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The power of taxing people and their property is essential to the very existence of government 
. —
 
James Madison, U.S. President
Cleantech de-carbonizing industry market development mechanism.
Today, Americans, aswell as citizens from virtually all other countries of the world, find themselves living under astate of exception, where normal rules of business and engagement are suspended.Essentially, we have all become
detainees
in a land of
Neverland 
where climate changethreatens not only national economies, but life itself on this planet.
1
 
Climate change generatedpredominantly anthropogenically.Supposedly rational humans, who otherwise should be concerned for their survival, discountingto zero the cost of using the earth
ʼ
s atmosphere as sink for carbon (and other GHGs) emissions.The science is about as solid today as the quantum physics used to build the first atomicweapon, demonstrated at the Trinity test on July 16, 1945, was at that time. Yet, today, there is
SPEEDING-UP TECHNOLOGY ADOPTION CYCLES FOR MITIGATINGTHE RISKS FROM CLIMATE CHANGE: While GeneratingGovernment Revenues, Creating New Jobs,and Reducing the Federal Deficit
Lyle Brecht Draft 1.5 Monday, December 7, 2009 CAPITAL MARKETS RESEARCH
Page 1 of 6
 
still a debate whether the science is solid. And, no Manhattan Project to mitigate the carbonclimate war between business as usual vs. doing something different has yet to emerge.Instead, climate change, is just another policy challenge scattered among many urgent andpressing issues in the U.S. such as health care reform, a $9,000 billion ten-year governmentdeficit, arguing the regulatory changes to address the 2008 financial meltdown of Wall Streetthat destroyed almost $50,000 billion of value worldwide, the collapse of the U.S. automobilemanufacturing industry, decisions on escalating the unnecessary and destructive war inAfghanistan, strategy for extracting the U.S. from the never-ending war in Iraq, expanding thecovert war in Pakistan, securing cyberspace, etc.Not only is there little apparent prioritization as to what is more or less important, budgets oftenappear to have little analytical basis for deciding, given a finite amount of capital, where do weobtain the highest return for our invested capital or even how much capital is required to actuallyadequately address this particular problem? What is particularly alarming is that business-as-usual urgency regularly takes precedent over the important issue of climate change.Thinking about climate change economically, investing in industrial activities that ameliorate ormitigate anthropogenically-caused climate change should produce the greatest economic returnon invested capital (EROIC). Why? Because, the opportunity cost for
not 
investing to addressclimate change is so large. Our economic accounting still assumes GHG
ʼ
s as an externality,where the cost of using the earth
ʼ
s atmosphere as a carbon sink is discounted to zero. Thus, themarkets send false signal as to where positive returns on invested capital can be obtained. WallStreet imagines that real returns can be achieved through financial engineering, even as no realwealth is created through, for example, the buying and selling of CDOs (collateralized debtobligations).
2
Today, there is a downward destructive cycle of allocating capital to activities that pollute theearth and add carbon to the atmosphere which generates a negative real return on investedcapital. As global warming and pollution gets worse, this adds real economic cost to theeconomy, producing a drag on GDP growth, more human immiseration, and further mis-allocation of capital that continues the downward destructive cycle. Instead, what we so badly
SPEEDING-UP TECHNOLOGY ADOPTION CYCLES FOR MITIGATINGTHE RISKS FROM CLIMATE CHANGE: While GeneratingGovernment Revenues, Creating New Jobs,and Reducing the Federal Deficit
Lyle Brecht Draft 1.5 Monday, December 7, 2009 CAPITAL MARKETS RESEARCH
Page 2 of 6
 
need to create new jobs, to produce sustainable economic growth, and to enable humandevelopment that lifts persons to a state of capability and real freedom is to invest in mitigatingthe risks from anthropogenic climate change. This will create a virtuous cycle of producing realeconomic returns on invested capital.Various schemes to reduce carbon have been proposed. However, all these schemes, some ofthem relying on setting voluntary targets for CO2 or creating carbon derivatives and carbonoffsets markets (just what we need, more dis-economic financial engineering) do not adequatelyaddress the structural aspects for decarbonizing the global economy. That is because, in oneway or another, all these proposed schemes address carbon mitigation in a Band-Aid fashion.Instead, we propose addressing carbon (and other GHGs) as a cost of industrial input andoutput to the economy. The objective is to discontinue forever the practice of discounting theuse of the earth
ʼ
s atmosphere as a carbon sink to zero. Since there is real economic cost foremitting carbon to the atmosphere, this should be costed, just like any other industrial input oroutput. If national or global governments also wish to impose firm limits on carbon emissions ordrive these limits to certain minimums by a specific date, then tow mechanisms may be readilyemployed; adjusting the cost of inputs and outputs and setting rules for trading emissionpermits.However, given the state of GDP growth, government deficits, unemployment statistics, andstresses on the average citizen and their families, I would like to propose a program thatgenerates government revenues, creates new jobs, reduces the federal deficit (and lowers theexisting federal debt), while at the same time speeds-up technology adoption cycles forindustrial growth that decarbonizes the global economy. The objective is to free up significantamounts of capital that can be invested productively in cleantech, producing some of the highestreal rates of economic return on invested capital available today. Below, are the recommendedchanges to the tax code, and other federal and state government structural changes toaccomplish these objectives and to initiate a virtuous cycle of jobs creation and sustainableeconomic growth while decarbonizing the industrial activities of the global economy.
Starting with payments by citizens and corporations to the Internal Revenue Service (IRS):
SPEEDING-UP TECHNOLOGY ADOPTION CYCLES FOR MITIGATINGTHE RISKS FROM CLIMATE CHANGE: While GeneratingGovernment Revenues, Creating New Jobs,and Reducing the Federal Deficit
Lyle Brecht Draft 1.5 Monday, December 7, 2009 CAPITAL MARKETS RESEARCH
Page 3 of 6
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uploaded a new revision for this document (#3)

12 / 08 / 2009

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uploaded a new revision for this document (#1)

12 / 07 / 2009

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12 / 07 / 2009
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