What’s the Best Use of Green Money?

A friend of mine considers to buy a new car. I suggested he buy a car for the future. A hybrid, for example. He was not convinced; they may be too pricey. Maybe the money could be better spent; maybe he somehow could get more environment (less carbon) for the same amount of money. That’s a very good question, actually. What is the best use of green money? I rarely see that kind of questions discussed.

A Ph.D. student I met in the US, however, had the idea that Americans should, instead of buying hybrids, donate their money to environmental programs in other parts of the world, where the potential to save carbon was much higher. Not that gas-milage on American cars is much to write home about, but think rain forest protection and third world energy systems.

Now, determining what projects gets the best effect on the environment for the least amount of money is not an easy task. The natural way to do that would be through a market mechanism, but no such market exist as far as I know. The Americans has started to trade in carbon, and that is a start, but it’s about emissions, and doesn’t really give incentives to structural changes. (Or maybe it does; I have to think. I don’t think big changes will happen very fast, anyway, because of cap-and-trade programs.)

Back to the hybrid. There are many good reasons for not owning a hybrid. They are expensive, they don’t go very far, and noone really knows (me, that is) the economy in them. A crucial thing, of course, is how to generate the power to run them. If it is generated from coal, for example, it doesn’t really help. Shai Agassi on TED.com has solutions to some of the problems with today’s hybrids (he’s vague on the power generation issue, though):

Hat-tip: Env-Econ

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One Response to “What’s the Best Use of Green Money?”

  1. Shai Agassi: Electric Evangelist « Kvams Says:

    […] Agassi: Electric Evangelist By kvams I mentioned Shai Agassi a while ago, which lead the Economist to run an article on him. They call him an electric […]

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