Carbon credits are dead – long live greenbucks! It finally dawned on eco-conscious consumers in the West that their old habit of outsourcing polluting production processes to the East was backfiring on their ideals. At the same time the EU dropped the unworkable carbon tax – carbon credit scheme in favor of direct support for green industries.

The shift has caught some manufacturers by surprise – those that were blithely working on the old ‘lowest cost rules’ paradigm.

Now countries that have long espoused a ‘zero emissions’ philosophy like Sweden are leading the race, closely chased by China and India, whose visionary leaders saw the writing on the wall. Other eastern manufacturers like Korea, Vietnam and Thailand are finding that their low-price strategy is flagging in the face of rampant eco-consumerism and regional environmental regulation.

This new investment in the business of green technology and green energy has been termed ‘greenbucks’ and is set to outdo the dotcom boom in terms of sheer size and speed of adoption. The world’s biggest players are involved – industry giants, venture capitalists and leading economies.

The Kyoto Protocol is in tatters, and the term ‘global warming’ is considered obsolete, but green business is booming on all fronts as the new consumers – connected and informed – demand eco-friendly goods and services, never mind the cost.

ANALYSIS >> SYNTHESIS: How this scenario came to be

Investing in green industries
Simply put, ‘greenbucks’ is direct investment in green technologies, energy and industries, and the funds that finance and support them.
This scenario implies that regulatory incentives like carbon tax and carbon credits and international cooperation agreements like the Kyoto Protocol will fail and that consumers will somehow change their behavior of bargain hunting in favor of a more sophisticated and environmentally conscious mindset. Are the chances of this happening very low? What is the driving force that will make consumers change, and make this scenario possible? Will they be scared by ‘Climate Change Fever’ or will enlightened self-interest and ‘greenscan’ technology make them realize that they will benefit financially and environmentally? The EU may be able to influence this paradigm shift to some degree, but will this be a world-wide phenomenon? The idea is that the quality of life (perceived or real) improves so much that this green experiment outweighs poverty issues – at least in the developed world – and other producers are forced to toe the line if they want to participate in the new green boom.
There are many examples where consumer franchise outweighs rational economics. The natural fur trade was destroyed by ‘bunny huggers’ and replaced with the faux fur fashion. Organic foods sell at a premium to their mass produced, chemically treated and economically superior rivals. For some, going green is only for the wealthy, but for others it is the only alternative to self destruction on a global scale. The West has for decades wallowed in the luxury of the ‘China Price’, but at what cost to humanity and the planet? As the mobile information age makes every purchase decision increasingly transparent to the buyer – both in terms of economic AND ecological cost – how many consumers will choose the recycled package and forest friendly logo over the ‘Made in Cambodia’ bargain? And as they vote with their dollars, how many investors will follow the trend? Who will be the winners and losers, and how long will the bubble last?
These are questions without a definitive answer, but some of the possibilities are explored in the Scenario Matrix below.
2005: China world’s second-worst polluter
China has become the world’s second largest emitter of greenhouses gases, after the United States. By other measures, such as total air pollution and water quality, China is possibly the most polluting nation on earth. Diseases from air pollution become the leading cause of death in China.

China is also on top of the consumption lists – oil, steel, coal; it seems China has a ravenous appetite for resources and commodities. By its own calculations, China is both the second largest producer of energy as well as the second largest consumer. According to the New York Times, pollution from Chinese coal has a global fallout: “The increase in global-warming gases from China’s coal use will probably exceed that for all industrialized countries combined over the next 25 years.”

By contrast, Sweden has the lowest CO2 emissions per capita of all developed nations.

2006: GE invests $50m in green China
US industrial giant General Electric strikes a deal with the Chinese government to invest US$ 50 million on developing green technologies. Is China taking note of the impending crisis, or is an astute corporation getting a head start on future business imperatives?

China’s Mid- and Long-Term Development Plan for Energy is designed to increase the proportion of renewable sources of energy in the entire ‘energy structure’ to around 15% by 2020 from the current 7%.

Sweden sets itself the goal of achieving total independence from oil by 2020. The country is already covering many of its energy needs with renewable resources such as bioethanol to fuel its cars and wood to fire its power plants. The government has decided that Sweden will be the first country in the world to become independent from oil – by the year 2020.

Conservation counts. In the early spring of 2006, large land mammals venture into urban areas of the United States – white tailed deer, assorted bears and a wild coyote captured in Central Park. Wildlife experts say this phenomenon is partly due to the success of conservation efforts, increasing habitats and animal numbers.

Developments in the carbon trading markets, especially under the European Trading Scheme (ETS), raise the question about whether this market actually works. Tony Ward, energy director of consultancy Ernst & Young, tells the BBC: “ETS has created volatility in carbon prices and it has also [failed to] encourage meaningful investment in carbon reducing technologies.”

2007: Climate change fever
Global media attention and debate on climate change reach a fever pitch. Following a string of natural disasters including tsunamis, Category 5-plus hurricanes, wildfires, floods and heat waves, the planet’s climate has become the most politicized issue of the day. Al Gore’s movie about global warming, “An Inconvenient Truth” was the toast of the Cannes Film Festival in 2006. Eight months later it is overshadowed by one from Michael Moore, which is nominated for an Oscar.

While academics, scientists and politicians slug it out over global warming, pending ice ages and carbon trading, business leaders are quietly taking note of a paradigm shift in consumer habits. Consumers are going green – voting with their euros, dollars and yen for products and services that come from eco-friendly producers.

The Kyoto Protocol, never having been ratified by the United States, is a bulldog without teeth, and criticized by many as being ‘too little, too late, too bad’. Considered ineffectual by many of the world’s most powerful actors, it becomes irrelevant. Certainly Sweden and Switzerland have managed to stay on top of the green scale without it, and those to whom it doesn’t apply – like China – have never bothered to comply. They have their own agendas, self-serving they may be, but the market is the ultimate dictator.

Bill Gates invests almost a billion dollars of his own money in green technology ventures.

2008: GreenScan launched
Sony Ericsson launches the GreenScan service in conjunction with the Swedish government. Simply snapping a picture of any product’s bar code with your camera phone and sending it to +46GREEN will send back that product’s rating on the green scale, as well as price comparisons with its nearest (greener) competitor. Consumers love it because it automatically tells them where they can get the best price, even if they choose the less green item.

2009: Forests are fuel fields too
Sweden’s forests are fueling the nation to the tune of 35% of its gasoline needs. Wood power is also driving the switch to renewable electric energy. The symbol of a green pine tree adorns all of Sweden’s eco-premium products. Investment and consumer support flock to the greenest of green economies.

Carbon Credits are suffering the infamy of being a vehicle for enriching the fat cat industries of the developed world while the poorest nations pay. Ironically some of the globe’s biggest industrial corporations make massive windfalls by simply shutting down or curtailing carbon-heavy plants and production lines – some of which were financially ailing anyway. In African countries ‘Carbon Tax’ is a convenient way of bolstering the state coffers, without any discernible benefit to the environment, and reducing economic growth with yet another impediment to free market activity – trade and production.

The complexities of the carbon exchange system prove to be its downfall; only the most astute and sophisticated industrialists can turn a profit, making it another competitive disadvantage for those who feel they are suffering rather than profiting from globalization.

2012: Greenbucks
Greenbucks is the new investment game in town. Funds specializing in investment in technologies for eco-friendly production and energy are all the rage. Consumers shun anything connected with polluting factories or industries that damage the environment. Biofuels and hybrid cars dominate the automotive scene.

Sweden is sitting pretty, well on its way to oil independence. China, having come late to the race, is making enormous strides – it has no option if it wants to be a global competitor. No longer does the lure of a bargain dominate all buying behavior. Consumers are too savvy, too connected and too concerned to simply buy on price. Just as ‘Made in Japan’ became a symbol of quality, ‘Made in China’ has become a symbol of dubious respect for the planet, and mankind, and China has a massive mountain to climb to get on the green side.

The planet seems to smile as green fever takes hold. Will it last longer than bubbles of the past?