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The 21st Century Environmental Revolution: A Structural Strategy for Global Warming, Resource Conservation, Toxic Contaminants, and the Environment / The Fourth Wave by Mark C. Henderson.
See also Book II of the Waves of the Future Series
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
Energy will be explored in conjunction with the automobile industry. Both have a massive impact on the planet and are undergoing significant changes.
Oil and other fossil fuels are currently vital to just about all countries around the world. Some are dependent on them to fill their energy needs. Others—like many states in the Middle East—rely on them for income as net exporters.
Even within a country, world oil politics can have a tremendous impact. For example, most of the petroleum production in Canada currently comes from one part of the country, Alberta. Recent price hikes have meant billions of dollars in profits for that one province alone. A lot of that money came from the high prices charged for oil products to other Canadian provinces, some of which are significantly poorer than the already well-off Alberta.
The politics of fossil fuels are complex and far-reaching. What is for sure is that nobody is immune to them.
The oil industry is not about to disappear. Gasoline and diesel are still widely used around the world. As well, there is too much capital involved, and the lobbies are too big and too influential to be displaced. There are also many mega-projects currently under development around the world.
From an environmental perspective, it would be desirable to phase out fossil fuels as quickly as possible. However, because of the reasons mentioned above, most changes will occur gradually. An intermediate stage for the industry would probably lead to a stabilization in the use of fossil fuels in many countries as renewable energy alternatives are phased in. However, a global decrease in consumption might not occur given the continued growth of the world population and the emergence of massive markets like China and India.
What might change this is a stronger commitment to greenhouse gas reduction, but support for the idea continues to waver as the Copenhagen Summit in December 2009 showed. The only other hope at this point is the adoption of more powerful environmental strategies, especially those that would make it easier and more cost-effective for countries to reduce carbon emissions. The Green Economic Environment is one such approach.
When the price of oil went up in the 1970s, many people and businesses bought into renewable energy technologies only to see their investment amount to nothing in the mid-1980s and 1990s when oil prices collapsed.
The GEE proposes to tax fossil fuels, such as petroleum and coal, for several purposes. Firstly, higher prices would reduce consumption, hence mitigate the production of greenhouse gases. Secondly, taxing fossil fuels at a level sufficiently high would make profitable the renewable energy industry and further the growth of a leading-edge sector of the economy.
The GEE would impose a variable levy on the price of a barrel of oil (either imported or locally produced) to raise it domestically to a set target, for example, $150.00. For a going market price of $120.00, the tax would add up to $30.00 and would be periodically readjusted to maintain the final price of oil at about $150.00 over time. This would create a predictable and stable environment that would not only foster the growth and development of alternative energy technologies but also prevent the crash of the new sector and the loss of precious green investment.
The GEE would be collected at the producer level. However, unlike other mineral levies, it would target domestic supplies and imports only. Exports would be exempt. This would raise the price of gasoline domestically and encourage conservation. But it would allow international market pricing mechanisms to continue to operate for petroleum, a resource vital to all countries, many of which are struggling economically.
Remember that the GEE is revenue neutral. As the fuel levy is collected, income and sales taxes would be reduced in proportion.
The GEE fossil fuel strategy would yield many benefits. The simple tax on petroleum would in one fell swoop conserve resources, reduce pollution and greenhouse gases, promote the development of the renewable energy sector, and decrease dependency on the Middle East. The total benefits are so large and far-reaching that we should immediately move ahead with the strategy. The GEE fossil fuel approach is not the path to the future: it is the eight-lane highway to it. Alone, it would achieve the goals of the Kyoto Accord and yield multiple environmental benefits.
Currently, environmental strategies comprise most often a panoply of regulations and incentives such as grants and tax breaks, all of which require huge bureaucracies and a lot of monitoring. A tax on oil charged at the producer level where there are very few players would be much more efficient. With it, the law of supply and demand would on its own promote the development of the renewable energy sector without government intervention. This GEE strategy for fossil fuels would be efficient and produce a green energy growth sector that is stable and more competitive.
Fossil fuel taxes are never popular, but remember who pays for the grants and tax breaks used to fund environmental and renewable energy initiatives. We do. One way or the other, we pay. These expenses would disappear under a GEE system. In addition, with the GEE, a lot of money that would otherwise be spent on monitoring and new bureaucracies would be saved. The end result would be a more competitive and stronger renewable energy sector, and one that is fine-tuned to market laws.
Cap-and-trade is not bad in itself, but it is a flexibility component tagged on to regulatory limits. It would provide indirect support to the renewable energy sector in the form of a market for emission credits. However, the trade aspect would not reduce carbon emissions and would be more complex and less cost-effective than the GEE, among other things.
Under the GEE, other fossil fuels would also be taxed to reduce their use and decrease greenhouse gas emissions and other pollutants. The levies would prevent a shift from petroleum to other non-renewable types of energy which could be equally, if not more, damaging to the environment. Lower taxation could be applied to cleaner or less carbon-intensive technologies if these ever come through. For example, natural gas—a cleaner burning and over 50% less carbon-intensive fuel—could face lower levies.
Taxing petroleum is likely to be a very sensitive issue for producing countries. They tend to be very protective of their massive oil wealth. The GEE would not result in their giving away the revenue from these resources.
Internationally, the tax would not be imposed on exports, meaning that none of the profits from them would be lost. For example, Alberta, Canada, would continue to sell its oil to the U.S. at international prices just as it does now. Nationally, regular prices would also remain in effect for producers. For example, Alberta would continue to sell its oil to Canadians as per normal supply and demand pricing although consumers themselves would pay a tax on top of it.
Local producers and importers of oil would remain on a level playing field as the levy would be collected from both. Since the GEE is revenue neutral, consumers would also come out even, paying lower income and retail taxes in compensation.
Specific producing regions would not be cheated through the new system either. For example, the levy that Albertans would pay to the federal government would not go to other provinces but would be received back as per the principle of revenue neutrality. The reverse would also be true; the levy that other provinces would pay the federal government would not go to Albertans but back to themselves.
What would change is that fossil fuel consumption would go down. It would undeniably be good for the environment everywhere, including producer regions. Oil not sold now would only be preserved for the future. As such, the wealth from producer regions would not be lost or given away but a source of income for them over a longer period of time.
Ethanol-blended fuels are gaining in popularity. Increasingly, big North-American car manufacturers are producing flexible-fuel vehicles (FFVs) capable of running on both gasoline and ethanol blends up to 85% in concentration.
The new fuels are cleaner burning and more carbon efficient than pure gasoline and diesel. Furthermore, they can use existing distribution infrastructure. They are also good for local economies, benefiting the agricultural industry.
Over the years, the U.S. and Canada have subsidized their agricultural industries by the hundreds of millions of dollars because, among other things, of the low market price of some commodities. In Eastern Canada, potato crops were often destroyed to prevent an oversupply and a price collapse. Now, they could be turned into ethanol.
A biofuel strategy would be very positive in those sectors, and things have already begun to change. In the fall of 2005, France announced that it would turn part of its overly plentiful wine production into ethanol. Canadian and American farmers are already doing better from the rising demand for biofuels.
The shift to renewable energy would reduce waste and losses and generally make agriculture much healthier financially. The new economic landscape would eliminate the need to subsidize it with taxpayers' money. It would also result in cleaner burning fuels, lower greenhouse gas emissions, and a reduced dependency on oil.
Unfortunately, not everything is rosy about biofuels. Food prices are rising partly as a result of crops and land being diverted to the production of ethanol. Italians made headlines in 2008 for complaining about a sharp rise in the price of pasta. The United Nations was talking of a potential food crisis in developing countries as people could no longer afford the skyrocketing price of rice following the high cost of oil in the summer of that year. World grain reserves were at historical lows. This was the result of not only the production of biofuels from edible crops but also rising fossil fuel prices and speculation.
Biofuels do present a number of challenges. There is obviously the question of competition with food crops for arable land. But this does not have to occur. Alternative fuels can be generated from garbage, inedible plants grown in unused fields, and agricultural and industrial byproducts. Governments would therefore be able to intervene and exercise some control on the problem.
That would be important, especially in developing countries where many people can already barely afford food. The use of edible crops and good agricultural land for the production of biofuels can be regulated. It is a problem for which there is a solution.
A second issue is that of low net efficiency: it takes a lot of energy (often from gasoline and diesel) to produce biofuels. The issue should improve with research and technology. More importantly, the Green Economic Environment will make it possible for renewable energies to sort themselves out through markets. Because fossil fuels would be taxed, biofuel sources with low net efficiencies (i.e. requiring a lot of energy to be produced) would be less profitable and, as a result, attract less investment when not abandoned completely.
Note that electricity generation from hydro, wind, tidal, geothermal, and solar sources is not expected to affect the price of food. It does not compete with it for land. As such, not all new alternatives would cause problems. Electric cars have begun to hit the roads and are increasingly becoming a viable option for the future. That will decrease the demand for ethanol.
Biofuels and other sources of renewable energy will be an evolving landscape for some time. We should not panic as new problems and challenges emerge. Most will be solved.
Can new land be developed for the production of energy? Areas that are valuable to us for one reason or another (old-growth forests, wildlife habitats, etc.) should be protected, but could other types of land be converted and have a positive effect in terms of carbon reduction?
Large tracks of tropical forests are currently being cleared and planted with palm trees for the production of vegetal oil for biodiesel. Wetlands and grasslands are also being targeted for conversion to biofuel production. Unfortunately, these are already carbon sinks (i.e. areas that store significant amounts of carbon). As such, many argue that their clearing adds to global warming problems (Common, 2008, January 25).
The real question is, would we be making the same mistake as we did before by trying to create new land for agriculture: treating the symptoms rather than the disease? Clearing strategies would lead to the progressive denaturalization of the planet by the replacement of forests, wetlands, etc. with crop fields. Is this really the answer, or is it the problem?
What put us into this mess in the first place is unbridled consumption and population growth. A permanent solution to environmental problems will need to address these issues.
The new economics of the environment will have to be closely monitored and regulated. The science will evolve as we go along, and governments will find out what works and what does not. Efficiencies will likely improve over time and with economies of scale. The new green environment would certainly create new challenges and call for changes in laws and regulations.
In the long run, food prices will probably trend higher not because of any biofuel strategy but because the cost of oil will keep increasing. This is just the new reality of resource depletion, a reality that we have only begun to get a taste of. The GEE would slow down that process by promoting alternative sources of energy, hence preserve oil reserves and slow down the increase in price of the commodity. In addition, it would favor green goods and make them cheaper. And that includes food.
Could governments use regulations to force the addition of 10% ethanol or more to gasoline and promote a transition to renewable energy that way? Technically, yes. However, the move would cause problems in that the oil industry would have to purchase quite suddenly a large amount of ethanol for which there is little supply at the moment. This could result in high costs for the fuel and chaotic gasoline prices.
The best approach could include regulations, especially initially, but should be based primarily on market forces. A high and stable oil price would make ethanol blends and biodiesel more competitive, which would promote a natural switch to these cleaner and more environmental options without creating a supply crisis. The higher the target price, the more competitive biofuels would become. As such, governments would be able to implement a strategy progressively and control the speed of the process.
A market approach to bioenergy would ensure a gradual and smoother transition by allowing production to grow and respond to demand as opposed to using regulations and creating a supply crisis.
A biofuel strategy would create markets, sustain crop prices, and prevent the loss of investment and jobs. The growth of the industry would ensure a thriving agricultural sector for the future and help redistribute wealth regionally.
Hydrogen was the focus of much media attention a couple of years ago. This potential energy of the future captured the imagination of the public because its combustion or use in fuel cells to create electricity is essentially pollution free, water vapor being the only exhaust emission.
The main reason why hydrogen seems to have overtaken electricity in the race for clean power in transportation is that it provides a longer driving range. The best electrical storage technology (batteries) to date could satisfy urban commuting needs but remains impractical for longer range or heavy transportation.
There are a number of problems with hydrogen. Firstly, the gas is highly explosive. Safe storage technology is under development, but costs are high and may remain an issue. A second concern is that it is only an intermediate fuel. There is no source of hydrogen per se. There are no vast pools of it underground as there are for oil. It needs to be produced from or with other sources of energy, for example, coal, natural gas, etc. An obvious issue is that producing hydrogen from fossil fuels would release in the atmosphere large quantities of carbon dioxide, a greenhouse gas. As such, it would not be an alternative or a renewable energy.
Hydrogen can be produced with electricity through a process called electrolysis. However, each time you transform one energy into another, there is not only the cost of doing so but also a conversion loss. 100 units of electrical power could yield only 70 of another energy. As such, it is better to use it directly rather than convert it into something and then back into electricity in the fuel cell of a car. Different avenues are being explored for hydrogen production, but it is unclear at this point in time whether or not the gas will become the energy of the future.
A third concern is the massive amount of capital investment a conversion to hydrogen fuel would require. Simple, well understood, and cheap infrastructure already exists for electricity: knowledge, distribution lines, motors, etc. Such is not the case for hydrogen. Capital expenditure for a hydrogen society would be high and probably fairly risky as a lot of government planning would be involved. It would require a huge commitment and a leap of faith into a future that may never happen.
A fourth concern is the old chicken or egg problem. Which came first? Do you build a huge and expensive distribution system first, hoping that people will switch to hydrogen transportation? Or do you build cars for which there is yet no fuel distribution system?
Breakthroughs may change the odds for hydrogen, but currently there are still too many questions left unanswered. An educated guess at this time points to limited applications and niche markets.
A large-scale future for this fuel may come through if research leads to ways to convert the world's massive coal resources to the gas without carbon emissions or pollution. But again, even the large reserves of the fossil fuel will also eventually run out and its mining is a significant source of pollution. These are aspects that will also need to be considered for hydrogen.
Compared to the renewable energy sector, the fossil fuel industry is highly concentrated. Its immediate and long-term interests are not necessarily the same as those of society as a whole. Global warming problems preclude our continuing down the fossil fuel road. Diversifying into decentralized renewable energies would spread wealth around and benefit future generations.
For a few years now, EEStor (a U.S. company) has been working on a super battery, the EESU (Electrical Energy Storage Unit). The ultracapacitor would triple the current driving range of electric cars to about 300 miles (500 kilometers) and would recharge in minutes. This would surpass by a long shot lithium-ion batteries and the best technology available to date.
The battery would be nontoxic and apparently would not degrade over time from recharging like others on the market today. This would make it more conservational and less harmful to the environment. EEStor also reports that its self-discharge rate is very low and that it would perform well at low temperatures—unlike other batteries—making electric vehicle transportation much more viable in colder climates.
Zenn Motor Company, a Canadian manufacturer of electric vehicles, has heavily invested in the technology and the EEStor company. It is the only automobile manufacturer with a license for the use of the ultracapacitor in cars. It had originally planned to put out vehicles with EESU batteries at the end of 2009, but that schedule has been postponed. 2010 should be the do or die year for the EESU.
Skeptics believe that such a technological leap is impossible and warn about the dangers of meltdowns for the high-energy battery in car accidents. The technology has had successful initial testing in independent labs, but the final word is not out yet.
What is certain is that if the EESU does come through, it would change the whole picture for the transportation industry. Electric cars would then be able to replace gasoline vehicles without the usual inconveniences. This would likely kill the market for both the hydrogen and hybrid technology and would revolutionize transportation and our urban environments.
Several companies are looking into improving lithium batteries. One of a number of interesting developments is the use of lithium iron phosphate to speed up recharge time by up to 100 folds (MIT).
Others focus on increasing energy storage capacity, among them single crystals of lithium cobalt oxide (Toyota), silicon nanotube anodes (Stanford University, Hanyang University in Korea, LG Chem), lithium-air technology (IBM), and ionic (U.S. Department of Energy, Scottsdale) and lithium-sulphur batteries (NSERC-funded lab, University Of Waterloo, Canada). These new technologies claim to be able to increase energy storage capacity by three to ten times and would also change transportation as we know it.
We will see many other advances in the near future, some of which should turn out to be very significant. The automobile industry's recent surge in interest in alternative cars will result in a lot more money going towards battery research. However, the technology will also be crucial for the production of electricity at home, enabling the storage of intermittent energies (wind, solar, etc.) while increasing the supply for a rapidly growing electric transportation sector.
As some have already pointed out, millions of batteries in cars would provide a way to store large amounts of excess grid electricity. While it is possible for governments or power companies to orchestrate a system for this, the GEE would make it happen on its own through market forces.
Companies would simply have to offer cheaper rates at peak-production or low-consumption times—which they already do, excess energy currently being sold at lower rates to companies that require a lot of cheap electricity, for example, aluminum producers.
At times of excess production (e.g., on windy and sunny days) or low demand (for example, at night), special meters would simply turn on certain outlets and let home and car batteries be charged with low-cost energy. The cheaper electricity would simply be used at peak consumption times at home or for transportation. The rest could be fed back into the grid.
Doing a detailed study of renewable energies is beyond the scope of this book. Rather, this section will try to identify major trends and highlight the issues and factors that may enable us to select policies for the short term and develop a blueprint for the energy and transportation sectors of the future.
Special attention will be paid to strategies that may benefit us on several counts as opposed to those furthering a single goal. Policies that may be able to bridge us to the medium-term will also be given preference as it makes no sense to develop plans for an infrastructure that will become obsolete in a decade. Decisions regarding a future for energy and transportation may ultimately be a matter of social choices as the various options open to us have different implications.
At the moment, there are two major trends in the future of transportation and energy. The first one, fuel cells, is still at an early stage of development and depends on new technologies. Hydrogen, which sparked the idea of clean transportation, would necessitate a huge investment in infrastructure and has fallen out of favor for this and other reasons. While the wealthier parts of the world may be able to afford such a strategy, most countries may find it simply too expensive or not the most cost-efficient option for them.
However, new ceramic fuel cells have significantly increased the efficiency of making electricity from natural gas (NG). The process would produce carbon dioxide but only about half as much as gasoline. NG is also much cleaner than other fossil fuels in terms of toxic contaminants such as sulfur dioxide and nitrous oxide. It is abundant, widely distributed around the world, and currently significantly cheaper than petroleum. As well, the economics of its efficiency in transportation are very promising (Blakeslee, T., 2009, September 23).
Natural gas is mostly methane, which can be produced or captured from biomass such as garbage, sewage, manure, crop residues, etc. Biogas, as it is called, is renewable and can use the existing infrastructure for NG distribution.
Biomass only degrades into methane under anaerobic fermentation, that is, without exposure to oxygen. A few apples under a tree will not produce biogas, but fermenting them in a sealed barrel would generate methane and be carbon neutral.
Landfill sites, sewage lagoons, manure tanks, and large piles of organic matter with limited oxygen penetration will naturally emit methane. As the latter is a greenhouse gas 20 times more potent than carbon dioxide, capturing it from biomass (i.e. not letting it be released into the atmosphere)—as opposed to producing it—would actually be carbon negative and have a reduction effect on global warming several times that of CO2 for an equal weight.
The combination of the wide availability, low costs, and shared infrastructure of NG and biogas as well as the renewability and potential for decreasing global warming pressures of the latter makes methane fuel cells a strong contender for the future of transportation. The technology already exists as small-scale 2 kW stand-alone power generation units but has yet to be adapted for use in cars. Methane fuel cells could be a very significant avenue for the future of transportation.
The biofuel-electricity future is a mix of both old and new technologies. Research will lead to exciting new developments and improve production techniques and hardware, but some of the science behind it is quite old. Vegetable oils—from which biodiesel can be derived—have been produced for a long time. Ethanol—drinking alcohol—is actually something that has been around for millenniums. Regular gasoline engines can burn 10% blends without modifications. Ethanol production is relatively simple and well understood and would be of prime benefit to the agricultural industry, at least in the U.S. and Canada.
The future of biofuels would entail low infrastructural spending as a lot of the technology is already here and can use existing distribution systems. Flexible-fuel vehicles increasingly represent a growing market in North America.
Brazil has already tested and proven the feasibility of a large-scale implementation of a biofuel strategy. The South American country already has millions of cars running on ethanol produced from local sugar cane crops—with very positive results for its economy.
A biofuel-electricity strategy would rely on ethanol and biodiesel for long-range transportation. Urban commuting would be based on electric vehicles. At the current state of technology, their shorter range (about 150 miles or 240 km in better models) does not make them a realistic option for long-distance traveling, but their lack of emissions makes them perfect and as clean as hydrogen for commuting to work.
An electricity-based urban transportation strategy would greatly decrease pollution and smog problems. It would also reduce the need for biofuels, whose production competes for agricultural land and causes increases in the price of food.
Future technological directions are paramount in considering options for long-term strategies. Optimally, current policy choices should support future options whatever they may be. An interim strategy should yield an infrastructure that would be able to support both a fuel-cell and a biofuel-electricity future.
Currently, world energy is derived from a variety of sources: oil, natural gas, coal, hydro, etc. This is for good reasons: needs are so massive that concentrating on only one kind would result in a supply shortage and skyrocketing prices. In addition, some types of energy are better suited for certain applications. As such, we will have to continue to get energy from several different sources in the future, and the more options are open to us, the better. To do this, we have to look for common ground between the fuel-cell and biofuel-electricity scenarios.
A fuel-cell car is actually an electric vehicle powered by a cell as opposed to a set of batteries. As such, both could share the same automobile architecture with the exception of the energy module. Their motors and other components could be exactly the same.
Designing and developing convertible electric vehicles may be the solution to the chicken or egg problem posed by a monolithic hydrogen strategy or to make other new technologies adopted earlier. Cars using either batteries or fuel cells as a source of energy (and convertible from one to the other by the replacement of the power module) could significantly speed up changes in the automobile industry and prevent investments from becoming obsolete in case one technology does not come through or falls out of favor. Convertibility would allow both manufacturers and consumers to switch from one to the other if the price of one type of energy rises significantly.
The power grid would essentially be the only infrastructure needed to support electric vehicle transportation in urban settings. Batteries could be recharged at off-peak times (either at home or work). The grid is already a common infrastructure for electricity produced from a number of sources: hydro, coal, nuclear, etc.
The same network could support many of the future's renewable energies. In fact, it has already begun to happen. Governments are increasingly talking about new policies allowing the buy back of surplus electricity from households. If there is a significant shift in transportation from diesel and gasoline to electricity, the consumption of the latter will increase and drive prices up. New sources will be needed to meet the rising demand and keep costs down.
As such, electrical networks would become central in increasing supply. The grid is already providing support for many wind farms. With little additional investment, it could also support millions of micro-producers—for example, anyone purchasing a backyard wind turbine or solar panels with the intent of selling surplus energy into the grid. This has already started to happen in many countries. With increased demand, micro-producers would become an important source of renewable energy supply. Wind turbines and solar panels may just become a ubiquitous part of the landscape in the near future.
The grid would become central to not only increasing the supply and delivery of renewable energies but also supporting hydrogen without the need for massive infrastructural investment. The clean fuel could be produced at home from grid electricity in small electrolysis machines. At the moment, efficiencies are not great, but that may change in the future.
Direct home production would remove brokers and retailers from the equation, meaning that it could favorably compete with commercial ventures. It could also take advantage of off-peak rates, which would also serve to lower costs. Although hydrogen has fallen out of favor, the future might still hold some promises in this respect.
The electrical grid is a common infrastructure that is already in place and offers the possibility to significantly increase energy supplies and do so from renewable sources.
The Green Economic Environment strategy proposed in this book would make most of the above happen on its own. It would promote renewable energies and provide stability for the sector, preventing the loss of investment—as has occurred when the price of oil dropped—and ensuring growth for the future.
Implementing a biofuel strategy would be relatively simple. All that is needed is for oil prices to be high enough to make renewable energies competitive (as discussed in the chapter on fossil fuels). The market would take care of much of the rest. It would make renewable energy and ethanol blends cheaper than gasoline and diesel, and ensure that fuels that are carbon intensive (e.g. ethanol produced from food crops) are more expensive and fall out of favor.
Carbon-negative technologies such as methane capture (but not production) could be the object of further promotion under the GEE because of its multi-fold impact on global warming from the removal of a potent greenhouse gas from the atmosphere. The strategy could be as gradual or as fast as we would want and essentially without quotas or regulations.
There are two main sectors in transportation. Each is qualitatively different in terms of needs, challenges, and markets. Long-range transportation, such as the trucking industry and holiday traveling, requires vehicles capable of going over long distances without refuelling. Electric vehicles are not currently appropriate for long-range and heavy freight and would not be suitable alternatives for these purposes at this point in time. As such, long-distance transportation would continue to be based on gasoline, diesel, and blends that include renewable fuels.
Urban commuting, the second main sector, is characterized by a multitude of smaller vehicles operating within densely populated areas. These play an important role in urban air pollution and smog problems. As such, everything should be done to make their emissions as clean and pollution free as possible. The sector would be an ideal candidate for electric or fuel-cell vehicles.
Both the fuel-cell and the biofuel-electricity future would find a common ground in a convertible electric vehicle. Governments and industry could work together in order to design a basic frame for modular electric vehicles that could be powered by either batteries or fuel cells. These would initially be operated with the former, making them highly suitable for urban commuting. They would immediately provide cleaner urban environments and decrease fossil fuel consumption and greenhouse gas emissions.
When the fuel-cell technology comes through, the same modular vehicles could be used. These commuter cars would provide continued work in and a transition for the industry. This would mean a cleaner environment now, create work for the automobile industry, and provide a transition to both battery and fuel-cell technology.
Convertibility between electricity and fuel cells would allow people to switch easily between different types of energy according to supply and cost. This would support a better and more stable price environment, provide a flexible and diversified energy strategy for the future, and prevent our being held hostage to fossil fuels ever again.
The strategy would conserve an enormous amount of non-renewable resources as an entire generation of vehicles could be upgraded to better technology—as is likely to happen in a leading-edge sector of the economy—as opposed to being scrapped and added to landfills.
From a business point of view, convertibility would provide the egg to the chicken or egg problem of hydrogen. Ten years from now, battery-operated fuel-cell-compatible vehicles would already be in wide use. Infrastructural investment would be less risky and could be provided by the private sector as opposed to taxpayers and governments. Of course, that assumes that hydrogen is not dead already.
The immediate implementation of a convertible electric vehicle strategy for commuting would revolutionize the urban environment. Cities would quickly become much cleaner and quieter. Smog would be significantly reduced or may disappear altogether.
During the transition period, we would live in cities where single people would use mass transit or electric cars to commute to work and rent a hybrid vehicle for holidays. Couples with two gasoline automobiles might keep one to commute to work and use for family holidays. The second one would be replaced by an electric car.
Appropriate electrical grid policies would have to be implemented alongside an electric vehicle strategy in order to increase the supply of electricity and promote renewable sources of energy.
This chapter will explore in more details future options relating to the automobile industry, a very important sector in the economy of many countries and one that will see plenty of changes.
In the short and the medium term, the GEE would increase the demand for more environmental and conservational generations of vehicles. In the long term, two trends would develop as a result of taxation on non-renewable resources.
Firstly, manufacturers would begin downsizing cars. Secondly, we would see part of the production shift to remanufacturing. Automobiles would be kept for longer periods of time, repaired, and upgraded as opposed to being bought new. Greater standardization and increased modularity of architectures would make it easier for parts to be replaced and reconditioned.
These two avenues of development would spell a significant decrease in resource depletion and major changes in our cities and living environments.
What about hybrid vehicles, those having both a fuel engine and an electric motor? They are often viewed as being the solution to all problems in the automobile industry of the future. Undeniably, they are a step forward. However, they raise several issues.
Early models really disappointed in terms of improved fuel consumption. There has been much improvement in the technology since, but they may fall short of how far the transportation of the future needs to go. As well, hybrids use up more resources as they call for both a fuel engine and an electric motor and are heavier and more metal intensive as a result. This will probably limit their future.
Hybrids might retain a place as family or holiday car but do not go far enough in terms of fuel efficiency and resource conservation as far as urban commuting is concerned. We can do a lot better. In the long term, they might be able to carve themselves a share of the market if fuel efficiency increases significantly and competing technologies like the electric car do not see significant advances. Because there is so much in the pipeline in that respect at the moment, the odds are against the hybrid.
For the last 20 years, there have been many calls for better public transportation in order to mitigate environmental problems. While the approach can be effective in large cities, it is not the answer everywhere or to everything. The reality is that personal vehicles are here to stay and the automobile will remain pervasive in society. Public transit has to be improved, but more effective and conservational vehicles have to be designed for individual transportation.
Mass transit is an important alternative that offers multiple benefits to society. It reduces traffic and its related problems, among them, noise and air pollution. Most larger cities today would grind to a halt without it. Public transportation reduces the demand for fossil fuels and promotes the conservation of non-renewable resources.
It prevents the use and purchase of millions of vehicles. Moreover, buses, trains, and subway cars are built to last much longer than regular automobiles. Because of their initial price tags, public transit vehicles also tend to be repaired and refurbished more extensively. That makes them highly conservational, several times more than current automobiles.
There are different mass transit models currently in effect in cities around the world. Some involve standard fares regardless of the distance traveled. Others are based on a concentric zoning system expanding away from city centers. Each has a certain amount of built-in inefficiency. For instance, the standard-fare system charges the same price to people traveling short distances as it does to those transiting much longer ones. The zone model addresses this by setting fares generally based on the distance traveled from city centers but does not reflect the intensity of travel routes.
In most cities, some transportation lines are heavily used while others are not. The buses, trains, or subway cars servicing the latter often run half empty or worse. That is not good. Despite the longer distances involved, major routes can be far more efficient than shorter ones because vehicles are in full use. They generate more revenue, and the actual cost per person—and to the environment—can be much lower than what passengers are actually charged.
A third model better reflects actual costs and is also more environmental. The zones of the second option are modified into a more organic artery system. The efficiency pattern of public transportation systems is brachial just like a tree, with trunks and major branches being highly efficient and smaller ones being less so. The artery model would make many long-distance routes cheaper and encourage people living in suburbs to leave their cars at home and reduce pollution.
Instead of being concentric, transit zones would extend like fingers from the central business district along main arteries. Fares would be cheaper on primary routes as these would be more extensively used. They would increase on secondary and tertiary lines.
Public transportation is a clear avenue for the future and deserves government support. It has many limitations, such as availability in suburbs and smaller towns, frequency of service, and practicality in certain situations. Government support to increase its use and benefits would mitigate many of its limitations; more people riding would mean more frequent service and route expansions.
As public transit will not satisfy all the transportation needs of the future, other ways of improving traffic, reducing pollution, and conserving resources have to be explored.
One of the most efficient means of transportation is the bicycle. It is heavily used in a number of Asian countries. Unfortunately, it is increasingly being replaced by scooters, motorcycles, and automobiles—with disastrous results for both the urban and natural environments.
Bicycles are not as popular in advanced countries although they provide a cheap, environment-friendly, and healthy alternative in terms of exercise. Many cities lack appropriate paths for them, making their use dangerous. The bicycle would do better under the GEE and would gain from being promoted by governments, be it in the form of paths, safety measures, or financial incentives.
Car pooling is also a very good and growing environmental option considering that most daily commutes are done by single persons in four-passenger cars.
Undeniably, the conservation of non-renewable resources would mean that automobiles would be kept longer and repaired more extensively. Many jobs would eventually shift from the new car industry to the parts and repair sector as well as pre-owned vehicle retailing. Refurbishing used automobiles and upgrading power modules would become a growth industry in the longer term.
Increasingly, cars would switch from being a disposable good with a seven or eight-year lifespan to something that is fixed, upgraded, and refurbished for two to three decades. New cars would cost more, but their resale value would also be higher.
Obviously, less metal would be used in designs. Vehicles would be smaller, lighter, and R&D would shift towards substitutes for metals: plastics, fiberglass, carbon fiber, composites, and biomaterials. The industry would focus on longer lasting and higher quality vehicles.
It would also move towards more easily reusable uniform chassis (where most of the metal in a car is located) and modular designs. Cars would look different on the outside but would be built on more similar basic architectures and with larger numbers of standard components to extend their lifespan and reusability.
Although electric vehicles are not yet suitable for long-range transportation, the technology is essentially ready for the urban environment. Prototypes were built over 50 years ago. At this point in time, the best battery technology still leaves us wanting in terms of long-range transportation, but it is sufficient for urban and work commuting—which account for most of the driving that people do in a year. This does not represent a niche but the largest part of the market.
Since the electricity distribution infrastructure is already in place, cars would simply be recharged at home from a regular power outlet, often taking advantage of cheaper off-peak energy rates at night. That would change the economics of electricity.
Batteries are currently an issue in northern climates. A combination of better insulation and additional infrastructure could help mitigate the problem. In the Canadian Prairies where winters can be bitter, parking lots are supplied with electrical outlets so that cars can be plugged in even while people are at work. That could also be part of the solution. The additional infrastructure would represent some expense, but all components are mass-produced, can be quickly installed, and require little maintenance.
With the exception of batteries, electrical technology for cars is low cost because it is already well established and mass-produced. Maintenance for motors is also much less expensive than for combustion engines as there are no carburetors, radiators, oil changes, etc. That would also mean a lot less metal, hence a much lower initial price under the GEE system. As electric cars are not currently mass-produced, they are bound to be more expensive than they will be in the future. Their simpler and lighter technology should eventually make them significantly cheaper than their gasoline alternative.
Conservational and environmental cars could be designed and mass-produced relatively quickly if governments and industry cooperated to speed up the process. Cross-industry regulations could bring in more uniform chassis for longer lifespans, maximize the use of standard parts, and establish modularity to enhance repairability and allow for easy future fuel-cell conversion.
Government involvement could bring about a fair amount of synergy, leading to cooperation within industries, reducing financial risks, and decreasing the potential for the loss of investments. Both modularity and convertibility would also prevent a large amount of resources from being invested in obsolescence.
At the moment, the incentive to move to clean-powered cars is growing. The GEE would increase the demand for greener automobiles and usher in new generations of conservational (smaller, less metal intensive, built to last) and environmental (powered by clean and renewable energy) vehicles.
We have now progressed from gas guzzlers to convertible electric cars. The GEE would take us one step further to the single-passenger electric vehicle (SPV).
A four-passenger automobile is not needed to transport only one person. Significant amounts of resources and energy would be saved in designing one-passenger cars for work commutes. The benefits of one-seater vehicles are many: smaller automobiles are more maneuverable in congested traffic, easier to park, and generally less costly to drive. Single-passenger vehicles would cost less, use up less non-renewable resources in their manufacturing, and probably be more than twice as energy efficient. Lower weight would also extend their driving ranges.
There is a market for SPVs as well as price, conservational, environmental, and traffic incentives to minimize the size of cars. The new single-passenger vehicles would be not only shorter, allowing twice as many cars in a traffic lane, but also thinner, allowing two vehicles to drive side-by-side within it.
At moderate and high commuting speeds, SPVs would run staggered on different sides of four-passenger car lanes, allowing twice the number of vehicles within a given space as currently while respecting safe driving distances and easing pressures on circulation. As they slow down to approach intersections, stop signs, and red lights, or are caught in traffic jams—where their congestion-reduction ability would matter most—two SPVs should be able to run side-by-side within current lanes, a given space packing in as much as three or four times the number of vehicles it now does.
Single-passenger conservational and environmental cars would nearly quadruple the current traffic capacity of roads. This could eliminate most of the circulation problems that plague commuters on a daily basis in most large cities around the world. Of course, it assumes that we do not increase the total number of cars on the road. The GEE would not lead to that if appropriate tax rates are set. It would make cars generally more expensive, preventing their proliferation.
In fact, increasing the number of vehicles on the road would defeat the purpose of designing more conservational cars and result in even more non-renewable resources being consumed. It would also undermine environmental alternatives such as public transit, car pooling, and cycling.
On their own, SPVs would yield significant conservational and environmental benefits. Reducing the total number of vehicles on the planet could further increase environmental gains but is likely to be politically unpopular. In the short term, maintaining the status quo in terms of number of cars on the road is probably the best policy as it would allow governments to bring in the GEE with much less resistance on the part of the general public.
Fourth Wave urban environments will be drastically different. SPVs will mean clean (emission free), quiet (electric motors can hardly be heard), and, in many instances, traffic-jam free transportation in urban environments.
There are a number of technical issues relating to SPV transportation. Car width would have to be restricted if two of them are to fit within a single lane. Vehicles would have to be properly designed to prevent rollovers upon turning. Architectures would have to include such things as swivel technology and low centers of gravity. Car speed may have to be limited. Alternatively, cities could choose to redraw some traffic lanes.
GEE-based transportation would call for much higher quality vehicles, ones that would be built to last for a long time and be more repairable and upgradable. Some parts are already fairly standard in today's cars—wheels, tires, batteries, mufflers, etc.—and components like brakes can be refurbished. The used car industry already exists. As such, the GEE would not call for extreme changes, but it would refocus the sector.
Although advances will continue to be made, we already have the technology necessary for electric vehicles. What is currently missing is a market. The green economic environment proposed here would create one.
How farfetched is all of this? Since the first edition of this book was published, many of the things discussed in it have started to happen. There are not many single-passenger vehicles on the market at this point in time. However, the electric automobile is in and sizes are decreasing. The industry is increasingly talking about biocars, vehicles having parts made with bioplastics and composites produced from soy, wheat, canola, or sugar cane.
Some companies have already developed plant-based polyurethane foam for seat cushions. Volvo claims to use renewable materials in dozens of its car parts. Mercedes S-Class vehicles are also going green, their bio-components tipping the scale at 43 kg per unit (Stauffer, 2008, February 15). SPVs are not here yet, but the automobile industry is definitely moving into greener fields.
In the second half of 2008, the auto sector saw tremendous changes. SUV sales dropped sharply. Major manufacturing companies shocked analysts by suddenly deciding to close several SUV manufacturing plants in the U.S. and Canada. Most automakers started talking about either developing or producing electric cars and more energy-efficient vehicles. Some have models already on the market.
There is an existing market for single-passenger electric cars: families that already have two vehicles. Two multi-passenger long-distance fossil fuel cars or Sport Utility Vehicles (SUVs) are not needed for simple urban commuting. The second one—if it is really needed—could easily be an SPV.
Currently, most cars making the daily work commute are four-passenger vehicles which convey only one person. This way of getting around is highly inefficient not only from a fuel perspective but also from a non-renewable resource point of view. Two-car families are a ready market for SPVs.
Other possible buyers for the one-seater electric vehicle are single people. Instead of purchasing a gasoline automobile, many of them would choose to buy a lower cost electric car for commuting to work or school, especially once the GEE makes vehicles pricier. They would rent a gasoline automobile or a hybrid once in a while as necessary.
Remember that the GEE would be revenue neutral, and that while cars would be more expensive, people would have more money to spend.
The minivan and SUV markets really took off on the safety issue: the bigger, the safer. However, the real question is, safer for whom? Although they offer more protection to their own drivers, they may not be better for the rest of us. Much bigger vehicles are more dangerous to both other drivers and pedestrians, at least in theory. Greater safety for all lies in decreasing the average size of vehicles, not the opposite.
A lack of safety does not stop pedestrians from crossing the streets or many people from riding bicycles and motorbikes—which do not provide much protection in collisions with cars. As such, a market for SPVs will develop regardless of the safety issue.
Smaller cars are often thought to be less safe for their own drivers. This is likely true to some extent. However, design is a large component of safety. Race cars are smaller, yet they provide higher protection than your average automobile. Properly engineered SPVs could offer a reasonable amount of protection. They would also provide much safer city streets for everybody.
SPV transportation would bring in vehicles about 65% smaller than current four-passenger cars. That would mean, in theory at least, a 65% conservation of non-renewable resources—metals—a 65% reduction in intermediate chemical use, and at least a doubling of fuel efficiency.
Much smaller, resource-efficient, and more repairable one-passenger vehicles would offer a number of cost savings. This should initially translate directly into greater affordability compared to regular cars, especially under the Green Economic Environment. Mass production would give SPV transportation an even stronger competitive edge and, in doing so, achieve massive conservational, environmental, and traffic benefits.
To speed up the development of the industry, governments and automobile manufacturers could get together to design a uniform chassis for a one-passenger car that would be mass-produced and used as common architecture for all manufacturers in their first models. Cooperation would lower development costs, enhance modularity and reusability of chassis, and enable mass production even for the first models.
Pooling R&D resources would force on the industry efficiencies that would be beneficial to both consumers and manufacturers. Standardization could also occur internationally. Modular designs would create a platform that is both conservational and environmental and do so on a massive scale, worldwide.
GEE taxation on non-renewable resources and stable high oil prices would be the basis that would provide for steady and predictable growth of not only the renewable energy sector but also SPV transportation. Appropriate government support and industry cooperation would eliminate the high development risks and insecure markets for car manufacturers.
The consumer would be happy, the industry would be happy, jobs in the new automobile sector would be preserved, resources would be saved from building much smaller vehicles, and energy efficiency would improve.
The demand for electricity—which has the potential for being produced cleanly—would increase. The markets for wind turbines, solar panels, and other renewable energy technologies would take off. Micro-producers would join in the frenzy, selling excess electricity back to the grid and improving their own country's balance sheet. The shift to electric vehicles in urban transportation would decrease the demand for biofuels and lower pressure on food prices, perhaps averting widespread instability and a world hunger crisis.
SPV transportation would mean massive gains in resource conservation and energy efficiency. Those would occur to a large extent in a market-friendly manner. As necessary, regulations and incentives—including tax breaks and rebates on insurance—could be used initially to enable a quick takeoff for SPV transportation.
A huge market for SPVs would be in developed countries where they could provide an alternative to many of the cars on the road today. Together with double-passenger vehicles based on the same conservational and environmental technology (DPVs), they could take over the bulk of the market for cars.
Most countries around the world cannot afford a North American style of transportation. Neither can the planet. The question of transportation in the developing world is highly complex. On the one hand, a proliferation of cars around the globe would be disastrous. On the other, the automobile is of great appeal to the growing middle class of many countries.
A significant part of transportation in the developing world is based on smaller vehicles: gasoline rickshaws, motorcycles, scooters, etc. A switch from fossil-fuel to electricity-based transportation in their case would be a major improvement. Smog and greenhouse gas emissions would be significantly reduced. The demand for cleaner domestically-produced renewable energy would increase, creating jobs in the local economy.
A properly implemented GEE scheme would lead to gasoline rickshaws, motorcycles, and scooters being replaced by their electric equivalents. The technology already exists. Several companies currently make battery-powered scooters for the North American market. At present, electric rickshaws are being produced for many countries around the world. Electric vehicle transportation could already be a reality in many countries. What is missing is the incentive structure to make it happen.
Together, China and India host about one-third of the entire world population. Their economies are some of the fastest growing today. Each has a growing middle class. Under the most likely scenario, a significant increase in the number of cars in these countries is probably inevitable.
Single-passenger electric vehicles would represent a better option for developing countries. Their lower cost, lesser use of metals, easier maintenance, and smaller ongoing energy needs would provide both affordability and environmental benefits. In comparison, fuel cells would require more expensive technology and larger investments in infrastructure.
In March 2009, Tata Motors (India) released a new gasoline sedan, the Nano, which costs only about 100,000 rupees, or less than US$ 2,200. Although it has very good fuel efficiency and low emissions, many believe that it will spell disaster for the planet and the one-billion-people country because it makes gasoline automobiles affordable to so many people. The company is planning to expand to the European and U.S. markets within the next couple of years, offering a version of the Nano below US$ 7,000.
To cater to its growing middle class, China will either import India's cheap automobiles or follow suit with similar models. The country will likely also want to take advantage of international markets. This would also be disastrous for the planet. SPVs might be a better alternative and would have huge potential sales in both the developed and developing world.
The ready market for SPV transportation is actually really, really big internationally. One questions is, do we want a proliferation of gasoline vehicles in the developing world as it seeks better living standards, or do we want conservational and emission-free SPVs? A second one is, who will take advantage of this opportunity first: North America, Europe, Asia? A third one would be, once India and China start delivering cheap gasoline cars to world markets, what are the current leaders in the automobile sector (North America, Europe, Japan, etc.) going to produce and sell, if not the next generation of cars?
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Tata Motors is expected to release the Indica EV, a four-passenger electric vehicle, in Europe in 2009 or early 2010! The North American auto industry might have already lost that battle, being behind developing countries in one of the biggest sector of growth for the future.
Copyright Waves of the Future, ©2010
More information: Friends of the Earth Alliance to Save Energy Alternative Energy UN Sustainable Development