🌎  Waves of the Future  🌍

The Green Economic Environment (GEE)

By simply changing the way governments collect taxes--AND WITHOUT INCREASING THEM--countries could create a green economic structure in which environment-friendly goods and technologies, as well as ecological practices, would be rewarded. This would result in green growth. Economies would progressively and effortlessly become greener and greener over time.

The same structure would put non-green goods at a competitive disadvantage and result in degrowth in their sector. The GEE would therefore have a double impact on economies and be twice as powerful as any other strategy for it.

The GEE would change the incentive structure of economies and make the massive power of markets help save the environment instead of destroy it. This new revenue-neutral strategy could be the most powerful approach we have so far for long-term sustainability.

The GEE is NOT an ELEGANT SOLUTION on the surface as it relies on taxation and would imply changes in the pricing of consumer goods. BUT consumer prices have always changed--the cost of energy has gone up, that of electronics has gone down, etc.--and will continue to do so, and the GEE is CHEAPER (ESSENTIALLY FREE) and MORE EFFECTIVE than other strategies, making it the best choice overall.

The GEE would provide a viable alternative to GHG targets and credit trading systems without reliance on additional funding sources, subsidies, or new regulations. It would help boost demand and markets for natural clean solar and wind power as well as for ethanol and biodiesel while addressing the problem of net efficiency in biofuel production. Cars and the auto industry would see many changes in conjunction with the development of smart-grid technology. It would provide a means for managing both depletable and renewable resources.

The GEE would address both the causes and the effects of climatic change and could help save the environment, save the earth.

- Components of the Approach -

The Failure of Cap-and-Trade

Costs, Complexity, Non-Compliance, Bureaucracy, Fraud, Etc.

Cap-and-trade is not enough for the environment.  It does not address most environmental issues

The destruction will continue on several fronts even if we manage to reach CO2 and other carbon emissions targets. Jet fuel just made the news for having been found in baby formula (April 09)...

What is cap-and-trade going to do about toxic chemicals, packaging, recycling, the conservation of metals and other depletable resources, etc.?

Of course, everyone wishes the Kyoto Accord to succeed, but it is already bursting at the seams, with many participants reluctant and subject to opting out upon government changes.

China and India are likely to never make carbon emissions targets. If it comes to choosing between poverty (starvation in these countries) and destroying the planet, rich countries have made it clear what would prevail.

We almost had a famine in parts of the world just a year ago when the price of oil shut up. Did the Middle East boost oil production? No. That famine could be snapping at the world's heels again in a couple of years when economies pick up, and countries will be routing and rooting for more oil production and the development of coal resources.

Cap-and-trade, as a strategy to reach CO2 and other carbon emission targets, is not the best solution we have. It is costly, complex, prone to fraud and political favoritism, would require a sizable bureaucracy, etc.

(see Structural Solutions vs Cap-and-Trade).

Of course, fiscal stimulus packages work in its favor, and political pressure could keep the system going. However, those energies would be wasted supporting a second-best solution.

We need a much more profound approach, one that would deal directly with the cause of problems, not its symptoms. This is what structural strategies, like Henderson's Green Economic Environment (see below), are about. They are the only thing that will be able to deliver the change that we need.

A Cost and Benefit Comparison

of Cap-and-Trade and the GEE for

Carbon Emission Reduction

Is cap-and-trade the best strategy we have for global warming and greenhouse gas reduction?

Remember the turnaround in the renewable energy sector in 2008 right after oil hit record prices? It happened so fast that most were caught unawares.

Didn't anybody think that such quick changes could point to a powerful solution for global warming and the environment?

Someone did and developed a structural strategy based on the same forces that delivered the turnaround.

The idea behind structural approaches is to try to deal with the causes of problems rather than their symptoms. The way economies currently operate is very destructive to the environment.

We can try to mitigate the problems (the symptoms) with strategies such as cap-and-trade. However, the economic system (the cause) would continue on as a destructive force.

Fix it could be a much more effective and less costly way to deal with global warming and other environmental issues. This is the idea behind Henderson's Green Economic Environment (GEE).

A Comparison Between

Cap-and-Trade and the GEE

Cap-and-Trade

Cap-and-trade would set limits on CO2 and other carbon emissions. Companies not able to meet those would buy credits from others via a newly established trading system.

The system addresses the symptoms (emissions levels) rather than the cause of problems.

The approach would involve significant costs. A trading system would need to be set up as well as a new bureaucracy. Procedures would have to be established to measure carbon emissions for individual businesses. How much credit would an acre of forest be worth? What if the forest is very young? Etc.

Companies would have to waste time evaluating emissions, trading, and reporting to governments. This complexity would make it more prone to fraud than simpler alternatives.

It may also lead to economic distortions as goods would be created for the credit trading system rather than consumer markets.

Cap-and-trade would be more bureaucratic and costly to manage and enforce than the GEE.

Caps & the GEE

For a brief overview of the strategy, see The Green Economic Environment.

The GEE would involve minimal bureaucracy, no emission trading system, and very little reporting, if any, for most businesses.

Companies would see the price of non-green production inputs rise and make simple business decisions as to switching to greener materials.

The higher price of unenvironmental goods would change the incentive structure of economies, directly addressing the causes of problems and boosting demand and markets for green products.

Because it is simpler and more market friendly, the GEE would be much more powerful. It would also be less prone to fraud.

It could be used together with caps to meet current Kyoto Accord targets or as a new more powerful and flexible system.

In scientific lingo, a structural approach would fix the causes of problems by building the cost of externalities into the price of goods, therefore resolving the current imbalance existing in economies.

Regulations (Caps) vs. Dynamic Taxation

Regulations tend to be non-dynamic. That is, companies try to meet limits but have no reasons to do better and exceed them. Caps can be renegotiated and increased, but it may be difficult to do so.

Taxation is dynamic in nature. Companies would not only meet limits but exceed them. For example, if the price of oil goes up, manufacturers that need it would look for cheaper alternatives. After caps are reached, they would continue to do so because it would further decrease their costs and increase their profits.

The GEE structural strategy could work as is with Kyoto targets and be more powerful and effective than cap-and-trade.

It could also work as a stand-alone 'economic restructuration' in which international taxation rates would be negotiated instead of caps. Initially, those could simply be set high enough to approximately deliver carbon emission levels similar to those already agreed upon.

This would result in a more flexible and much more powerful and market-integrated system. The strategy would also be more efficient and less costly to enforce than cap-and-trade.

Revenue-Neutral Environmental Taxation:

The Best Free Option for Global Warming and the Environment

Revenue-neutral taxation is actually one of the best tools we have for the environment.

It is effective, easily scalable, and essentially free to the taxpayer. It could be used to create a green economic environment.

One of the biggest obstacles to environmental change has been the lack of funding. However, a Green Economic Environment (GEE) strategy could make the issue irrelevant.

A green economic environment could easily be brought about with the use of revenue-neutral taxation. This would involve changing the way governments collect taxes, raising some and lowering others in such a way that people's income would not change overall.

With Henderson's structural strategy--the Green Economic Environment (GEE)--taxes would be raised on non-green products and lowered on income and retail sales. For example, the total cost of gasoline might go up $200 in a year, but income tax would go down by $200.

In this new landscape, non-green products would be more expensive, but people would have more spending money. In the end, they would be able to buy about the same amount of goods as they did before.

The GEE would shift consumption to greener products and boost demand and markets for environmental goods. Green jobs would be created, and the ones that resulted from fiscal stimulus packages, preserved.

It would provide an economic environment that would promote carbon emission reduction. It could work with or be an alternative to cap-and-trade. Unlike that latter, the approach is applicable to other environmental issues. It is also easily scalable, allowing countries to start with low taxation levels and increase them gradually as desired.

The Green Economic Environment would be a much simpler approach than cap-and-trade. It would be free, less bureaucratic, less burdensome on the industry, and require less management and enforcement (see

Structural Solutions vs Cap-and-Trade).

Revenue-Neutral Taxation Is the Perfect Tool for Global Warming and the Environment. Cap-and-Trade Is Not.

If we want to save the planet, we

already have the means to do it.

The Global Warming Component of

the Green Economic Environment (GEE)

The global warming component of this structural strategy is based on revenue-neutral taxation and is essentially free for consumers and taxpayers.

We already know that the approach works and just how powerful it can be.

The GEE would involve taxing fossil fuels to raise their price. Because it is a revenue-neutral solution, people would see other taxes drop in compensation.

Global Warming, CO2, Carbon Emissions,

and Managing Green and Renewable Energies

From the 2008 experience alone, we know that rising the price of oil could shift markets to renewable energy and would promote conservation, which would reduce CO2 and other carbon emissions.

Under Henderson's structural strategy, a tax would be added to the wholesale price of oil to maintain its cost around a certain level, for example $125/barrel. This price could be set lower initially and later on adjusted to a level high enough to achieve the carbon emission targets prescribed under international agreements.

No new trading system would be needed and no detailed assessment or reporting would be required from most businesses. The strategy is fully scalable and could be implemented gradually to give the economy and everyone time to adjust.

Of course, the price of gasoline would go up, but people would have more money to spend from a drop in income and other taxes (see Revenue-Neutral Taxation).

The strategy could be applied to other fossil energies and work in the same way. It would enable green and renewable energies to sort themselves out according to their carbon intensiveness. For example, ethanol produced from corn would become expensive and fall out of favor as its production requires large amounts of fossil fuels which would be taxed.

Henderson's structural strategy is a solution that would call for very little bureaucracy and minimal enforcement (see Cap-and-Trade vs the GEE). We already know that it works and could deliver what we need for global warming.

The Toxic Chemical / Contaminant Component of the Green Economic Environment (GEE)

In 2009, jet fuel (perchlorate) made the news for having been found in baby formula. The EWG also detected it in cow milk and drinking water in the US.

The EWG found as well dozens of toxic contaminants and carcinogens in the body tissues of infants (see below).

What does cap-and-trade do about toxic contaminants? Noting. It actually falls short on most environmental issues. We need a more fundamental and broader approach such as the GEE.

Under Henderson's structural strategy--the Green Economic Environment (GEE)--toxic chemicals and other undesirable compounds would be taxed based on their harmfulness to the environment. This would increase their price and deter their use.

The strategy would shift industries and markets to greener alternatives and progressively reduce the presence of toxic chemicals and carcinogens in the environment.

Taxation would cover both the toxic chemicals used as inputs in the fabrication of goods and final consumer products such as non-green cleaning agents, solvents, pesticides, etc.

The system would be revenue-neutral, with consumers seeing income/retail taxes drop in compensation for the higher prices of some goods (see revenue-neutral taxation).

Background Information

Body Contaminants: What Is Out Is Also In

New research on human tissue contamination as a result of environmental causes is unequivocally pointing to the fact that what is out is also in. Human bodies are not dissociable from what is in their environment. We are not only what we eat but also what we breathe and what that which we ingest is produced from.

As such, it should not be surprising that jet fuel residue is found in cow milk in California and in the drinking water of half the states in the US (Rocket Fuel Chemical in California Cow Milk). Milk and water are staples of life. Research found that fire retardants known to be thyroid toxins were identified in elevated concentrations in American women breast milk--infants' very first food out of which they will build their bodies (Study Finds Record High Levels of Toxic Fire Retardants in Breast Milk from American Mothers: Executive Summary).

Two other groundbreaking studies have also highlighted the crisis brewing on the horizon. One was conducted by the Environmental Working Group (EWG) in association with Mount Sinai School of Medicine in New York and Commonweal. In the tissues of adult humans, it found a total of 167 chemicals, of which 76 are known carcinogens, 94 are neurological toxins, and 79 can lead to birth defects or developmental problems. A followup study in 2005, Body Burden: The Pollution in Newborns examined the chemical contents of the umbilical cord blood of infants. Samples were tested for 261 compounds, and the results were equally disturbing.

The other study is a Canadian one. Sponsored by Environmental Defence, it checked for fewer chemicals but also found in human tissues a frightening cocktail of compounds (heavy metals, PCBs, PBDEs, pesticide and insecticide residues, etc.), many of which are known to cause cancer, toxify the nervous system, and affect hormonal systems, reproduction, and development. View the detailed results of the study here: Polluted Children, Toxic Nation: A Report on Pollution in Canadian Families.

Through the food that we eat, we absorb the contaminants contained in the soil. Likewise, the cocktail of chemicals contained in our drinking water (jet fuel residues and others) are also absorbed into our bodies. Our lungs act as a vacuum cleaner, trapping and absorbing the impurities of the air we breathe. They actually act as a filter for it, the bad stuff being retained within our bodies.

Some of these substances cannot be eliminated by animal digestive and excretory systems. So, they keep accumulating in us, in our bodies. That is, they bioaccumulate. Levels are lower in plants and increase rapidly as you go up the food chain, to the animals that eat the vegetation and to us that eat the animals that eat the vegetation. It gets worse at each level of the food pyramid.

PCBs and mercury are examples of such compounds. The former have been banned for production and in open systems a few decades ago but are still everywhere in the environment. What happens to the remaining quantities still being used in closed system is anybody's guess. There is yet very little regulation regarding the use and production of mercury.

Renewable Energy, Forestry, Fisheries,

and Resource Management:

The Green Economic Environment (GEE) Strategy

In 2008 a sudden shift to renewable energy created havoc: Ethanol production began competing with food for land.

We saw what overexploitation did to the cod stocks on the Grand Banks area off the eastern coast of Canada and the US. Of course, there is also the problem of chronic deforestation.

Henderson's structural strategy would provide a way to manage those kind of problems. Revenue-neutral taxation offers us a free way to promote good practices and discourage harmful ones and overexploitation.

Henderson's structural strategy, the Green Economic Environment (GEE), would give us simple options in terms of managing renewable resources, be it fisheries, forestry, or energy production.

The approach would use revenue-neutral taxation to increase the price of products made from materials that are over or improperly exploited. This would reduce demand for them, lower pressure on resources, and promote better management practices. Of course, a revenue-neutral system would mean that taxes on income and retail goods would be reduced in compensation.

Not all renewable energies are equally as good for the environment. Some biofuels, for example the production of ethanol from corn, have a low net efficiency and compete with food and are carbon intensive.

Henderson's approach would increase the competitive advantage of the energies and production methods that are better for the environment. In some cases, regulation could also be used.

The Conservation and Non-renewable Resource Management Component of

the Green Economic Environment (GEE)

Metals are a depletable resource just like oil. Unlike oil--which has many relatively inexpensive and renewable alternatives--metals have very few substitutes.

Their depletion will follow a pattern similar to that of oil, with sharp price increases as reserves decrease. Unlike oil, there will be no turn back or switching because of their low substitutability.

For that reason alone, it would be important to conserve metals. However, they are also a major source of environmental pollution and degradation.

Under Henderson's structural strategy--the Green Economic Environment (GEE)--metals and other depletable resources would be taxed to increase their price.

As a result, the manufacturing industry would look for substitutes and try to reduce their use whenever possible. This would translate into greater conservation and an extension of reserves.

The cost of metal-containing goods would go up. However, consumers would not be penalized in the process as higher prices would be offset by lower income/retail taxation (see revenue-neutral taxation).

Creating a Green Economy

The Recycling, Reuse, and Packaging Component of the Green Economic Environment (GEE)

Because packaging is mostly single use, it needs to be targeted aggressively by any meaningful environmental strategy.

Most other goods are used over and over again and much less wasteful in comparison. The GEE would tax raw materials and unenvironmental packaging to increase their price.

This would lead to conservation and boost markets for recycled materials, which would then become more profitable.

The system would be revenue-neutral and compensated for by a decrease in other types of taxation (e.g. on income and retail sales). See also Book II of the Waves of the Future Series

Henderson's structural approach--the Green Economic Environment (GEE)--would use regulation to standardize containers like bottles and jars into fewer formats. This would make them more reusable and improve the economics of cleaning and reprocessing.

The GEE would use revenue-neutral taxation to increase the cost of new inputs (raw materials) used in the fabrication of containers. This would make new containers more expensive, but consumers would pay lower income and retail taxation in compensation.

More expensive packaging would promote conservation, a shift to greener alternatives, and increase the amount of recycling.

Recycled materials would be not be taxed as inputs. This would make them cheaper and more profitable, which would promote

the growth of the industry as well as recycling.

Appropriate taxation levels would eventually create natural markets for recyclables and lead to a thriving industry that would no longer need to be supported by taxpayers.

Hybrid, Electrical, and Hydrogen Cars and Vehicles

The Automobile Industry and the Upcoming SPV

Hybrid vehicles are only a short term solution for the environment.

Given the impending shortage of many base metals, the transportation of the future will have to be based on highly conservational (using less materials) and environment-friendly vehicles, that is, towards Single-Passenger electrical Vehicles (SPVs).

This will result a dramatic reduction of fossil fuel use and carbon emissions, much healthier cities, as well as the conservation of metals. The Green Economic Environment could make this happen as quickly as we want.

The Green Economic Environment (GEE) strategy proposed by Henderson would lead to higher prices for metals and energy. Because it is a revenue-neutral system, these would be compensated for by lower income and retail taxes.

The resulting incentive structure would promote a reduction in the size of cars to decrease both their raw-materials content and fuel consumption. Cars would get much smaller and narrower, which would increase energy efficiency, save resources, and reduce traffic congestion.

SPVs would be powered by either hydrogen cells or batteries (and convertible from one to the other) as electricity would become more competitive than fossil fuels under the GEE.

The higher demand for this clean energy would be met by increased commercial production and, via smart-grid technology, by millions of micro-producers (you and I) feeding power directly through into the existing electrical power grid.

A View of the New Green Society and Sustainable Economy

More information: USGS Conservation International Sierra Club Friends of the Earth Alliance to Save Energy Alternative Energy Earth Day Network Environmental Defense Fund Environmental Working Group NRDC Global Warming Cap-and-Trade