E.T.C. (Existential Threat Credit)

Over the years, I have been intrigued by the concept of market-based nonproliferation. Much of this has to do with the success of the HEU deal which resulted in the blending down the highly enriched uranium (HEU) from 20,000+ Russian dismantled nuclear warheads into fuel for nuclear reactors, relying on nuclear fuel markets to finance this transformation.

Since market-based carbon abatement has been very successful, with the creation of both compliance (government run) and voluntary carbon markets, it seemed like this would be a good model for nonproliferation to follow. The problem is that, unlike the case with carbon, there is no measure for the abatement of proliferation. However, there are powerful motives to link these two initiatives.

Climate change and nuclear war are both considered existential threats. Which one is the most serious is a matter of opinion. For instance, Bjorn Lomborg of the Copenhagen Consensus Center argues that nuclear war is a greater threat in penning Be Afraid of Nuclear War, Not Climate Change – WSJ. While we can debate which threat is greater, there should be no question that the threat of nuclear war has increased in recent years and may be at its greatest level ever, as indicated by the current setting of the Bulletin’s doomsday clock.

The Norwegian Nobel Committee would seem to echo this concern as it awarded its 2024 Peace Prize to Nihon Hidankyo, an organization consisting of the survivors from Hiroshima and Nagasaki atomic bomb attacks, who bear witness to the horrors of nuclear war and call for the elimination of nuclear weapons and support for the bombing victims.

More than a philosophical exercise, picking one existential threat over the other has financial implications, given how nonprofits and others allocate their spending. In addition, it has practical implications. For example, if funding for climate change initiatives grows at the expense of nuclear nonproliferation expenditures, this would not necessarily make the world any safer, especially if the funding between the two causes became too unbalanced.

A putting-all-your-eggs in one basket approach would seem inherently flawed if one is concerned about the future existence of the planet. You might be able to conquer the climate change challenge, although this is a herculean task, but all that work is for naught if the planet is destroyed or rendered uninhabitable due to a nuclear conflagration.

A more sensible approach from a market standpoint would be to have a product that works towards both the carbon abatement and nuclear nonproliferation goals in unison. This is where the notion of ETC, or Existential Threat Credit, comes in. Such a product would encourage investment in activities that would abate climate change as well as nuclear proliferation.

How would this work? One approach would be to marry credits for nonproliferation activity with carbon credits. Currently, carbon credits can be augmented or designed to address other social and environmental concerns by integrating beneficial treatment addressing these concerns into the carbon credit framework.

It is also the case that nuclear war poses a climate risk but one that is different from climate change. A nuclear war would likely result in a climate crisis in the form of a nuclear winter, where firestorms created by atomic blasts send soot into the atmosphere, blocking the sun. While this may be a second-order effect of nuclear war, it would be a rather devastating one.

Earlier this year, Nordhaus and Lynas penned a Wall Street Journal opinion piece, entitled One Nuclear War Can Ruin the Whole Climate – WSJ, which expands on the climate impacts of a nuclear war. With nuclear war, you are dealing with a devastating discrete event, as opposed to the more continuous and gradual impact of climate change, although the effects of a nuclear war would be long lasting.

To move forward on this initiative, considerable work will need to be done. The credits would have to be structured to have a meaningful impact. Importantly, there needs to be a governing body to determine which expenditures to limit nuclear proliferation and nuclear war would qualify for credits, just like with other social and environmental goals. One can imagine that such credits could be given for support to organizations that seek to eliminate nuclear war and limit nuclear proliferation, as well as companies that develop technologies that support these efforts.

It should be noted that it is possible to invest in both climate change abatement and nonproliferation abatement today by buying carbon credits and contributing to organizations that seek to prevent nuclear proliferation and nuclear war. Other avenues exist to support efforts to end nuclear war, such as when a crowdfunding campaign raised 44.7 million yen to finance the travel of Nihon Hidankyo to Oslo to collect the Nobel Prize. However, creating a generally available product that addresses both causes would likely result in much greater participation, resulting not only in more funding but also more awareness of the dual goals of eliminating nuclear war and abating carbon emissions.

The time may be right to introduce such a product. Concern about climate change remains high while concerns about nuclear war are likely the highest they have been in a long time. Anything that can be done to move the needle forward on these fronts or, in the case of the Doomsday Clock, move the hands backward, should be considered.