Green Capitalism - Waves of the Future
Climate Change, Non-Renewable Resources, Energy, Contaminants, Carbon Pricing...The 21st Century Environmental Revolution
10. A Blueprint for National GEE Implementation
11. Disposable Grandchildren: Packaging and Contaminants
Regulations, Tax Breaks, Subsidies, and Alternative Strategies for the Environment
Are regulations the best strategy for global warming, pollutants, and natural resource management?
A New Strategy for Toxic Chemicals, Wastes & Contaminants
Overview Reviews
See also Book II of the Waves of the Future Series
-- Warning 404 Error --
Around June 15, 2025, our website will be renovated.
GOOGLE SEARCH RESULTS and the current LINKS and BOOKMARKS you may have will stop working and probably show 404 Error messages.
To access our new site, simply type:
wavesofthefuture.net
in your browser's address bar at the top.
Once there, you can recreate your bookmarks and links. Thanks.
CHAPTER 10-11
10. A Blueprint for National GEE Implementation
This chapter looks at the steps for the implementation of the Green Economic Environment strategy at the national level. But first, it runs through a theoretical scenario to explore the ins and outs of the system.Implementation Scenarios
The next few sections take a closer look at theoretical scenarios of implementation for the GEE. This will help visualize the new landscape and demystify certain issues. The first one is a sudden and drastic script that will serve to dispel some of the myths that may arise as a result of the work of lobbies opposing environmental change. The purpose of this extreme scenario is to enable the testing of the strategy's feasibility. Of course, it is not meant to be a viable option for countries but rather to stretch ideas to the limit.Canada is used as an example as the country's size makes it easier to illustrate situations. Monetary figures may be viewed in either U.S. or Canadian dollars as both are about equal in value at this point. As well, for the time being, issues of international competition are set aside so as to be able to focus strictly on a national scenario of implementation.
D-Day Implementation
D-day implementation refers to a drastic scenario which involves high initial tax levels. It would occur on a national basis and, as already expressed, assumes no international trade issues.Suppose that the Canadian government decides to implement a Green Economic Environment strategy overnight. The federal retail sales tax on goods and services (GST) as well as its provincial equivalents would be eliminated. This would automatically lower the price of goods and services by about 12%.
The non-progressive bracket of income tax (its flat component) would be dropped. As such, the first $30,000 of net personal revenue would no longer be taxable, and the average worker in Canada would save about $10,000. As a result, that person's monthly take-home pay would be instantly about $800 more ($10,000 divided by 12). Someone having a gross revenue of about $40,000 would have about $30,000 net after the basic exemption (about $10,000) and, therefore, would not pay any income tax.
The new GEE levies implemented by the government would include: a 100% tax on non-renewable raw materials (effectively doubling the price of steel, copper, nickel, etc.) to promote conservation; a flexible tax added to the cost of oil to maintain its price around US$ 150 a barrel (or any other price determined appropriate, politically or otherwise—which could be more or less) in order to reduce gasoline consumption and greenhouse gas emissions and promote the development of the renewable energy sector; and a 100% tax on key contaminants and pollutants.
Supported by regulations, standardization would be used in the packaging industry to further encourage resource conservation. Reusable containers would be tax exempt. Those that cannot be reused but are recyclable or made of renewable materials would see a $1.00 levy. Those that are not reusable, not recyclable, and not made of renewable materials would have a $2.00 packaging surcharge added to their price.
After a few months, the resource tax on metals would have filtered up. The impact of the GEE on particular products would depend on a number of factors: the content of metals, the amount of transformation that raw materials go through, the proportion of labor and technology in the product, and the total final value of the item. On average, consumer products with high metal contents would have seen a 25% to 35% increase in price while the costs of those with moderate amounts would have risen by 15% to 25%. Items with low metal contents would have seen an increase of 5% to 15%.
Computers and consumer electronics—which can have 80% to 95% of their value coming from the cost of technology (the operating system, memory, the CPU, etc.)—would not have gone that much higher in price although they can contain a fair amount of metal. Luxury cars would have been less affected by the new levies than regular ones as a larger proportion of their costs comes from labor, which reflects itself in a much higher final retail price.
Household cleaning and other chemical-based products that are harmful to the environment would have almost doubled in price because of the contaminant tax. At the end of the year, the taxpayer who had been $10,000 richer because of the income tax reduction would have spent $10,000 more on purchases. The government would have given from one hand and taken back with the other!
The purpose of the GEE is not to raise more money for the environment or the government. It is to change the incentive structure of the economy so as to naturally deter unenvironmental practices and promote green consumer behaviors. On average, people would break even at the end of the year, but consumption patterns would change for the better. As unenvironmental goods become more expensive, people would move away from them and shift to greener alternatives.
The GEE would create a green economic environment in which one would be rewarded for doing the right thing (buying green) and punished for purchasing products that are not environmental. And all of this, at no additional costs to the taxpayer.
The marketplace would also significantly change for businesses. Unenvironmental products would become hard to promote and less and less profitable. Green goods, which had been difficult to sell because of their higher prices, would gain a competitive edge and see their markets expand. Many products would be redesigned with less or no metal as the manufacturing input became more costly. The demand for automobiles would shift to smaller fuel-efficient and conservational sizes and cheaper models that used substitutes for metals whenever possible. Green industry sectors would be on their way to becoming highly profitable.
A drastic overnight implementation of the GEE would be difficult but manageable. Some things would become more expensive, but people's disposable income would increase in proportion as a result of people having to pay less income and retail taxes. As such, total consumption (hence, jobs) and purchasing power (the total amount of goods that one can afford to buy) would remain the same. People would be spending differently, not less. Unemployment would not have risen. The way of life would change, but the overall standard of living would be comparable to earlier on.
Under the GEE, we would see the world around us become greener and greener, year after year. Less metal would be part of our lives. Contaminants and toxic compounds in products would decrease. Fossil fuel use would go down, less garbage would be produced, the environment would begin cleaning itself up, etc. We would see an explosion of alternative energy technologies appear and a battery of green products hit store shelves, most of them cheaper than their alternatives.
Habit Shifts
Some people would likely want to take maximum advantage of the new green economic environment provided by the GEE and radically change some of their habits. For example, they would consume a lot more green products and keep their cars longer or get much smaller and more fuel-efficient ones. Their new environmental habits would lead to significant savings. In the example above, their actual expenses may only increase by $7,000, leaving them with a $3,000 bonus from the $10,000 tax break they received on income.Others would go with the flow and change their habits at about the same rate as most people. They would spend $10,000 more, the same amount they got back in income tax reduction, and come out even. However, their habit changes would be for the better. A lot of resources would be conserved, carbon emissions would go down, and contamination would decrease.
Some people simply do not care about the environment or can afford not to. They would continue to change cars as often as before, fill up landfill sites, and buy products in non-renewable packaging. They would find life more expensive, spending more than before on consumer goods.
Overall, the GEE would be neutral, but some would benefit more than others. The difference is that under a green economic environment, those who do the right thing for others and future generations are the ones who would win out.
Employment Shifts
Assuming no international competitiveness issues, an implementation of the GEE would not cause widespread job losses as total spending would not change. Money would not be taken out of the economy.Unenvironmental sectors would see employment decrease, but green industries would have a corresponding increase. The money not used to purchase goods harmful to the environment would now be spent in other sectors of the economy. Job creation in these would generally make up for the losses from non-green industries primarily because the GEE is revenue neutral.
Overall, because the amount of consumption has remained the same, there should not be any increase in unemployment as a result of the green economic environment strategy proposed in this book.
The Forest Industry
Just as some sectors in the economy would decrease in size and importance under a GEE system, others, such as the forest industry, would thrive. The demand for its products would increase. That would mean growth and more jobs. Government regulations would need to be put in place to ensure the proper management of the industry.For example, clear-cutting practices would have to be phased out and replaced by better options. Replanting would have to increase to not only renew the resource but also expand it to meet increased demand. Forest preservation for current and future generations would have to become a priority. Regulation will likely remain the primary instrument for the protection of old-growth forests.
What Needs to Happen
Let's look back at the initial planning exercise that we did to determine what an optimal environmental plan would look like (the silent scenario).The GEE would result in higher costs for products with high metal contents. Manufacturers would shift to substitutes whenever possible, and the automobile industry would start building more conservational and environmental vehicles. All of this would help save non-renewable resources, which is what would take place in an ideal situation.
Products that are made with toxic chemicals or are harmful to the environment would become more expensive under the GEE. Manufacturing and consumption would move to greener alternatives. Carbon taxes would result in a shift to renewable energy. As a result, contaminants and carbon emissions would decrease, which are things that would also happen under an optimal environmental plan.
The GEE strategy proposed in this book would deliver exactly what would happen under ideal circumstances. Of course, some job and economic displacement would be inevitable no matter how we decide to address environmental problems. A better unemployment insurance system would help us make the transition and result in a society being more competitive in the long term.
The GEE would make the changes much less painful than the other options we have. The D-Day scenario was one of drastic implementation, but countries will likely begin slowly, making the transition relatively easy.
We have the means to bring about large-scale environmental change; the only question remaining is, do we have the will? We do not really have a choice. Problems are already bad and will only get worse with further delays. The GEE will inevitably result in a number of lifestyle adjustments. However, together they will have a huge impact on global warming, conservation, and the environment.
We can act now; the GEE gives us the means to do so.
First Step: Laying Out the Foundation
The GEE is scalable. This means that the initial tax rate on raw mineral resources could be 100%—a doubling of current prices—or 30% or less as necessary. As such, the Green Economic Environment strategy could easily be phased in slowly and progressively, making it implementable without an excessive amount of planning. In the beginning, it would likely be difficult to estimate the most appropriate level for each tax. However, because the system is scalable, it would not be necessary to do so.Lower initial rates would decrease the impact of the GEE on the economy and allow governments to see how environmental taxes interact with each other and to assess appropriate levels. They would also help familiarize the public with the implications of the new system. As such, scalability would make it possible for countries to begin creating the green economic environment without delay. Of course, as environmental taxes are collected, the retail sales levies and the non-progressive share of income tax would be reduced in equal amounts.
What is important is to lay down the foundation as early as possible to start reducing carbon emissions, the depletion of non-renewable resources, and contaminants. Initiating the implementation early would have several advantages: it would give us more time, allowing for a softer implementation, and dispel any hopes that a government commitment to a greener future is lip service. It would be a firm signal to the business sector that times are definitely changing and that companies should start planning for a green economic environment.
Second Step: Short-Term Levels of Taxation
The second stage is intermediate in nature and would seek to establish a realistic national implementation. Countries would more fully commit themselves to the new system and select rates of taxation should be high enough to achieve significant amounts of resource conservation and pollution reduction but not so high as to overly affect a country's international competitiveness.Third Step: Progressive Implementation
This step would lead to the establishment of optimal national levels of taxation for the different categories of products and resources involved. It would essentially be a fine tuning of the tax rates developed during the second step. The resource and other GEE levies would be gradually increased to the new targets.Fourth Step: International Agreements
As national implementation would likely reach limits, the fourth step would be the development of international agreements. These would support fuller national implementation, eliminate international competitiveness issues, and take the green economic environment worldwide.The GEE Diffusion Effect: A Closer Look
The GEE would be charged on raw materials and other products and diffuse itself as it moves up into finished products. Even fairly high initial tax levels—if this is what a country chooses to do—would not result in excessive price hikes for consumer goods. This section takes a closer look at the issue.Tax Diffusion Through the Economy
The GEE would spread in different patterns throughout a country's economy. At one end, items like machinery, machine tools, and automobiles would probably be hardest hit by resource taxation as they contain large amounts of metal. However, a drastic 100% tax on raw materials would not automatically mean a doubling of the price of these items. The parts and components of machinery and vehicles are not simply metal. They are technology, labor, and materials.A kilogram of steel and a tractor part weighing one kilo are not the same thing. The part is metal that has been smelted, cut, or shaped into a specific design. In those processes, value is added to raw materials. For example, the part weighing a kilo may sell at double the price of its weight in steel. That tax would therefore apply to only half of the final price. Let us look at an example based on the drastic implementation scenario discussed earlier.
Suppose that a tractor made of 90% metal had a value of $100,000, with the cost of its metal parts being $90,000 and that of its non-metallic components, $10,000. Firstly, the tractor would not double in price from a 100% tax on raw materials as only its metal parts would be affected by the tax; the $10,000 worth of non-metallic components would not go up in price.
Secondly, the tax would affect only the raw materials, not their fabrication. Suppose that raw materials cost $40,000 and their manufacturing into parts, $50,000 (for a total of $90,000 as above). A 100% tax on non-renewable resources would double the cost of metals from $40,000 to $80,000. The costs of manufacturing the parts ($50,000) and of non-metallic components ($10,000) would themselves not be affected. The final cost of the tractor would have increased by $40,000 to $140,000, which is a 40% rise in price.
At the other end of the spectrum would be services, such as the legal, educational, and healthcare industries. As these do not generally involve the selling of material goods, their costs should essentially not go up. If anything, they should decrease as retail taxes are dropped. The same would be true for renewable resources such as wood products and foodstuff.
In between, you have the vast range of consumer products that would see varying increases in price depending on the value of the non-renewable raw materials they contain as well as the amount of transformation these have gone through.
A New Consumer Environment
Going back to the Canadian example, dropping the federal retail sales tax would make goods and services 5% cheaper. Doing the same thing with the provincial sales taxes would further reduce most prices by another 6% or 7% for a total of about 11% to 12%. As a result, under a 100% GEE scenario you may see the price for high-metal content goods increase by about 25% net. The cost of services and renewable resources would decrease by a few percentage points. Other items would range from no change in price to moderate increases.Many things would be cheaper, others, more expensive, but our total purchasing power would essentially remain the same as we would have more disposable cash from the rebate on income and retail taxes. The GEE would mean a different way of life but not a lower standard of living. We would experience a different consumer environment which would lead us to buy fewer unenvironmental goods and more green ones. Our buying patterns would change.
The Packaging Scenario
In the packaging industry, the strategy would yield similar results. The GEE would, for example, bring in taxes on new containers. The environmental levy would optionally be backed up by regulations standardizing them. The products purchased by consumers would remain exactly the same. A fruit juice is the same regardless of what it is bottled in.As all new containers would be taxed, companies would naturally and progressively shift to recyclable and reusable alternatives. The soft drink and beer industries in many countries used to function on that basis and still partly do so today when they reuse their own bottles. In terms of economic organization, this is essentially old technology.
What would be different under the GEE is how the recycling of empty containers would work. It would be based on markets as opposed to the bureaucratic refundable-deposit system. Empty bottles would eventually be sold to recyclers rather than returned. Of course, the old way of doing things would still remain an option in situations where it is desired or is still the best alternative. Under the GEE, choice would still exist for consumers. Soft drinks in plastic bottles would still be available but more expensive because of their less environment-friendly packaging.
One thing that would change in our lifestyles is that we would likely spend more time recycling, taking items over to depots or processors and selling them back for reuse or raw materials. Those who would be too busy to do so, or would not want to, could forgo the cash and just leave them at the curbside to be picked up by recycling entrepreneurs or kids wanting to make a little cash.
The Dynamism Issue
The chisel effect of the GEE in shaping a new society would be continuous. Dynamism is a very positive and desirable factor in bringing about environmental change. Metal content would decrease in many things as non-renewable resources would be substituted for by renewable or reusable materials. Businesses would continue to seek ways to lower their costs by switching away from taxed inputs. As the price of toxic intermediate chemicals would go up, they would be increasingly replaced by more environment-friendly alternatives. Processing methods would change and become greener.A continuous incentive to do better is exactly what we want. For the first time with respect to the environment, the issue would not be the lack of funding but keeping positive change from happening too fast.
11. Disposable Grandchildren: Packaging and Contaminants
This chapter will cover in more details one of the most important sectors of the economy as it relates to the environment: packaging. Its products are pervasive in society. Furthermore, many are single use and, for that reason, extremely wasteful. As such, the packaging sector has a massive impact on the environment and is in need of major changes.Currently, conservation includes various recycling and reuse programs. Renewable resources such as paper products are also the focus of recycling because of the cost of their disposal. The packaging industry is of direct relevance to resource conservation not only because of its use of non-renewable materials—such as steel and aluminum—but also because of its products' utilization of landfill space. Targeting the sector is crucial because of the sheer amount of waste it generates and because, if properly managed, it is one of the keys to resource conservation.
The 20th Century Approach
How should we manage the packaging industry? Should we impose severe restrictions on it? Should we tax it or assess import tariffs? It is undeniably one of the most difficult environmental problems to handle. The way we currently manage packaging is nothing short of a crime against humanity.Packaging serves once and is then discarded. How can we still be so widely using non-renewable resources for its fabrication? We consume tons of depletable materials—which will be desperately needed by future generations—for products that not only see virtually no use but also cost a lot of money to dispose of and will plague landfill sites for a long time!
The 20th century can make one claim: to have brought about the disposable society. By indulging in convenience, we are turning the world into a garbage dump, making our very grandchildren disposable. They will be left living in a highly polluted environment, with their own body tissues reflecting the chemical mix around them.
Recycling and reuse programs will need to see significant shifts in approach and scale if they are to achieve effectiveness and produce reasonable results for the environment. Recycling is not the long-term solution to resource conservation. It is just a part of it. On the current scale, it only mitigates the problem although we may feel that a lot is being achieved.
Plastic soft drink bottles, for example, can be recycled to make t-shirts, carpeting, or pillow stuffing. However, most bottles do not get recycled in the first place and end up in landfill sites. Products made from recyclables eventually also end up in garbage dumps, only later. Steel containers can be resmelted, but again, a lot of them do not get recycled in the first place, and even metal that has been given a second life eventually rusts away into the environment.
Recycling helps conservation, and efforts in this direction should continue. However, it only slows down depletion to some extent and delays the inevitable. For that reason, the real long-term solution for the industry is to reduce, reuse, and shift to renewable resources such as paper and cardboard.
The Market Approach
Recycling programs often have to be funded by governments because there is generally no market for used materials at the actual cost of collection. That is, recyclables are most often resold by municipalities at less than it costs to pick them up. Taxpayers, therefore, have to make up the difference. Furthermore, the government bureaucracies that run the programs tend to be less efficient than their private sector counterparts.Another approach to recycling has been the refundable-deposit system in which a small levy is charged on bottles and cans and refunded when the empty containers are returned to vendors. Hundreds of millions of deposits have to be collected and kept track of by retailers. Then, each has to be refunded. Net surpluses and deficits have to be accounted for and returned to or claimed from government agencies. Again, this may not be a very efficient approach.
The GEE would enable and support a new strategy for conservation. A levy on packaging and/or materials would have the double effect of reducing our consumption of non-renewable resources and of creating natural markets for reusables and recyclables by increasing their value above the cost of their collection, i.e. by making the industry profitable. This could replace the more bureaucratic and inefficient deposit system although the latter would still be an option wherever it is more functional.
Under the GEE, private companies would buy and sell reusables and recyclables for profit. Items would be collected and sold for cash at market prices without government intervention. The system would have the advantage of keeping the element of choice for both corporations and consumers. Certain useful but wasteful types of packaging would still be available, although for a higher price, as opposed to being regulated out. This would provide more options for consumers and is generally preferred by businesses as it gives them more flexibility and time to adapt.
In the long term, natural markets would develop by themselves as non-renewable resource taxes are progressively increased and profitability levels are reached in those sectors, i.e. when the cost of recycled resources such as metals is significantly lower than that of newly extracted minerals. However, in the short term, there could be the need for a combination of approaches.
The Short-Term Market Approach
Although resource taxation remains, in my opinion, the most efficient approach to environmental change, its initial levels would be limited by international competitiveness. As such, an interim strategy for packaging is likely to be needed in the beginning.The goal for the industry would be to shift to either reusable containers or 100% renewable, recyclable, and biodegradable resources such as cardboard. Non-renewable and non-biodegradable materials such as polystyrene fillers (better known under the trade name Styrofoam) would be taxed in order to foster their replacement by environmental alternatives such as cardboard frames, molded paper pulp, etc. Regulations could further be applied to inks, glues, tapes, chemicals, etc. to ensure that they are of only non-toxic and fully biodegradable types.
With respect to food-grade and other containers having a potential for reuse, the GEE would tax new items, making used ones or those made with recycled materials cheaper. Market forces would naturally act to shift industries towards them. Food-grade containers include the various plastic tubs and steel cans that edibles come in as well as the aluminum cans and glass or plastic bottles used for liquids. The goal would be to switch from them to reusable alternatives as they are a large part of our daily production of garbage.
Generalities
Under the GEE, people would not return their empty containers for a refund. Instead, they would resell them to a local recycler for what these would be worth on the market at that time.The role of governments would be to set taxes sufficiently high so that empty containers would be worth reselling instead of being thrown away. In some ways, the GEE approach would resemble the refundable-deposit system, except that it would not have its bureaucracy. One of the main differences between the two would be that the price of returns would not be fixed but vary from recycler to recycler and by locality.
Communities that are too small for recycling to be profitable or that do not have local recyclers could continue the programs that they already have.
Double-Taxing Inputs
Under the general GEE scheme, raw materials (outputs) from producers would be taxed once. One way to solve the lack of initial incentive or profitability in the reuse and recycling industry would be to tax those outputs again when they are bought by packaging manufacturers (as inputs).For example, steel and glass would be taxed once with producers at the established GEE rate. Manufacturers that use these to make regular goods (tools, toys, dinnerware, etc.) would not pay a second levy. However, companies using them for the manufacturing of packaging would be taxed a second time as the raw materials are purchased as inputs.
This would make containers fabricated from new materials more expensive, which would increase the incentive for packaging manufacturers to move to used materials. It would also create a market for recyclables since waste metals would be cheaper as they would not be taxed. Manufacturers of packaging would naturally shift to them.
Each type of material could be assessed for environmental friendliness or desirability. Criteria such as reusability, renewability, biodegradability, and toxicity could be used to set tax levels. For example, steel and aluminum would be assessed higher levies because they are depletable. Cardboard would be at the bottom of the scale because it is both renewable and biodegradable. As desired, the various types of plastics currently used in the packaging industry could be assessed individually and get different tax rates.
Imported containers could easily be taxed based on weight. Governments would simply have to require exporters to list the types of materials and net weights of packaging on labels and shipping documentation.
This would probably be the simplest approach to creating a market-based strategy for the packaging industry at the beginning. In the longer term, the basic GEE output tax might be enough to support profitable markets for used materials although input taxation would remain an option to ensure high standards of recycling in an industry that is very wasteful.
Keep in mind that we are still discussing a revenue-neutral approach in which higher environmental levies would be offset by a drop in other taxes.
Individual Taxation
A less desirable strategy would involve individual levies on types of items. This approach would be more difficult to implement because of the variety of packaging available. However, it may be preferred by some countries for one reason or another. Let us first look at the range of available options.One of the best environmental packaging at the moment is glass. It is natural, recyclable, and reusable. Under an individual taxation scheme, new containers would face levies to promote reuse and expand markets for recyclables. Used ones would remain unlevied.
Plain cardboard would be a very good choice too but can only be used for packaging dry goods. For liquids, an alternative to glass is waxed cardboard cartons as are currently used in the packaging of milk and some drinks in many countries. These, however, are generally not reusable. They could be levied but at a low level because of their bio-biodegradability and the renewability of their materials.
Other alternatives such as regular plastic bags (those used for carrying groceries) and plastic-lined cardboard cartons could be levied at an intermediate level. They are less environmentally desirable but better than many other options.
Because they do not bio-degrade easily and are generally not made from renewable resources, plastic containers would be fully targeted under an individual taxation system. So would steel and aluminum cans. However, the same items made from recycled materials would be taxed at a lower level in order to promote their use and the development of their markets.
Examples of Individual Taxation
Individual taxation would be fairly complex. The following is an example of it and assumes that regulations standardizing container types and sizes have been implemented (see Standardization a little further down).For the sake of simplicity, the following will deal only with smaller size items such as soft drink bottles and steel cans for foods. Larger or more expensive containers could be the object of a separate scheme or category. Non-renewable would refer to packaging made from resources that are limited in supply and depletable such as steel, tin, aluminum, etc. As most materials do eventually biodegrade, non-biodegradable would refer to those that do not break down within a few years in nature.
A typical scheme could look like this. Taxes would be charged preferably directly to manufacturers and on imports at customs. The first level of levies, $1.00/item for small sizes, would be applied to new non-renewable, non-reusable, non-biodegradable containers.
It would essentially comprise items that we would want to phase down or out for their unenvironmental or unconservational characteristics. This would shift producers and food processors—as well as consumers—away from them and towards better alternatives. The $1.00 levy would not be a refundable deposit but a cost. It would be recouped through revenue-neutrality and by selling containers back to recyclers.
The second level of levies, $0.75/item, would be applied to composite containers such as plastic- or foil-lined cardboard cartons, for example, those currently used for packaging juices. This level would represent better alternatives. The levy would promote a switch to more environmentally desirable types of materials.
The third level of taxes, $0.40/item, would be charged on all new non-standard containers not already taxed above and made of reusable and recyclable materials. This would represent good alternatives such as glass containers. New and non-standard items would be taxed to promote a shift to standard ones, which would be more reusable, and to encourage reuse.
The fourth level would target new standard containers. A $0.30/item levy would promote their use over that of non-standard ones. The less fragmented markets are, the cheaper and more efficient processing for reuse would be because of economies of scale. This would result in lower costs to consumers, more successful processing industries, and increased resource conservation.
Fifth level packaging, used containers, would not be taxed. At present, this field is fairly limited. Beer is one industry in which bottles are washed, sterilized, and reused. However, this is undeniably the exception rather than the rule. Various foods could be packaged in reusable glass jars. Soft drinks could go back to being bottled as they used to.
The above could be a typical packaging scheme used to promote environmental and conservational behaviors in the sector. Of course, rates could be higher or lower. As a general rule, the higher a tax, the more industries would shift away from undesirable products and towards more environmental alternatives.
Countries could distinguish between types of plastics based on reprocessability. Reusability could also be graded and levied differently based on the number of times a container can be refilled. Ultimately, each container type could even be graded individually based on environmental and conservational characteristics and desirability. So could raw materials under a double-taxation scheme.
Overall, the above system would mean that the choices that are better for the planet would be less expensive. Plastic soft drink bottles would still show up on shelves; so would steel and aluminum cans. However, they would be more costly. That would provide for flexibility for both consumers—who would still be able to choose lighter packaging out of convenience—and producers, which may find it cheaper or more useful to use less environmentally desirable containers, or too expensive to convert away from them in the short term.
International Issues
The GEE packaging component would be relatively simple to implement on a national basis. Once the taxes are in place, the market would take care of the rest. The question is, how do we ensure that local manufacturers and businesses are not put at an unfair advantage with the implementation of such a system?Packaging does not represent a large percentage of the total value of the products we purchase. Furthermore, once markets are developed, used containers and those made from recycled materials may come out to be cheaper than even unlevied new ones. As such, there might not be a need to do anything.
However, imported packaging itself (empty boxes, bottles, etc.) would have an unfair competitive advantage. To ensure fairness, governments may choose to implement the levies that are applied to local packaging on all imports and optionally rebate them on exports. This could be done under either the double- or the individual-taxation scheme. Foreign manufacturers using recycled standard containers or countries having such programs could qualify for tax exemption through bilateral agreements.
A second option would be to apply a uniform but lower tax on all imports. This would offset some or most of the unfairness in competitiveness and keep things simpler.
A third option would be to charge levies at points of sales in stores. That would be much more bureaucratic, greatly multiplying the number of places from which governments would have to collect. However, it would have the benefit of treating both locally-made and imported products in the same way. The bureaucracy would shift from manufacturers to retailers. Such an approach could make it difficult to distinguish between new and reused containers.
In the long run, the solution may lie with international agreements since common standards would greatly simplify things.
Standardization
Taxes on packaging would shift markets to environmental alternatives. As already stated, glass is one of the best options as it is reusable. However, the fact that containers can be reused does not mean that they will be and not go straight to the landfill. Many fruit juice and drink bottles are not reusable. Others are never recycled despite the refundable-deposit system. Glass is a depletable resource.The plethora of formats currently existing on the market makes it generally unprofitable to collect containers and process them for reuse. Unless special measures are taken to address the issue, we could still end up adding substantially to our garbage problem—not to speak of wasting a very useful resource—even if we have a sound recycling and reuse strategy. As such, countries serious about the environment should consider standardizing formats. Simple regulations could easily achieve that and result in broader reuse markets, higher rates of return, and savings.
The large variety of sizes and shapes currently in existence makes it difficult and often unprofitable to process containers for reuse. The market for each type is very small, and trying to collect, process, and warehouse them would be costly given the limited volumes. Even in the beer industry, there are dozens of bottle designs although it does not appear to be so. Most are very similar but specific to companies, fragmenting the market and making it more expensive for businesses to reuse them.
If containers were regulated into a minimum number of categories and designs, reuse could become more profitable and attractive to businesses of all sizes. Standardized sizes and formats would promote larger markets. For example, there would be a very few types of each of 5 ml, 10 ml, 50 ml, 125 ml, 250 ml, 350 ml, 500 ml, 1 liter, etc. jars and bottles. Design specifications would be available to both local and foreign container manufacturers so that overseas exporters who wish to qualify for a tax exemption could do so. A levy differential between non-standard and standard containers would be put into effect to promote the shift to the latter.
Standard containers would be slightly less expensive to produce than their non-standard equivalents as they would be manufactured and handled in larger runs. As most companies would purchase the same types of containers, their market size would increase and they could be more easily reused as the larger volumes would make it profitable to collect and resell them.
The processing, transporting, storing, and wholesaling of used standard bottles and jars would be much less costly as several companies within an area would share the same pool of containers, reducing inventory expenses and allowing their processing for reuse to be carried out locally. This would naturally promote a shift to them.
Furthermore, buying standard would mean buying green. As such, consumer preferences would likely shift towards this more environment-friendly alternative. Using standard containers would essentially be free publicity and a marketing advantage for most companies.
Under an individual-taxation scheme, governments could impose a higher levy on new standard containers—both local and foreign—to shift the market to used ones. Food processors and other companies would naturally gravitate towards the cheaper alternative, generating a demand for them, and essentially creating a reuse market.
Under
a double-taxation scheme, the second levy would act to make new
standard containers more expensive than used ones and promote a
shift to the latter.
What would be the
result of such an approach? Store shelves would look different.
Groceries would be heavier to carry. Consumers would collect their
standard used jars and bottles and sell them for cash to recycling
firms that would process them for resale. Reuse would be achieved
without the bureaucratic and inefficient need for deposits and
refunds, or the involvement of governments. An enormous amount
of resources would be conserved. Landfill and intermediate chemical
use would decrease drastically.
Used Container Processing
The beer industry often reuses its own bottles. It manages to do so because its product is pervasive in society and major players dominate the market. Large numbers of containers go back and forth between brewers and consumers. That allows for economies of scale to take place. Big companies have the capital to invest in bottle processing machinery (washers, sterilizers, etc.), but smaller ones often cannot afford it.Many small towns would likely not be able to economically process used bottles and containers if packaging levies are implemented without standardization. In most cases, they would have to be shipped out of town to larger centers for processing. The fragmentation of the market would add to costs, and the diversity of formats would make it unprofitable to collect many types of containers.
Packaging levies would reduce the variety of designs as companies shift to containers in lower tax brackets. The market would become less fragmented. As a general rule, the more formats, the larger the markets need to be for profitability. With fewer ones, smaller centers could also have viable reuse processing operations.
Supply and Demand in the Reuse Market
Since the GEE strategy does not involve a deposit system, the price paid to consumers for their empties could vary depending on supply and demand and by localities. As such, the market could not always be relied upon to set a price which would ensure that recycling and reuse do occur.Larger communities should reach high levels of efficiency and be the most beneficial to consumers. Smaller and less competitive ones may have to be supported by regulation. Governments may need to establish a minimum amount paid per empty container. It would have to be high enough to ensure that they are returned and that conservation strategies bear fruit.
A number of states in the U.S. have bottle return systems. The average deposit charged is about $0.05. Although some programs are relatively successful, the rate of return of others can be as low as 60%. Canada's deposit fees range from $0.05 to $0.40. To provide enough incentive for people to return most of their empty containers and achieve acceptable recycling standards in today's context, a minimum levy of $0.20 to $0.30 may have to be charged. In places where markets would not occur naturally and be profitable, municipalities would likely have to run recycling and reuse programs themselves. As in other GEE components, all of the above would be compensated for by a drop in other taxes.
The GEE would yield very tangible benefits in the packaging sector. A lot more would be reused and recycled than currently is. Waste would become valuable. Companies would actually compete over your garbage. Resource depletion and landfill expenses would be greatly reduced, intermediate chemical usage from the manufacturing of new containers would decrease, and the cost of recycling programs to municipalities, eliminated in many cases.
As packaging is massively used everyday, governments should not hesitate to use high standards of reusability, renewability, and biodegradability in its respect. They should do so urgently. The industry is in dire need of a comprehensive policy ensuring that reuse is maximized and that wastage is minimized. The only issue here is convenience, and our inability to get our act together.
GEE Management of Renewable Resources
Governments may also choose to tax some renewable resources to avoid over-exploitation. For example, new paper could be levied (at the producer level for collection efficiency) to reduce pressure on forests.Recycled paper products would then become cheaper than new ones, promoting conservation and saving landfill space. A stronger demand for them would be created. Market forces would kick in, leading companies into the business of collecting paper and reselling it for profit to recyclers. Some of this is occurring at the moment but on a much smaller scale than it should.
The GEE could be pushed further into a full management strategy for renewable resources. To promote reforestation, governments could tax old-growth lumber in order to shift the demand to timber coming from land that has been replanted. It could assess higher levies on lumber produced through clear cutting or other poor management practices (assuming those are not regulated out).
The same strategy could be applied to fisheries, with poorer management approaches penalized by taxation, or species with dwindling stocks assessed levies to increase their price and decrease demand. Of course, all of this would also be done in a revenue-neutral way.
The GEE would be a powerful market-based mechanism to manage renewable sectors of the economy. It would provide for them the same benefits that it offers as a conservation strategy for non-renewable resources: simplicity, flexibility, market friendliness, minimal bureaucracy, etc.
The New Consumer Environment
Resource conservation would include a combination of taxes on non-renewable resources to decrease their use and create natural markets for recycling. A second set of levies targeted at non-renewable packaging would deter its use and reduce unnecessary wastage. Standardization and taxes on new containers would lay the foundation for a solid reuse industry without the need for the inefficient deposit-refund system.Levies on specific renewable resources could also be used to promote conservation and prevent over-exploitation by giving a competitive advantage to recycled products. Most municipal recycling programs would be taken over by private entrepreneurs. The new market-based approach to resource conservation in the packaging sector would be much more efficient and effective than the current patchwork of taxpayer-funded programs. Again, remember that all these taxes would fill governments' coffers and that overall taxation would remain the same.
The GEE would slowly reshape the economy. Store shelves would take on an unusual appearance at first. Some types of foods may look funny in glass jars. Bulk sections in stores would likely expand. Most soft drinks would again be sold in glass bottles and be heavier to carry.
We would not have the diversity of containers we are used to, but that would only mean saving resources and the environment. We would still see the familiar logos of food companies on glass jars.
Flexibility and Scalability of the Market Approach
Choice would remain a component of a market-based resource conservation strategy. Non-standard, plastic, and most other types of containers would still be legal but more expensive. A soft drink company that does not care about the environment could continue to use plastic bottles, but its product would be pricier because of the tax on non-reusable containers. Likewise, consumers would be able to continue to buy unenvironmentally packaged goods but at a higher price.Choice adds flexibility to the system. As already stated, it is an option that is often preferred by businesses as it gives them time to adapt. The flexibility of a market-based strategy would make it more acceptable to everybody. The approach is fully scalable, and the level of taxation as chosen by society would determine how much more one would have to pay for convenience.
Contaminants
The case for the reduction of pollutants has already been made many times in environmental literature. As such, the issue will not be rediscussed here in any detail. Contaminants would be a major target of a GEE strategy. Some issues—appropriate tax levels, international competitiveness, etc.—are very similar to those for non-renewable resources.One of the differences with respect to contaminants is that they are more substitutable than metals. There are generally many alternatives available. Also, their contribution to the final cost of many products is often much smaller than that of metals. As such, their impact on the price of consumer goods would generally be less important. These are some of the considerations that would have to be examined closely in defining and determining policy.
Under the GEE, contaminants would be taxed to reduce their use and shift industries to cleaner substitutes. The determination of what should be levied and at what level is much beyond the scope of this book. Each chemical has its own properties and effects on the environment. Generally speaking, the guiding principle for those would be, the more toxic or harmful a compound, the higher the tax applied.
Industrial and Domestic Contaminants
In the industry, undesirable chemicals and other compounds would be taxed at the producer level. The byproducts of the manufacturing process are more problematic as they are often not visible to authorities. They are not bought like inputs but produced internally. They are not sold either, making them difficult to track. In some cases, levies might be appropriate, but in others regulations might have to be involved.Many of the pollutants plaguing the planet today are not industrial. They are not intermediate chemicals or byproducts of the industry. They are the very goods produced for us consumers. They comprise the various household cleaners, laundry detergents, solvents, etc. we employ everyday. These and other harmful end products would also be targeted by the GEE (taxed at the manufacturing level) as they are used massively, in millions of households around the world. Relatively high levies should probably apply to them as many can be easily replaced by more environmental alternatives.
The Agricultural Sector
Ironically, the industry that puts food on our tables is also a very significant source of pollution. Modern intensive agriculture uses a variety of herbicides and pesticides that degrade our water systems and the environment. The GEE would and should target these contaminants to reduce their use and shift the industry and its R&D towards more organic alternatives and practices.Close attention should also be paid to domestic herbicides and pesticides for the same reason. Some urban centers in North America have already made moves in that direction. These would fall under the contaminant strategy of the GEE and would be taxed at the manufacturing level.
A second source of pollution relating to modern agriculture is the widespread use of chemical fertilizers. They are responsible for the explosion in productivity that the industry saw in the last century but are also prime culprits in the degradation of our rivers and lakes as they promote the growth of algae that choke them and the fish that live in it. They would be targeted by the GEE to reduce their use and promote greener practices.
A GEE strategy in the agricultural sector—assuming a government opts for it—would raise the price of foods grown with chemicals and artificial fertilizers, shifting consumption to better and healthier organic alternatives. People would consume fewer contaminants, antibiotics, and carcinogens. Agricultural land and the environment would be protected. Again, everything would be revenue neutral.