Maine's bold climate action plan will require money, commitment - Press Herald

Maine's bold climate action plan will require money, commitment - Press Herald


Maine's bold climate action plan will require money, commitment - Press Herald

Posted: 29 Nov 2020 01:00 AM PST

Spencer Thibodeau, left, and Troy Moon look over a new electric vehicle charging station in front of Portland City Hall on Nov. 19. Thibodeau, a city councilor who chairs the panel's Sustainability & Transportation Committee, and Moon, Portland's sustainability coordinator, spoke at a press conference that touted the city's drive to install new electric vehicle charging stations throughout Portland. In addition to City Hall, new chargers have been installed at Portland International Jetport and Payson Park, and the city plans to install more at the Back Cove parking area and on High Street. Gregory Rec/Staff Photographer

Flooded buildings and eroded beaches. More illness from ticks, mosquitos and high heat. A reduced lobster harvest, with crustaceans moving northward to cooler water. Down East weather that resembles present-day Rhode Island.

Those are some of the ways scientists say Maine will change over the next 30 years unless substantial steps are taken now.

To help slow the change, they say Maine urgently needs to slash greenhouse gas emissions and prepare for the myriad impacts of a climate that's changing so quickly, it poses a cascading threat to the health, prosperity and way of life of every resident and enterprise.

The primary way to do it is to encourage a quick pivot from gasoline and heating oil, Maine's dominant, longstanding energy options for fueling cars and warming homes. In their place, electricity from renewable generation such as wind and solar, coupled with evolving storage technology, will power electric vehicles and efficient heat pumps.

These areas get special attention because transportation accounts for 54 percent of Maine's climate-warming emissions, followed by 19 percent for home heating.

But it's complicated. If electrifying the economy makes power too expensive, not enough people and businesses will make the transition.

That is a summary of the conclusions, solutions and challenges contained in Maine's new Climate Action Plan.

Dubbed "Maine Won't Wait, a Plan for Climate Action," the document serves as a four-year blueprint aimed at blunting the impacts of climate change while building the foundations of a clean-energy economy. The final plan is scheduled to be released publicly by the Maine Climate Council to Gov. Janet Mills and the Legislature during an online presentation Tuesday.

It also will be available on the Maine Climate Council's website.

Mills also is expected to speak about her administration's climate actions to date and outline legislative priorities for next year based on the plan's recommendations. In addition, the governor is expected to outline what her office calls "an aggressive new economic goal for Maine," aimed at addressing both climate change and recovery from the pandemic.

MAINE'S CLIMATE CHOICE

The climate plan was assembled over the past 15 months by the Maine Climate Council. Both are creations of recent state laws aimed at cutting carbon dioxide emissions to 45 percent of 1990 levels by 2030, and 80 percent by 2050.

Despite restraints around the coronavirus pandemic, the council was able to amass information from 230 volunteer experts and interested stakeholders who formed six working groups and a scientific subcommittee. The general public also weighed in with comments and suggestions.

But now, the hardest work is just beginning.

Taking the suggested steps will cost untold billions of dollars in public and private investment over the period. And they will require personal, political and institutional commitments that may be hard, if not impossible, to sustain.

For starters, any hope for progress will be challenged by the twin specters of the global pandemic and a state-budget revenue gap forecast to be $1.4 billion. Add to that deep partisan divides about the role of government and the acceptance of basic science.

But doing nothing also could extract a steep cost, the climate plan emphasizes. Communities may bear $17.5 billion in flood damage by 2050, as well as job losses in coastal tourism. Treatments for tick-borne Lyme disease will climb, and $600 million in annual revenue from fisheries and aquaculture will be at risk from an ocean that's warming and becoming more acidic.

Curbing emissions doesn't have to sap economic activity, according to the plan. It cites research showing that Maine reduced gross carbon emissions by 32 percent from 2005 to 2017, while its gross domestic product grew by nearly 5 percent.

Moving toward a so-called clean energy economy can actually help jump-start a recovery following the coronavirus pandemic, according to a report issued early this month by the Mills administration. Building on a process already underway, thousands of new jobs can be created in businesses that insulate homes, upgrade heating and lighting systems and develop solar and wind projects, for example.

Some of that economic activity will spring from policies already enacted by the Democratic-controlled Legislature and championed by Mills. For instance, mandates to increase the share of renewable power utilities must buy already has triggered hundreds of millions of dollars in investment, chiefly for solar projects.

Aside from tax credits, most of that is private money. But comparable investments will be needed to spur actions that businesses won't take on their own over the next five years, and that many Mainers simply can't afford.

Examples include weatherizing 17,000 homes, subsidizing electric vehicle purchases and the construction of charging stations, and increasing incentives to coax homeowners with oil and propane heating to install 80,000 more high-efficiency heat pumps, as well as 35,000 whole-house heat pump systems.

AN EXPENSIVE PLAN

To pay for it all, the plan suggests a variety of funding options and concepts. The General Fund and revenue bonds are two examples. One-time money, such as the Volkswagen emissions settlement and millions of dollars from the New England Clean Energy Connect power line settlement for electric vehicle rebates, also could help. The plan even suggests looking at ways for tourists, who predominately arrive by car, to foot some of the bill.

"This is all ambitious," said Hannah Pingree, who oversaw the climate council's work as director of the Office of Policy Innovation and the Future. "We wouldn't have set these goals if they weren't achievable. But it will take funding and action."

Pingree, a Democrat who previously served in legislative leadership, is well aware of the political obstacles facing the plan. Electric and natural gas customers already help pay for energy-savings programs run by Efficiency Maine through a small charge on their bills. Pingree knows there will be resistance to asking customers to pay more, and that increasing rates would be counterproductive.

"The whole plan requires stable and affordable electricity prices," she said.

That understanding is shared by Rep. Seth Berry, D-Bowdoinham. Berry chairs the legislative committee that handles energy and utility matters.

Because 84 percent of Maine's total emissions come from transportation and buildings, Berry said, the solution is to power those sectors with clean electricity. But the power has to be more affordable than the gasoline and fuel oil it replaces. The big question is how to make that happen quickly.

Asked if he thinks the climate action plan can be carried out as intended, Berry replied, "Not without greater clarity on funding."

Perhaps the best hope of receiving a meaningful slug of new money rests with the federal government and some form of pandemic relief package in 2021.

During the 2010 recession, the Obama administration earmarked billions of dollars in stimulus money to weatherize homes and boost clean-energy projects, although the number of jobs created fell short of expectations. In Maine, federal stimulus money helped pay for the Three Ring Binder rural broadband expansion and Central Maine Power's smart meters. It gave homeowners rebates to weatherize homes and upgrade heating units.

President-elect Joe Biden ran on an ambitious climate-action agenda, although it remains unclear how the makeup of the new Congress will affect those ambitions. Still, Pingree noted that her mother, Democratic U.S. Rep. Chellie Pingree, and Republican U.S. Sen. Susan Collins both serve on their respective appropriations committees and will play key roles in any recovery package that emerges from Congress.

CLEANER HOMES AND CARS

The heating, cooling and lighting of buildings generate nearly one-third of Maine's greenhouse gas emissions. But even with additional money, weatherizing 17,000 homes by 2025, and 35,000 by 2030, would be a major challenge. Even now, insulation contractors have trouble finding enough skilled laborers willing to suit up in coveralls and respirators to crawl into dank cellars and sweltering attics to do the careful work of air sealing.

The pace of work and level of investment would have to increase dramatically.

In 2018, Efficiency Maine issued rebates totaling nearly $1.5 million to 2,391 home projects, to which homeowners contributed $2.9 million. Each home can qualify for up to $3,500 in rebates for air sealing and insulation.

On the low-income side, a total of 750 homes were weatherized in 2018 using $9 million in federal funds, according to the Maine State Housing Authority. In 2019, $6.7 million was used to weatherize 415 homes through the Home Energy Assistance Program, MaineHousing said.

A transition to electric vehicles, a strategy the plan labels "Embrace the Future of Transportation in Maine," will require an even heavier lift. The plan notes that Maine is a rural state, but it overlooks the fact that seven out of 10 vehicles Mainers drive are trucks and variously sized sport utility vehicles.

Despite that preference, the plan calls for putting 41,000 electric vehicles on the road by 2025, or 28 percent of new sales. The state's current market share for such vehicles is roughly half a percent.

That's not a realistic goal, according to Adam Lee, chairman of Lee Auto Malls. Lee, who's also board president of Maine Conservation Voters and a strong advocate of electric vehicles, said he laments that no car dealers were on the council despite the outsize role of transportation in climate change mitigation.

"The goals and objectives seem aspirational," Lee said. "I'm not sure how we can sell 41,000 electric vehicles when I had a hard time selling 30 Nissan Leafs a year."

Lee said he expects interest in electric vehicles to grow soon, as manufacturers release more models that are less expensive and have better battery range. That's exactly what General Motors is promising. It recently announced that its battery technology breakthroughs would boost range as high as 450 miles on a single charge. It pledged to have a small, electric SUV for sale under $30,000 by 2025.

Today, the range-cost equation offers limited affordable options. One example is a 2020 Nissan Leaf Plus, with a rated range of 226 miles. It has a sticker price of $28,700 after state and federal rebates, according to Efficiency Maine. But Lee said manufacturers will need to increase subsidies to move more electric vehicles. He noted that Nissan recently started offering a $199-a-month lease deal on the Leaf, although it's for a basic model with a smaller battery and less range.

'BANG FOR THE BUCK'

The issue of how to finance the rapid switch to electric vehicles isn't well addressed in the climate plan.

Notably, the plan demurred on endorsing a compact of East Coast states including Maine called the Transportation Climate Initiative. That approach would require fuel distributors to bid into a shrinking limit, or cap, of greenhouse gas emissions. Money raised through the process would go to states to help fund electric vehicles, mass transit and other priorities.

Environmental advocates are for it. Acadia Center, a clean-energy advocacy group with an office in Maine, is pushing for Maine to support what it calls "the only policy proposal that would reduce emissions while providing a stable and sustainable revenue source."

But the initiative would raise gasoline prices, which has attracted strong opposition in some states. It's a nonstarter for the Maine Policy Institute, which lobbies on free-market and individual freedom issues.

Jacob Posik, the center's communications director, said many people want to address climate change, but that support falls off when they hear about the specifics to pay for it.

"From a free-market standpoint, we're opposed to subsidies and credits for anything," he said.

Today, most residents can qualify for a $2,000 state rebate, on top of a $7,500 federal rebate for many plug-in cars. But Posik said it would be better to wait for manufacturers to make electric vehicles that are price-competitive with gasoline models, as General Motors is promising, rather than increasing government subsidies.

"We may have the right goals and ideas," he said of the plan. "But how to put them into action, with the budget crunch we have now, will be a daunting task."

In an era of tight resources, Maine should focus on actions that produce the greatest benefits for the lowest costs, according to Tony Buxton, a lawyer who has represented the Industrial Energy Consumer Group for many years. They include heat pumps, LED lighting and computerized motor controls in industry.

The manufacturing trade group supports the electrification of heating and transportation, but it estimates the electric grid will have to expand by three to five times to accommodate enough solar and wind to meet the demand.

"It is a grave error to not do the biggest-bang-for-the-buck stuff first,"Buxton said.

Correction: This story was updated at 10:30 a.m. Monday, Nov. 30, to correct the name of the Maine Policy Institute.

Comments are not available on this story.

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Paying for the Pandemic and a Just Transition - Transnational Institute

Posted: 30 Oct 2020 05:02 PM PDT

Methodology: Overview Table

SPENDING

The spending in Table 1 are sometimes estimated annually and sometimes as one-off shocks to finances. The final column, 'Spending /Revenue each year over the next 10 years ($ billions / year)' makes these estimates consistent by spreading any one-off expenditure over a 10-year period. In order to spread the costs over 10 years, I use long term interest rate forecasts from the OECD. Specifically, I take the forecast for 2020Q1 for the projected long-term interest rates of government bonds maturing in ten years. The forecast assumes a second wave of COVID-19.

To find a single global long-term interest rate, I find an average of the long term interest rates for the following countries: Australia, Canada, France, Germany, Italy, Japan, Korea, Mexico, UK, USA, India, South Africa and the EA17, as these are the countries for which the OECD provide data for. They provide a fairly good sample for a global interest rate. The average interest rate from this is 0.023 as outlined in the online appendix.

I have assumed that the 10 year bonds work like a coupon bond with fixed payments for 10 years which completely repay the debt and interest by the tenth year. Any debt taken today (P) (or in the first quarter of 2020) can therefore be transformed yearly coupon payments (C) that pay off the debt after 10 years according to the following equation:

PROPOSALS

As discussed in greater detail below, some of the proposals take into account feedback effects and behavioural changes from tax changes, while others don't.

The vast majority of this $9.45 trillion-dollars is raised by global governments from the private sector. However, there are a set of public policies, where some of the revenues will be raised from the public sector in the Global North:

  • PROPOSAL EIGHT: A debt jubilee, of the size called for by UNCTAD, could free up the equivalent of £100 billion a year for the Global South over the next ten years.
  • PROPOSAL NINE: A new issuance of Special Drawing Rights, of the amount requested by Progressive International, could release the equivalent of $ 250 billion per year to the Global South for the next 10 years.
  • PROPOSAL TEN: A new Marshal Plan, of the size called for by UNCTAD, could raise the equivalent of £50 billion a year for the Global South over the next ten years

Why do I include these on the revenue rather than the expenditure side of our table? The most obvious answer is because these are specific proposals for raising money by governments. Second, to the extent that some of these proposals will increase government debt in the Global North, the impact will be relatively small. Some of the debt jubilee will hit the wealth of private rather than public creditors, who make up around 17% of the stock of debt owed by IDA countries (poor countries eligible for concessional World Bank finance through the bank's "International Development Association").122 The Special Drawing Rights, as a monetary injection, will not directly impact government budget sheets. Lastly, the Marshall Plan, spread across budgets in the global north over 10 years can be easily raised by the wealthiest countries through new debt via public financial institutions. Proposals 8–10 are just one-off measures and so I spread these out over the 10 years by simply dividing each proposal by 10 (i.e. I do not use an interest rate to discount future income).

Methodology 1: Spending Required to Fight the Pandemic and a Just Transition

SPENDING THREE: The cost of fighting climate breakdown across the globe is $1–$3 trillion a year

The references for this comes from a report in The Intercept: "In 2015, the England-based Centre for Climate Change Economics and Policy issued a report calling for up to $2 trillion in annual climate financing. Another estimate by the Intergovernmental Panel on Climate Change calls for $2.38 trillion in annual funding for energy sector development alone. Another 2015 report, produced by the World Bank and consultancy firm Ecofys, said financial transfers "could reach up to US$100–$400 billion annually by 2030, possibly increasing to over $2 trillion dollars by 2050." A 2011 U.N. estimate put the "annual financing demand to green the global economy" in the range of $1.05–$2.59 trillion. The World Economic Forum estimated in 2013 that there needs to be at least $700 billion in green infrastructure spending per year by 2020, separate from the $5 trillion annual investment in traditional industries".123

SPENDING FOUR: Between $1.5–$7 trillion per years between 2015 and 2030 is needed to achieve the sustainable development goals.

The World Bank provide a summary on the costs of achieving sustainable development goals:124 "A major recent costing exercise by the World Bank estimates that low- and middle-income countries face investment needs of $1.5 trillion to $2.7 trillion per year (4.5–8.2 percent of their combined GDP) between 2015 and 2030 to meet infrastructure related SDGs, depending on policy choices. Costing exercises have also been carried out by other international institutions, but the results are not easily comparable.3 The IMF estimates that additional spending of about $1.3 trillion (2016 US$) per year during 2019–30 is required to make meaningful progress toward the SDGs related to infrastructure in low-income developing economies and emerging market economies combined, and another $1.3 trillion for the SDGs related to health and education (Gaspar et al. 2019). The UN estimates that $5 trillion to $7 trillion per year between 2015 and 2030 is needed to achieve a set of SDGs globally, with the estimates being $3.3 trillion to $4.5 trillion per year in developing countries, mainly for basic infrastructure, food security, climate change mitigation and adaptation, health and education (UNCTAD 2014). The World Health Organization (WHO) estimates the additional annual investment needed to meet the SDG on health in low- and middle-income countries is about $370 billion (Stenberg et al. 2017; WHO 2017). The Food and Agriculture Organization (FAO), the International Fund for Agricultural Development (IFAD) and the World Food Programme (WFP) jointly estimate that an average of $265 billion per year is needed during the period 2016–30 to sustainably end hunger (FAO, IFAD, and WFP 2015)."

SPENDING FIVE: In the United States alone, campaigners have estimated than anywhere between $5.9 to $14 trillion of reparations for slavery are required.125

The methodology behind this estimate is set out in a paper by Thomas Craemer. He adds up how many hours all the slaves worked in the US from 1776 (when the country was official established) to 1865 (when slavery was officially abolished). He then multiplies the amount of time they worked by average wage prices at the time, adding a compounding interest rate of 3 percent per year (more than making up for inflation). There is a range because the amount of time worked isn't definitive.

Methodology 2: Taxing the rich: global wealth taxes

PROPOSAL ONE: A global wealth tax could raise $4.417 trillion a year

The global wealth taxes can be found on page 982 in Capital and Ideology by Thomas Piketty and in the methodology section p33. Piketty and in the methodology section p33.

The proposal is that the richest 0.1% would pay an effective rate of 10%, the top 1% would pay 5%, the top 10% would pay 1% and the bottom 90% would pay 0.5% effective tax rates on their stock of wealth. Piketty takes into account the fact that very quickly the tax would reduce top wealth shares and potential revenues. He therefore assumes that after implementation, the richest 0.1% would have 2% of the wealth, the top 1% would have 10%, the top 10% would have 30% share and the bottom 90% would have the rest. Multiplying these rates by each fractile's share of wealth gives an aggregate effective tax rate for the whole population, which he works out as 1.225%.

I multiply this effective tax rate by the total global wealth estimate for 2019 from Credit Suisse data ($360.6 trillion) to find the $4.417 trillion a year in revenues.126 Piketty says that his wealth tax proposal will raise roughly 5% of national income/GDP. Given that global GDP is $87 trillion a year, 5% of this is $5.2 trillion – slightly more but roughly in the same ball park as our estimate.127

1a. A billionaire wealth tax could raise $70 billion a year128 to $100 billion a year129

The $70 billion estimate comes from a 2019 report by Oxfam, which argues for a small 1.5% tax rate on any individual net wealth (i.e. wealth minus debts) over a billion dollars.130 This is a tax on the stock of wealth. The underlying database for this tax comes from the Forbes billionaire rich list.

The billionaire tax proposal is interesting as it outlines a political strategy for creating the equivalent of a global wealth tax, even without a global fiscal authority to raise the tax. The proposals architect, Didier Jacobs, argues that firstly, billionaires could be asked by campaigners to donate the money, which would be credited against a future global billionaire tax. From this, hopefully a few would commit. The second stage of the tax would enable the UN general assembly to call all the worlds billionaires to give 1% of their wealth. Lastly, national governments could implement this as a tax: all the billionaires that have assets in their country have to give 1% of their wealth, which would be channelled through a global fund.

The $100 billion estimate comes from a report by Move Humanity, calling on billionaires to give at least 1%" of their wealth each year, or be taxed if they don't. The report doesn't outline the methodology behind this estimate.131

PROPOSAL TWO: Taxing the capital income from offshore private wealth could raise $125 billion a year

The estimates for the stock of hidden wealth offshore also come from Zucman (2014)132;  $21–$32 trillion Henry (2012); $11 trillion (OECD). There are two estimates for the revenues lost by governments due to this tax evasion with similar conclusions: a paper by Zucman (2014) estimates the losses at $189 billion a year133 and a report by Tax Justice Network134 estimates it at 190 billion. I take the estimate from Zucman, as this breaks the estimate down into revenues from income from wealth, rather than the stock of wealth itself. I only use the estimate from income from wealth as this is consistent with also implementing a global wealth tax.135

See here for an overview of Zucman's methodology.

Lastly, none of these estimates take into account potential tax revenue losses from tax evasion and avoidance, the costs of administration or feedback effects from the other policies in the report. This is beyond the scope of this report, and would require a more detailed model on these interactions. The focus here is just on static estimates.

Methodology 3: Taxing Big Corporations: from pandemic profiteers to treasure islands

PROPOSAL THREE: An excess profits tax on the 32 most profitable global companies would raise $104 billion a year.136

The figures for the excess profits tax comes from a September 2020 Oxfam report137 and the methodology for the tax from a July 2020 Oxfam report, based on the design by Prof. Avi-Yonah.138 Excess COVID-19 profits are defined as 2020 net profits that exceed the four-year (2016–19) average of the particular company. The tax would only apply to large corporations with $500 million or more in annual gross receipts. The resulting excess profits after credits would be taxed at 95 percent, with total combined tax liability (of regular corporate tax and excess profits tax) capped at 80 percent of net earnings. This tax would only apply during the duration of the pandemic. As this only applies to the top 32 most profitable global companies, it underestimates the revenues that can be raised globally.

The Oxfam proposal differs from the one put forward by Professor Allison Christians and Dr. Tarcísio Diniz Magalhães139, who argue that an excess profits tax should not be limited to just COVID-19 profits. Following what the OECD is trying to do in its project, by defining routine and non-routine profits, they argue in the cited paper that an excess profits tax should exist beyond COVID-19.140

One of the key benefits of a global excess profits tax is that a national version of the tax would be undermined by profit shifting by large multinational corporations. Dr Tarcísio Diniz Magalhães argues that as a short run alternative to a global excess profits tax, countries could use unilateral withholding of taxes big tech companies already have to pay on advertising revenues and other outbound payments.

PROPOSAL FOUR: A total of $200–$600 billion of corporate tax revenues are lost each year globally due to tax havens.141

Sources for the different estimates:

  • $600 billion estimate is from IMF's Fiscal Affairs Department (Crivelli et al., 2016)
  • $500 billion: lower income countries still losing around $200 billion, Tax Justice Network (Cobham & Janský, 2018)
  • $200 billion Torslov, Wier and Zucman
  • These figures are roughly corroborated by recently released data from OECD
  • For the top estimate ($600 billion), $400 billion is lost for OECD member states and around $200 billion for lower-income countries.

Looking just at the IMF paper, the estimate is found by asking the question, how much revenue would a country gain, if opportunities for profit shifting were to be eliminated by raising the average rate in tax havens to the level of its own? Therefore, if it were possible to shut down corporate profit shifting to tax havens, countries not in tax havens could raise an extra $650 billion (Crivelli et al., 2016).

Minimum Corporate tax rate estimates

The OECD has recently been working on setting a minimum global corporate tax rate as part of its new inclusive framework on taxation. This OECD estimate of $100 billion is the total impact of both implementing its Pillar 1 and Pillar 2 proposals. Pillar 1 is a proposal that aims to make businesses pay more taxes where their consumers and therefore sales, are located. Pillar 2 outlines a global minimum tax rate of 12.5 percent rate.142

For the Clausing et al (2020) estimate, "for each country in the database, an effective tax rate is calculated as taxes paid (on a cash basis) by U.S. multinational companies relative to their profit before tax. For those countries where this effective tax rate is below 28 percent, the difference between 28 percent and the country's effective tax rate is multiplied by the total profit in that country. For example, in 2017, profit reported in Bermuda is $32.5 billion before tax. Since the calculated effective tax rate in Bermuda is only 2.7 percent, the minimum tax for Bermuda is calculated as (28%–2.7%)* ($32.5 billion)."

Can we add excess profits to hidden profits estimates?

The relationship between tax avoidance and revenues from an excess profits tax are complicated. If tax avoidance is fully clamped down on by multinational corporations, global profits would likely decrease, reducing the revenues that could be raised by the excess profits tax. On the other hand, an excess profits tax at such high levels would likely reduce the level of tax avoidance, thereby reducing the $600 billion estimates. However, as we have no way of modeling these dynamic effects, I add the two estimates together, acknowledging that to some extent they will be bites of the same apple.

Proposal 5: A financial transaction tax of 0.1% could raise between $237.9 and $418.8 billion across the world.143

The estimates for this tax are lower bounds for potential revenues due to missing data on a number of financial instrument types. Again, I do not include any dynamic feedback effects from a FTT on the excess profits tax and limiting tax avoidance.

Methodology 4: Fossil Fuel Dividend

Proposal 6: Eliminating public subsidies to the fossil fuel industry and implementing a tax on the cost of pollution could raise an extra $3.2 trillion a year in revenues

This $3.2 trillion is the revenue estimate from an IMF report on how much would be raised from a fossil fuel tax and eliminating public subsidies. Most of this comes from taxing fossil fuels at a rate which internalises their external costs. This is simply an overarching figure, rather than a specific proposal for a fossil fuel tax. For example, it does not take into account any behavioural change or costs of setting up and implementing such a tax.

Furthermore, most of this money would have to go back into providing clean energy and social safety nets for the poor hit by higher fossil fuel energy costs. Once I take into account the benefits from reduced environmental damage plus high revenue minus the losses from consumers facing higher energy prices, the IMF estimates that the net benefit to the world is more than $1.3 trillion, or 1.7 percent of global GDP (in 2015 prices) a year. I decided however to use the $3.2 trillion a year estimate, rather than this net benefit figure, as the $3.2 trillion is the amount that could be raised in revenues for governments.

CASE STUDY: Is it possible to reform fossil fuel subsidies?

The estimates for direct subsidies are the following.

Methodology 5 Reclaiming Economic and Monetary Sovereignty

PROPOSAL EIGHT: A debt jubilee could free up the equivalent of $100 billion a year for the Global South over the next ten years.

At the beginning of the pandemic, UNCTAD called for a debt jubilee of $1 trillion. In order to make this one-off proposal comparable with the other estimates, which are yearly estimates, I divided the $1 trillion by 10 years – the timeframe of the report. In reality, the $1 trillion would be paid out immediately, rather than spread over the 10 years.

PROPOSAL NINE: A new issuance of Special Drawing Rights could free up the equivalent of $250 billion a year

Progressive International are calling for $2.5 trillion worth of Special Drawing Rights to be issued. In order to make this one-off proposal comparable with the other estimates, which are yearly estimates, I divided the $2.5 trillion by 10 years – the timeframe of the report. In reality, the $2.5 trillion would be paid out immediately, rather than spread over the 10 years.

PROPOSAL TEN: A new Marshall Plan could raise the equivalent of at least $50 billion a year for the Global South

At the beginning of the pandemic, UNCTAD called for a Marshall Plan of $500 billion support for Official Development Aid (ODA) receiving countries, largely in the form of grants. In order to make this one-off proposal comparable with the other estimates, which are yearly estimates, I divided the $500 billion by the ten years – the timeframe of the report. In reality, the $500 billion would be paid out immediately, rather than spread over the 10 years.

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