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Solutions: economics - July 21

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Many more articles are available through the Energy Bulletin homepage


CanadaChanging: Ecological Fiscal Reform

Amy Taylor, WorldChanging
Fiscal policy refers to the ways that governments collect (e.g., through taxes, royalties and user fees) and spend (e.g., through grants, tax credits, exemptions, refunds and rebates, and accelerated capital cost allowances) money. When these fiscal components are adjusted to better integrate environmental costs and benefits, ecological fiscal reform (EFR) is achieved. Financial incentives for environmentally beneficial behaviour are provided and economic, environmental and health benefits can result.

There is increasing interest in the use of EFR in Canada and elsewhere. Indeed, the OECD Environmental Strategy for the First Decade of the 21st Century, which Canada has adopted, calls for governments to give priority to ecological fiscal reform. Already in Canada there are a number of successful and innovative EFR policies in place.

...The federal government also has a very successful wind power production incentive, the WPPI. This incentive provides financial support to electricity produced from wind: an initial incentive payment of 1.2¢/kWh of production, gradually declining to 0.8¢/kWh, was introduced for qualifying projects commissioned between April 2002 and 2007. The wind power production incentive has been instrumental to the growth of the wind industry in Canada. The original program to support 1,000 MW of wind power was fully subscribed two years ahead of schedule in 2005. The quadrupling of the program in 2005 is supposed to lead to 4,000 MW of wind power by 2010, but it will be fully subscribed a year or two early.

At the provincial level, both British Columbia and Quebec are leaders in the use of ecological fiscal reform in Canada. British Columbia has tax breaks for bikes, alternatively fueled vehicles, materials used to conserve energy, and energy efficient furnaces, boilers and heat pumps. The tax incentives are automatically received at the time of purchase. These breaks have facilitated increased purchases of eligible technologies including a six-fold increase in qualifying boilers between 2000 and 2005 from 116 to 689 and an increase in the number of efficient furnaces from 2,457 in 2000 to 8,671 in 2005.

In a precedent-setting initiative, the Quebec government recently announced the introduction of Canada’s first carbon tax. The revenue from the tax will provide finances to a Green Fund, used to support actions to reduce greenhouse gas emissions. At the policy level, organizations like the Green Budget Coalition and the National Round Table on the Environment and the Economy are pointing the way to further options for the future.
(Amy Taylor is Director of the Ecological Fiscal Reform Program at the Pembina Institute.)
(19 July 2006)
First in a series of WorldChanging articles on Canada.


A new kind of money

Julian Darley, AlterNet
Today's money is based on the belief that it's worth something. Crazy, no? Why not back your dollar in sustainable energy produced in your hometown?
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The decline in the availability of cheap energy is likely to be accompanied by an equally ominous possibility of world financial meltdown. That we are facing both of these threats now is not an accident: energy and financial stability are intimately linked. I believe the solutions for dealing with these twinned threats are equally linked. To build an environmentally sustainable, monetarily stable world, we need to create an economy in which locally produced energy provides the backing for local currencies.

Let's start with energy first. Energy decline will soon challenge just about every common notion of life that we have developed during the industrial era. Most of what we have built in the globalizing world of the last half century depends on cheap energy, particularly oil and natural gas.

After years of oil-industry financed obfuscation, there is a broad scientific consensus that our profligate use of fossil fuels is producing global warming. And despite similar oil industry denials, there is a growing consensus that we are rapidly approaching Peak Oil, after which world oil output will go into permanent decline. (The United States experienced Peak Oil in 1971.) After global Peak Oil, oil will still be available, but at ever increasing prices.

To lessen the impact of global warming and the inflationary pressures of Peak Oil, we should be moving as rapidly as possible to an energy system based on locally based renewable energy production.
(20 July 2006)


Reserved For The Future

Prof. Goose, The Oil Drum
In previous installments of what is becoming a potted series on economics, Stuart looked at interest, and I talked about demurrage, a kind of money tax that is designed to encourage long term thinking.

Some observers, on seeing the idea of negative interest/a money tax, remark that such a currency would have a hard time competing for users if it were to exist in a free market of currencies as it would be less desirable to hold than a currency that became more valuable over time.

Others point out that it's unlikely such a radical change could be brought about short of revolution. In these uncertain times nothing should be discounted but it is probably more profitable to look at less radical alternatives.

There are various other proposals for economic reform. One which I quite like comes from the New Economics Foundation, whos reports are well worth reading if you're interested in environmental/sustainable economics. James Robertsons and Jospeh Hubers 100-page book, "Creating New Money: A Monetary Reform for the Information Age", proposes some changes to our economies that could prove handy in a post peak oil world.

When I was young, I thought that money was important. Now that I am old I know it is. -- Oscar Wilde

Before we can understand this solution, we need to look at the problem.

The previous posts have dealt primarily with interest, the payment of which encourages conversion of assets into currency, and the charging of which encourages competition and growth. This is not always bad but for the case of renewable assets like forests, game reserves, farmland etc it can be problematic.
(20 July 2006)


Cities reward 'lifestyle' that conserves water

Judy Keen, USA TODAY
More cities are creating or expanding programs that give residents and businesses rebates or utility-bill credits for installing grass-free lawns or toilets, washing machines and showers that use less water.

Warren Selkow, a retiree in Glendale, Ariz., got a $100 check — and lower water bills — after planting foliage that needs less water than grass. "The first thing I heard was 'never cut grass again,' " he says. "I thought, this is not a bad deal."

Glendale just increased the residential rebate, first offered in 1986, to as much as $750, depending on the size of the lawn. The program was expanded last year to give businesses and homeowner associations as much as $3,000.

Water conservation manager Jo Miller says Glendale wants to create "a lifestyle of conservation." Water usage dropped 5.6% between 2002 and 2005 despite population growth.

"Rebate programs have grown substantially" because of expanding drought conditions and population increases, says Greg Kail of the American Water Works Association, a trade group. Examples...
(20 July 2006)


This trade in carbon emissions won't combat global warming

Peter Bunyard, The Guardian
There are much more honest and sustainable ways of dealing with climate change
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Europe's gas emissions trading scheme is in disarray, as reported in the Guardian (Emission permits: UK and 10 others miss deadline for setting targets, July 4). The 11 governments now "face warnings of legal action from the European commission". In fact, the scheme may well prove unworkable, not least because British industry feels it is being unfairly treated in comparison with France and Germany, which are actually calling for emission allowances that would exceed their emissions of several years' back.

It is questionable whether carbon emissions trading will bring a certifiable reduction. As now embodied in the EU emissions trading scheme, fossil- fuel-burning companies such as power utilities, steelworks or cement factories are granted substantial carbon credits that they can sell - on the basis that they have emitted less than expected. That may provide some incentive to look to more efficient technologies, but the assumption is that someone elsewhere, even in another country, is going to buy that credit in order to pollute.

In addition, the use of tradeable carbon units combined with the Clean Development Mechanism (CDM) - whereby the Kyoto signatories from industrialised nations can invest in emission-reduction projects in developing countries - has huge potential for environmental damage and fraud.

How relevant are such schemes when deforestation, particularly in the tropics, results in tens of times more carbon emissions than putatively captured by all CDM schemes put together? Perhaps a carbon tax that could be ploughed back into carbon-reducing schemes, even by the original emitter, would be much fairer and less prone to abuse.

Peter Bunyard is science editor of the Ecologist
(21 July 2006)


Miliband unveils carbon swipe-card plan

David Adam and David Batty, Guardian
The environment minister, David Miliband, today unveiled a radical plan to cut greenhouse gas emissions by charging individuals for the amount of carbon they use.

Under the proposals, consumers would carry bank cards that record their personal carbon usage. Those who use more energy - with big cars and foreign holidays - would have to buy more carbon points, while those who consume less - those without cars, or people with solar power - would be able to sell their carbon points.
(19 July 2006)
Also posted at Energy Bulletin.


Solution: Carbon tax

Various, Energy Bulletin
Links to recent articles on carbon taxes.
(5 July 2006)

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