Tuesday, August 17, 2010

Paying to clean up our own mess... taking a look at carbon taxes and plastic pollution taxes

Ben Kritz made a good point about Juan Ponce Enrile's calls for a shift to a compensatory character of funding from The Adaptation Fund, established by the Parties to the Kyoto Protocol of the United Nations Framework Convention on Climate Change (UNFCCC).

Internationally, official delegations sent by the Philippines to negotiate the international climate treaty have taken strong positions to treat climate finance not as aid or charity but as compensation to be paid by countries responsible for the problem. This, I believe, is the correct stance.
In fact, legally, I would analyze and look at this matter as a "tort". Harm was inflicted on our people, and more injury is expected in the future arising from impacts emanating from the profligate and polluting practices and lifestyle of developed countries. There is a climate debt that needs to be paid and reparations are in order.
Unfortunately, laudable positions taken by the Philippines abroad on climate-related finance are not reflected here at home. We still conduct our business with a beggar's bowl. We accept climate-related concessional loans from countries responsible for this climate crisis.  We accept climate-related grants with conditions that are onerous and injurious to our financial health and ultimately, to our people's welfare.  We have exercised national leadership so poorly, particularly with the agency that is tasked to be leading and coordinating the national climate effort.
Ben had this to say:

When the Philippines decides to clean up its own act and enforce what environmental/anti-pollution laws it already has on the books, it will then be in a position to dare talk about "compensatory funding." This was one of my biggest beefs with GMA last year -- the environmental harm that causes direct human harm in this country does NOT come from across the seas.
Her position, which is what JPE seems to be agreeing with, was that global environmental effects -- of which Ondoy would be an individual example -- are made worse by the countries that are responsible for the greatest amount of pollution that contributes to global warming, and that the countries who do not contribute significantly to that problem should be compensated proportionally in order to withstand the effects.
Okay, so on principle, that is not completely off-base. But what aggravates the effects of a typhoon (or even an ordinary heavy rainstorm) here? It is the LOCAL pollution, poor infrastructure planning and design, poor land management, etc. If all else was equal, i.e., if the Philippines was rationally managing its own environment, then yes, the idea of 'balance in mitigation' might well come into play. But singing the sad song about "we suffer from the effects caused by the rest of the world" just doesn't wash at this point. 

 And just now, I came across Alex Magno's column which talks about the introduction of a carbon taxes:

In our own little economy, we will need to quickly build a dozen or so power plants over the next few years to avert a power shortage. Since we have renounced nuclear power, nearly all these plants will use fossil fuels — even as we all know demand will soon outstrip supply of fossil fuels over the next decade.
We can no longer rely on token gestures aimed at mitigating climate change. At the rate we are going, the Antarctic might melt away before we actually begin reversing the greenhouse effects of the carbon we emit.
The “inconvenient truth” now requires taking inconvenient steps to confront it. Nobel laureate Jeffrey Sachs, who now advises the UN secretary-general, has proposed a truly inconvenient tool to wield against the challenge posed by climate change.
We will make no progress in the battle against climate change, says Sachs, if people can freely emit carbon without penalty. He proposes that all governments now introduce a “carbon tax” on all activities that result in carbon emissions. That will create greater market impetus to either shift to renewable energy or to at least reduce the carbon footprint enterprises or private citizens make.
If we charge a road-users tax on people who use the roads, a sin tax on people who consume unhealthy products and every sort of property taxes on people who own land, why not impose a tax on carbon footprints? The revenue from such a tax will provide enough money for really meaningful public investments in reversing climate change. Let’s give this idea some serious thought.
What are carbon taxes?  Here's a definition from the Wikipedia:
A carbon tax is an environmental tax that is levied on the carbon content of fuels.[1] Carbon atoms are present in every fossil fuel (coal, petroleum, and natural gas) and are released as carbon dioxide (CO2) when they are burnt. In contrast, non-combustion energy sources—wind, sunlight, hydropower, and nuclear—do not convert hydrocarbons to carbon dioxide. A carbon tax can be implemented by taxing the burning of fossil fuels—coal, petroleum products such as gasoline and aviation fuel, and natural gas—in proportion to their carbon content. Accordingly, a carbon tax increases the competitiveness of non-carbon technologies compared to the traditional burning of fossil fuels, thus helping to protect the environment while raising revenues.
From what I can understand, this will in effect force people to shift to non-carbon or non-combustion energy sources.

Although, certainly a good idea, one would have to consider that non-combustion energy sources are not easy to come by or affordable -- unless, of course, the carbon tax is expressly levied to subsidize the shift to non-combustion energy sources.

Now, if you said that carbon taxes will do just that, you'd have to figure out if we have enough rich people or industries who'll basically pay the higher priced combustion energy sources.  Otherwise, we'll just end up with higher priced fuels and energy whether it is combustion based or non-combustion based.

In any case, I think as far as taxing as a way of curbing the use of products and processes that are harmful to the environment is concerned, we can also look at taxing producers of plastic wastes (companies and consumers of products that come in plastic bags, pouches, sachets, and bottles).

This represents a larger base for taxation.  Just consider, if you will, the amount of revenue you can raise from taxing the use of plastic sachets by figuring it from the volume of plastic sachet products that are produced and marketed on a daily basis.

Here's one estimate:
Giant consumer goods manufacturer Unilever claims that every day, it sells 160 million products.  Assuming that the sales volume of the other manufacturing giants, Procter & Gamble and Nestle is in the vicinity of Unilever’s, that would be some 500 million products sold daily.
Let’s peg a conservative estimate that 10 percent of all products sold are in plastic sachets, then that’s 50 million.  That’s 50 million plastic sachets and pouches that will eventually find its way to our oceans, waterways, landfills and drainage systems ready to clog the free flow of water and trigger floods or kill marine wildlife.
But it is really reasonable to think that of the 500 million products sold daily by the three giants, only 10 percent of are in tiny plastic sachets?
And here's another way of figuring it.
According to Unilever’s vice president for corporate planning Chito Macapagal, 70% of Unilever Philippines 2007 sales is from the sachet market. That’s 70% of 30 billion pesos, or 21 billion pesos three years ago. That’s nine zeroes following 21. The company was enjoying double digit growth rate from the previous year, so expect that by now those numbers are now not just big, but big big.
Can you picture how many sachets 21 billion pesos’ worth of Unilever products are? Well, let’s see. Which brands of theirs have sachet variants? Sunsilk, Creamsilk, Rexona, Clear, Knorr, Lady’s Choice, Close-Up, Best Foods, and Vaseline come to mind. 
Moving on, 21 billion pesos in sachets, if say, the average price for any given sachet were 20 pesos conservatively (I say conservatively because first, most of those mentioned cost less than 20 pesos, and second, 21 billion pesos in Unilever’s sales is at supplier-to-distributor prices, which are lower than retail), would be equivalent to 1,050 million sachets. If a given sachet has 10mL of product inside, it’s like they’re producing- no, selling at least one Olympic size swimming pool’s worth of product every 3 months. That doesn’t sound like much, but you could shampoo all 90 million Filipinos 20 times over with that much shampoo, if it were all shampoo.
What’s difficult to imagine is the sheer quantity of packaging material that went into the making of all those sachets. If 1,050 million sachets were sold, then the waste would be 1,050 million multiplied twice to include front and back of the sachet, times 3 inches by 4 inches (I took an estimate of a Clear shampoo sachet), which equals 25,200 million square inches. This is the equivalent of about 16.26 square kilometers worth of sachet or wrapper material. Now, before you do take the initiative to shoot me for driving you nuts with numbers, picture this: 16.26 square kilometers of sachet is enough to cover all of Ilog Pasig.
Taxing plastic containers can easily generate several billions of pesos in additional funds which can fund the acquisition of technologies that will help reduce the amount of plastic trash, clean up our drains and rivers, etcetera...

Moreover, it will also force people to shift to the more ecologically sound practice of using reusable containers for all sorts of products.

1 comment:

Energy Audit said...

Your post has shown clear information about the carbon taxes and the plastic pollution taxes.

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