New rules, new tools, new deals: Why we should proceed from ins-trument debate to society reform

1. 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

3. 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

4. CO2/CLIMATE CO2/CLIMATE WATER POISON SOIL EROSION BIO-DIVERSITY WASTE DESERTS RESOURCE DEPLETION Climate priority is undisputed – but it understates the true scope of the problem

5. DRILL BABY DRILL! Even while we are convening, they are drilling and spilling all over the place...

6. China Emerging economies OECD Both for energy as for resources, emerging countries dominate demand

7. Our kids may long back to when there was just the „simple“ climate problem ... Carbon vs. rest at this conference: Probably >85% to 15%!

9. « With your constant optimism, you are wrecking our nice gloomy spirit »

10. All EU countries have some green taxes • Witness of EU-Creativity! • Many roads to Rome! • Autonomy from neighbours! • Similar situation in new MS Examples from EEA 2005

11. 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) Europe is a worldwide fore-runner and successful exporter of eco-instruments

12. 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 Many “synergies” will help us to protect the climate AND conserve resources

13. «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. Being more general: We only must deve-lop our solutions faster than our problems This very conference bears witness about the multitude of ideas and solutions! *Lady Joan Branson

15. In 2008/ 2009, most governments found themselves with very limited options

16. South Korea and China had the highest green share in their stimulus packages • We missed most of the chances on the spending side. Now let’s try and maximize the opportunities from refinancing the debt!

17. Most states had high debts/ deficits even before crisis Crisis leads to heavy revenue losses ... ... plus huge expenses for saving banks ... plus financing Keynesian impulses (worldwide 3-4 trillion US dollars) Additional pressure from Greek and Euro Crisis... ... plus hidden risks from parafiscal shadow budgets (bad balance sheets in truth always even worse) New money for new tasks, like climate, demography ... Consolidation pressure from high debts and/or deficits is mounting • STATES VERY CREATIVE IN SEARCH OF NEW REVENUES!

18. 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“ In Germany, a lib-con government sur-prisingly embraced eco-fiscal elements • “GREEN CONSOLIDATION” is used by many other EU countries: (e.g. Estonia, Greece, Hungary, Ireland, Iceland)

19. Usually, the lead to a combination of: environmental damage, with the government paying for it economic inefficiency, because whatever is subsidized will be used wastefully and a huge fiscal burden, bringing some states to the edge of insolvency. Environmentally harmful subsidies always pose a double, if not triple waste

20. Typical areas for perverse subsidies (just look for the biggest lobbies...) DRILL BABY DRILL!

22. Weltfinanz-, Wirtschafts- + Sozialkrise HOUSING CRISIS US real estate crisis – 2nd world crisis – social crisis – sustainability crisis – elite crisis Globale Nach-haltigkeitskrise Krise der Elite

23. Financial/economic and environmen-tal crisis have very similar roots

24. Abolish capitalism? Improve capitalism? „Gan-dhism“? Abolish capitalism – worldwide idealism and selflessness – or improve capitalism? Worldwide economic and environmental crisis from uncontrolled capitalism

25. .... the economic truth: è fair competition and efficiency .... the social truth:è fair wages and social security .... and the ecological truth:è Internalisation of external effects How about a price system that will finally tell the truth in all three dimensions? • Wrong prices lead markets in wrong directions!

26. DECENCY/ EFFICIENCY • Adam Smith... • Decent markets, efficiency,fair competition • Prices telleconomic truth SOCIAL EQUITY AND SECURITY • Mill, Marx, Bismarck, Beveridge... • Social security, 8h-day, unions.. • Prices tellsocial truth ECOLOGICAL SUSTAINABILITY • Pigou, Kapp, Meadows, Weizsäcker... • Eco-regulation, green budgets • Prices tellecological truth DEMOCRACY/ HUMAN RIGHTS The new vision: A greener capitalism, with more equity and decency ECO-SOCIAL MARKET SYSTEM DECENCY/ EFFICIENCY SOCIAL EQUITY AND SECURITY ECOLOGICAL SUSTAINABILITY

27. In Asia, there seems to be openness for a progressive evolution of capitalism Source: Singapore Times, November 2008

29. Failure of media, politics, and above all, elites! Degree of nee-ded knowledge reached 80% 95% 30% 95% Acceptanceof need for action Actual imp-lementation Public, Media Politics, Business, elites The biggest impediments to action are not the deficits of our knowledge! Main focus of researchers Main topics of Green Budget Europe/ Germany Knowledgeof climate problems Knowledge of climate solutions Natural Scientist Economists, managers,engineers

30. The are more kinds of double dividend than just the classic relief for labour

31. 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

32. 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)

33. We can see important parts of this vision in the EUROPE 2020 strategy SMART GROWTH Innovation – Education – Digital Society SUSTAINABLE GROWTH Climate, Energy, Mobility Competitiveness INCLUSIVE GROWTH Employment and Skills Fighting Poverty DECENCY/ EFFICIENY SOCIAL EQUITY AND SECURITY ECOLOGIAL SUSTAINABITY

34. Crises and problems create opportunities for intellectual progress

35. Personally, I sold the big station wagon use the new company car most of the time 242 gram C02/kg With 112 gram C02/kg most eco-efficient German car (2008)

36. 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! IF YOU LIKED THIS PAPER AND OUR IDEAS:

37. 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. Some nice quotes from Budapest (1)

38. Kerryn Lang, Research Officer, Global Subsidies Initiative GSI We 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! Some nice quotes from Budapest (2)

39. “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) Some nice quotes from Budapest (3)