Select Committee on Treasury Written Evidence


Memorandum submitted by STEERglobal

EXECUTIVE SUMMARYSTEER TOWARDS ENVIRONMENTAL AND ENERGY SUSTAINABILITY

  STEER is a proposal to stop chasing consumption higher by starting to invest:

    (a)  against climate change;

    (b)  for global energy stability via renewable energy; and

    (c)  by returning substantial funds equally across the world.

  A new "VAT style" tax could be placed on sales of imported products and the funds generated invested in projects adapting and mitigating against climate change. Uniquely, the proposal is to return an equal share of the funds to the producer nations who would otherwise be unable to afford those projects. The tax proposed, the Environmental Tax on Imports (ETI) could realise in excess of $500 billion pa and be a major stability fund. This could be an opportunity for comparatively free energy.

  "All of the world would get all of the benefit against everybody's climate change problem". See "Proposal" background summary and "chart" (s) attached.[133]

OUTLINE: PRACTICAL REASONS FOR AN ENVIRONMENTAL TAX ON IMPORTS (ETI)

  1.  Such a proposal is justified because of the difference between the values of currencies. Technology is therefore unavailable to poor countries without vastly increasing debt burdens, whereas with ETI in place, essential energy could be made available. It is also justifiable because of the lack of reflection into the international sphere of national taxation systems and the greater and greater global needs. It is necessary because:

    1.1.1    Sea level rise and energy shortages will affect the global economy, hitting the poorest hardest, but with substantial effects on the finance industry.

    1.1.2    It is still not widely understood how imminent this threat is because of the cushioning effect of floating ice which has been melting in Arctic regions adding nothing to sea levels. In the next 30 years it is estimated that the increase in sea levels will increase significantly[134], yet national budgets are already stretched in meeting sea attack.[135]

    1.1.3    Meanwhile global energy supplies previously dependent on fossil fuels must undergo a transition towards clean renewable energy, without over-reliance on bio-fuels because of the land take that bio-fuels would require (estimate: 20% of UK land area needed for 10% of emissions to be absorbed). [Bio-fuels would not reduce climate change, because they displace other vegetation which absorb CO2].

    1.1.4    The growth in consumption of fossil fuel that would occur from China and India joining in the consumer revolution indicates that we, as a global community, must think again to maximise sustainability, since the Chinese appear to be rushing headlong into the unsustainable Western growth model.

PROGRESS

  2.  The line of thinking that we must take may now have been relatively well accepted by the UK government at least, judging by the progress in spring 2006:

    2.1.1    Proposal from incoming Environment Minister, David Miliband: "We need an Environmental Contract which will be as important for the 21 Century as the Social Contract was for the 20th Century". (Referring to poverty reduction in Britain, the successful Health Service, Welfare State, etc which laid the foundation for successful periods, post WWII in UK and was a model for the world).

    2.1.2    Appointment of an Environmental Diplomat in the Foreign Office to work around the world. (Yet the UK government thinking may be based on the lower sea level rises than those in the Treasury data, Stern in January 2006).

  2.2  The good work of the UK's Stern Review in calling for input to the world wide climate change problem, and in publishing the STEER proposal on their website along with a number of international contributions should be recognised. With STEER it should be possible (now that this way of funding the research and implementation of projects on a global scale has been suggested) for quicker acceptance of the necessary change to national and international law and taxation. STEER could be politically attractive because the proposal would eventually lead to comparatively free energy and therefore extend the life of oil and gas supplies, improving the outlook for the majority of businesses. How could this be done? By investment in conservation, renewable energy and sustainable transport via incentives using the ETI.

  2.3  In a similar way to the action of President Hoover in the USA in the 1930s by constructing hydro-electric power, following boom and bust and the Wall Street crash in 1929, large-scale investment today (first in clean transport and renewable energy to reduce the human impact on the atmosphere, then in sufficient sea barriers or other measures to control the sea) on an international basis is necessary to solve the climate change and energy problem. Such investments should consist of:

    2.4.1    Funding for conservation by insulation and energy efficiency (see reference 1).

    2.4.2    Subsidised funding of micro-generation of renewable energy, increasing flexibility and reducing transmission losses (see our case study) "free energy".

    2.4.3    Increases in pumped storage (to collect wind and solar [PhotoVoltaic power] energy from those micro sources) and in hydro-electric power, wave, tidal power etc Hydro-electric is relatively the most reliable and cleanest energy source, well proven and widely used in many countries.

    2.4.4    Greater subsidy for sustainable mass transit for medium cities and larger towns and to improve rail networks.

  In these ways the longevity of oil and gas can be extended and the future protected.

  2.5  Without such an investment program we believe the market will be too slow to turn towards sustainability because of the lack of incentives, and with the rise in energy costs there would be further problems. There is also the problem that with the pace of globalisation, exchange rates could tend to equalise or the "Eurodollar" or "globaldollar" could come about reducing the obviousness of currency differences between countries as a justifiable reason for taxation. If this happened the window of opportunity for acceptance and implementation of the ETI might close.

  2.6 The need for an integrated approach to the above problems has prompted the STEER proposal for environmental and energy sustainability. By implementing an entirely new, global "green" tax, demand and inflation would be moderated in favour of sound investment and a greater return to the environment made in both rich and poorer countries with benefits to global security. A green import tax like this can be justified (if the suggested return was made) because developing countries would otherwise be unable to invest against climate change due to their currency disadvantage and their resulting debt problems. ETI is specific.

FURTHER REASONS FOR THE INTERNATIONAL GREEN LEVY, ETI

  3.1  As well as the impending rise in fuel costs, it is well documented that motor transport could be under pressure due to growth in Asia coupled with the decline in easily available oil. We do not believe that raising fuel prices much beyond 50% increase on UK 2006 levels is practical, given the impact that would have on a business world that has grown dependent on road transport. Yet crude oil has more than doubled and a figure of eight fold cost of extraction has been quoted for some reserves. Further points:

    3.2.1    The "West" (or others with power in the current economic system) are seen by the "rest" as exploitative, greedy and manipulative. Implementation of the STEER projects with substantial funds returned via projects to producer nations and using local involvement, design and labour would increase stability and global well-being.

    3.2.2    the "problem" of "aid" could be more geared to emergencies (there would be fewer of them if the investments were made against climate change/sea barriers).

    2.4.5    there are advantages for the West in slightly deterring the relocation of manufacturing industry, hardly affecting existing production in poorer countries.

    2.4.6    Reduced need for "protectionism" encourages more innovation by poorer countries in supply of goods where there are clear advantages (deterring undesirable agribusiness, or shifting populations). Investing via a mechanism frees the system from direct political intervention (see recent proposals in the UK by the Chancellor, Gordon Brown. STEER could therefore be a good adjustment to the trade mechanism).

  A restructuring of data collection, systems analysis, further research, development and allocation relating to global resources can be justified if all the above points are considered. The end of oil and gas is only one of the future difficulties—the most immediate one. The ethics of business and the economic system in use have been called into question recently (eg FT report on US Treasury investigation into manipulation 4-10-06) . There have also been calls for a convention on resource use and a code of protocols between countries and companies.[136] Certainly the time appears to be now that co-ordination of the climate change, energy and taxation issues described above needs to start—an integrated approach. Although STEER might initially sound idealistic, the prospect of reducing the future cost of transport and energy[137] for both domestic use and businesses across the world must make such a proposal an imperative, a popular investment for stability.

THE WAY FORWARD

  Some opposition from certain vested interests is likely, so further collaboration between those with suitable knowledge and experience would be needed to work with government and to press for the change in the law to provide the ETI tax (see chart).[138] While this is going on increased subsidy levels can be announced to accelerate the provision of insulation and renewable energy to reduce man's impact. Later the actual barriers against the sea can be researched, tested, developed, planned and deployed while measures such as hydrogen fuel gradually become a reality.

October 2006







133   Not printed. Back

134   IPPC have the politically sensitive job of declaring the levels and are delaying. But the University of Birmingham suggest that the cycles are natural (if accelerated by man) and likely to lead to:
Climate change-the predictions
- 90% of the world's coral reefs may be dead in 50 years.
- If all the ice in the world melted, the sea level would rise by 75 metres.
- We would have already committed the Greenland ice sheet to melting, which would cause an estimated seven metre rise in sea level. Current climate models predict a global temperature rise of 1.4-5.8 degrees centrigade by 2100. (Ed: Any rise of this magnitude could lead to unprecedented changes in climate).

- By 2100, the level of CO2 in the atomsphere will probably be twice that of the pre-industrial period. (Ed: Might this trigger further feedback of greenhouse gasses from tundra and ocean floor, ultimately leading to an over-hot Venus like atmosphere?)

 Back

135   In the Katrina incident alone that devastated New Orleans, "one year on" in August 2006 the figure spent is $107 billion, yet 300,000 residents are yet to return, half the hospitals are still closed and 76,000 homes have no electricity. Many UK areas are vulnerable and the costs could be greater, borne by a much smaller nation. Back

136   Quakers and Business annual conference, November 2005. Back

137   The recent doubling of energy costs for householders in UK might result in fuel poverty for very many affecting a wider section of the community. Yet without STEER we estimate that there could be a further doubling within three years and again inside five years-an eight fold increase altogether, which would be beyond the means of the bulk of the population. Back

138   Not printed. Back


 
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