©Robert I. Bell 2015
Robert I. Bell presentation at round table: Enclencher la transition écologique de l’économie maritime – regards croisés –ParisClimat2015 – Objectif Océan Les propositions de l’économie bleue Déroulé de la journée du 8 juin, 17h (5 :00 pm) – Agence Spatiale Européenne, Paris (simultaneous translation in French)
Thank you, Nicolas, for inviting me.
We are here to help make COP21 a success and to save the oceans. I have an idea for both.
CO2 from fossil fuel, producing both acidification of the oceans and global warming, is not the whole problem, but is perhaps the biggest part. Punishing CO2 emissions, however, is NOT the solution. So far, it hasn’t worked. The solution is in switching investment from fossil fuel to renewables.
I quantified in Le Monde a few months ago a simple metric to clarify how big the switch has to be: Le Ratio Espoir/Deluge = The Hope/Doom Ratio. The total investment in green energy and conservation divided by the total investment in fossil fuels. It is roughly US $250 Billion divided by $ 1 Trillion, i.e. about ¼. But we need at a minimum the inverse of that number. According to the International Energy Agency, we would need an investment of $1 Trillion per year into renewable energy for quite a few years. Others put the figure higher.
How do we get the money? Not by the way we have been going. We tried the concept “the polluter pays” with Cap and Trade. It didn’t work. That system would have combined the integrity of governments with the efficiency of markets. However, what we got was: the efficiency of governments combined with the integrity of markets. The price put on carbon became a joke, in a range of € 5 to 7.
That leaves a carbon tax, to punish fossil fuel use. Good luck! A leader who implements it in a major country usually needs to find another line of work quickly. We’ve seen that in Australia, we’ve seen a back down from it in France—by the current President, and the previous one.
The concept the polluter pays could work, maybe, for strong people holding sway over weak ones. But we are the weak people, the oil companies are the strong ones. We are going to make them pay?
Last week six fossil fuel company executives signed a joint request for some kind of a price on carbon. The PDG of Total suggested $40 per ton of CO2. This would replace coal by natural gas, produced by… the six companies.
Their carbon tax, however, could just keep them pumping their natural gas produced CO2 in the air longer.
How much longer? One answer comes, amazingly, from Saudi Arabia. Their Oil Minister, Ali al-Naimi, has said that 25 to 35 years from now his country, Saudi Arabia, which has a lot of money–our money–for investment, will use solar power and no longer burn oil. They will even export solar power, maybe to us, if we don’t build up our renewable energy as fast they do. Why would we be slower? Maybe because we had a carbon tax to promote natural gas as a bridge fuel.
We meet here not to save oil companies, but oceans. We should simply reward what we want rather than punish what we don’t want.
To save the Oceans and the planet, we need a tsunami of money breaking into renewable energy. I have suggested elsewhere that we tax-shelter profits from all investment in renewable energy. Tax shelters worked, perhaps sometimes illicitly, for the internet, cell phones, e-commerce. Why not for saving the Oceans and the planet from global warming? KPMG, the accounting giant, has detailed the tax incentive plans of over 30 countries. China’s massive build-up in renewable energy is in part a result of a significant series of tax shelters and deductions, some of them quite complicated, from corporate income tax for Chinese companies in the sector.
Not discussed by KPMG, but I have written about it in Les Echos and La Tribune, is that the shale gas boom in the US is largely a result of a tax dodge dating back to 1916, allowing total depreciation of the hole in the fiscal year it was drilled. As a result, the CEO of one of the main drillers, Chesapeake Energy, a couple of years ago proudly proclaimed that his company had drilled and fracked some 16,000 holes starting in 1989. Due to the accelerated depreciation, they paid almost no federal taxes during that period. But because of Chesapeake and a few other drillers, the US got its shale gas boom. They also took advantage of another old tax dodge, the Oil/Gas depletion allowance: 15% of the gross income is tax sheltered. Why not, for example, use the same concept for inverted holes—otherwise known as wind turbines. Full depreciation during the year they are installed and hooked up, and loss carry-forward (sort of the equivalence of the oil depletion allowance) for a number of years? But what about tax revenue losses? The US shale boom, while it lasted, produced a local and federal tax revenue bounty—taxes on wages, local businesses, etc.– even though the drillers paid essentially nothing. Besides, in Europe, the oil companies have volunteered to be taxed on carbon. Total , BP, Shell: Thank you!
Are there any other tax shelters that could help our Oceans? Sure, Exclusive Economic Zones, maybe transformed into Special Economic Zones, could be 200 mile wide expanses for fleets of floating wind turbines. There is already a project for over 100 of them off Hawaii. The whole Atlantic facing the EU could be armadas of energy.
We know that COP21 will produce a series of national CO2 reductions targets. Translate those into Renewable Energy Portfolio Standards, quotas, and combine them with national, or EU wide, tax shelters, and COP21 will save the Oceans, save the whole planet.