JUNE 2015 Vol. 3 Issue 3

Environmental Fiscal Reform: looking back in 2015

A look back at what has been happening during the first half of the year in EFR: the economic system’s downsides are revealing themselves as environmental pressures rise. The case for environmental fiscal reform has never been stronger.

FOSSIL FUEL NO LONGER DRIVING

It is becoming ever more apparent that the fossil fuel industry, long underpinning economic growth and indeed the industrial model is less and less the mainstay of a healthy economy.

Firstly it is highly subsidized

The fossil fuel industry swallows up $5.3 trillion a year worldwide in hidden costs to keep burning fossil fuels, according to the International Monetary Fund (IMF). This money, the IMF noted, is in addition to the $492 billion in direct subsidies offered by governments around the world through write-offs and write-downs and land-use loopholes. In a sane world these subsidies would be invested to free us from the deadly effects of carbon emissions caused by fossil fuels, but we do not live in a sane world.

Secondly, demand falls as resource limits are met, not as many might say, because of price signals.

Cheaper fossil energy, is actually a warning sign. As resource limits are reached, the law of supply and demand ceases to be apparent.

Read Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)

On the same lines, academics have been warning that the way energy works in the economy is not as a commodity. One of the clearest explanations for this comes from Professor Robert Ayres.

Read Understanding the role of energy in the economy

The recent pre-study, carried out by the Swedish MISTRA organisation asks for changes in the very framework of what is often loosely-called “the Economy”(1).

Link to the pre-study

 

THE ECONOMIC SYSTEM IS CREATING POVERTY

Although praised for being the engine of modernisation and a human invention that drives development, the ideal of the industrialist, capitalist economy has been coming under criticism as the actual cause of poverty. This insight is not new, indeed it prompted the invention of the popular board game Monopoly, but with better data and with economics as a discipline increasingly attracting bright, non-linear thinking minds, the issues are being raised more often.

Two recent stories on poverty creation:

Fastcoexist, commondreams.org

Marxist economist Michael Roberts offer clear concise analysis of where the global economic system is failing to produce results – there is a permanent long-term decline in profits that has been going on since 1869 and is reaching a point where it might be self-defeating.

THE MONEY SYSTEM AS A NEGLECTED PART OF THE ECONOMIC SYSTEM

We are pleased to see the work of Professor Steve Keen being given more notice. If the economy is to align with environmental constraints and social demands, (the ceiling and floor), the role of money needs to be embraced.

DIET AND THE PLANET: NEED FOR ECONOMIC MEASURES BUT WHAT?

The carbon, phosphorus and nitrogen footprint of the food we eat makes up the largest single contribution to the planetary boundary challenges we have today.

Environmental fiscal reform has increasingly been turning toward the challenge of changing people’s food habits. The recent European Sustainable Phosphorus Platform meeting in Berlin concluded that one of the main challenges for phosphorus (listed as one of EU’s scarce raw materials) is to change the phosphorus footprint of the food we eat.

Economist Geoffrey Sachs takes up both the issue of food and need for system reform, (Link to article).

TSSEF has released a version of its simulation describing how its dividend-bearing pollutant mechanisms can be implemented to drive the circular economy or P and N whilst reducing the dietary footprints of P and N. (See our simulation page)

(1) Alfredsson, E., & Wijkman, A. (2014). Prestudy: The Inclusive Green Economy-Shaping society to serve sustainability, minor adjustments or a paradigm shift.

 

MORE ON EFR

See the Swedish Sustainable Economy Foundation’s website for more information on EFR or Stephen Hinton.org

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