Carbon Pricing to promote Public Goods

Carbon Pricing for Public GoodsGeneva, January 25. By Adam Koniuszewski, GCSP Fellow

The Cost of Carbon Pollution

The enormous economic, social and environmental costs of climate change have been widely recognized since Nicholas Stern worked on quantifying them a decade ago. These costs however remain largely unaccounted for in the marketplace. This failure to apply the polluter pays principle distorts prices, encourages carbon pollution, and gives fossil fuels a competitive price advantage over cleaner alternatives.

Pricing Carbon

A number of nations, including Scandinavian countries, Switzerland and Italy, are trying to correct market signals by pricing carbon. In 2016, carbon pricing covered 13% of global emissions; a number that is expected to reach 50% of emissions by 2030. Carbon pricing, in the form of a tax or carbon trading, generated $50 billion in government revenues in 2015.

A “Framework Convention for Carbon Control” 

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The author suggests that carbon pricing experiences have produced valuable lessons for more governments to adopt it. In fact, there is now a compelling case for creating a “Framework Convention on Carbon Control” (FCCC) and an independent agency to oversee all aspects of carbon emissions and sequestration. Inspired by the successes of the “Framework Convention for Tobacco Control” (FCTC) in alleviating the smoking epidemic, the carbon control convention would be designed to fix market failures and insufficiencies that create de facto subsidies for carbon pollution.

The author also suggests that by ending fossil subsidies and implementing carbon pricing, nations can generate a revenue base that could be used to reduce corporate and personal income taxes. In addition to supporting national priorities like health and education, carbon finance can also fund the universal goals represented by 2030 sustainable development agenda.

For more see:  Winning the Tax Wars – Tax Competition and Cooperation 

Published by Wolters Kluwer, Jan 2018 (see chapter 9)

About “Winning the Tax Wars”

Tax Wars Book FlyerThe book is the outcome of the 2016 TaxCOOP conference at the World Bank in Washington DC on the impacts / solutions to international tax competition. It covers transfer pricing / profit allocation between tax jurisdictions, the need for compliance, investigations and protecting whistleblowers, wealth taxation in an increasingly unequal world, derivatives and hedge-funds, tax investigations, electronic commerce and crypto-currencies, and sin taxes. Its authors, editors and experts include: Brigitte Alepin, Blanca Moreno-Dodson, Louise Otis, Allison Christians, Vanessa Houlder, Lyne Latulippe, Patricio V. Marquez, Richard Murphy, Erika Siu, Eric M. Zolt and Adam Koniuszewski.

About TaxCOOP

TaxCOOP is an international independent and nonpartisan conference on tax competition and the weaknesses of the current tax system in the era of globalisation. Thanks to its various initiatives, TaxCOOP is now recognised as one of the most influential tax initiatives globally.

 

Winning the Tax Wars

I authored the chapter on Carbon Pricing in this new and most timely book on global tax competition: Winning the Tax Wars:

Tax Wars Book Flyer

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The book, resulting from a TaxCOOP Conference at the World Bank in Washington DC in 2016, covers how tax competition has evolved and its impact on developed and developing countries, the state of play when it comes to multinationals and transfer pricing / profit allocation between tax jurisdictions, the need for compliance, investigations and protecting whistleblowers, the need for a wealth tax in an increasingly unequal world, and, tobacco taxation.

A full chapter is devoted to promoting public goods and addressing climate change through carbon pricing along with recommendations to solve the growing crisis of tax competition represents my contribution to this important and authoritative work.

For more about Taxing Wealth by Richard Murphy check here.

The last TaxCOOP Conference took place at the United Nations Office at Geneva on October 16, 2017.

 

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Thanks to such initiatives, TaxCOOP has become the only conference in the  top 50 most influential on the global tax scene.

TaxCOOP Top50

More on this soon.

 

 

Was air pollution a factor when Portugal beat Poland?

poland-vs-portugal-live-streaming

A research team at the IZA Economic Institute in Bonn (Germany) found that air pollution significantly impacts the performance of football players, even when measured pollution is below what the EU considers “safe level” thresholds. Above those concentrations, the measured decline in performance reached as much as 16%!

The World Health Organization reported that outdoor air pollution in cities for fine particles (called PM2.5 being smaller then 2.5 microns including dust, exhausts and coal combustion) was almost three times higher in Poland than in Portugal (28.7 vs. 10.8 ug/m3). Health effects include asthma and respiratory diseases such as lung cancer – children, the elderly and those with lung or heart disease are most at risk.

Outdoor air pollution causes 3.7 million premature deaths around the world according to Dr. Maria Neira, WHO Director for public health, environmental and social determinants of health.

In December 2015, the European Commission referred Poland to the EU Court of Justice for persistently high and dangerous levels of air pollution – mostly coming from household heating and road traffic. The Commission deemed that measures taken by the authorities were inadequate.

While we cannot attribute the victory of Portugal to pollution, it is clear that poor air quality affects more then just the quality of football games. Urgent action is needed!

Happy Canada day to all!

Flag_of_Canada149 years ago on this day, the people of Upper Canada and Lower Canada came together to create one great nation, Canada.

“From the outset, Canada was formed not in spite of differences, but because of them. Thanks to the hard work and understanding between many cultural and religious communities, Canada is the diverse, inclusive, and compassionate country that we are fortunate to call home today”, said Canadian Prime Minister Justin Trudeau this morning.

Those words were echoed this morning by Canadian Ambassador to Switzerland Jennifer MacIntyre in her talk to the members of the Canadian-Swiss Chamber of Commerce when she said that “Canada is strong precisely because of the diversity of its people. This is not only a source of pride but the reason of our prosperity and success as a nation.”

I can certainly relate to this message. My family escaped the tyranny of the communist regime in Poland in the early 1970’s and we received a wonderful welcome in Montreal (Quebec). That is where I grew up and where my parents and brother still live and celebrate the “vivre ensemble” (Living together).

Four decades later, Canada still is a beacon of hope for refugees escaping the atrocities of the middle-east crisis. The Trudeau administration committed to take in 25,000 Syrians only to increase this number by tens of thousands soon after.

So many Canadians are willing to sponsor them that the government can’t bring them quickly enough. “Where are the refugees that you promised us? When will they arrive? We are waiting for them! is what I hear from the constituents in my Toronto riding” said Minister of International Trade Chrystia Freeland during the Forum of the Americas in Montreal two weeks ago.

And this constructive and solutions-oriented approach extends well beyond the refugee crisis. When the Canadian delegation arrived at the Paris Climate Conference in December, the assembly was chanting: Welcome back Canada! Welcome back Canada! and that was even before the climate minister Catherine McKenna voiced Canada’s commitment to maintaining climate change well-below 2 degrees.

At a time when the dark forces are shaking the world by promoting hate, fear and isolationism, there is a new wind blowing from Canada. One that is supported and celebrated by all Canadians. It is a message of peace and tolerance, a celebration of multiculturalism and diversity and a reason for the whole world to celebrate!

Happy birthday Canada!

Related Links: 

The promise of diversity

COP21 – Paris Climate Conference

For a Carbon Tax by Stephane Dion

Reinventing Energy Services with Scott Foster

What would we do without energy? from smartphones to transportation our way of life runs on energy. But faced with the realities of climate change and 1.3 billion who lack access to modern energy, Scott Foster from the UN Economic Commission for Europe (UNECE) argues that we have got the energy equation seriously wrong and need to change the way we think about energy.

Energy as a Service

We can meet the challenges of sustainable development and climate change if we think of energy as a service instead of a commodity. Scott argues that we want hot showers and cold beers not barrels of oil or kilowatt-hours of electricity. Fostering this revolution to think in terms of services and obtaining this value most efficiently will radically reduce waste, improve efficiency and help address climate change and energy poverty.     hot shower cold beer

Transforming Energy Utilities

There is a compelling business case for transforming energy utilities into service providers because they have the financial capacity, the expertise and the business partners to make it happen. Most importantly, we know it works! The successful experience of California where it was  implemented after the oil crisis in 1978 for gas and 1982 for electricity shows has been replicated in 15 other American states for electricity and 23 for gas, with legislation pending for 12 other states.

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Incentives for the market to work

The winning formula is to share part of the savings between the end users and the utility so that the energy provider works for its customers to lower energy consumption and reduce energy bills. Sharing savings turns out to be more profitable then selling more energy which aligns the interests of all parties in a win-win relationship. A far cry from the traditional model of selling ever more energy that has fostered massive investment in efficiency, renewables and innovation while creating jobs, growing the economy with the added benefits of lower carbon and environmental and footprints. It is high time we put this experience to test in Europe other parts of the world…

 

Powering Forward, by Bill Ritter, JR.

PoweringForwardAs “Powering Forward: What Every American Should Know about the Energy Revolution” becomes available for sale today, I am grateful to Bill Ritter, his team at the “Center for the New Energy Economy” (CNEE) at Colorado State University and to Fulcrum Books for providing a copy of the book for this review.

Bill Ritter Jr. knows a thing or two about the energy revolution and the sun that is setting on the fossil fuel industry. As Governor of Colorado, he turned the State into a leader in clean energy and then launched the “Center for the New Energy Economy” (CNEE) to help other states accelerate their transition to a clean-energy future.

Having hosted Gov. Ritter at the Geneva “Green and Inclusive Economy” Conference ahead of the Paris climate summit, I was familiar with his work as governor and at the CNEE including the need to address climate change, the cost of clean versus fossil energy and green jobs. All are well covered, as one would expect in such a book. But “Powering Forward” is different in that it goes much further to address the role of science and education, the need for well informed citizens for a functioning democracy and how biased and misleading media coverage has helped the climate denial industry. But his most important contribution is to shed some light on the government intervention versus the free-market myth and his attempt to turn a divisive energy debate into a consensual and bi-partisan quest for a better future.

The Myth of the Invisible Hand

For many, government intervention amounts to “corporate welfare” and invariably drives up costs for consumers. It may therefore come as a surprise that fossil fuels have been subsidized since 1916 and that American energy utilities have been run as quasi monopolies with no competition. While most will agree that governments should not pick winners or losers, thinking that energy markets are “free” is a misinformed illusion. The reality is that government still largely favours fossil fuels with obsolete policies from the carbon age that are slowing down innovation, artificially restricting consumer choice and undermining American energy security.

The Tea Party Turns Green in Georgia

A good example comes from Georgia where the Sierra Club and the local Tea Party took on the monopolistic energy structure. It did not sit well with them that people could not choose where they get their electricity from and they forced a change in law to allow customers the ability to generate their own electricity and sell it back to the grid.

Consensual and Bi-Partisan

Business as usual is no longer an option. We are at the crossroad and must now decide if we will become the victims of our future or its architects. By working together and reconciling our differences we can turn scarcity into abundance and crisis into opportunity. This is the key contribution of Powering Forward.

Powering Forward Energy Facts: 

– Scientists understood the link between CO2 and the greenhouse effect in the late 1800s

– Lyndon Johnson is the first US president to raise the climate alert in 1965

– In 2006, Colorado College warned there would be no more skiing in the state by 2050

– On windy days 60% of the electricity in Colorado comes from wind

– At $25 per megawatt hour, wind power is over 20% cheaper then natural gas

Centralized power wastes up to 2/3 of the primary energy put into the system

Americans prefer energy conservation to energy production

– 87% of Americans think the US government should act about climate change

– The US Department of Defense sees climate change as a threat multiplier

– The IMF estimates fossil fuel subsidies at nearly $2 trillion including external costs. Most of the income is received by the wealthiest according to the IEA

US fossil subsidies amount to $2,180 for each man, woman and child annually

– The true cost of coal-fired power amounts to some $0.27/kWh

6 of the top 10 solar manufacturers are Chinese

9 of the top 10 wind manufacturers are non-US

Warren Buffet is buying solar power for $0.038/kWh (the avg. price paid by US households is close to $0.12/kWh)

– Arizona’s energy utility installs free solar panels and pays its customers $30/ month for 20 years to feed power into the grid

Renewables in the Post-COP21 Agenda

Transformation of the global energy system forms the backbone of climate action. Without significant movement towards decarbonisation, the chances of keeping global temperature rise below two degrees celsius are low if not impossible. For Energy Day at the UN climate change talks in Paris, IRENA brought together scientists, policy-makers, business leaders and civil society to explore the future of renewable energy.

Arthouros Zervos, Chair of REN21, confirms the upscale in renewable energy deployment around the world and most importantly in developing countries. This is not surprising given the rapid drop in the cost of solar and wind power. According to the latest study by Lazard, a leading financial advisory firm, the cost of solar and wind power have dropped by 82% and 61% in 6 years:

Fossil Fuel Subsidies

One obstacle remains the massive fossil fuel subsidies of some $500 billion (IEA). These figures increase to $5.3 trillion or 6.5% of global GDP if externalities like pollution are included (IMF WP/15/105). In some countries, energy prices are kept artificially low by policies that can cost up to 40% of total government spending. This is why Kuwaitis get to pay $0.22 per liter of gasoline (Feb. 29 2016) and that electricity costs as little as 1 cent per kilowatt-hour in Saudi Arabia.

Private sector and civil society leadership 

ikea-solar-panelFor Peter Agnefjäll, CEO of IKEA, it has become clear that we must grow within the limits of the planet. This positive impact on planet and people is behind IKEA’s decision to invest in renewables with the objective of becoming totally energy independent globally by 2020.

Civil society can help propel this transformation with initiatives for entire sectors of the economy. For Jules Kortenhorst from the Rocky Mountain Institute and the Carbon War Room,  is working on scaling up to reduce costs and accelerate the uptake of renewables  like sustainable jet fuels for the aviation industry, improving the efficiency of maritime shipping and also in buildings, thanks to IT solutions and big data.

Tapping onto geothermal  

Iceland provides a powerful business case for geothermal energy to heat and cool buildings in cities. For President of Iceland, Ólafur Ragnar Grímsson, such solutions have proven profitable without subsidies and provide a cost-effective path towards lower emissions. In 2010, 24 countries generated electricity thanks to geothermal power while some 70 use it for heating.

COP21 a turning point

AdnanZ-AminAdnan Z Amin, Director-General of IRENA, recognises that ParisClimat2015 represents a decisive moment for renewables. From now on, the connection between clean energy, the de-carbonization agenda and the safe climate imperative are inseparable.

Cooperation between civil society, the private sector and policy makers is key to accelerate this transition.

Other resources: UNECE Sustainable Energy