new rules, new tools, new deals: why we should proceed from ins-trument debate to society reform
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New rules, new tools, new deals: Why we should proceed from ins-trument debate to society reform. Towards a greener and fairer capitalism 11th GCET Bangkok, November 2010 Dr. Anselm Görres, President GBE. Bangkok is an excellent location for talks about the true scope of our challenges. - PowerPoint PPT PresentationTRANSCRIPT
New rules, new tools, new deals: Why we should proceed from ins-trument debate to society reform Towards a greener and fairer capitalism
11th GCET Bangkok, November 2010Dr. Anselm Görres, President GBE
Towards a greener and fairer capitalism – Exhibit 3
IST DIE UMWELT ÜBER-HAUPT EIN PROBLEM –WENN JA, WIE GROSS?
ENVIRONMENT AS A PROBLEM – AND TO WHAT
EXTENT?
Towards a greener and fairer capitalism – Exhibit 4
Bangkok is an excellent location for talks about the true scope of our challenges
« A risk-analysis firm published an index that identifies South Asia as the region most vulnerable to the effect of climate change. Of the 16 countries listed as being at extreme risk over the next 30 years, five are South Asian. A heavy dependence on agriculture and weak public insti-tutions make the region especially vulnerable. »
The Economist, October 23rd 2010
Towards a greener and fairer capitalism – Exhibit 5
CO2/CLIMATE
Climate priority is undisputed – but it understates the true scope of the problem
RESOURCEDEPLETION
BIO-DIVERSITY
POISON
SOIL EROSIO
N
WASTE
WATER
DESERTS
CO2/CLIMATE
Towards a greener and fairer capitalism – Exhibit 6
Even while we are convening, they are drilling and spilling all over the place...
DRILL BABY DRILL!
Towards a greener and fairer capitalism – Exhibit 7
Both for energy as for resources, emerging countries dominate demand
ChinaEmerging economiesOECD
Towards a greener and fairer capitalism – Exhibit 8
Our kids may long back to when there was just the „simple“ climate problem ...
CLIMATE ALL OTHER RESOURCES
Main substances
Basically only coal, oil, and gas
Multitude of metals, sands, and other substances
Main instruments
Eco-taxes, e-trading, subsidy reform, efficiency
Multitude of national regulation systems
Main agents for solutions
Limited number of large emitter countries
Multitude of developing countries
Chances for coordination
Worldwide with Kyoto, strong role of EU
A lot more difficult – up to now almost no rules
Progress Since 1980! Almost at zero!
Carbon vs. rest at this conference: Probably >85% to 15%!
Towards a greener and fairer capitalism – Exhibit 9
WARUM WIR DENNOCH OPTIMISCH SEIN KÖNNEN
(UND MÜSSEN)
WHY WE CAN AND MUST STILL BE OPTIMISTIC
Towards a greener and fairer capitalism – Exhibit 10
« With your constant optimism, you are wrecking our nice gloomy spirit »
Towards a greener and fairer capitalism – Exhibit 11
All EU countries have some green taxes
Examples from EEA 2005
1. Witness of EU-Creativity!2. Many roads to Rome!3. Autonomy from neighbours!4. Similar situation in new MS
Towards a greener and fairer capitalism – Exhibit 12
Europe is a worldwide fore-runner and successful exporter of eco-instruments
• Regulation: First positive experiences in the 1970ies, for instance against „Waldsterben“ (dying forest syndrome)
• EU today belongs to the fore-riders, e.g. with „Eco-design“• Eco-taxes: All EU-countries have several variants of it, some
also performed macroeconomic green fiscal reforms.• Emission trading: On 1.1.2005, Europe starts roll-out of an
American invention• Green Subsidies: Overvalued, but very popular nevertheless...• Slashing perverse subsidies: New sex appeal through debt
crisis• Feed-in tariffs: Hidden eco-tax (because non-budgetary), copied
by over 30 countries worldwide• Toll systems: Another important eco-fiscal instrument, whether
on country or city level (London, Stockholm)
Towards a greener and fairer capitalism – Exhibit 13
Many “synergies” will help us to protect the climate AND conserve resources
• In both cases, we need to decouple output from input – i.e. learn to do more with less
• Most material-intensive goods and services are also energy-intensive – and vice versa
• So reducing material and energy intensity goes hand in hand
• Each time, the benefit is to avoid price peaks after passing the production peak
• And in both cases, we reduce the vulnerability of our economies
Towards a greener and fairer capitalism – Exhibit 14
Being more general: We only must deve-lop our solutions faster than our problems• «Men created the problem, so men can solve it»*• Or perhaps God sent us these problems to make us all
better world citizens? • But we don’t need to all become altruists.
Enlightened self-interest will do the job just fine!• Is it so difficult to understand that you cannot solve a big
problem with a small tool?!?• If we need more supranational cooperation, then let’s
have the cooperation.• If we need more government, then let’s have more
government. Nature does not care about ideology.This very conference bears witness about
the multitude of ideas and solutions!*Lady Joan Branson
Towards a greener and fairer capitalism – Exhibit 15
NOCH GIBT ES CHANCEN FÜR DEN GRÜNEN KEYNESTHERE ARE STILL CHANCES FOR A
GREENER KEYNES!
Towards a greener and fairer capitalism – Exhibit 16
In 2008/ 2009, most governments found themselves with very limited options
Towards a greener and fairer capitalism – Exhibit 17
South Korea and China had the highest green share in their stimulus packages
Country Stimulus Package Volume US bn $
Green Share (%)
South Korea Green New Deal 38 69% China NDRC 581 34% EU Recovery Plan 253 14% Germany Stimulus Plan 130 13% USA Emergency Economic
Stabilization Act 700 2% Japan Stimulus Package 476 2% Italy Emergency Package 101 1%
Sources: HSBC; for Germany GBG-Analysis
We missed most of the chances on the spending side. Now let’s
try and maximize the opportunities from refinancing the debt!
Towards a greener and fairer capitalism – Exhibit 18
Consolidation pressure from high debts and/or deficits is mounting
1. Most states had high debts/ deficits even before crisis2. Crisis leads to heavy revenue losses ...3. ... plus huge expenses for saving banks ...4. plus financing Keynesian impulses
(worldwide 3-4 trillion US dollars)5. Additional pressure from Greek and Euro Crisis...6. ... plus hidden risks from parafiscal shadow budgets
(bad balance sheets in truth always even worse) 7. New money for new tasks, like climate,
demography ... STATES VERY CREATIVE IN SEARCH OF NEW REVENUES!
Towards a greener and fairer capitalism – Exhibit 19
In Germany, a lib-con government sur-prisingly embraced eco-fiscal elements
WITHIN THEIR NEW SAVINGS PACKAGE THEY PROPOSED• Cancelling eco-tax-exemptions• Introduction of a new air traffic charge• Eco-tax on nuclear elements• Extending truck toll to 4-lane-highways below autobahn• ... and promised: a Tobin tax on financial transactions.SOME OF THIS UNDER THE EXPLICIT HEADLINE:„ECOLOGISATION OF THE SOCIAL MARKET ECONOMY“
“GREEN CONSOLIDATION” is used by many other EU countries: (e.g. Estonia, Greece, Hungary, Ireland, Iceland)
Towards a greener and fairer capitalism – Exhibit 20
Environmentally harmful subsidies always pose a double, if not triple wasteUsually, the lead to a combination of:1. environmental damage, with the
government paying for it2. economic inefficiency, because
whatever is subsidized will be used wastefully
3. and a huge fiscal burden, bringing some states to the edge of insolvency.
Towards a greener and fairer capitalism – Exhibit 21
Typical areas for perverse subsidies (just look for the biggest lobbies...)
DRILL BABY DRILL!
Towards a greener and fairer capitalism – Exhibit 22
ZEIT FÜR EINE NEUE UTOPIE!
IT IS TIME FOR A NEW VISION!
Towards a greener and fairer capitalism – Exhibit 23
US real estate crisis – 2nd world crisis – social crisis – sustainability crisis – elite crisis
Weltfinanz-, Wirtschafts- + Sozialkrise
Globale Nach-haltigkeitskrise
Krise der Elite
• Every half year a new name!• Fast career : From US-sub prime-
crisis – international financial crisis etc. – to second world economic crisis
• Worldwide social crisis with poverty, unemployment and starving
• Climate and sustainability crisis• ... and at its base: elite crisis
In 2010, it also became a fiscal and currency crisis
HOUSING CRISIS
Towards a greener and fairer capitalism – Exhibit 24
Financial/economic and environmen-tal crisis have very similar roots
SIMILAR ORIGINS/ PROBLEMS
Fin. Crisis
Envir.Crisis
COMMENTS
Many forms of market failure and perverse incentives
Not only external effects…
Government failure
Weak regulation, partly due to laissez-faire ideology
Violation of simplest rules, even rules for kids
All I needed to know I learnt at kindergarten (clean up your dirt...)
Explosion of state debts
Greek case shows dangers
Business as usual no longer an option
Outdated growth model and wealth concept
Overall: Unsustainable behaviour of consumers, firms, governments ... and you know what: We all
know it’s not sustainable!
Towards a greener and fairer capitalism – Exhibit 25
„Gan-dhism“?
Abolish capitalism – worldwide idealism and selflessness – or improve capitalism?
Abolish capitalism?
Improve capitalism?
Worldwide economic and environmental crisis from uncontrolled capitalism
Towards a greener and fairer capitalism – Exhibit 26
How about a price system that will finally tell the truth in all three dimensions?
.... the economic truth: fair competition and efficiency
.... the social truth: fair wages and social security
.... and the ecological truth: Internalisation of external effects
Wrong prices lead markets in wrong directions!
Towards a greener and fairer capitalism – Exhibit 27
The new vision: A greener capitalism, with more equity and decency
DECE
NCY/
EFFI
CIEN
CY
SOCI
AL E
QUIT
YAN
D SE
CURI
TY
ECOL
OGIC
ALSU
STAI
NABI
LITY
ECO-SOCIALMARKET SYSTEM
DEMOCRACY/HUMAN RIGHTS
SOCIAL EQUITYAND SECURITY
• Mill, Marx, Bismarck, Beveridge...• Social security, 8h-day, unions..• Prices tell social truth
ECOLOGICALSUSTAINABILITY
• Pigou, Kapp, Meadows, Weizsäcker...• Eco-regulation, green budgets• Prices tell ecological truth
DECENCY/EFFICIENCY
• Adam Smith...• Decent markets, efficiency,
fair competition• Prices tell economic truth
Towards a greener and fairer capitalism – Exhibit 28
In Asia, there seems to be openness for a progressive evolution of capitalism
Source: Singapore Times, November 2008
Towards a greener and fairer capitalism – Exhibit 29
NEUE STEUERN + PREI-SE, NEUE HÄUSER +
AUTOS, NEUES DENKENNEW TAXES + PRICES,
NEW CARS + BUILDINGS, EVEN NEW THINKING!
Towards a greener and fairer capitalism – Exhibit 30
Acceptanceof need for
action
Actual imp-lementation
95%
Public, Media
Politics, Business,
elites
The biggest impediments to action are not the deficits of our knowledge!
Knowledgeof climate problems
Knowledge of climate solutions
80%
95%
30%
Degree of nee-ded knowledge
reached
Failure of media, politics, and above all,
elites!
Main focus of researchers
Main topics of Green Budget Europe/ Germany
Natural Scientist
Economists, managers,engineers
Towards a greener and fairer capitalism – Exhibit 31
The are more kinds of double dividend than just the classic relief for labour
Ecological Tax Reform (ETR – 70ies to 90ies)
Green Fiscal Reform (GFR – early 2000s)
Green Keynesianism Green Consolidation
╬ More green taxes
╬ More green taxes
╬ More green pro-jects
╬ More green taxes
GREENER SPEN-DING!
▬ Less bad subsidies
╬ New reve-nues (ETS)
▬ Less bad subsidies
▬ Less la-
bour tax
NO NET EFFECT ON EXPENDI-TURES!
▬ Less la-bour tax
= SLIGHT SUR-PLUS!
╬ Other green revenues
= BIGGER SUR-PLUS!
Budget neutrality
Budget neutrality or slight surplus to pay for
green projects Budget surplus used
for green consolidation
Towards a greener and fairer capitalism – Exhibit 32
Austerity is not enough: We need a new growth model and new values
Simple austerity programs will not solve the crisis but enforce it.There is no return to the august times of pre-Lehmann.We need a new, smarter growth model than in the past to build a better future, including
• New houses and buildings• New traffic systems, cars, trains, ships, airplanes• New agriculture, new foodstuffs, new bio products• New technologies and new factories• New products in all areas, with less waste and packaging • And a new life style
This will create many new jobs. But it will not be possible without new values and visions
Towards a greener and fairer capitalism – Exhibit 33
We need both – small scale technologies, but also some of the real big things
» I‘d put my money on the sun and solar energy. What a source of power! I hope we don‘t have to wait till oil and coal run out before we tackle that. « (Thomas Alva Edison, 1931)
Towards a greener and fairer capitalism – Exhibit 34
We can see important parts of this vision in the EUROPE 2020 strategy
DECENCY/EFFICIENY
SOCIAL EQUITYAND SECURITY
ECOLOGIALSUSTAINABITY
SMART GROWTHInnovation – Education – Digital Society
SUSTAINABLE GROWTHClimate, Energy, Mobility
CompetitivenessINCLUSIVE GROWTHEmployment and Skills
Fighting Poverty
Towards a greener and fairer capitalism – Exhibit 35
Crises and problems create opportunities for intellectual progress
FOR GOVERN-MENTS OF ANY COLOR
Green revenues are not from the devil, but a god-sent giftto combine environmental and fiscal sustainability
FOR TRADITIONAL KEYNESIANS
After 30 years of supply-side melodies, the crisis gave you a splendid comeback – but this time, please don’t forget to repay the debts
FOR ECO-TAX ADVOCATES
Even the definition of our beloved Double Dividend may evolve over time, for instance from a budget-neutral tax shift from labour to nature to more deficit consolidation
FOR THE LEFT
Don’t believe for one second you can advance social progress by fighting environmental progress!
FOR THE RIGHT
Please forget everything you used to think about a conflict between Green and Growth!
Towards a greener and fairer capitalism – Exhibit 37
Personally, I sold the big station wagon use the new company car most of the time
With 112 gram C02/kg most eco-efficient German car (2008)
242 gram C02/kg
Towards a greener and fairer capitalism – Exhibit 38
IF YOU LIKED THIS PAPER AND OUR IDEAS:
• Don‘t be surprised if perverse incentives produce perverse results
• Please support Green Budget Germany or GB Europe
• Please help us organize future conferences in your city/ country/ organisation
• Please help us to create a fairer and greener Capitalism; in the EU and elsewhere!
Towards a greener and fairer capitalism – Exhibit 39
Some nice quotes from Budapest (1)Prof. Dr. Zoltán Cséfalvay, State Secretary of the Ministry for National Economy:This is the time to think the unthinkable. For too long, we have not dared to think the green ideas. This crisis is the day.Janez Potočnik: European Commissioner for the Environment:We don't need subsidies which pretend to help by supporting old industries and locking people into the jobs of the past.Árpád Kovács, President, Hungarian Economic Association:We’ve seen far too many red budgets, not in the sense of party but of deficit. We need black/green budgets, again not party colors, but positive fiscally and ecologically!Helen Mountford, Senior Counsellor, OECD:We’ve studied perverse subsidies throughout the world, also attempts to get rid of them. We know it’s difficult but it’s doable. We offer country-tailored advice to help.Jos Dings. Director, European Federation for Transport and Environment (T&E):It’ not true that the Chicago Convention bars air fuel taxes and it’s a job if the ETS raises the price by only 0,01 Cent.Arno Schroten, Senior Researcher/Consultant, CE Delft, The Netherlands:Any economic or ecological costs not contained in the market price can be seen as an external effect or as a subsidy.Katri Kosonen, Principal Administrator and Economist in the DG Taxation and Customs, EU:The subsidy for company cars in the EU amounts to 5,4 bn Euro and 0.5 percent of GDP, in Germany even to 0.9%.Dr. Benedek Jávor: Chairman, Parliamentary Committee for Sustainable Development, Hungary:We should start to shift the burden in our tax system from labour and other productive forces to energy and resources.John Hontelez, Secretary General, European Environment Bureau (EEB):Europe2020, with its advise to use environmental fiscal reform as part of national government budget consolidation measures as “growth friendly” is an opportunity for us. But in order to have an impact, the National Reform Programme process that is triggered by Europe2020 should involve national parliaments and civil societies, so it is necessary that the deadline of October 2010 for delivery of such plans is postponed till next Spring.
Towards a greener and fairer capitalism – Exhibit 40
Some nice quotes from Budapest (2)Kerryn Lang, Research Officer, Global Subsidies Initiative GSIWe know enough about the benefits of subsidy reform to start the process today. We need more political leadership and public awareness. And we need NGOs like GSI.Bathó Ferenc, State Secretary for the Public Budget:You are speaking from my heart. Nothing here will remain unchanged from the past. This revision of our tasks will be influenced by your conference. The next budget will be a greener budget. I can promise you we will phase out some harmful subsidies. We need to convince investors and stakeholders that in the long run, they have more to gain from new subsidies for new energies and technologies than from the old, harmful subsidies.Mikael Skou Andersen, European Environment Agency:We must acknowledge that the rise in the oil price also helped triggering the 2008 crisis. At the same time, countries with higher energy prices are less exposed to further price hikes and show less inflation effects. Perhaps we need to define a concept of core inflation that does not include the inevitable and even desirable increases in energy prices and taxes.Walter Deffaa, Director General, European Commission. Directorate:By splitting energy taxes into an energy and an CO2-part, we can expand the CO2-level outside the emission trading sector, reduce the subsidy for diesel vs. petrol, and achieve a comparable level for all heating fuels. With such mobile factors like energy, transport, we need more harmonization of indirect taxes to overcome prisoner’s dilemma and unfair competition.Cees van Beers, Delft Technical University:Let us not forget the hidden subsidies outside the budgets, e.g. through minimum prices in agriculture or maximum prices for some energies. We may be successful in curbing visible perverse subsidies only to see them return as invisible ones!Jean Chateau, Administrator, Environment Directorate, OECD:We estimate that eliminating perverse subsidies would reduce greenhouse gases blamed for global warming by 10 percent by 2050. However, the cost would be unevenly distributed, with the highest burden on OPEC-countries, Russia and China.Erwin Mayer, Consultant for Climate and Energy Policies, Denkstatt:If we want to beat the perverse lobbies, we must understand their strategies. Perhaps we need more plebiscites!
Towards a greener and fairer capitalism – Exhibit 41
Some nice quotes from Budapest (3)
“We don't need subsidies which pretend to help by supporting old industries and locking
people into the jobs of the past.Instead we have to let go and invest in the jobs
of the future. It is not about jobs OR environment, it is about WHAT KIND of jobs
AND the environment.”(Janez Potočnik: European Commissioner for the Environment)