Swedish Carbon Tax

The more I've been looking into the culture of Sweden, the more I have gotten excited about the chance to live there for an entire year. One of the draws of studying abroad is that it will let me step into the midst of a new culture and for the first time, have the chance to try and call it my own. Traveling up until now has consisted mostly of 'visiting' other countries, with very little time simply 'being' the country. Sure, it has opened my eyes to other places and ways of viewing issues, but it always ends up by me saying "Aboriginal people feel this..." or "Jordanians would act like this..." or "Jamaicans do things this way..." It will be exciting to respond differently a year from now and be able to finally say, "In Sweden, we thought like this..."

So I've been slowly stumbling through some of the unique features of Swedish culture that I will soon be apart of, and I'm finding that Sweden is definitely a step ahead of us here in the US. Below are just a few of the rankings they have received in the past few years:
  • Climate Change Performance Index (2006 & 2007) - 1st
  • The Global Gender Gap Report (2007) - 1st
  • Corruption Perception Index (2008) - 1st
  • Index of Democracy (2007) - 1st
  • Environmental Performance Index (2008) - 3rd
  • Human Development Index (2007) - 6th
  • Global Peace Index (2009) - 6th
  • Life Expectancy (2008) - 10th
Now the ranking I was most interested in was the Climate Change Performance Index put forth by Germanwatch, a leading environmental group in Europe. And what I found was some interesting facts about Sweden's environmental policies.

One of the more important things to note about Sweden is their carbon tax. Since 1991, Sweden has implemented a carbon tax on much of their society (although certain industries do receive relief or exemption). In doing so, the government has made it more expensive to choose carbon-based solutions over green solutions. Over the years, the tax has slowly increased, transitioning their economy away from fossil-fuel dependency (currently all energy is provided by nuclear and hydro, which isn't perfect but definitely in the right direction). What is really interesting to note however is the impact this tax has had on the Swedish economy. Many critics of a carbon tax claim that such a tax would hinder economic growth and that there is no need to tax a commodity which is already increasing in price (such as gasoline prices).

Sweden poses an interesting answer to the first complaint held by critics. From 1990 to 2006, Sweden cut its carbon emissions by 9% while enjoying economic growth of 44%, showing that it is not valid to make the general statement that a carbon tax will decrease economic growth. In fact, the carbon tax has placed Swedish industries in a unique leadership role and developed a niche global market.

We can also look at the claim that energy costs are rising and a carbon tax is just an unnecessary increase to the price. In fact, as the graph below shows, when adjusted for inflation, the average price of electricity sold by the US electric power industry has not increased gradually over the past few decades. Back in the 1970s there was an increase in energy prices - which started the first movement towards solar panels and similar sustainable technologies. But we can see by 1980, the energy prices were already dropping. Although it appears that energy prices seem to be on the rise once again, we can not rely solely on the price to increase over the next few years, as many critics claim may happen.

Average Retail Price of Electricity Sold by U.S. Electric Power
Industry, 1960-2003 (Chained 2000 Dollars, from EIA)

A valid concern, however, with the specifics of a carbon-tax would be who the tax actually affects. It is one thing to tax the industries and companies directly tied to the fuel sources, but if the tax doesn't affect the consumer to some degree, they will have no monetary incentive to change their current behavior.

In order to meet the goals put forth at the G8 and eventually at COP15, aggressive initiatives need to be put in place to ensure that we make a quick transition to a less carbon-dependent planet. The specifics of such initiatives and whether a carbon-tax would be appropriate for different countries will be left for the experts to decide. But it is encouraging to see that such a plan worked for Sweden and can be used as a case study for other countries.

Further information and sources:

Sustainability in Big Business

People are often quick to jump on the big corporations and businesses out there and label them as the bad guy when it comes to environmental concerns and sustainability. And for most of the time, these complaints are probably fair and have some backing of truth behind them (and are also much needed because they ensure that we are always thinking creatively and critically to develop the best plans). But we rarely take the time to congratulate these same companies for some of the efforts they are making in favor of sustainability.

One of the recent companies is none other than Walmart.

Tomorrow, Walmart will be announcing the creation of the Sustainability Index, which will attempt to analyze and make note of each product's entire life cycle on the packaging of the product. Much like a nutrition label works nowadays, the Sustainability Index would take into account the energy, materials, and natural resources that went into creating a product along with the social implications involved along the way. The Index would then compare various products and rank one another based on a predefined system.

Check the following article for more information on the Sustainability Index.

One of the neat things I find about big companies such as Walmart is that they are able to use their size to influence their suppliers and other similar vendors to move towards a sustainable future. For example, Walmart is planning to create a Sustainability Consortium in which leading universities along with other businesses such as Costco, Target (both of which are competitors of Walmart), General Mills, and Tyson (both of which are suppliers to Walmart) will come together to discuss the Sustainability Index and it's greater use with products and in stores.

Walmart has a history of starting similar ventures in the past. A few years ago, Walmart decided that they were going to help launch CFLs (compact flourescent lights) in the US through their stores. To do so, they made it a priority to place CFLs on the shelves directly as customers walked into the store and at eye level. They were able to sell CFLs in such large quanitity that they're overall price eventually dropped and made it affordable for the consumer. Nowadays, incandescents are rarely used over CFLs and our country was able to make a switch to a more sustainable product.

The key for sustainability in business is to recognize the niche a company serves - then to use that niche to make the biggest impact for sustainable change.

Walmart recognized that their niche was selling stuff. So they decided to promote the selling of a sustainable product (CFLs) in their store to directly influence the behavior of their consumers.

It's easy for critics to dream of an ideal, sustainable society and then criticize big businesses for not fitting into that picture. But the reality of the situation is that we don't live in an ideal world, and that there are times when we have to work alongside the non-ideal to strive for the ideal.

For Walmart, having started from trying to implement a new form of light bulb into the public, they have really stepped up their plan with the creation of a Sustainability Index - which goes to show that big business is capable of striving towards a more sustainable future.

Another big business I have been reading about who has made significant changes in their company to impact the public is that of McDonalds - however the Swedish branch, not the American. Working with The Natural Step (a consulting group that started up the Master's program I will be starting in August), McDonalds systematically redirected their environmental efforts for the organization. Once an easy target for environmental activists of Sweden, Swedish McDonalds is now a wall-respected ethical company working towards a sustainable future. The CEO has gone as far as to ask "Do we need hamburgers at all in the sustainable society?" This lead to the introduction of veggie-burgers and more radical purchasing for the company's meat a few years ago.

When a company is able to question the main item that defines it's company through a sustainability lens (hamburgers for McDonalds) - then that is the point at which meaningful and actual change can truly happen.

I'm a big believer that if properly guided, human beings have the ability and desire to make this world a better place. A big problem with sustainability is that the breadth of disciplines and wealth of knowledge makes it overwhelming and difficult for us to make informed decisions. I'm hoping that my master's degree in Sweden will better prepare me to guide others towards sustainability and show that such changes are not only possible, but already happening all around the world.

Moving towards COP15

This upcoming December, members of the United Nations (along with countless NGO's, researchers, and supporters) will be meeting in Copenhagen, Denmark to discuss future global agreements for comprehensive climate change action. It will mark the 15th UN meeting between nations to address the global environmental situation.

As luck may have it, I have the fortunate timing to be studying in southern Sweden during this period and will most likely have the ability to visit Copenhagen (a 4 hour train ride from my university) during the negotiations.

The Copenhagen talks will mark the last conference from which a set of strategies and goals will be established and agreed upon (as much as possible at least) between countries. Building up to the event, known as COP15, there have been many talks and discussions, the most recent of which happened this past week at the G8 Summit in Italy.

At the Summit, leaders agreed that it is imperative to keep global warming under 2 degrees Celsius (about 4 degrees Fahrenheit). In order to reach this goal, the International Energy Agency estimates that US funding in energy efficiency and clean technologies needs to quadruple in order to meet the target. The recent stimulus package allocated 100 billion US$ to green energy investments - in fact, 400 billion US$ will need to be spent annually for the next 20 years if we want to reach this goal.

Despite understanding the true implications of what must be done to lessen our impact on the planet, it's nice to finally see the US stepping up and recognizing its' significant role on climate change and therefore taking a larger leadership role. It reminds me of a quote from Hillary Clinton: "America cannot solve the most pressing problems on our own, and the world cannot solve them without America."

However, the G8 Summit also brought up a few issues which must be further worked out before COP15. Although the US and other developed countries are currently the largest emitters of greenhouse gases, it is predicted that developing countries will soon emit more than developed countries (according to the EPA). Two significant developing countries to watch are China and India. Countries such as these claim that it is unfair for countries who have already experienced growth and significant development to limit developing countries by capping everyone's emissions levels. With populations significantly growing in Asia, it is important that whatever decisions are reached in COP15 must properly address the developmental needs of these countries while also recognizing the impact they will have on global warming.

For more information about COP15 and the issues surrounding the conference, check out the following websites:

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