By Sonia Labatt and Rodney R. White
Reviewed by Gary W. Silverman, CFP®
This book is written on the premise that "climate change is occurring and that human activities are a major contributing factor." I know that many readers of this review don't believe that. Whether you do or do not isn't the issue since most governments of the industrialized nations think so. A quoted report maintains that unabated, this climate change could cost as much as 20 percent of global GDP. It furthers that if the world acts quickly, that cost could be kept to less than 1 percent.
It doesn't take a Ph.D. in economics to understand the magnitude that a 10 percent to 20 percent drop in GDP would cause. This is the reason why in 2005, the European Union required its member states to impose emission caps on individual industrial facilities. The regulation is done through the issuance and subsequent trading of emission allowances. Less pollution and you have allowances to sell. More pollution and you must buy.
So far this hasn't been a big deal as the allowances were granted generously. It is due to be tightened at the close of 2007. If this takes place, a true carbon finance market place will evolve almost overnight. Investors need to consider how climate change and/or this reaction to climate change will affect their investments.
Even more profound are some concepts that are filtering through the governments and populations of Europe: giving individuals their own carbon allowance each year. This personal allowance could be credited and debited according to their purchases, travel choices, and energy consumption.
Sonia Labatt and Rodney White also take the time to give the reader a background in pollution sources and controls, as well as discussing the Kyoto Protocol. This book is a valuable guide for anyone wishing to get ahead on this issue and understand the implications of this market-based approach to combating climate change.
Gary W. Silverman, CFP®, owns a fee-only financial planning firm, Personal Money Planning, in Wichita Falls, Texas. He is the host of the television show Falls Informer, editor of the financial newsletter Personal Money Planning, and a frequent contributor to the print and broadcast media.
John Wiley & Sons Inc.