The next big eCommerce opportunity for Google, Amazon, eBay - carbon trading

[Google, Amazon and eBay are classic examples of the best of what America is good at- ingenuity and entrepreneurial capitalism. They dominate the global eCommerce marketplace.

Although the ecommerce economy has grown leaps and bounds over the past decade the eCommerce activities of these companies is still a relatively small part of the overall economy.

While click advertising, etrading and selling merchandise over the Internet has done wonders for the bottom line of these companies in the past decade, these markets are now maturing. The entire global advertising market is still very small compared to other economic activities. As well large portions of society still do not use eBay or Amazon for a variety of reasons including security, cross border shipping issues and so on. It is unlikely that these companies will be able to continue their spectacular growth of the past decade without some fundamental new business paradigm shift. Mobile eCommerce may provide some incremental revenues but I think its contribution to the bottom line will be miniscule at best.

The big challenge for these companies and many others like them is to move to the next wave of eCommerce which I believe will be carbon trading in exchange for bits and bandwidth.

There is a growing consensus that global warming is one of the greatest threats facing humanity. Increasingly governments and citizens are becoming aware of the severity of this threat and are clamouring for solutions.

To date the most obvious approaches to mitigate against global warming is to impose carbon taxes or implement various forms of carbon trading such as cap and trade or carbon offsetting.

Carbon taxes however, even if revenue neutral, are going to meet with stiff political resistance. Rather than imposing taxes can we instead provide carbon "rewards" where consumers and businesses are rewarded for reducing their carbon footprint, rather than being penalized if they don't?

To date carbon trading has been associated with various government mandated cap and trade systems or unregulated carbon offset trading. In cap and trade systems large carbon emitters are allocated carbon emission targets and can only exceed these targets by purchasing carbon permits from organizations who produce far less carbon. In offset trading there are a number of independent companies that audit and trade carbon offsets of individuals and businesses for high carbon emission activities such as air travel offset against telecommuting and other energy saving practices.

However these markets are very immature and relatively small.

Instead of trading carbon emission for carbon reduction, perhaps a better scheme would be to trade bits and bandwidth which have an extremely small footprint against activities that have a heavy carbon footprint.

A couple of simple examples come to mind which have been mentioned before on this blog:

(a) Amazon could work with public transportation systems and offer free eBooks with its new Kindle eReader to people who buy public bus and subway passes. Amazon would get a small percentage of every bus pass to pay for its ebooks and consumers would have a new incentive in which to take the bus or subway. Even if consumers still drive their SUV to work they would be helping out by providing a new revenue source to public transportation

(b) Free broadband Internet could be offered to consumers who are willing to pay a carbon premium on their gas and/or electric bill. See http://green-broadband.blogspot.com

(c) University students could be awarded with free cell phone, music and or videos if they agree to pay a carbon premium on their parking passes.

Etc

To my mind the trading and exchange of bits and bandwidth for carbon represents an entire new eCommerce business model with significant revenue potentials. Companies that are first movers in this space will quickly dominate this new market.

Carbon credit trading does not need to be limited to simple bilateral transactions, but like money can it can create multiplier effects, where consumers of bits and bandwidth can purchase other products and services with their carbon credits.

For example, universities could offer voluntary programs where students pay a premium on anything that creates a carbon footprint such as parking fees or residence power consumption etc. In exchange the students would be granted free access to the music and film industry libraries.

The "bits for carbon" fee would encourage students to reduce use of their automobiles and/or reduce their energy consumption within their residences or other activities. The university could also undertake energy audits on the students activities to earn additional valuable carbon credits, in the same businesses now earn carbon credits for promoting tele-working, tele-presence etc

But instead of paying the record and music industry actual money for the designated authorized music and video services, they instead would be paid in equivalent value of carbon credits, or the university would only purchase "originating" credits that were produced by the music/video industry through their own carbon reduction activities. The music and motion picture could then possibly double down their money by instituting their own carbon reduction schemes and trade in these credits or they could sell them to a variety of carbon trading brokers.

As one start to think about these concepts it becomes apparent there could be a whole range of business opportunities in trading bits and bandwidth for carbon.