Greta & Larry are Right, We Don’t Have a Plan (but get ready, we will)

A strong policy response is inevitable, predictable and necessary - so get a plan, start running your plan, and engage governments to regulate sooner vs. later

First, a quick refresher for corporate leaders who haven’t been deep in the climate dialog. Governments have been told that they “do not have a plan” for managing the impacts of climate change. The straightforward math laid out by a teenage Swedish activist to show that we do not have a plan is exactly right. But just as governments do not have a climate plan, most corporations do not have a financial plan for climate either. And it’s not just Greta who says so. Larry Fink from Black Rock vociferously agrees with her on the math and the potential economic consequences. Smart self-interested CEOs and CFOs will develop plans for the inevitable scarcity of carbon, and will engage governments to make carbon scarcity happen sooner rather than later as they develop their own “carbon advantage”.

Global CO2 concentration1 in the atmosphere, which had been no more than 180 ppm (parts per million) prior to industrialization, rose to 375 ppm in 2003 when Greta Thunberg was born. It is now above 410ppm, and rising at a seemingly inexorable 2ppm/year. It hasn’t been as high as it is now in the last 800,000 years, and when it was this high the planet was hot enough that humans wouldn’t survive happily, and had far less land area because sea levels were several meters higher.

In order to avoid raising the temperature of the earth to a point where large tracts become uninhabitable, we need to drop our emissions of CO2 so that levels of atmospheric carbon do not rise above 430 (the well-known 1.5 degree warming goal) or 450 (the concentration required to limit warming to 2 degrees C).

Let me be crystal clear: a plan would be one where the pink line in the graph below levels off and reaches a peak no higher than 430 or 450. It does not continue to go higher, and if we can master carbon removals it goes down. That is all there is to a plan. It either achieves that goal (peak CO2 < 430-450 ppm), or we face even more awful consequences of climate that impact human lives. The blue line in the graph below shows that emissions have become plentiful since the 1850’s, they must drop to zero. That’s what Net Zero means: the blue line (annual global CO2 emissions), which has been inexorably increasing for 200 years needs to drop, drop fast, and get to zero in the next decades.

This ^^ is a really really important graph. Please please please, look at the shape of the blue line (emissions) and the pink line (amount of CO2 in the atmosphere) and commit it to memory and think about what it means to bring the blue line down to zero in 20 years.

So what would a plan look like that would satisfy Greta Thunberg (or me)? A set of policies that ensure2 we (1) get to a lower peak atmospheric carbon than 430 ppm, (2) get to that peak sooner vs. later, and (3) maintain the world economy so that human livelihoods are maximized. The blue line above gets to zero quickly after rising, and rising at an accelerating rate, for 200 years.

Put simply, carbon emissions would become a scarce resource. It would be “expensive” to emit carbon, and increasingly expensive. In this context, I don’t care what form that regulation takes - it just would mean that you wouldn’t be allowed to emit as much carbon from your car, your power plant, your steel mill, or your furnace3. This would need to hit everyone in the world - after all, a ton of CO2 emitted in one place has the exact same effect on the earth’s warming as one emitted anywhere else. Consider lead paint (in many countries, it was outlawed in the 1970’s over industry objections because it was actually poisonous), or sulfur dioxide (its emissions were capped in the US and eventually managed down to near-zero because it caused acid raid). Recall too hydro fluorocarbons (HFCs), which were stamped out in a matter of years because governments listened to scientists who rightly pointed out the consequences of a disappearing ozone layer and acted.

Eventually, governments will move beyond platitudes to make and enforce a plan that bends the curve of emissions downwards. What had been free and hence used willy nilly (the right to emit a ton of CO2 whenever and wherever you wanted) will become scarce one way or another. Last week it came out that Exxon had nominally supported a carbon tax, because they believed that it would be politically impossible in America. Ironically, their callousness may increase the likelihood that carbon scarcity happens sooner in the US (and hence around the world, through the appealing magic of a “border adjustment”).

Why does this matter to business people in temperate climes, and comfortable air-conditioned offices and homes? One can make a moral argument that each CEO and CFO bears an individual portion of the collective responsibility to ensure that areas of the Middle East and South Asia are still habitable by humans in decades to come. One can even make a practical argument that disruptions to supply chains in some of these scenarios have the potential to be so disastrous that the global economy would be thrown into disarray, with accompanying impact on the asset values that these corporate leaders have spent years accumulating in their own portfolios. But I’d rather focus on something nearer and closer to the day-to-day jobs of most CEOs: optimizing P&Ls and building shareholder value.

As we saw in Portland, Seattle and Vancouver last week, wet bulb temperatures are rising to a level that human life can be compromised - people can die in places they never needed air conditioning before. Wildfires are appearing in places where they extremely rare like Hawaii, and the prospect of this year’s fire season in Washington, California and the rest of the American West has the potential to be apocalyptic. And it’s likely to get worse - not fear mongering, but basic science. The evidence that global warming is having an immediate effect on human life is very clear, and young Republicans are rating climate as one of the most important issues to them. Feedback loops from added air conditioning and building relocation has the potential to increase emissions as people aim to survive these new conditions.

“The costs of failing to get climate change under control would be much larger than those of bringing emissions down to net zero.”

The combination of these two factors is potent: (1) the only meaningful plan is one which lowers atmospheric concentrations of CO2, and (2) the apparent political will to get a plan rapidly in place is growing - and is likely to grow quicker as more climate-related headlines hit. It seems inescapable that regulation (in the form of a plan that controls emissions of CO2) will come, and the longer we delay the harder those regulations will need to bite, in order to bring down CO2 emissions faster before our “carbon budget” is used up.

Smart CEOs, CFOs and boards will understand this risk of carbon scarcity and lay out a plan for managing it, and even driving it. Their carefully crafted Net Zero 2050 plans may require a lot more work / hardship in the “in years” (that is to say, soon), than the “out years” (or to put it bluntly, on the next CEOs tenure) if regulations begin to bite sooner than current plans reflect. Smart CEOs & CFOs will be planning for how to create “carbon advantage” within their sector, and will lobby aggressively for sooner & steeper regulation / scarcity / pricing. I’ll begin to provide a recipe next week for the moves I would make to understand the risk my company is facing, manage it, and create pressure for the right kind of regulation (which addresses the problem, and which does so in a way that I can understand, manage, and profit from). Companies which can develop strategies for becoming carbon-advantaged, can build competitive advantage in a decarbonizing world. They need to hold governments accountable for having a plan that meets the goal of rapidly dropping CO2 emissions - they cannot do it alone.

Regulation is coming

We have seen example after example of regulation that industries have fought tooth and nail. Some of the more existential emitters (read oil & gas companies, or those which are carbon disadvantaged) are likely to fight the imposition of carbon scarcity. But their objections can be overcome by those companies and citizens who see a better (and potentially more profitable) world in one where regulation drives down CO2. There is a simple plan for carbon scarcity that can be a win for many companies, we just need corporate leaders and citizens to support it. Right now a lot of US government policy is oriented at building more things (EV chargers, a smart grid, etc) which may very well be needed if carbon becomes scarce, but no current policy other than the CES is directly oriented at making carbon scarce. If you’ll recall, making carbon scarce is the ONLY THING THAT MATTERS. (Sorry for all caps, but this is one of those situations where I think it’s stylistically justified, even if I’m talking to CEOs).

COP26 in Glasgow is later this year. Rational, self-interested companies and managers should actively support the scarcity of carbon in a meaningful way (the blue line of annual CO2 emissions goes down to zero, and fast). But they should do so in a way that has a level playing field (a ton is a ton is a ton no matter who emits it or why), and which is efficient (we don’t waste money killing off some tons of emissions that are really harmful to economic output when there are lower hanging fruit in terms of “low regrets” / “low cost” carbon emissions to eliminate elsewhere), which hits all geographies and ownership structures the same, and which allows companies to plan for the future (there’s a scarcity framework that they can build into capital allocation models and incorporate into strategies). If we delay action too long, the reaction of governments may4 be swift, uncompromising, and horribly inefficient. I can’t guarantee that an effective plan will come from Glasgow this year, but smart companies will be proactive in supporting a plan for nearer term carbon scarcity instead of reactive and scrambling. The cost of delay here is high - for the earth, for shareholders, and for managers. Let’s let the math be the guide to whether we have a plan that will work.

We put off taking our medicine for a long time5. Better a stent for the earth’s climate now than a quadruple bypass in a few years.


There’s a lot here about climate science. If I’m honest, a lot of people’s eyes glaze over when discussions of CO2 emissions or concentrations come up. But this is a commodity like any other - oil, corn, pork bellies, diamonds, money. If you’re curious, the simplest discussion I know is here at, but I’ve tried to lay out all that I think matters to CEOs, CFOs and boards in this article.


Note, when I say “ensure”, I mean it. A policy that had an effective global minimum tax rate on carbon emissions, and higher minimums for richer countries, which every 2 years reset the current tax rate and published an expected forward curve, and which set the tax rate based on an economic model of how to most effectively use our carbon budget (to minimize the effects of climate change, and to maxmize global well-being), that’d be great. Do I expect that? No. I expect a flat rate that is below the SCC (social cost of carbon) to be passed fairly soon, without the guarantee that it will be raised until we eliminate emissions. I’d like it to be “globally revenue neutral”, which means that it’s redistributed entirely to voters within a country and to countries based on need (solar panels cost the same globally, but per capita incomes are lower in India and, wait for it, China). Again, perhaps a pipe dream. But if we don’t do something like that soon, what we get later will be “worse” from a wastefulness standpoint and an “inability to forecast” standpoint. No one ever told me I should be a politician.


Economists equate scarcity and expensiveness. Sorry, little I can do about that. Carbon scarcity is the goal, the method doesn’t really matter - either way I’ll equate it to it being “dear” or “expensive” (vs. “cheap” or “free” as it is today). For instance, regulation that says “you may not ever burn any fossil fuel again on pain of death” is just a really really really expensive price on carbon emissions. Jail time is less expensive, a price is less expensive yet. But a core thesis here is that no individual action from consumers nor individual action from companies can accomplish making carbon emissions truly scarce.


This is one of those funny things. I write above that if governments delay further that their eventual reaction may be swift. No, it will have to be swift in order to avoid catastrophic consequences for the earth. There’s a well-known graph on this, and while a picture is worth a thousand words. But it’s simpler to understand if you think about a health situation - if your doctor says you have to lose 100 pounds in 100 days to survive, you can (a) start immediately and lose 1 pound a day, (b) wait 50 days and then lose 2 pounds a day, or (c) keep gaining weight for 50 days until you have to lose 150 pounds in 50 days which works out to 3 pounds a day. Right now we’re on path (c). And going from free carbon emissions to prohibited carbon emissions will be costly & disruptive beyond conception - this isn’t weight loss. Better to get on a challenging exercise program now than to know that you’ll need a defibrillator that might or might not work. More cardiac analogies coming later in this article.


Again, I can’t recommend Losing Earth by Nathaniel Rich enough, and the book is even better than the article. It does no one any good to cry over spilt milk, but to understand the gravity and magnitude of the milk that has knowingly been spilt already and the time that has been wasted was pivotal for me in my own decision to begin to work actively on decarbonization as opposed to being a passive supporter.