the fix. 

The hard truth is that the people of the world need energy. More than 1.5 million new energy consumers are added to the world's population every week. Every week! Energy contributes to almost every aspect of our economy and quality of life and is vital to lift people from a life of poverty. Energy has been, is, and will continue to be a force for good. To argue the contrary is simply to ignore overwhelming data.

But everything has a cost - in this case, the CO2 emissions that come with much of that energy. Not so good. 

The challenge? The most reliable, affordable, scaleable and available energy sources today, oil, gas and coal, unfortunately produce CO2. But increasing levels of CO2  in the atmosphere contribute to climate change , and with that significant economic and societal costs and consequences. How can we reduce our carbon footprint while accelerating the innovation and deployment of new carbon reducing technologies for fossil fuels and the implementation of new alternative energy sources?

How you can do it: 

Step 1: Determine your current CO2 output

You can make an adequate rough estimate of your personal  CO2 footprint using any number of widely available, free online calculators. It will take you less than an hour. Much less. These calculators not only provide the numbers needed for your DIY carbon tax but equally important, will significantly increase your awareness of opportunities for reducing emissions. 

My CO2 output is presently above the US national average, which is itself well above the average for the EU and China. Not good. I suspect yours may be higher than you expect too. 

Step 2: Establish your carbon reduction target

My goal is a 10 percent reduction in my own CO2 emissions in 2015 and to cut my emissions in half over the next decade. This exceeds most government mandates. There are so many ways you can achieve a reduction in your CO2 emissions - from energy conservation to choice of vehicles and travel. Many websites offer practical advice. How you do it is up to you. 

Step 3:  Apply a price for carbon to your CO2 output and determine your annual carbon tax 

Just this past month, former U.S. Treasury Secretary Lawrence Summers called for a carbon tax and suggested a price of $25/ton.  I will take a deep breath and set my carbon price at $40/ton. Motivation. Note that this is well above the price of carbon as traded anywhere in the world or of most corporate internal carbon prices. 

In application then, I simply multiply the price of $40/ton times my calculated CO2 emissions to arrive at the annual carbon tax.  At the average per capita emissions of CO2 in the US of 17 tons per annum, the carbon tax would be $680.  With strong energy conservation and efficiency measures you can save money to offset the tax and in many cases will actually come out ahead - revenue positive at the start.   Still, if my proposed $40/ ton carbon price  is too high for your budget, for your own carbon price challenge simply consider a lower carbon price, such as Summers' $25 even Microsoft's $6-$7. Just take the challenge.

Step 4:  Save and Invest the tax proceeds 

What can I do with my tax proceeds and cost savings? Invest!  Should you decide to take the challenge and join me,  your investment choice should help to reduce CO2 output and spur development and the deployment of cleaner energy.  The investment  can help grow your personal wealth, spur economic growth and create jobs.  Invest in companies that develop, produce and deploy products and services available to reduce our carbon footprint. Invest directly in products and services that reduce your carbon footprint and can save energy costs. Contribute to institutions and organizations doing high quality basic and applied research in science and engineering directly related to energy.   

Step 5: Support Organizations Helping to End Energy Poverty:

Do something to help others less fortunate. Use a portion of your tax and savings to invest in organizations which help alleviate energy poverty around the world. The world needs energy now, esspecially in poverty, famine and disease stricken places like sub-Saharan Africa.  Every contribution helps. 

Take the Carbon Price Challenge

The basic principles of the Carbon Price Challenge may be applied beyond individuals of course. But just imagine if a thousand people concerned about energy and climate initiated their own personal carbon tax, as I have done.  Then multiply that by ten thousand. And more. Imagine if businesses and institutions did the same. Imagine the energy savings and the research investments in cleaner energy, the improved lives of people living in energy poverty, and the opportunities for creating wealth and investing in our future. 

Imagination and talk are one thing -  action another. Each of us can make a difference. How much of a difference is up to me and up to you. Collectively the impact can be massive. Challenge two people now to take the Carbon Price Challenge. Think big.

Tweet your commitment and nominees to me at lawrence_energy, #carbonpricechallenge.

So, today I challenge you and former Vice President Al Gore and Richard Branson to join me, and ask each of you to challenge two people to join you. 

A Revenue-Positive Carbon Tax and Investment Program You Can Begin Now

         Time is valuable, especially when it comes to the difficult task of addressing climate change while providing people around the world with the energy they need. Are you frustrated by the pace and proposals of climate and energy talks and searching for solutions that are within your control and enable you to make a difference? Would you like to lower your carbon emissions, save energy and money, invest in clean energy, and help end energy poverty? Here's a one-minute overview of a Do-It-Yourself, revenue-positive carbon tax and investment program to help you achieve your goals, starting now.

1. Cut your CO2 emissions in half over the next decade through energy efficiency, conservation, lifestyle choices, and use of cleaner energy technologies.  Start slow or fast - it's up to you. See valuable how-to links here.

2.Tax yourself with a $5 - $40/ton self-imposed price on carbon. It's easy to make an estimate of your carbon footprint and tax.

3. Save money through your energy savings to offset or complement the tax.

4. Create value by investing your tax and energy savings in companies, institutions and organizations researching, developing, implementing and deploying clean energy solutions. You choose the investments and you receive the returns on those investments.

5.  Go one step farther and contribute a percentage of your tax to organizations and institutions helping to end energy poverty around the world. 

                                            You can make a difference

           For more information on how to start click here.

          Join us  @lawrence_energy  #carbontaxonme