The phrase “it’s not fair” is not just the preserve of petty childhood tantrums – you hear it a lot in climate negotiations between global leaders too. Now, a proposal to force rich people everywhere to stick to personal emissions targets offers hope for a fairer climate deal.

The plan was put forward by Heleen de Coninck of the Princeton Environmental Institute at the Copenhagen climate congress last week.

The Kyoto protocol, which will expire in 2012, divvies up emissions rights roughly according to how much nations emitted during the 20th century.

While industrialised countries were given different targets according to what they could reasonably achieve, developing nations are not required to limit their emissions at all on the grounds that their 20th century emissions were negligible compared to those of rich nations.  Link to article

18th March 2009

Executive Summary

This submission does not generally address existing fiscal mechanisms; others have contributed exhaustively to those issues.  It focuses instead on new actions that address the current crisis but which would also strengthen our position in the face of an immanent energy crisis coupled with advancing climate change.

Despite the constraints of EMU membership, innovation is still possible – in fiscal mechanisms, in financing development and in complementary money systems.  We ask the Irish government to employ these innovations so as to lighten the burden on taxpayers, foster solidarity between the public and private sector and increase productivity and competitiveness. These measures are outlined briefly in the following action points.

Banking & Debt Reform in Ireland

1    Nationalise AIB and Bank of Ireland as, together with Anglo Irish, these banks carry the biggest portfolio of impaired property development loans now guaranteed by the Irish government; an action now unavoidable to restore credibility.

2    Separate out the impaired property development loans into a series of capital or equity partnerships, preferably LLPs (Limited Liability Partnerships).  This will remove substantial debt from the banks balance sheets.

3    Require that the banks and lending agencies offer the option of swapping existing mortgage obligations for shares in an equity partnership created for property owners in repayment difficulties and with negative equity.

4    Tighten regulatory oversight on bank lending and reserves to become similar to Canada’s that protected their financial sector from the worse effects of the crisis. Require that the financial sector executive remuneration and non-executive board members fees do not exceed more than 8 times the average full time wage paid by the bank and that bonuses are similarly bounded and are based on long term sustainable profitability of the institution.

5    Launch a set of special savings products offers (termed accounts, general savings accounts, SSIA-type accounts and/or bonds) in order to generate investment to provide the capital for essential, economically viable infrastructure projects.

6    After these reforms are carried out the previously nationalised banks should be privatized again.

7    The process of nationalization, reform and re-privatisation would not be necessary were Bank Ireland and Allied Irish Bank willing to undertake the reforms above on an agreed basis.

8    Extend the DIRT tax to cover the bond holders in all banks covered by the Irish government guarantee.

This reform can raise considerable immediate funds for the government as well as providing a relatively stable flow of funds in the future, reducing the risk of volatility in Exchequer receipts.

Climate  and Energy Measures

9    Create an independent Carbon Trust with the power to impose an upstream cap on carbon emissions from fossil fuels with permits necessary to import or mine fossil fuels (industrial peat extraction) under the excise duty controls as per Feasta proposal.

10    Distribute at least 66% of the permit income to citizens as their rightful share or dividend of an essential commons resources. A significant portion (33%) should be retained as a ‘children’s’ fund’ to provide investment for national infrastructure needed for their future in low carbon economy.

Land Value Taxation

11    Announce the phased introduction of an annual land value tax (LVT) that will replace existing transaction taxes such as Stamp duty and development levies.

12    Require that all sale and rental property transactions are recorded accurately in a central database and published to inform the valuation office and the general public.

13    Replace rates on commercial and industrial premises by an annual land value tax (LVT) including on empty and derelict sites, public buildings and charity owned land with commercial zoning.  This reform is achievable in 2010

14    Extend to zoned development land while abolishing development levies and Part V contributions.  Achievable in 2011.

15    Replace stamp duty on all property transactions and extend LVT to all residential dwellings when valuation records and estimates are completed. This is achievable for 2012.

16    Extend the LVT to all land in the state including farmland based on rentals yields and abolish all income tax on farming activities.  Achievable in 2012.

17    When economic recovery begins, all increase in land values should be captured by an increase in LVT so that a property boom never has a chance to develop again, and rising LVT revenues allow for the reduction of taxes on income and businesses.

Address Contraction in the Domestic Money Supply

18    Initiate a top level group to consider the design and implementation of an emergency complementary currency to fill the shortfall of euro in circulation because of the overhang of debt and continued contraction of liquidity in the euro system.

19    Develop a system of parallel VAT taxation reflective of the quid-denominated transactions. Permit the payment of LVT at least in part in quid to establish the value of the new complementary currency.

20    Support the development of other mutual credit cooperatives, barter systems or peer to peer transactions backed by a mutual insurance pool.

Pensions Policy

21    Pensions-provision relief should be gradually reduced to reflect the new investment environment of higher systemic risks and lower economic growth in the medium and long-run future

22    Extend pension and other tax reliefs to a wider selection of local investments such as renewable energy, municipal bonds for infrastructure which involve reducing Ireland’s dependence on fossil energy.

23    All pension taxation relief’s should be at the lower rate of income tax so that the well off do not benefit to a greater degree than the lower income groups.

24    As a partial recompense for the pension tax relief moratorium, the Exchequer should use future injections of capital into Irish banking system as the means for repairing the balance sheets of the Irish households.

25    Reclaim the commons for its owners – the people – to establish the capital base for a dividend that will provide economic security for everyone, especially in old age.

-End-

Feasta; foundation for the Economics of Sustainability
14 St Stephen’s Green
Dublin 2
Tel: 01-661 9572 / 086 8267555
Contact: Emer O’Siochru : emerosiochru@gmail.com
Project Manager Smart Taxes Network

Exxon Mobil coming out in favour of a carbon tax to combat climate change, after so many years funding denial that climate change even exists, sounds like King Herod belatedly announcing his support for child protection policies. The shift happened after pressure from the Rockefeller family and a change of CEO, but sceptics have noted that Exxon had this change of heart just as the US is looking to enact a domestic cap-and-trade scheme. It has been suggested that Exxon is simply attempting to derail cap-and-trade, not to bring about a carbon tax.  Link to article

Posted by David Morris (Guest Contributor @Gristmill) at 11:19 AM on 04 Mar 2009

The new mantra in energy circles is “national smart grid.”

In the New York Times, Al Gore insists the new president should give the highest priority to “the planning and construction of a unified national smart grid.” President Barack Obama, responding to a question by MSNBC’s Rachel Maddow, declares that one of “the most important infrastructure projects that we need is a whole new electricity grid … a smart grid.”

We lump together the two words, “national” and “smart” as if they were joined at the hip, but in fact each describes and enables a very different electricity future. The word “national” in these discussions refers to the construction of tens of thousands of miles of new national ultra-high-voltage transmission lines, an initiative that would further separate power plants from consumers, and those who make the electricity decisions from those who feel the impact of those decisions.

The word “smart,” on the other hand, refers to upgrading the existing network to make it more resilient and efficient. A smart grid can decentralize both generation and authority. Sophisticated electronic sensors, wireless communication, software and ever-more powerful computers will connect electricity customers and suppliers in real time, making possible a future in which tens of millions of households and businesses actively interact with the electricity network as both consumers and producers.  Link to full argument

James Hansen has again been lecturing Congress on the virtues of tax-and-dividend. I’m no policy expert, but neither is Dr. Hansen, so I’m going to share some of my own amateur observations for the benefit of fellow Grist wonks.

Hansen did some calculations and came up with the following dividend estimates for a $115/ton (equivalent to $1/gallon) tax:

Single share: $3000/year ($250 per month, deposited monthly in bank account)

Family with 2 children: $9000/year ($750 per month, deposited monthly in bank account)

Wow! Free money! That sounds enticing. Of course, the money has to come from somewhere, so people’s energy costs would, on average, increase by the same amount. But with that much money sloshing around there are bound to be huge inequities. For example, I live in northern California, where we have a mild climate and little coal power, and I don’t need to drive much, so I might see my net income rise by maybe a couple thousand dollars. That would be nice, but folks back east who are paying more wouldn’t like it one bit.

The tax rate and dividend should increase with time. …

[The tax rate should increase until fossil fuel energy is not competitive with clean energy.]

Nothing’s going to happen until the tax rate is high enough to overcome the price barrier. Once it does, there will be a “tipping point” at which clean energy will start to overtake fossil fuels and a variety of positive feedback mechanisms (competition, technology, economies of scale, learning by doing) will make the transition self-sustaining and gradually less dependent on price supports. So what is needed is a high price incentive right away — not a gradually escalating incentive.

However, a high price incentive does not imply a high tax; it is possible to have an initially high and declining carbon price incentive implemented through an initially low and increasing carbon tax.

The dividend would put money in the hands of the public, allowing them to purchase vehicles and other products that reduce their carbon footprint and thus their taxes.

It’s not that simple. Vehicle owners don’t think much about fuel costs when they make purchasing decisions, so an effective policy would shift the monetary incentive into vehicle prices (e.g. via feebates). Suppose that were done, so that gas guzzlers in a particular vehicle utility class were subject to a $2000 carbon tax, while comparable hybrid vehicles with half the fuel consumption were only levied a $1000 tax. The $1000 price difference would cause buyers to favor the low-emission vehicle, and their carbon dividends would be more than sufficient to offset the $1000 tax.

Rather than routing the monetary incentives through dividends, an alternative approach would be to simply apply gas guzzler taxes to directly subsidize low-emission vehicles. For example, a $500 tax on the guzzler, which finances a $500 subsidy for the hybrid, would result in the same $1000 price differential and the same incentive for the hybrid — but without the complications and distributional inequities that would be created by an economy-wide carbon tax.

Better yet, keep the tax at $2000, and use it to fund a $2000 subsidy. Now you’ve got a $4000 price differential in favor of the hybrid.

Actually, that’s a little over-simplified. If hybrids make up a small market fraction — say, 10 percent — with guzzlers making up the other 90 percent, then a guzzler tax of only $400 could fund a $3600 hybrid subsidy, again yielding a $4000 price incentive.

Well, why not take it a step further: At a 10 percent hybrid market share, keep the tax at $2000 and increase the subsidy to $18,000!

Okay, that’s going overboard, but the point is that a very modest tax can create a comparatively huge price incentive immediately, while the hybrid market is in its nascent stage. As the hybrid market grows, the tax might increase to unreasonable levels to maintain the same price incentive, but by that time hybrid technology will have become cheap enough that the incentive can be diminished or even eliminated. (The same principle would apply to other industries like electric appliances and power generation.)

The broader point is this: If carbon tax (or allowance auction) revenue is applied directly and specifically for its intended purpose of reducing the taxed industry’s carbon emissions, and is not squandered on free handouts (“dividends”), then it is possible to create immediate and substantial price incentives far greater than anything that tax-and-dividend lobbyists (or cap-and-traders) have in mind.

If we want use dividends to give consumers an equity stake in decarbonization, we could do so by investing carbon tax revenue in renewable energy and clean technologies in exchange for equity, and distributing equity shares to the public on a per-capita basis. Those shares would yield dividends that increase — not decrease — as carbon is phased out.

[revised 3/2/2009]

If you’re perplexed by the “cap and dividend” policy, check out Cap’n Dividend’s Excellent Climate Solution. It’s an amusing 90-second flash animation for the Web that explains the basic logic of the “cap and dividend” policy, a leading proposal for curbing C02 emissions and global warming. Viewers are invited to send the video to their friends as part of a larger effort to inform more people about the proposal, which is gaining momentum among environmentalists, economists and Members of Congress.

As regular readers of OTC may know, the basic idea behind cap and dividend is to auction “pollution rights” to companies that sell carbon-based fuels and put the money in a trust fund owned by all citizens (because we all own the sky). Then the money is distributed in annual dividends to everyone. The auctions use market forces to discourage C02 pollution, but the trust dividends help everyone meet the higher costs of using carbon-based fuels. The system also rewards those who reduce their energy consumption.

The “Cap’n Dividend” animation was recently released by Cap and Dividend, a project of On the Commons. For more, go to http://www.capanddividend.org.

For more information, visit http://www.capanddividend.org/watch

….Fertiliser is the second biggest expenditure on most livestock farms after feed, and in the case of tillage farms it accounts for over 33% of production costs. Irish farmers are being asked to pay considerably more for their fertiliser than their EU counterparts and this is severely eroding the competitiveness of Irish agriculture. The dramatic fall in international wholesale prices is clearly not being passed back to farmers…Link to article

Published by @Brookings, January 06, 2009 —

“..Low oil prices also take the wind out of the sails of alternative-energy ventures, which would be unfortunate because, while oil prices are low right now, they won’t stay that way. Once we move past the current global recession, prices will shoot back up, thanks to the demand shock from rapid economic growth and supply constraints caused by underinvestment. Tighter supplies will also mean greater price volatility down the road.

Faced with this reality, policymakers need to take measures now, while prices are low, to encourage both conservation and development of alternative energy sources. But what are the options? A gasoline tax is a hard sell politically and ignores the 35 percent of oil consumed in the United States in forms other than gasoline. Moreover, a gas tax won’t directly reduce price volatility-it will only add to the pain of the next oil price spike. Others have proposed a price floor on oil, but that has an element of arbitrariness to it: There’s no reason consumers should enjoy all the benefits of market price declines until some random price point, and none of the benefits beyond that point. “…Link to full article

Published: February 20, 200

SHANGHAI — With the world suffering through a tight credit market, China has suddenly gone shopping.

Beijing said on Friday that one of its big state-owned banks, the China Development Bank, agreed to lend the Brazilian oil giant Petrobras $10 billion in exchange for sending China a long-term supply of oil.

That investment came after similar deals were signed this week with Russia and Venezuela, bringing China’s total oil investments this month to $41 billion.

China’s biggest aluminum producer also agreed earlier this month to invest $19.5 billion in Australia’s Rio Tinto, one of the world’s biggest mining companies. And last Monday, the China Minmetals Corporation bid $1.7 billion to acquire Australia’s OZ Minerals, a huge zinc mining company.

Flush with cash and eager to take advantage of weak commodity prices, China is once again on the hunt for global energy and resources to power its growing economy. But this time, China is being welcomed as an investor overseas.  Link to full article