Competent green tax shift good for all bottom lines

Takeaway for Leaders at all Levels Everywhere

Sustainable re-design is our only option, and the rest is all about timing. The sooner well informed policies help us prepare and act on this imperative, the better for all, not the least financially. A nice ground for agreements across political parties.

Green taxes on CO2 emissions for example, if politically well designed, would help everybody to soft land on development curves that are inevitable, instead of crash landing on violently increasing cost curves that will follow unsustainable practices. All to get rid of such practices before the crashlandings, of course. Once learning curves and cost curves towards scalable and attractive futures is mainstream, the green taxes can be removed. Whereas the alternative, due to political paralysis, means guaranteed crash landings on exploding cost-increases from social, ecological and financial destruction. The costs show as dead end investments in non-scalable ideas, failures to foresee more and more sustainability driven markets in time, costs for wasteful management of ever more expensive resources, and costs for all kinds of repairs of social and ecological systems. Things that currently plague us all, not the least the obsolete actors themselves.

More in detail:Left-wing leaders in Sweden regularly get stuck on a question that is often asked in the media. “How high must oil prices be set for climate reasons?” As if an increase in these levels could only be achieved through political decisions, and as if the reasons for “greening” would be all about ethics and values.

But the prices of unsustainable practices e.g. fossil- and bio-fuels will go up anyhow, and the prices of electrically powered traffic systems will fall anyhow. Regardless of political decisions. This is due to laws of Nature and logics directly derived from those [1]. In many markets, life cycle costs for ownership of cars powered by electricity from privately owned solar cells, for example, have already intersected with such for fossil cars. And the difference will continue to increase in favor of electrification. The remaining question is when, and to what societal impacts, change will happen. So, already the question about “setting the price” is doubtful and needs to be nuanced to avoid locking-in answers into incorrect assumptions.

So, modelling of attractive futures for e.g. traffic, within the boundary conditions of the FSSD, clearly shows that innovations around electric vehicles, for instance, are possible to scale to global dimensions. Whereas fueled cars are inherently not. Fuels, including biofuels, are extremely resource-intensive with energy losses all the way from production, via refineries, distribution and finally use in the relatively inefficient combustion engines. Not to mention all the costs related to damage from CO2 emissions and climate change. Why are biofuels also doomed, they are regularly mentioned as a “solution”. Well first, a certain amount of carbon from “left-overs in forestry”, for instance, have a higher degree of utility if used as feed-stock for material production or soil-improvments, than being blown off in a single piston strike of an engine, see the previous Kalle reflection on Spatial planning. All while the “fuel cycles” for electricity from natural energy flows do not cost anything, precisely because there are no fuels involved; sunlight, winds, ocean currents, ocean waves, hydroelectric power and geothermal energy keep flowing regardless if we put some propeller or turbine in the way or not. And electric grids are, unlike fuel-stations, part of the societal infrastructure anyhow. The scaling-up of these solutions will continue, while fuel markets are dying. However, the pace of spontaneous cost increases of obsolete practices is still a bit too slow on many markets for any sufficient change to happen in time, like for all early stages of exponential curves. Which dangerously slows down wake up calls to avoid gross destruction of social, ecological and financial systems.
So, an introduction to political conversations about this could start by answering two rhetorical questions:
  1. – “What do we know about the relative cost of fuels versus electric propulsion of vehicles?” Answer: that difference will continue to grow in favor of electrification, exponentially, because of laws of nature.
  2. “So, how much would an ordinary fuel-Traficant need to gain from electrifying their habits sooner rather than later, to make the change in time rather than too late to avoid crash-landings?” Answer: That question is relevant for setting green taxes right, and depends not only on marginal costs, but also on habits, so microeconomic modelling is needed here. Traffic habits have been explored in scientific articles and in practical collaboration between, among others, the top management advisors Sero and Telia, as well as in scientific papers on sustainable traffic modelling for the South of Sweden funded by the Swedish Energy agency [2].
Once the above has been understood, it is obvious that politicians only need to introduce a sufficient green tax shift in certain markets where spontaneous price-shifts have so far only reached the first stages of exponential cost increases.
Say that we might need an agreement of about 30 percent higher fuel prices to begin entering the economically and ecologically attractive development curve in time. And then, after some time, decide how things are going in relation to the goal of 100% phasing out of fossil fuels and 100% electrification from the natural free flows. The better it goes, the less need for further increased environmental taxes. Again, these are only there to create the incentive for a “soft landing” in time. To the benefit of all bottom-lines everywhere.
Beyond the “difficulty of getting old dogs to sit,” what other factors cause uncertainty when it comes to predicting the exact time of even worse spontaneous shifts in all markets, if we fail to change this by green taxes? It is uncertainties about the degree and timing of geopolitical tensions and wars over natural resources, oil deliveries from dictatorships, and what we expect in terms of the industry’s awakening and innovative responses to the inevitable. So we really need politicians who are responsible here and do not miss out on helping society to land softly on the necessary transition. All to help markets, politicians and industry wake up to the inevitable shift in time.
So, again, to assist the political debate, our politicians must have a better, and/or braver, attitude to the above facts. Perhaps the parties, at least in the Left Bloc, could soon agree to set the tax shift at about 30 percent higher than today’s prices for diesel, oil and biofuels, followed by much higher, or much lower, environmental taxes, depending on how it goes.
Since it is only a faster-than-today, phase-out of CO2 emissions from traffic that counts, to avoid crashing into huge social, industrial and private cost increases, we could also consider forcing a stop to further use of fuels through legislation. Which only insightful politicians can evaluate in terms of feasibility in relation to environmental taxes.

All hot topic Reflections are direct consequences of our Operative System.

For a deeper dive into the science behind the Operative System that informs all Reflections, see the peer-reviewed Open-Source paper with all its references: doi.org/10.1002/sd.3357. For the full title, see footnote [3] below.

Or, for concluding reflections, practical insights and training, click on “Kalle Reflects” to see all reflections.

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Footnotes:

[1] Mainly the first and second laws of thermodynamics, gravity and the matter conversation principle, see previous Kalle reflections and publications on what is scalable and what is dying on future markets.

[2] See publications from Sero, a leading company for sustainability advise on traffic, or Modelling of Sustainable Traffic in the South of Sweden sponsored by e.g. the Swedih Energy agency.

[3] Broman, G. I., & Robèrt, K.-H. (2025). Operative System for Strategic Sustainable Development―Coordinating Analysis, Planning, Action, and Use of Supports Such as the Sustainable Development Goals, Planetary Boundaries, Circular Economy, and ScienceBased Targets. Sustainable Development, 1C16.

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