Green Capitalism - Waves of the Future

Climate Change, Non-Renewable Resources, Energy, Contaminants, Carbon Pricing...

The 21st Century Environmental Revolution

15. The Global Environmental Accord: Beyond Kyoto

16. The Environmental Revolution

GHG Targets, Carbon Taxes, Greenhouse Gases Emission Trading, Kyoto Accord, Copenhagen, Climate Change

Cap-and-trade is not the best strategy there is for global warming. Neither does it address the majority of issues on the environmental agenda. See details at...

A Cost-Benefit Comparison of Cap-and-Trade and Cap-and-Restructure

Overview  Reviews

See also Book II of the Waves of the Future Series


15. The Global Environmental Accord: Beyond Kyoto

The Kyoto Protocol is perhaps the world's greatest cooperative effort so far in addressing environmental problems. However, it fails in many ways. As discussed earlier on, it is a regulation-based approach that is somewhat bureaucratic. Secondly, it attempts to address essentially only one issue: greenhouse gases. It does nothing for the conservation of non-renewable metallic resources or many other environmental problems. Thirdly, the intent of the accord is not to stop global warming but only to slow it down. As such, countries are admitting failure from the start.

Why the need for an international accord on global warming? The obvious part of the answer is to force every country to participate and have together a bigger impact on climate change. The not-so-obvious one is that fighting global warming alone would decrease a country's international competitiveness by making domestic production more costly regardless of how it happens, cap-and-trade or a green economic environment. Having a global accord would ensure that countries are treated similarly and continue to compete on an equal footing in both cases.

The Kyoto Protocol
Broadly speaking, the first stage of the Kyoto Accord proposed to have countries reduce their emissions of greenhouse gases for the 2008-2012 period. Groups of countries were given different reduction targets expressed as a percentage of their 1990 emissions levels. For example, the U.S. and Canada had to reduce them to about 6% or 7% lower than they were in 1990.

One of the issues raised with Kyoto is that countries that had underperforming economies in that year have much stiffer standards to meet, their emissions having been lower than usual in 1990. Another problem is national growth levels since then. Countries that had stagnating economies during the 1990s are at a significant advantage compared to others, their emissions having increased less than they would normally have. As well, countries that have seen significant increases in population and economic growth during that period have much further to go to reach Kyoto targets.

Governments that fail to reach the agreed upon targets in 2012 would have to purchase emission credits. That would probably entail the setting up of an international trading system of some kind.

The United Nations Climate Change Conference held in Copenhagen in December 2009 was the latest round of negotiations of the Kyoto Protocol—which is due to expire in 2012. It aimed to produce a successor agreement with much more ambitious greenhouse gas targets. One of its key goals was to have countries agree on a 50% global emission reduction by 2050 (80% for developed countries). The Copenhagen Summit failed in both producing a successor accord and in getting countries to agree on the stiffer targets.

At the last minute, the U.S., China, India, Brazil, and South Africa agreed on a new draft. The proposed agreement has much lower emission limits, is non-binding, and was not adopted by the 193 countries participating in the conference. As such, little has changed with respect to a global accord on greenhouse gases except that the major players at the table have agreed to continue talking.

As discussed earlier, the above is not the best option to address global warming. The whole system is complex, and its structure is essentially regulatory, cumbersome, and bureaucratic for both governments and industry. The GEE could work with the Kyoto Accord and replace cap-and-trade. It would make it easier for industry to reduce greenhouse gases and would remove international competitiveness issues for carbon emissions.

However, a stand-alone international agreement based on a green economic environment strategy and common taxation rates would be more effective in addressing global warming. In addition, it would boost resource conservation, reduce toxic contaminants worldwide, and eliminate international competitiveness issues for all of the above. A GEE-based agreement would be a powerful and comprehensive successor to the Kyoto Accord.

The Global Environmental Accord
The following outlines what an international agreement based on the Green Economic Environment strategy would look like. For the sake of simplicity, it will be referred to as the Global Environmental Accord (GEA) and would generally involve three different groups of countries divided according to GDP levels: high, middle, and low. Of course, this could be expanded as necessary. In some cases, policies would be applicable across the board to all the different groups. In others, different levels would be applied according to purpose and ability.

The Global Environmental Accord would comprise four components: fossil fuels, non-renewable resources, environmental standards, and an export tax to non-GEA members. Initially, the main intent would be to establish a flexible framework that is acceptable to the largest number of countries.

The Fossil Fuel Component
To keep things simple, the following will focus on petroleum, but the GEA would also target other fossil fuels.

Under the Global Environmental Accord, oil would be the object of domestic and import taxes that would raise its cost within individual countries to a certain stable level. The example used earlier was US$ 150/barrel (that might even be too low if the cost of petroleum naturally rises above it). For a market price of $120, the levy would be $30. When the former reaches $140, the tax would drop to $10 so that, over time, oil sells at an average of about $150.

Initial price targets could be chosen so as to approximately achieve the global emission reductions already decided under the Kyoto Protocol, making everything simpler and easier to agree on. The GEE fossil fuel strategy would call for different price levels for each group of countries in order to maintain the status quo of Kyoto in this respect, i.e. stiffer targets for those better able to afford it.

Higher prices would lead to conservation and promote the growth of the renewable energy sector. For the U.S. and other net importers of fossil fuels, that would mean increased wealth as money would stop hemorrhaging out of their own economies.

After setting the initial target for oil, there would essentially only be a minimal amount of bureaucracy and no emission credit systems to establish. Enforcement throughout the entire business sector would boil down to regular tax collection from a handful of corporations. All a government would have to do is keep track of the international price of oil and establish the appropriate levy to be applied to both local and imported sources at the wholesale level. The tax would be revised periodically as the international cost of oil rises and falls or could be self adjusting.

The business sector would not face a regulation nightmare or need to spend time understanding and implementing arbitrary rules about carbon emissions and a new credit system. No rigid standards would be applied throughout an entire sector. Businesses would face simple input-price decisions for which they already have full expertise. The approach would be dynamic and flexible. Price levels in the accord could be renegotiated every few years in order to meet new emission targets. The tax would not be charged on oil exports so that international prices continue to be set through markets. Decreasing world demand would moderate increases in the price of petroleum.

A full GEE strategy for energy would also tax other fossil fuels, such as coal and natural gas, not only because they are depletable and produce greenhouse gases but also to prevent a shift from one source of emissions to another.

The Non-Renewable Resource Component
The non-renewable resource component of the Global Environmental Accord would be crucial for not only beginning the global conservation of resources but also supporting individual countries' national implementation of their own green economic environment. As already expressed, without multinational agreements a certain amount of conservation could be achieved, but progress would likely reach a ceiling as a result of decreased international competitiveness.

The Global Environmental Accord would establish taxation standards for countries with respect to non-renewable resources, 25%, 35% , 50%, or whatever would be deemed appropriate. Initially, these could be set lower in order to establish a broad-based common framework. They could be raised later to desired levels as economies adjust to the new green economic environment.

The rates would be fixed. Countries would not try to meet a target price as in the case of oil. The levy would be charged on both domestic supplies and imports. This would lead to conservation at home but would not hurt local economies as importing countries would themselves collect it, and consumers would get income and retail tax rebates as per the revenue neutrality principle. Regular international prices would remain in effect for importers, and the system would not penalize resource-poor or developing countries.

The new scheme would, for example, work like this. Richer countries would have to enable full taxation. Poorer ones would have more flexibility, being expected to tax to a minimum of 80% of the established standard. For example, 80% of a 25% tax rate would be 20%. This would promote exports for them and economic growth. The poorest countries would have even greater flexibility. This would let them choose what is best for their particular situation. Of course, nothing would stop them from still electing to meet the full standard as it would maximize conservation.

Higher prices for non-renewable resources would reduce demand and global depletion worldwide while offering poorer and the poorest countries options ranging from implementing the full standard to exercising varying degrees of flexibility in taxation in order to boost their developing economies.

Because GEE taxes would be collected as tariff by importers, the approach would be revenue neutral for individual countries and the money raised would be plowed back into local economies through reduced income and retail taxation. Under the GEA, countries that are resource poor would not be disadvantaged as world prices for raw materials would be maintained, and those having plentiful supplies of minerals would not enrich themselves at the expense of others as has been the case with OPEC for several decades.

The GEA would give us a mechanism to prevent a future of cartelization in which one commodity after another becomes the object of speculation. The OPEC way is not what we want as a future for our children and people around the world.

The Environmental Standards Component
The GEA's environmental standards component would serve to integrate and bring into a common framework existing regulations on pollutants and contaminants. It would mitigate the negative effects of the stricter environmental regulations of some countries on their international competitiveness and promote better national as well as worldwide standards.

Regulatory limits and bans would play an important role in this component. However, the accord would still be primarily market-based, relying on taxation to deter the use of a range of pollutants and contaminants. The component would integrate existing environmental legislation on highly toxic compounds as already agreed upon by the international community. Other chemicals would face worldwide taxation based on their toxicity, bio-accumulation, and potential for cumulative damage to the environment.

Operating on a formula similar to that of the non-renewable resource component—different levels of flexibility applying to groups of countries—the market-based approach would increase environmental standards across the board. Wealthy regions would have to meet full requirements while poorer countries could opt for softer targets as under the other two components. The poorest would have to adhere to less stringent standards although they could still choose to do better and enjoy a cleaner environment.

The Export Tax to Non-GEA Member
Under the GEA, member countries would not be charged export taxes when they import non-renewable raw resources. As explained earlier, a government would impose levies for local production as well as on imports, but exports to international markets would not be taxed for other members of the agreement.

The fourth component of the Global Environmental Accord would give countries the option of charging a levy on raw materials as they are exported to non-GEA members. The tax would range from zero to the full rate charged on imports. No levy would mean no incentive for non-members to join the accord or conserve resources. At the other extreme, the full tax would make non-renewable resources equal in price for both GEA members and non-members, which would result in overall international competitiveness between countries remaining the same. In between, various tax levels would raise prices and result in different degrees of conservation. As such, whether they are participants in the global accord or not, countries would be caught in the Global Environmental Accord's wake, being forced to conserve.

The GEA would not be just another environmental agreement. It would obviously be far more comprehensive. The fourth component of the accord would also give the international community the power to force the conservation of non-renewable resources worldwide.

A View of the Future
In most respects, the Global Environmental Accord would be more flexible and scalable than a regulatory equivalent. It would provide an international framework for the world to not only address global warming but also begin the conservation of non-renewable resources and increase environmental standards across the planet.

The Global Environmental Accord would result in many countries decreasing their dependency on oil. Their renewable energy sector would take off and not look back. Resource conservation would soften the impact of scarcity and delay potential crises. The use of contaminants and pollutants would progressively decrease from the continuous incentive provided by a market-based approach.

The alternative course is the current one: increasingly higher international oil prices, other mineral resources following suit a bit further down the road, environmental contamination getting worse and worse, and global instability growing from poverty and the power shifts associated with scarcity. That future is not that far away. It is probably our children's and grandchildren's!

16. The Environmental Revolution

The GEE provides a mechanism that could trigger an environmental revolution. It could do so because it is revenue neutral and would generally not cost the taxpayer a cent. The massive need for funding required by other environmental strategies is primarily why we have so far failed in making serious environmental progress. In a green economic environment, our habits would have to change, but we would generally enjoy a standard of living similar to the one we are used to.

An environmental revolution in the 21st century would require not only an effective strategy—the GEE—but also a number of key ingredients: fundamental legitimacy, popular support, and timing.

Fundamental Legitimacy
The fight for the environment certainly has undeniable and fundamental legitimacy: stopping global warming, ending the pillage of non-renewable resources, and protecting the environment for ourselves and posterity. The gouging of resources such as metals is a one-way street. There is no second chance!

The Demographics
Politics is a numbers' game. There would be two main demographics involved in an environmental revolution: baby boomers and post-boomers. The former are currently at the helm and will be for some time. They are the ones who have the political power to bring about an environmental revolution. Post-boomers are the new wave of consumers. They are important in keeping companies in business today and will be the ones patronizing them tomorrow.

Together, they have the power and the clout to bring about an environmental revolution.

The Timing
Just a decade ago, people were buying SUVs and gas guzzlers as if there were no tomorrow. Since the escalation of oil prices in 2008, people are slowly waking up to the possibility that the fossil-fuel honeymoon is over. We need to get real about increasing efficiency and shifting to green energy.

Change has started to happen, and global warming is now front and center on the environmental agenda. Unfortunately, contaminants seem to have taken a backseat, and the depletion of most non-renewable resources is not even on the radar screen.

The timing for a revolution is good for two reasons. Firstly, there is a much greater awareness about environmental issues than there was before, hence more political support. Secondly, there is an urgency to act with respect to not only global warming but also contaminants and the depletion of resources.

We now have an environmental strategy that could address all of these issues without costing a cent to taxpayers.

Your Part
Your helping to publicize this book would achieve three things: raise awareness that large-scale change for the environment is possible, let people know that there is a strategy that could make it happen, and support the work we do.

There are a number of ways in which this can be accomplished. Below are several options, but be sure to check the Waves of the Future website (https://www.wavesofthefuture.net) for updates and other possible strategies. If you have any suggestions, you will also be able to make them through the website.

Getting your local and educational libraries to purchase the book is one of the best ways to publicize ideas. It does not cost anything and makes the book available for free to many. Librarians will tell you how to go about it. It is usually just a matter of filling out a form. It can often be done online.

Word of Mouth
Obviously, the easiest way to help with this book is to recommend it to anyone you know. Getting bits and pieces from the media is not going to be enough. People really need to be aware of all of the arguments so that they will not easily be fooled by false claims made by detractors or opponents of environmental change. Political support will be much stronger and more effective if they do.

You can also publicize the book on any available bulletin board. There are some in shopping centers, grocery stores, condominium projects, community centers, at work, etc. Most schools, colleges, and universities have several of them.

You can also involve groups that you belong to, environmental, political, or other. Make sure that you give people the website address so that they can find other ways to participate and the most up-to-date information.

Online Promotion
One of today's most effective ways to advertise and promote something is the Internet. You can use every available opportunity that you have in this respect: blogs, forums, your own website, etc. You can add comments on your MySpace and Facebook pages or on any other network of the kind.

You can also make a YouTube video. You can use search engines to find environmental blogs, forums, discussion groups, etc. and tell people about it. Make sure that you always provide the website address for the book so that people are able to find more information. Do some of these things on a regular basis. Doing it one time only will not be enough.

An obvious means of promotion is to write a review at online bookstore sites such as Amazon.com or where environmental issues are discussed. It does not have to be long but could make a lot of difference. If you are not inclined to writing, just rate it. This is very useful to readers when it comes to purchasing something that they have not already heard about.

Another approach is linking to the Waves of the Future website. Doing this makes it more visible to search engines. In some cases, the website address (https://www.wavesofthefuture.net/) will suffice and a clickable link will be created automatically. If it is not, the correct HTML coding is:

<a href="https://www.wavesofthefuture.net/">The 21st Century Environmental Revolution: A Structural Strategy for Global Warming, Resource Conservation, Toxic Contaminants, and the Environment </a>

When you submit your comment, a clickable link should display with the title of the book. If that fails, check the Waves of the Future website or email us. Note that you can change the text of the link (in this case, the title of the book) and should do so if you create many of them. Using several environmental keywords is best.

The News Media
You can bring the book to the attention of the news media. Write to book-review programs on television, columnists, or environmental correspondents. Give newspapers your opinions through their Letters to the Editor section. Anyone can do that. Many publications now accept submissions via the web or email.

Best Places to Buy the Book
Royalties to authors can vary hugely depending on where you buy a book. In this case, purchasing directly from the publisher, Waves of the Future (https://www.wavesofthefuture.net), earns double the regular rate of royalties.

Governments and Corporations
Governments and corporations may be able to help. This is a major project that would benefit society as a whole. Countries may want to participate or support this one way or another.

Supporting the environment has become excellent public relations (PR) for corporations. Here is a chance for them to do something significant. Suggest it to your employer.

Green businesses would hugely profit from the GEE. Supporting this book is probably one of the best investments they could ever make to increase their markets as well as speed up the development of the entire sector. Suggest it to them.

The E-Book Project
The most obvious way to get involved for governments, corporations, and well-off individuals is to participate in the E-book Project. An electronic version of The 21st Century Environmental Revolution could be made available cheaply or even for free with donations from or the sponsorship of corporations, organizations, and individuals. See the Waves of the Future website for details.

Free digital copies of this book could make a lot of difference in terms of international promotion and political support for the Green Economic Environment and the Global Environmental Accord. The E-book Project would benefit everybody. Readers and fans would access the book for free, which would help promote major changes for the environment. Sponsors would get the satisfaction of contributing to a worthy cause. Their donations would go towards meeting their social responsibility goals.

Millionaires and billionaires could sponsor free e-books for everybody without even blinking: from owners of major corporations to investors, celebrities, and musicians. You got connections? Now is the time to use them.

There are thousands of professionals in North America alone, be they medical doctors, professors, engineers, architects, lawyers, computer programmers, etc. It would not take substantial donations from too many of them to reach the goal of free e-books for everybody.

The current population of North America and Europe is over one billion. All that is needed is for one out of every 1,000 people in those wealthy regions of the world to donate to the E-book Project the equivalent of a cup of coffee. Can you spare this much for the environment and your children's future?

Reading Lists
Add the book to online reading lists that you know of. Write to people hosting their own recommended lists and suggest that it be added to them. Some are very popular and would provide a huge amount of publicity for the book.

Obviously, you are the key to all of this. If you assume that somebody else will do it, little will ever happen.

Consumer Power
Consumers have an enormous amount of leverage. Everything we buy is a vote we cast. Every time we purchase something, we either reward environmental practices or punish them. We can buy green or purchase wasteful or excessively packaged goods and reward companies that do not care about and destroy the environment. As consumers become more and more aware of their power, attitudes in the business world will have to change. It is up to us. Some of this has already begun to happen, but there is a long way to go.

Our consumption patterns will define our future and that of our children and grandchildren. Conscious consumerism can go a long way in making tomorrow's world better. It is one of the most powerful weapons we have today. The GEE would bring in the profound changes that we need for the environment and magnify consumers' power by making green products cheaper and promoting a natural switch to their markets. With it, consumers will be able to choose the kind of world that they want to live in.

Industry as Partner
Industry can be a powerful ally in implementing the GEE. Many sectors would benefit directly from the emerging green markets. Several companies and even major producers of chemicals have already shifted a fair amount of their R&D towards environmental substitutes and rake in a lot of free publicity just for doing the right thing.

Future of Scarcity or Greener Society?
According to most estimates, oil reserves have already peaked or are expected to do so within the next few years. Other mineral resources will follow a similar pattern of increased costs and scarcity as world economies continue to grow. We will start being hit with shortages, prices will rise, and we will face crises as we have with oil. That may be only a few years or decades away.

The U.S. is especially at risk for resource shortages because it is, and has been for a long time, a large manufacturer and producer of goods. To feed its massive industry, it imports minerals from many countries around the world and could face very difficult times ahead. Without the GEE and resource conservation, it will likely have to contend with more crises in the future than it has in the past, resulting in increasing poverty. This is true of many other countries as well.

Both advanced and developing parts of the world have every reason to implement and support a GEE-based global environmental accord to ensure their continued economic success and that of their children. The Global Environmental Accord would prevent the cartelization of one commodity after another. The alternative is the OPEC way and the continuation on a destructive course that would bring only scarcity, crises, and geopolitical turmoil.

The New Landscape
What would the world be like under the GEE? What would the green economic environment imply for us all? Countries would get greener and greener year after year. There would be much less pollution in cities thanks to fuel-cell and battery-powered electric vehicles. SPVs would make most traffic jams a thing of the past, assuming countries opt for non-proliferation policies. Streets would be safer and much less noisy for everybody. Public transportation systems would reduce traffic and be more heavily supported by governments.

Consumers would retain their existing purchasing power, but prices would change to reflect a greener economic incentive structure. Many items would be more expensive, but there would also be more money to spend. Goods would be kept longer and repaired more extensively.

Because of the increase in the price of minerals, consumption would shift towards services and green sectors, promoting growth in various industries. Restaurants, bars, theaters, spas, sports and health centers, personal care companies, etc. would see their business grow. The music, video, and film industries would also do well. Obviously, renewable energy technologies, green construction and home repair, organic farming, etc. would simply thrive under the new system.

Many pollutants (overt and hidden) would be replaced by greener substitutes. Everything we buy would become less harmful to the environment. The waste disposal industry would change dramatically, transforming itself into a source of renewable and non-renewable materials for various industries. Packaging would decrease and become greener and often reusable. We would recycle much more intensively than we currently do.

The green economic environment would reward people for doing the right thing instead of punishing them as is currently the case.

Energy and a Thriving Agricultural Sector
Countries would produce a lot more of their own energy instead of relying on imports. It would come from diversified local sources. This would significantly change balance sheets for oil importing countries, keeping money at home.

Agriculture would become much more lucrative as the demand for its products would increase significantly. As a result, new investment would flow into the industry and serve to boost production, which would in turn help keep prices down.

Governments will likely have to regulate how much good agricultural land can be dedicated to the production of energy. Diversified domestic energy policies would lead to the production of biofuels from non-food crops grown on currently unusable land, refuse, and industrial waste and byproducts. Some energy could come from food crops to eliminate the excess production that often results in depressed agricultural prices and the need for subsidies.

The GEE would lead to a slowdown in the increase of the price of oil, which would have a positive effect on the cost of food. In addition, the system would favor green goods by not taxing them. This would include food.

The New Law of the Land
The Green Economic Environment would transform the world as we know it. The incentives to destroy the environment and waste natural resources would be gone and replaced with ones that would do the exact opposite. Finding ways to improve the environment and stretch out resources—as opposed to destroying them—would become very profitable. The new structure would reshape not only consumer markets but also the industrial sector, which would work for the environment instead of against it.

The companies that produce chemicals would redirect their research and development towards green alternatives to the scores of toxic compounds they themselves invented. The clean up of the environment and of industrial processes would begin and become a thriving sector.

The future would see better living conditions in cities and a robust (and unsubsidized) agricultural sector. The business environment would get greener and cleaner. We would buy fewer material goods and consume more services and environment-friendly products.

Copyright Waves of the Future, ©2010

More information: NRDC Global Warming Cap-and-Trade