Normative Narratives


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Green News: Properly Managing Natural Resource Revenues–A Focal Point of Sustainable Development

Following the adoption of the Sustainable Development Goals (SDGs) by the UN General Assembly, I would like to highlight a focal point of sustainable human development–utilizing natural resource revenue as a tool for sustainable human development.

Post-2015 Development Financing:

“There’s only so much amount of aid countries can rely on. Indeed, often you can’t rely on aid in the sense of relying on certain amounts every single year… it goes up, it goes down… governments fall in and out of love with the donors… so it’s not so reliable,” said Mr. Nolan.

“At the end of the day, a State operates on the basis of its own revenue collection. And a developmentally-oriented State, a State that actually wants to promote development through infrastructure, health, education spending, needs to raise most of the money itself.”

He added that raising revenue does not necessarily mean going into the rural areas and heavily taxing people. “It actually means taxing the better off in the society and also taxing companies, both domestic and foreign, more effectively.”

Tax rates, he noted, are very low in many low-income countries, in some cases under 15 per cent of gross domestic product (GDP). This could easily be increased by a series of reforms, as well as by better structuring of taxation in the extractive industries and greater attention to the transfer of money out of the country.

Meeting UN-backed climate goals requires leaving the vast majority of natural energy resource in the ground. But sustainable development is contingent on both the intrinsic (electricity) and market value of natural resources; one would be hard pressed to find a development practitioner that does not believe this revenue source is an essential piece of the development financing puzzle.

Developed countries have had decades, if not centuries, of using natural resources limitlessly in their pursuit of development; reliable access to energy is an indispensable part of poverty alleviation, economic growth, and modernization. We are essentially asking the worlds poorest countries to forgo the cheapest form of electricity available in the name of environmental sustainability (do as I say, not as I did). To reconcile this clear mismatch between ability to pay and necessity, the developed world must do more to reach it’s target of $100 billion per year by 2020 to help poorer countries fight climate.

The “Natural Resource Curse“:

The “Natural Resource Curse”–the misappropriation of resource revenue–robs the worlds poorest countries of a needed source of development finance. Often times the natural resource curse finances armed conflicts, which cause immeasurable human suffering, roll back development gains, and make future development much more difficult (conflict is often associated with poverty and malnutrition which stunts physical and cognitive development, can prevent children from going to school, and can cause trauma that leads to lifelong psychological issues).

The Natural Resource Curse is not inevitable, but fighting it requires good governance and the security capacity to counter those who wish to extract revenues for their own privilege. Battling the Natural Resource Curse also requires effective sanctions regimes–by driving ill-gotten natural resource revenues to the black market, and attacking that black market and related international money laundering, international criminals and terrorists would lose an important source of funding.

Sanctions, of course, require broad based cooperation. There is a risk that in this era of disorder and instability, the international community might “ease up” on bad-but-stable governments. The importance of good governance of natural resource revenues shows this would be a short-sighted and ultimately counter-productive strategy for fighting international crime and promoting sustainable human development.

If the world is to simultaneously address the needs of Least Developed Countries (LDCs) and reach climate targets, we must focus on making sure LDCs leverage all the resources they do extract to maximize social welfare. Effective “South-South Cooperation“–the sharing of best practices between developing countries–would greatly enhance this effort.

Given the importance of the source, the propensity for corruption (“Resource Curse”), and the need to leave much of the existing deposits in the ground, when it comes to properly managing natural resource revenues for sustainable human development, there is little margin for error.

Natural Resources and the SDGs:

Fortunately, proper natural resource revenue management is addressed many times throughout the proposed SDG text:

Goal 1. End poverty in all its forms everywhere

1.4 by 2030 ensure that all men and women, particularly the poor and the vulnerable, have equal rights to economic resources, as well as access to basic services, ownership, and control over land and other forms of property, inheritance, natural resources, appropriate new technology, and financial services including microfinance.

Goal 5. Achieve gender equality and empower all women and girls

5.a undertake reforms to give women equal rights to economic resources, as well as access to ownership and control over land and other forms of property, financial services, inheritance, and natural resources in accordance with national laws

Goal 12. Ensure sustainable consumption and production patterns

12.2 by 2030 achieve sustainable management and efficient use of natural resources

Goal 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

16.4 by 2030 significantly reduce illicit financial and arms flows, strengthen recovery and return of stolen assets, and combat all forms of organized crime

16.5 substantially reduce corruption and bribery in all its forms

16.6 develop effective, accountable and transparent institutions at all levels

16.7 ensure responsive, inclusive, participatory and representative decision-making at all levels

Goal 17. Strengthen the means of implementation and revitalize the global partnership for sustainable development

Finance

17.1 strengthen domestic resource mobilization, including through international support to developing countries to improve domestic capacity for tax and other revenue collection

17.3 mobilize additional financial resources for developing countries from multiple sources

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Green News: US-EU Free Trade Agreement–Putting the Cart Before The Horse


Negative Externality

Original article:

Officials familiar with the EU’s proposal have told Reuters the European Union will offer to lift 96 percent of existing import tariffs, retaining protection for just a few sensitive products such as beef, poultry and pork.

“This is just the first step, but it sends a message that no sector will be completely shielded from liberalization,” said one person involved in preparing the EU offer. The official declined to be named because of the sensitive nature of the talks. Two other European officials confirmed the offer.

Tariffs between the United States and the European Union are already low, and both sides see greater economic benefits of a transatlantic accord coming from dropping barriers to business.

The United States and the European Union are seeking to seal a trade deal encompassing half the world’s economic output, hoping it can bring economic gains of around $100 billion dollars a year for both sides.

All moves to lower the cost of trade are seen as beneficial for companies, particularly automakers such as Ford, General Motors and Volkswagen, with U.S. and European plants.

EU cars imported into the United States are charged a 2 percent duty, while the EU sets a 10 percent duty on U.S. cars. Including even higher duties for trucks and commercial vans, the burden for automakers amounts to about $1 billion every year.

I have generally been supportive of the US-EU Free Trade Agreement. Two large developed economic blocs dedicated to human rights principles should be able to draft a reciprocal FTA without the adverse human rights implications of the Trans-Pacific Partnership Agreement (TPP) (whether they will remains to be seen).

However, another concern comes to mind. It is a concern that is inherent to all free trade agreements, but more-so the further the geographical distance between partners. I am talking about emissions released from the transportation of goods. In the absence of a global carbon pricing mechanism, environmental concerns are likely to take a backseat to immediate economic interests.

Trade agreements result in increased emissions from the shipment of goods. The purpose of any FTA is to increase the flow of goods by lowering the cost of doing business between partners. Emissions from trading represent a “negative externality“–a cost to society not reflected in the market price of a good. In the absence of a carbon-tax, when the only considerations for transatlantic trade are comparative advantage and transactions costs, any U.S.-E.U. FTA will naturally result in greater emissions than “socially optimal”. Remember, the main purpose of a carbon tax is not to raise revenue, but to reduce carbon emitting activities in favor of more environmentally friendly substitutes.

The E.U. and U.S. “are seeking to seal a trade deal encompassing half the world’s economic output, hoping it can bring economic gains of around $100 billion dollars a year for both sides”; this economic gain should be subject to a carbon tax. An agreement encompassing half of the worlds output, between ideologically aligned partners, is an excellent opportunity to begin implementing new human rights and environmental norms. Failure to do so mainly serves large corporations (although partly consumers as well in the form of higher prices, depending on the elasticity of demand for a good), at the expense of vulnerable groups and future generations.

With all the political rhetoric about overcoming inequality and the costs of environmental degradation, and in light of the damaging effects of human rights violations on economic development and national / global security, it would be a grave mistake for the governments involved to continue to put GDP growth above all else. This outdated priority undermines other foreign policy and domestic goals the U.S. dedicates vast resources towards. 


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Green News: Competition in the Waste-to-Fuel / Energy Industry

(Everyone is sick of hearing about this government shutdown anyways right??)

The potential of the waste-to-energy industry is a recurring topic here at NN. To quote a NYT article on the subject, “THERE is an indisputable elegance to the idea of transforming garbage into fuel, of turning icky, smelly detritus into something valuable.” It seems that energy producers and waste management companies agree, as there has been a strong push in the past decades to turn energy based waste / fuel into commercially viable alternative power source. Most articles I have reviewed so far have referred to the gasification of garbage in specially designed power plants. A new concept proposes to capture the methane released from garbage already in landfills and turning it into energy/fuel:

Clean Energy Fuels will announce on Thursday that it has started selling a fuel made of methane from landfills and other waste sources at its more than 40 filling stations in California. The company, which is backed by T. Boone Pickens, is developing a nationwide network of natural gas pumps and plans to introduce the fuel elsewhere as well.

The company expects to sell 15 million gallons of the fuel in California this year, more than double the amount of similar fuels the Environmental Protection Agency projected would be produced nationwide.

To many in the industry, the pace of the fuel’s development has been something of a surprise.

“Though California and others have been investing in the development of this fuel, I don’t think people were expecting there to be a significant public supply or access this soon — maybe not even this decade,” said Tim Carmichael, who leads the California Natural Gas Vehicle Coalition, a trade group.

A big factor in methane’s rise is the surge in natural gas production from shale drilling, which had already nudged the transportation industry to begin shifting to vehicles that can run on the cleaner-burning fuel, making it easier to meet emissions standards.

Another reason is powerful government incentives, especially in California, that have imposed strict regulations intended to help reduce carbon emissions to 1990 levels by 2020. Under the program, suppliers that reduce emissions during the production, transportation and use of the fuel are awarded tradable credits.

These and similar federal incentives are allowing Clean Energy to sell the fuel, which is called Redeem, at the same price as its conventional natural gas fuel even though it is more expensive to produce.

But because of its source, the fuel counts as renewable and takes less energy to extract and process, making it more attractive to companies seeking to burnish their green credentials

The fuel’s environmental benefits also include capturing the methane before it is released into the atmosphere. When the methane-derived fuel is burned, it is far less harmful to the atmosphere than petroleum fuels. But the methane that escapes directly from decomposing waste is more potent as a heat-trapping gas than carbon.

For this reason, many large-scale farms, wastewater treatment companies and garbage companies have developed systems to capture escaping methane — known as biogas — for both transportation and electricity, and several start-up companies are working on systems of their own. There are projects in Europe as well, where biogas for transport is more common.

Beyond the bottom line, customers are increasingly interested in how clean the fuel is, said Andrew J. Littlefair, the chief executive of Clean Energy, adding that Redeem can burn 90 percent cleaner than diesel. “We’re seeing from these heavy-duty trucking fleets, and these shippers that hire these trucking fleets, they’re really interested in sustainability,” he said. “It’s gotten to be a very important part of the sale.”

John Simourian, chief executive of Lily Transportation, which uses a nationwide network of trucks to move a range of products, including construction materials and groceries, said that only a small portion of his fleet ran on natural gas but that the company was shifting over.

Not only is the fuel less expensive, but it gives the company a competitive advantage with customers on price and environmental concerns. “It’s just a win all around,” he said.

It is interesting to note all the different avenues being explored when it comes to turning waste into something valuable and environmentally friendly–and why not? According to Sharon E. Burke, the assistant secretary of defense for operational efficiency plans and programs “Waste is a problem, so if we could dispose of waste and create energy at the same time, that would be a silver bullet.” But you don’t need to be en expert to know that trash is a problem, especially in densely populated areas (such as major cities) which produce a lot of trash; it stinks, it takes up room, and it costs money to get rid of. It is safe to say that, with the current trash disposal system, we have a “surplus of trash”.

Now imagine a world where not only is trash not a liability, but there are actually companies biding for trash (both intra-industry and inter-industry; some want it for landfill methane extraction, others to gasify the garbage directly into energy)–a trash shortage! A stream of revenue could open up for large municipalities, instead of a large bill for waste management. It is true that eventually waste-to-trash will have to get off subsidies to become truly commercially viable. However, if as a society we are unwilling to reward waste-to-energy for it’s positive externalities (such as less emissions and less garbage around), we can still hold “dirty” energy producers accountable for their negative externalities via carbon tax / cap and trade. As waste-to-energy matures and becomes more efficient, and emissions prices stabilize due to a more complete global market, the industry should eventually be able to compete without subsidies. It would appear this world is not so unimaginable or far-off as one may think.

 

 


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Green News: Army Program to Test Waste-to-Fuel Viability

https://i2.wp.com/graphics8.nytimes.com/images/2013/08/18/business/18-TRASH-JP2/18-TRASH-JP2-articleInline.jpg

Continuing the narrative on the potential of turning waste-to-energy, an Army program will offer a natural experiment of the economic viability of the concept (original article).

THERE is an indisputable elegance to the idea of transforming garbage into fuel, of turning icky, smelly detritus into something valuable.

But big drawbacks have prevented the wholesale adoption of trash-to-gas technology in the United States: incineration is polluting, and the capital costs of new plants are enormous. Gasification systems can expend a tremendous amount of energy to produce a tiny amount of electricity. Up to this point, it hasn’t seemed worth the trouble.

Mike Hart thinks that he has solved those problems. In a former Air Force hangar outside Sacramento, his company, Sierra Energy, has spent the last several years testing a waste-to-energy system called the FastOx Pathfinder. The centerpiece, a waste gasifier that’s about the size of a shower stall, is essentially a modified blast furnace. A chemical reaction inside the gasifier heats any kind of trash — whether banana peels, used syringes, old iPods, even raw sewage — to extreme temperatures without combustion. The output includes hydrogen and synthetic natural gas that can be burned to generate electricity or made into ethanol or diesel fuel. The FastOx is now being prepared for delivery to Sierra Energy’s first customer: the United States Army.

Ethanol has long been promoted as an alternative fuel that increases energy independence, and federal law requires the use of greater amounts of it. But most ethanol in this country is produced from corn or soybeans, and many people worry that the mandate is pushing up food prices. Ethanol produced from trash — or agricultural waste, as others are trying — would allay such concerns.

The military is looking for ways to reduce its oil consumption, and to make it easier to supply the front lines with the fuel it uses in all its vehicles and generators. “These days, the supply lines are in the battlefield,” said Sharon E. Burke, the assistant secretary of defense for operational efficiency plans and programs. “And we consume a lot of fuel, which makes us a big target.

The FastOx gasifier is the brainchild of two former engineers at Kaiser Steel, patented by the grandson of one of them and commercialized by Mr. Hart. “It’s a modular system that can be dropped into any area,” Mr. Hart said, “using waste where it’s produced to make electricity where it’s used.” Once it’s off the ground, he said, “garbage will be a commodity.”  

Gasification is more efficient than incineration and eliminates toxic byproducts that come from burning trash. But it was especially appealing from a business point of view because it relied on a proven technology and used materials in wide abundance: blast furnaces being abandoned as the American steel industry was collapsing.

“What was compelling from the start,” Mr. Soderquist said, “was repurposing existing infrastructure into a generator of clean energy, with a second revenue stream from people paying you to take their waste.”

Results at the Defense Department’s testing facility near Sacramento have been promising; after about four hours, one ton of waste creates enough gas to produce 1,580 kilowatt-hours of electricity, which would power an average home in the United States for about a month and a half — at one-third the emissions of coal — and 42 gallons of renewably sourced fuel. And that’s with a 12-ton-a-day gasifier; existing blast furnaces can handle as much as 2,000 tons a day.

“California produces 30 million tons of garbage a year,” Mr. Hart said. “If it decided to turn its waste into clean fuels, at that rate it could meet all its oil consumption needs and still export more fuel than some OPEC members.” That is, if the FastOx can do what no other waste-to-energy gasification technology has done before: take any kind of trash, in any succession, without additional separation or preparation.

Any waste-to-energy plan, however, must overcome a major hurdle: the wild inconsistency of the waste stream. “Until you’ve demonstrated that you can handle it all, nobody’s interested,” Mr. Hart said. “I can understand it; they’ve heard similar promises before. We’ve got 150 cities, communities and businesses lined up to be Serial No. 2. Nobody wants to be No. 1.”

NOBODY, that is, except the Pentagon. The Defense Department is the country’s largest single consumer of energy, spending $15 billion a year just on fuel.

The appeal of Mr. Hart’s Pathfinder system is that it would produce fuel on site, eliminating the need to truck in fuel to dangerous military outposts. It would also reduce the need for trash-burning on bases, which creates pollution and noxious odors that have contributed to locals’ distaste for the American presence in Iraq and Afghanistan.  As a result, United States forces in Afghanistan are working to close burn pits.

Ms. Burke added, “Something for military operations has to be really rugged, deployable, simple to use — all of those things.” Consultants and municipal sanitation officials who’ve looked at the FastOx say it meets those criteria.

“Waste is a problem,” Ms. Burke said. “So if we could dispose of waste and create energy at the same time, that would be a silver bullet.”

Whats not to love about this story? An idea for turning trash-to-fuel, a seemingly futuristic and complex concept, with its origins in a 1980s steel plant. The process does not require complex new technology, but instead relies on modified blast furnaces, which are abundant due to the decline of the U.S. steel industry. Utilizing recycled capital and infrastructure only makes waste-to-fuel more appealing from a sustainability and affordability point of view. 

The idea was scoffed at, evolved through trial and error and by chance, and today has become the first trash-to-fuel concept to be adopted by the U.S. D.o.D. With minimal government aid (the article cites $8 million dollars from the federal and state government), and a little bit of American ingenuity and determination, garbage may someday be worth its weight in gold (not literally, but as the article says it will be a commodity, not a liability).

A little more research into the D.o.D energy consumption further emphasized the importance of “greening-up” D.o.D operations:

DoD analyses over the last decade have cited the military’s fossil fuel dependence as a strategic risk and identified renewable energy and energy efficiency investments as key mitigation measures.

As the largest energy consumer in the United States, the federal government plays an important role in the country’s energy system. In recent years, a number of factors have led it to reduce fossil fuel dependence through investment in renewable energy and energy efficiency, including supply risks, high and volatile prices, and environmental impacts. In fiscal year 2010, DoD spent $4 billion on installation energy and $11 billion on operational energy. The full cost of fuel can be as high as $400 per gallon by the time it is delivered to a remote Forward Operating Base.

Recent U.S. Military operations in the Middle East have been too closely associated with U.S. energy interests. It is hypocritical to cite foreign energy dependence as a national security threat and not do everything in your power to reduce your own organization’s reliance on those very same energy sources.

I often write about the sustainability of U.S. military endeavors from an opportunity cost (programs we can’t afford as a nation because of high military spending) and human loss perspective. This form sustainability is about knowing when to use military intervention and when to pursue other means of foreign policy, within the D.I.M.E. paradigm. However, sometimes military intervention is necessary; another manifestation of military sustainability is ensuring that day-to-day operations and necessary military interventions are carried out in the most environmentally sustainable way as possible.

Furthermore, according to the NYT article, less reliance on fossil fuels would reduce the number of military deaths; “about half of United States casualties in Iraq and Afghanistan between 2003 and 2007 were of servicemen and servicewomen moving and protecting fuel convoys, according to an Army report.”

As a nation we spend a lot on military programs–far more than any other country. We also consume a lot of energy; these two characteristics of America are not completely independent of one another. Both of these forms of sustainability are about making sure every dollar that goes to the D.o.D. is truly needed an fully utilized, as it is one dollar that cannot go to a school, hospital, infrastructure project, or any other public good / program (not to mention both reforms would directly save lives). There are arguments for and against reducing military spending, which I will not get into here. It is, however, indisputable that the D.o.D. and the D.o.S. should work together in order to operate in the most strategic and environmentally sustainable way possible.

Waste-to-energy is a promising concept that could eventually transform how the military and municipalities deal with waste–I’ll be sure to keep my readers up-to-date about this exciting experiment.