it now - Hertie School of Governance

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Spring 2014 · Issue Sixteen
Sustainability
discussed
in Schlossplatz
with Xiaobo Lü,
Michaela Kreyenfeld,
Martin Frick
et al.
Schlossplatz3 · Spring 2014 · Issue Sixteen
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Schlossplatz3
p. 2
Editorial
p. 4
The Effect of Corruption on Environmental Governance in China
Interview with Prof. Dr. Xiaobo Lü by Katrina Lampert and Sienna-Yiling Pan
p. 7
Sustainable Development Goals in the Post-2015 Development Agenda:
Can Rio+20 fulfil its promise?
by Akong C. Ndika
p. 10
Mechanisms for Sustainable Peace: Lessons from the Ivorian and Malian Crises
by Fortune Agbele
p. 13
The Future of Environmental Policy and Diplomacy
Interview with Dr. Martin Frick by Leah Yael Flam and Samantha Villella
p. 16
Regional Currencies—Sustainability in Your Wallet?
by Lukas Fesenfeld and Thomas Kiesgen
p. 21How Pension and Health Insurance Contributions Can Solve the Climate Problem:
Involving Institutional Investors to Finance Clean Energy Technology
by Michael Schulze
p. 24
Population Demographics and the Sustainability of the Welfare State
Interview with Prof. Dr. Michaela Kreyenfeld
by Meilin Moellenkamp and Katrina Lampert
p. 27Ones and Zeroes: The Sustainability of Labour Policies
in the Face of Sweeping Technological Change
by Sebastian Campos Groth
p. 32
The Sustainability of Carbon Taxes in the Political Process
by Johanna Arlinghaus
p. 36
Understand Today, Green Tomorrow: Why Universities Need an
Institutional Structure to Foster Their Sustainability Record
by Regula Hess and Lukas Fesenfeld
p. 40
Imprint
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Editorial
We live in a time where the future of the world’s younger generations
appears to be less secure than the generations that have come before.
With mankind’s leaps forward in areas such as economics, science,
and technology, we have also brought with us increased strain on our
planet’s finite resources. We must ask ourselves, how do we develop
prosperity today without compromising the life of future generations?
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About us
The question of how to create sustainability is far
from easy to answer. A rather broad “buzzword”, the
issue of sustainability applies not only to discussions
about the environment or energy, but also to economic topics such as fiscal sustainability, political
topics such as sustainable peace in conflict regions,
or societal issues like the sustainability of the welfare
state. As ecologic, institutional, and financial systems continue to show weaknesses, efforts to address
these shortcomings, and to create security for future
generations have increased dramatically within the
past few decades. As a progressively global concern,
this issue of Schlossplatz3 examines how sustainability has come to affect countries across multiple policy
fields.
Schlossplatz3 is a policy
magazine run by a student
team at the Hertie School of
Governance. In our studies
we come across myriads of
fascinating and crosscutting
topics. We pick one of them
for Schlossplatz3 and look
at it from different perspectives—public sector, private
sector, and civil society—
hence the superscript “3” in
our name.
We next turn our attention to the idea of carbon taxes,
We begin by turning our attention to China, where where Johanna Arlinghaus discusses its merits,
pollution is high, and so is corruption. We are privi- and its role in the political process. Finally, the
leged to have Dr. Xiaobo Lü explain in an interview, issue ends with a personal article by Regula Hess
how corruption in China is affecting the country’s and Lukas Fesenfeld, who introduce the idea
efforts to implement effective environmental gover- behind Hertie School’s own Green Office, and call
nance. Next our focus turns to the global stage, where for the institutionalisation of Green Offices in all
Akong C. Ndika looks at the United Nation’s Post- universities.
2015 Development Agenda and asks whether the 2012
Rio+20 forum to discuss sustainable development From the breadth of topics that these articles cover it
goals can actually fulfil its promises. Understanding is clear to see that the concept of sustainability should
that sustainable development can only stem from be an important part of any and all policy discussions.
sustainable peace, through the lenses of the Ivorian While many people choose to ignore our increasingly
and Malian crises Fortune Agbele looks at specific unsustainable habits as an inconvenient truth, others,
mechanisms put in place by regional and interna- like our writers here, choose to tackle the issue head
tional bodies to promote security on the continent.
on. By showing how applicable sustainability issues
are to any policy area, hopefully we can try to cultivate
An interview with Dr. Martin Frick explores the a consideration of sustainability measures in future
role diplomatic institutions play in shaping envi- discussions to come.
ronmental policy. Meanwhile, Lukas Fesenfeld
and Thomas Kiesgen consider the unique idea of Your Editorial Team
regional currencies, aimed to increase economic sustainability on a more local level. Michael Schulze
then goes on to investigate how institutional investors
can help solve the climate problem by financing clean
energy technology. In an interview, Dr. Michaela
Kreyenfeld discusses regional versus global
population demographics, and how this affects the
sustainability of the welfare state. Continuing along
this theme, Sebastian Campos Groth looks at the
sustainability of labour policies in regards to widespread technological change.
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The Effect of Corruption on Environmental
Governance in China
Interview with Xiaobo Lü by Katrina Lampert and Sienna-Yiling Pan
As one of the world’s most thriving economies China is also one of
the world’s leading contributors to pollution. Attempting to tackle
rising pollution is challenging enough, but local corruption in China
exacerbates this problem. We took the opportunity to interview
Xiaobo Lü about China’s rapid modernisation and the effectiveness of
environmental governance within the country.
To begin, can you describe more precisely what
the term “environmental governance” means, in
the Chinese context?
As countries modernise, they all face the challenge
of environmental protection—potential problems
of degradation to the environment, rising energy
consumption, and impact on climate change; modernisation inherently entails environmental problems.
From the perspectives of economics, environmental
issues manifest as negative externalities, which
makes these issues difficult to deal with as they are
external to market exchange. Due to this, governments often step in to regulate these kinds of negative
externalities. Institutions and formal laws, combined
with certain general understandings like recycling
and conservation are all part of the institutional
design in environmental governance, which attempts
to change peoples’ behaviour.
Applying these concepts to China, we observe that
China shares the same issues all modernising societies do, but it also has unique challenges, such as
a large population. In addition, much of China’s
population is concentrated in coastal areas, which
puts more intense stress on the environment of those
regions. The intense modernisation process for
China has evolved in a relatively short time, only
thirty to forty years, and an economic boom of this
magnitude in such a short period of time is itself very
unique. The combination of a dense population and
condensed modernisation time makes the challenge
for environmental governance much more serious for
China.
4
From looking at the experience of other countries’
modernisation processes, like the US and Japan’s,
China foresaw what issues they would face. The problem developing countries such as China face, however,
is that all wish for an improved and “greener” way
of modernising but struggle to find better solutions.
Given this conundrum, all countries will tend towards
economic growth to the detriment of the environment, and we can only hope latecomers like India will
not make the same mistakes as China. Even with the
realisation that China should avoid the errors Western
countries made while modernising, China made them
anyway. The question is, how should China stop and
reverse the modernisation mistakes it has made? Currently the most pressing problem is the burning of
coal, leading to terrible air quality and smog. There is
an ever-increasing need for energy in China, and the
country is still heavily relying on the burning of coal
as a source of generating power. Coal burning contributes to the rise of refined particle matter (PM2.5)
in the atmosphere, which does not evaporate and thus
turns into smog. The smog has become so bad that it
is no longer simply a problem of a given city anymore,
but now regional.
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If the government will have trouble implementing the scheme, do you believe local corruption
(which has already been noted as a problem in
China) will be one of the causes of implementation problems?
In your view, how is the Chinese government Absolutely, corruption in environmental regulation
currently positioning itself on the world stage in is a huge problem in China. All large projects are
regards to their understanding of sustainability? supposed to go through an Environmental Impact
China realises the seriousness of their sustainability Assessment (EIA), where projects are either approved
issues, however, it is not a purely economic problem or not. The national government requires local govanymore, but now also a political problem. As Chi- ernment to take part in this process, and herein lies
nese society becomes more affluent with an emerging the central-local relationship problem. The question
middle class the demands from the population have here is how to make national policy permeate down to
changed. While demands used to be about making the local level, and it is much easier said than done, as
money and economic opportunities, now they are local governments will always have their own interabout quality of life (i.e. air quality, food safety, lei- ests. Criticizers of Chinese governance say there is a
sure time). As the Chinese regime is not democratic, certain amount of local protectionism going on, thus,
however, and these newer demands of the population there is a call by some to centralise governance but it
are not met, the choices for citizens are limited. Many has not yet been done.
cannot vote with ballots or feet. On environment The counter argument to this call for centralisation
related issues, though, one can expect more active is that because the problem of environmental govparticipation through various means from the public. ernance is so large, one cannot completely rely on a
In fact, we have already seen more and more public centralised system—the bureaucracy would be too
actions including public hearings and protests in huge and costly. Instead, these criticizers argue that
local governments should oversee environmental
environmental impact assessment processes.
Although few would like to admit, when discuss- governance more cheaply. The problem with these
ing environmental versus economic development, proposed solutions is that they would all take time to
it sometimes is a zero-sum game. Environmental implement, but environmental governance is a probconcerns often mean one must take action at the lem of urgency. This is where things stand now and
cost of economic profits. For China it will take much what the government currently understands.
more time to find alternatives to the coal the country Corruption studies tell us the more regulation govcurrently so highly relies on. Because of this, in the ernment has, the more opportunities for corruption
short-term there must be a focus on regulation and that exist. Despite this, however, environmental
enforcement; in this regard China has environmental governance must have effective regulation. In enviprotection institutions in place, but seemingly not ronmental regulation, government regulation is particularly important because of the externalities. We
enough.
need government regulation, yet assessing fines and
Last year the Chinese government began imple- stipulating corrections is highly discretionary and
menting a pilot policy called the Carbon Emis- can lead to more possibilities of corruption.
sions Trading Scheme, to reduce carbon emis- The most fundamental challenge of ineffectiveness
sions. This is an important part of an overall when enforcing regulation is at the local level; local
strategy to improve environmental governance officials have a personal incentive to encourage rapid
in the country. Do you believe the government local economic growth at the cost of the environment.
will have trouble implementing it? How sustain- In order to try and combat this, the idea of a “Green
GDP” was introduced, which factors in externalities.
able do you see this scheme to be in reality?
The Carbon Trade Scheme is more or less accepted as But in practice, factoring in “greenness” was not
a good measure, the problem is that implementing enough to change the incentive structure.
it requires a widespread change of behaviour. The
scheme is based on an incentive structure, which
means that in terms of cost-benefit analysis, the
rewards have to be very good in order for the scheme
to work. In China’s case, both the rewards and punishments are not large enough to overwhelm the other
side—economic profit still prevails. This incentive
structure, along with monitoring, is a serious weakness of China’s environmental governance. There are
few cases in China where companies are punished so
harshly that they go bankrupt.
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In recent years the power of environmental regulators
has increased and we have seen a consequent rise in
corruption cases. In the last thirty years corruption
cases pivoted from retail, to human resources, to education to land resources, and now to environmental,
which changes as the power and focus of governance
changes. As mentioned before, the focus is not purely
economic anymore, but also about quality of life. Currently, most corruption in environmental governance
is in three areas: (1) EIA process and other standards
of assessment; (2) People use “environmental protection projects” (e.g. water purification, clean coal) to
enrich themselves. Environmental agency not only
has the power to regulate, but also the power to grant
money for projects; (3) Regulatory environmental
process, i.e. monitoring fines and such.
A clear example of this can be seen from 2013, in one
of China’s mid-level developed provinces. Amongst
the 1,233 corruption cases filed, which involved 1,675
people, 133 people were from the environmental
agency system of that province. These government
regulators included one provincial environmental
protection agency, 20 departmental chiefs of the
agency, and 8 district bureau chiefs, with all of these
cases being just in one province.
Social media is very powerful, and in
non-democratic countries like China,
it is a citizen’s only platform—it can
be a game changer.
Xiaobo Lü is Professor of
Political Science at Columbia
University, Barnard College.
His research interests include
post-socialist transition,
corruption and good governance, regulatory reforms,
and government-business
relations. He participated in
several conferences on regulatory reform and environmental
governance in China. Currently
he is a Fulbright Visiting Professor at the Hertie School.
One cannot make the blanket statement “more or less
regulation is better”, we need to remove certain kinds,
and strengthen others, although this will be difficult
as bureaucracy resists reduction. China is so vast
that it needs some regulators—primarily, however,
environmental governance needs better incentives,
punishments, and to design best practices. In that
sense, environmental regulators do not differ from
other parts of democracy.
From our perspective as part of the younger generation, we feel social media can play an imporCan you estimate the effectiveness of these EPA
tant role in tackling corruption. What are your
agencies? Is the amount of agencies necessary?
thoughts on this? How effective do you think
Indeed, one theory argues that corruption happens
social media can really be?
more in countries where the government regulates The impact of social media can be profound—it can
too much and creates the possibility of rent seeking, be a powerful new tool for anti-corruption in a counsuch as bribery. The other side of the argument main- try like China, although perhaps not in democratic
tains, however, that regulation is necessary. With countries like the US. The beauty of social media is
negative externalities one cannot count on business that “everybody is a reporter”. In China you do not
firms to regulate themselves and therefore must have have much press freedom so social media can crea third party. This argument holds true especially in ate a lot of watchdogs, and this has already proved
China’s case, where self-regulating mechanisms are to be the case. For example, three years ago, a local
very weak. In the US and Europe you can have indus- official spoke at a meeting and his photo was posted
trial associations that are strong and do self-regulate, online. Some netizens (i.e. citizens on the net), noticbut not yet in China. In a new market economy, people ing the expensive brand of his cigarette in the photo
tend to not follow the rules, unlike the US, which has calculated that a carton of that brand would have
a more “mature capitalism”. While too many regula- cost half of his normal monthly salary. The netizens
tory agencies can lead to corruption, some regulatory then spread their suspicion online that the official
agencies are necessary—and in some cases even, they must have had other sources of income. This led to
are not enough.
the local official being investigated and exposed for
corruption. This was one of the first instances where
we saw social media in China play a role in exposing
corruption. Social media is very powerful, and in nondemocratic countries like China, it is a citizen’s only
platform—it can be a game changer.
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Sustainable Development Goals in the Post-2015
Development Agenda: Can Rio+20 fulfil its promise?
by Akong C. Ndika
United Nations Secretary-General Ban Ki-Moon highlighted that eradication
of extreme poverty is the focus, and sustainable development is the guide
in the formulation of the Post-2015 Development Agenda. This is in light
of the deadline for the achievement of the Millennium Development Goals
(MDGs) next year, 2015, when all UN Member States are expected to submit
sustainable development goals (SDGs) to guide global development until
2030. In 2012, Rio+20 served as the platform to discuss extensively sustainable
development goals beyond the MDGs. We ask: did it fulfil its promise?
No significant and concrete commitments were made Global governance heading in the right direction
in the resolution agreed upon by governments in As a significant organisational boost, the governRio. This vacuum makes it easy to dismiss the non- ing body of the United Nations Environmental
binding agreement arrived at in Brazil as “business as Programme (UNEP) has opened itself to universal
usual” statements of intentions with no sticks to beat membership. The 58 member UNEP Governing
countries into staying the course of sustainability. Council has been transformed into a global intergovIn the long-term, the outcome document “The Future ernmental forum—the United Nations Environment
We Want” (United Nations, 2012), promised innova- Assembly—where each of the 193 Member States has
tions. Member States committed to putting in place an opportunity to shape the agenda of global sustainbuilding blocks to advance the sustainable develop- able development. With this enhanced legitimacy
ment agenda. Heads of Governments renewed their UNEP has been empowered to lead and coordinate
commitments, launched new institutions, enhanced global environmental work within the UN system.
opportunities for participation, strengthened the
policy-science interface, and improved coordination
at all levels.
If there is one exceptional result that Rio+20 brought
to the world, it is that under the leadership of the General Assembly, the Rio+20 Summit placed sustainable
development at the heart of the United Nations’ work.
More than before, Member States reaffirmed their
commitments to integrate the social, economic and
environmental dimensions of sustainable development in a balanced, harmonious and holistic manner.
Institutional innovations to achieve the SDGs were
put on the table.
Even with the increased level of
confidence in the evidence that
human activities are the major force
negatively transforming the planet,
science alone will not drive change.
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Tipping point
Proposed in 2009, “planetary boundary” made its way
into the Rio+20 preparatory process (United Nations,
2013), and is re-emerging as a galvanising concept in
the working group. It did not go unopposed by some
Member States, though, which later pushed it out of
the final document adopted. As an organising idea,
planetary boundary delineates “safe operating zones”
where humanity can pursue economic growth and
An upgraded institutional toolbox for the UN General human development with minimal likelihood of irreAssembly was also launched. A High Level Political versibly harming the life support systems of the earth.
Forum inclusive in membership has been created to Nine identified planetary thresholds of tolerance
provide specific guidance and leadership for strength- define which human activities risk environmental
ening the weak links between the three sustainable damage of catastrophic and irreversible proportion.
development pillars: environmental, economic, and
social (UNEP, 2013). The Forum provides an inter- As the concept of ‘’tipping points’’ re-emerges in
governmental platform for setting norms, building policy discourse, so are battle lines re-drawn. Even
capacity, improving implementation, and facilitating with the increased level of confidence in the evidence
flows in finance and technology.
that human activities are the major force negatively
transforming the planet, science alone will not drive
Most importantly, the Forum will strengthen the pol- change. Politics, to a large extent, remains decisive.
icy-science interface, a perceived missing link in the What are the implications of the proposed boundaragenda-setting chain of its predecessor, the defunct ies on sovereignty, in particular the rights of southern
Commission on Sustainable Development. Through countries to pursue their own economic and social
a Global Sustainable Development Report, Member development priorities? What are acceptable tradeStates will undertake periodic reviews of their prog- offs in integrating the three pillars of sustainable
ress. This high profile publication intends to provide development? Against a limping global economic
a state of the art review for decision-makers, comple- recovery, will the goals usher a green economy transmenting and adding value to other existing reports formation, healthy enough for the planet? How will
within the UN system.
the goals play out in a new geopolitical order, where
global economic growth increasingly depends on
To drive with vigour, a global agenda for sustainable carbon-propelled prosperity of key southern coundevelopment, key processes have been launched. tries like China?
Building on lessons learned from the Millennium
Development Goals, Member States agreed on a In addition, there are even greater conceptual and
framework to formulate a list of focused, time-bound, practical challenges for unifying the MDGs and SDGs
measurable goals as well as targets for tracking prog- into a single global development agenda beyond 2015.
ress on sustainable development. The United Nations How will the “social floor” approach implied by the
is breaking away from the top-down approach of the MDGs be balanced against the “planetary ceilings” of
MDGs and establishing a 30-member Open Work- the SDGs? Will a balance be struck within each goal
ing Group, with representatives nominated by all of or across the different goals? How can we ensure the
its five regional groups, to draft a set of sustainable goals are global enough while at the same time sufdevelopment goals by 2014 (United Nations, 2013). ficiently flexible to accommodate individual country
In parallel, an Expert Working Group will explore needs and capacities? How can we ensure that the
options for financing and technologies.
goals are long-term but also elastic enough to incorporate new and emerging trends and issues?
The Rio+20 Summit, as a glass half
full, set in place some significant
institutional innovations to advance
sustainable development.
8
Despite these questions, there are signs for qualified
optimism. A window of opportunity is emerging—
discrete streams of progress in science, policy and
politics, all in search of a common point to converge.
The latest Fifth Assessment Report of the Intergovernmental Panel on Climate Change (Rockstrom, Sachs,
et.al, 2013), more than ever before, hardens the sci-
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22.04.14 10:36
ence behind planetary limits and propels the urgency
for collective action to prevent the climate system
from warming beyond the safe two degree level.
Added to the momentum injected by a merger of the
two global policy processes, are a range of innovative
technologies, policy initiatives, and verifiable voluntary commitments by individual countries to pursue
environmentally-compatible strategies for economic
development.
Akong C. Ndika is a Programme Officer with the
United Nations Security Sector
Reform Capacity Building
Support programme for the
African Union Commission,
Addis Ababa. Previously, he
worked as a Technical Officer
for environment and health
issues with the World Health
Organization Office at the
European Union, Brussels. He
is an alumnus of the Hertie
School MPP programme’s
pioneer class of 2007.
Deadline next year
Pressure is mounting as the 2015 deadline nears.
Governments have agreed to reach a globally binding climate deal by the end of next year in Paris. In
tandem, Heads of States are also expected to adopt a
set of unified global development goals.
To achieve concrete progress for people, economy,
and the planet, the United Nations will have to offer
much more than a convening platform, it will have to
inject entrepreneurialism into the negotiating process effectively crystallising the momentum around
the emerging streams of progress into collective References
action. The 1987 Montreal Protocol demonstrates United Nations, Rio+20 United Nations Conference on
how creativity, risk-taking, and leadership by the UN Sustainable Development, “The future we want”,
enabled a widely recognised and successful global A/CONF.216/L/1* (19 June 2012)
agreement to phase out ozone-depleting substances. United Nations Environment Programme, “Proceedings of
Unlike climate change negotiations, science was not the Governing Council/Global Ministerial Environment Forum
strongly on the side of proponents of a globally bind- at its first universal session”, UNEP/GC.27/17 (12 March 2013).
ing regulation. It took months after the signing of the United Nations, General Assembly resolution 67/290,
treaty for a consensus to emerge on Chlorofluro Car- “Format and organization aspects of the high-level political
bons (CFCs) as the smoking gun of the observed hole forum on sustainable development”, A/RES/67/290
in the radiation protective ozone layer (IPCC, 2013).
(23 August 2013).
United Nations, General Assembly, “Letter dated 19 July
The Rio+20 Summit, as a glass half full, set in place 2013 from the Co-Chairs of the Open Working Group of the
some significant institutional innovations to advance General Assembly on Sustainable Development Goals
sustainable development. Now, it is time for the UN to addressed to the President of the General Assembly”,
exercise much needed leadership to leverage the sepa- A/67/941 (23 July 2013).
rate streams of emerging consensus in key areas into Rockstrom J., Sachs J., Ohman M., and Schmidth-Traub
effective global agreements. It took, in part, personal G. (2013): “Sustainable Development and Planetary
creativity from the then UNEP’s director, Moustafa Boundaries”, Background Research Paper Submitted to the
Tolba, to build a decisive coalition of key states to High Level Panel on Post-2015 Development Agenda.
draft the Montreal Protocol text, which was success- IPCC, (2013): “Summary for Policymakers”. In: T.F., D. Qin,
fully agreed upon by all countries (Parson, 1993). It G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels,
remains to be seen what lessons have been learned Y. Xia, V. Bex and P.M. Midgley (Ed.): Climate Change 2013:
from the disappointing failure at Copenhagen. The The Physical Science Basis.
Paris meeting of parties, planned for 2015 to agree Parson, Edward A. (1993): “Protecting the Ozone Layer” .
on a binding global treaty on climate change, will be In: Keohane, R., Haas, P., and Levy, M. (Ed.) (1993):
a key test. The world cannot afford to fail again for Institutions for the Earth: Sources of Effective International
humanity and our planet (ibid.).
Environmental Protection. MIT Press, pp. 27—74.
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Mechanisms for Sustainable Peace:
Lessons from the Ivorian and Malian Crises
by Fortune Agbele
The African Continent has had to battle with one form of conflict or
another for decades. As observed on the continent, although there has
been a decrease in inter-state related conflicts, the number of intra-state
conflicts has risen: these are conflicts fought on a smaller scale and
within territorial confines involving several non-state actors. Largely,
many of these conflicts are a result of poor governance and leadership.
These conflicts are also marked with high mortality rates, regional
spill-overs, and economic-related losses, which negatively impact the
continent’s development. As surmised by Collier et al (2003): prolonged
civil war is development in reverse.
Several instruments, including negotiations and
peacekeeping missions, have been employed in
responding to these conflicts, and most of these interventions have been spearheaded by the international
community. Although interventions from the international community are relatively better organised and
have more secure funding, the heavy reliance on this
has sometimes resulted in huge costs for the continent. This can be seen in the case of Rwanda, “where
the international community failed to provide security” (Besada, 2010). Additionally, external interventions in the long term may not be sustainable, as they
can lack the full support of the countries involved.
These experiences can thus inform the development
of an African-grown conflict strategy, to help provide
guidelines for conflict prevention and peacekeeping
interventions, so as to ensure sustainable peace and
security on the continent.
In 2002, the African Union (AU), in collaboration
with the Regional Economic Communities (RECS),
established the African Peace and Security Architecture (APSA). This collaboration was done to provide
a framework of formal legal agreements, institutions,
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and decision-making processes, aimed at conflict prevention, management, and resolution. The framework
in its totality looks like the perfect package to address
the recurrent outbreaks of conflicts on the continent.
Furthermore, the initiative promises to promote the
sustainability of peace and security, since it is largely
supposed to be own-grown. Through the establishment of the early warning system, for instance, it is
expected that possible crisis zones will be monitored
to identify threats to peace and security; tensions will
be anticipated to facilitate early response, in order to
avoid the outbreak of conflicts. Additionally, the Panel
of the Wise, made up of respectable and prominent
personalities within the region, was formed, with
the task of engaging and negotiating with parties to
potential conflicts.
Prolonged civil war is development
in reverse.
Another component of the APSA Framework is the
Peace and Security Council; this body serves as the
decision-making organ when it comes to issues
relating to the prevention, management, and resolution of conflicts on the continent. Also, key to the
operationalisation of the architecture is the African
Standby Force (ASF), which was supposed to be operationalised in 2010, but has been repeatedly postponed.
The ASF, when formed, will be a collection of brigadelevel, mobile, and regionally based joint forces, that
can respond quickly to threats to peace and stability.
Nevertheless, over a decade after the APSA Framework came into being, the continent is still stuck
with the old ways of responding to crises, which have
not always proven to be effective, as is the case with
the Malian and Ivorian crises. Both continental and
regional bodies failed to successfully intervene to
avoid the bloodshed, witnessed in these two countries,
revealing the shortcomings of the rapid response
mechanism within the AU and the Economic Community of West African States (ECOWAS).
(ECHO, 2014). Both crises had in common the lack of
a swift and effective response to curtail the situation
from being exacerbated. Additionally, both crises
somewhat ended after an external intervention from
the French. This raises the question if the continent is
ready to spearhead solutions to its own problems and
crises, and as such, whether the supposed “African
solutions to African problems” can really be relied
upon? Why is it, that in spite of the APSA framework
(which is supposed to provide the much required lead
to tackle the peace and security needs on the continent), the AU with RECs could not provide the rapid
interventions needed, instead leaving it for foreign
intervention?
These crises therefore show the existing loopholes
that need to be addressed in the quest to promote
peace and security anywhere on the continent. They
bring to bear the lack of readiness and weak mechanisms for rapid responses to crises. In the case of
Mali, urgent counteraction was required when armed
groups launched an offensive on Kona. However, neither the AU nor ECOWAS was ready because AFISMA,
the African-led International Support Mission, was
still at its planning stage (ISS, 2013).
Further, the ability to determine at what stage of a
crisis to use force, and the readiness to mobilise and
deploy such force within the shortest time, is critical. Many conflict situations on the continent have
shown to be quickly calmed only through the rapid,
pragmatic, and effective coordination of most, if not
all, the actors in a conflict (ISS, 2013). This knowledge
brings to mind the urgent need to build an effective
rapid response mechanism. When fully operation-
The 2010 Ivorian political stalemate between the then
incumbent president, Laurent Gbagbo, and Alassane
Ouatarra, turned violent following the failure of
mediation efforts by both the AU and ECOWAS, and
their further failure to initiate military intervention
and save lives. Two years later, the continent was again
faced with a crisis, this time in Mali. The Malian crisis
was sparked by an unexpected coup d’état on March
22nd, 2012, causing over four hundred thousand
people to be internally displaced or become refugees
11
22.04.14 10:36
Fortune Agbele holds a
Master of Public Policy from
Hertie School of Governance,
and is alumni of the DAAD
PPGG Program. She worked
in various capacities with
the German Agency for
International Cooperation
(GIZ) in Germany, Kenya and
Ghana. Currently, she is the
Programme Manager for
Youth Empowerment for
Africa, an NGO in Ghana.
alised the ASF is supposed to fill this gap. The question still remains, though, with full deployment of the
ASG repeatedly postponed, when will this take place?
Will the continent be able to have a rapid response
force that is fully capable of responding quickly? The
AU has proposed the African Capacity for Immediate
Response to Crises (ACIRC) as a temporary mechanism, where a rapid response force could be created to
act swiftly in times of conflict, whilst the continental
bodies take time to fully operationalise the APSA. We
must, however, ask whether this new mechanism will
not also be saddled with the challenges that usually
face African initiatives—challenges in the form of
lack of financial resources and the political will and
leadership.
grown initiatives, as these are likely to gain the necAdditionally, there is the need for the AU and the essary support from the various states. Nevertheless,
various RECs to build greater collaboration, and such initiatives would have to be well coordinated to
create more synergies in their approach to handling produce the desired result.
interventions. There will be the need for both the continental and regional bodies to define rules, in order
to determine how they will engage each other during References
crisis situations. Confusion is likely to occur when no Besada, H. (2010): “Crafting an African Security Architecture:
clear formal or even informal convention has been addressing regional peace and conflict in the 21st Century”.
developed, to avoid overlapping roles. Defining roles The International Political Economy of New Regionalism
will help to prevent tensions between the respective Series, Surrey, 2010/10.
continental bodies, as seen in the case of Mali, where Collier, Elliott et al, (2003): “Breaking the conflict trap: civil
war and development policy”. World Bank Policy Research
Both crises had in common the lack
of a swift and effective response
to curtail the situation from being
exacerbated.
Report, Washington, DC, 2003/06.
ECHO (2014): “European Commission Humanitarian and
Civil Protection, 2014 Factsheet”. European Commission
—Humanitarian Aid and Civil Protection, Brussels.
Ero, C. (2013): “The Problem with ‘African Solutions’”.
International Crisis Group.
Gueye, A. (2013): “Gabon to Mali: history of French military
interventions in Africa”.
Institute for Security Studies (2013): “Lessons from the
the transition from MICEMA (the ECOWAS Mission to
Mali) to AFISMA was marked with tension. As noted
by Vines (2013), there is a general feeling at the AU
that the RECs are not always fully committed to AU
leadership, and conversely, in the regions, the AU is
sometimes felt to be overstepping its bounds.
Malian Crisis for the International Security Architecture”.
Vines, A. (2013): “A decade of the African peace and security
architecture”. International Affairs 89(1): 89—109.
The Ivorian and Malian crises, as discussed above,
present lessons to all the relevant institutions that
are concerned with building a sustainably peaceful
and secured continent. They have exposed the gaps
within existing frameworks for addressing conflict
related crises, which need both short and long term
measures to fill them. The continent also needs own-
12
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The Future of Environmental Policy and Diplomacy
by Leah Yael Flam and Samantha Villella
At the 2012 United Nations Rio+20 Earth summit, 192 countries agreed to
create a set of universal Sustainable Development Goals. They pledged to find
new ways to look at sustainability and to set new goals that could change the
playing field for social and economic developments in the coming decades.
In 1987, the World Commission for Environment and
Development prepared a document entitled “Our
Common Future”, which featured for the first time
the now well-known term, sustainable development.
It stated that ‘sustainable development is the development that meets the needs of the present without
compromising the ability of future generations to
meet their own needs’. There is an ethical principle to
sustainability that implies a responsibility to the wellbeing of future generations (Vezzoli and Manzini,
2008). By definition, then, humanity’s well-being is a
core tenet of environmental quality.
It can be argued then, that if sustainability policies
are to be decisive and effective these overarching
economic, social, and environmental issues should
be considered in equal measure. We took the opportunity to interview Dr. Martin Frick, who is currently
teaching a course entitled “Environmental Changes
from an International Diplomacy Perspective”, at the
Hertie School of Governance, in order to get an expert
insight into the topic.
How did you first get involved in issues concerning the environment?
I was a German diplomat based in New York with the
responsibility for the UN General Assembly's Third
Committee. The Third Committee is the committee
13
22.04.14 10:36
of the General Assembly in charge of human rights
and humanitarian affairs. Since I had dealt with the
founding resolution of the Human Rights Council
in New York, I was transferred for the German EUPresidency 2007 to work on establishing the Human
Rights Council in Geneva. Around that time, the
Maldives initiated the first resolution on the human
rights impacts of climate change, and that is how I
really became confronted by the issue. Since then, I
have continued to work on different aspects of climate change and the international efforts to fight it.
What does environmental sustainability mean
to you?
There was a very interesting Forum in Sweden that I
attended with the subtitle, ‘How on earth can we live
together?’ That is exactly what sustainability means
to me. Simply put, it’s to sustain human life in a dignified way on this planet.
There is an ethical principle to
sustainability that implies a
responsibility to the well-being of
future generations.
What role can public-private partnership play in
the future of environmental policy?
I believe that public-private partnerships are essential.
Take for example the Green Climate Funds agreed
upon in Copenhagen. Even when the commitment
to spend a hundred billion dollars a year for climate
change adaptation in developing countries is fulfilled, it will not be enough money. So we need to
think about how this money can help leverage private
investments on a much larger scale. I think to combat
climate change we basically need to pull out all the
stops, and public-private partnerships are at the forefront of potential solutions.
14
How can developing countries benefit from environmental sustainability regulations and practices?
In an international framework, of course, we are
looking into substantial transfer payments. If emissions do have a price there will be more money to be
transferred from developed to developing countries.
In addition, however, on the basis of high CO2 emissions developed countries have developed technology
that is pivotal to developing countries. Think of solar
power as an example. Solar power is now already
without any subsidies and is the cheapest source of
energy for some of the world's poorest countries; it is
even cheaper than diesel generators, which currently
are in many least developed countries the main source
for decentralised energy production. So, as Africa
leapfrogged into mobile phone technology, I can see a
huge potential for the developing world to really jump
directly into the latest generation of renewable energy.
What major challenges do you see moving forward in creating good environmental policies?
I think there are two: one is simply imagination. We
have a tendency to deal with current problems as if
what we have at our disposal right now is what we will
have at our disposal in twenty years, but technology is
changing so rapidly that we should be a little bit more
imaginative and daring. Even if there is a gap between
the current technology and what we need, we should
be confident that we will have the right technology
when we need it most. The second is that we are in an
extremely complex and complicated world that generates experts. As such, one of the biggest challenges I
see is how do we combine different fields of expertise
to the one big holistic solution that we need.
What role should human interests and social
justice play in creating sustainability practices?
I think creating a more sustainable world is the best
human interest you can imagine because the alternative is just grim. There is a clear connection between
the fight against climate change and the fight against
poverty. Think of indigenous peoples who live a traditional lifestyle and protect their piece of land—this is
something that, in economic terms, has zero output.
If you bring in the environmental perspective of that
thinking, you might actually find that populations
who live a traditional lifestyle deliver in fact valuable
services to the rest of mankind. Because of this, indigenous peoples might be eligible for support, perhaps
just as much as you would pay a park ranger to look
after a national park.
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What role do you see for Bonn?
There was an article by Professor Hugo Slims some
years ago in “Foreign Affairs” where he basically
argued that while Geneva was, at the time of the Cold
War, the venue where the UN dealt with less important issues, now Geneva suddenly has all the interesting portfolios—humanitarian affairs, refugees and
other issues that are crucial in the multi-polar world.
Dr. Martin Frick is the
German Representative to
International Organizations
based in Germany. He works
in Berlin and Bonn, home of
18 UN-organizations including
the secretariats of the UN
Conventions to combat climate
change (UNFCCC) and desertification (UNCCD). 2010-2012,
he has built up the Berlin
branch of E3G—Third Generation Environmentalism—a
leading climate think tank.
I can see a similar development in Bonn: Beginning
in the 1990s, it became the home for many of the UN quite an interesting scenario with the Energiewende.
organisations dealing with issues that were consid- A substantial chunk of renewable energy is being
ered specialist topics in the environmental world, like produced by individual citizens rather than by big
climate change and desertification. As it now turns companies. Today, it is produced by family homes
out, these are really central multilateral topics for the with solar cells on their roofs and by farmers creat21st century. If you just look at 2015, at the negotiation ing bio energy. I believe this is the sort of bottom up
for sustainable development goals and the upcoming movement that we need. If you think about it, there is
COP21 in Paris in 2015, it becomes evident that Bonn a small revolution going on.
is at the heart of central UN processes.
In the climate negotiations, top-down vs. bottom-up
What about the EU’s role in wider climate change has an entirely different meaning; top-down meaning
negotiations?
an internationally binding treaty such as the Kyoto
The EU is an interesting case because the EU for many protocol versus the bottom-up’s pledge in reviewing
years has been the driving force in climate nego- the system introduced in Copenhagen. I believe in
tiations. It has shown a “leading by example” style of 2015 we will see a balance of both.
leadership, using soft power and building alliances,
which is very modern and very different from other In 2015, it might be less realistic that we will see a
styles of leadership. Examples include the Durban strong top-down approach, but on the other hand, a
Alliance between the European Union and some of simple bottom-up pledge system is for the moment
the least developed countries on this planet. Given the just not good enough, as pledges do not match what
sort of hybrid nature of the European Union between we need in emission reductions (i.e. to stay below the
national sovereignty and the supranational entity, 2°C guardrail).
this is just the right way for the EU to show leadership.
Of course, though, this sort of leadership demands
ambitious action inside the European Union and this
includes setting ambitious targets. EU citizens need
to understand the interrelatedness between internal
EU decisions—as energy regulations and emission
targets—and the foreign policy ramifications of it.
We often discuss the bottom-up and top-down
approach concerning the environmental sustainability. Where do you see it in the future?
There are different meanings to bottom-up and topdown to begin with. If you look at Germany, we have
There is a clear connection between
the fight against climate change and
the fight against poverty.
15
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Regional Currencies—Sustainability in Your Wallet?
by Lukas Fesenfeld and Thomas Kiesgen
The economic crisis of 2008 and the resulting distrust in (public)
monetary systems have led to a growing interest in alternative ways of
designing economies and monetary systems. More and more citizens
and civil society actors are beginning to question to what extent the
current economic system serves the interests of people and the planet.
Debates about how to make the financial system more sustainable
touch upon a wide variety of topics. Money is usually regarded as one of
the crucial instruments of modern market economies and thus features
prominently in this debate. Regional currencies are one option, albeit
one which has not been widely discussed, to redesign our economy
and monetary system towards being more sustainable.
What are Regional Currencies?
Regional currencies are not a new phenomenon, but
their number starkly increased over the last decade all
over Europe. They belong to the wider family of secondary currencies, which include all currencies and
means of payment other than the respective primary
currency, like the Euro or the British Pound (Degens,
Max Planck Society, 2013). They are narrower in distribution and usage, however, because they can only be
used in a limited geographical area, like a village, city
borough, or a larger region. For instance, the internet
based Bitcoin or Airline and Hotel bonus miles cannot be considered as regional currencies due to their
unlimited geographic scope. Regional currencies vary
16
considerably regarding their aims, size, and degree
of organisation. They can either aim to substitute,
or exist in parallel to the official primary currency;
they can have only a handful of members exchanging goods and services, or be professionally run and
marketed large-scale projects.
Can they be sustainable?
Notwithstanding their differences, many of today’s
regional currencies share their connection to the
wider concept of sustainability, be it its social, economic or ecologic dimension. In the Greek ports of
Patra and Volos, for example, which have been hit particularly hard by the global financial crisis, the idea of
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17
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social sustainability seems to be the raison d’être for
the regional currency “TEM” (Greek abbreviation for
"Alternative Monetary Unit"). With “TEM” the organisers hope to strengthen the local community and
emphasize giving over taking. With other currencies,
the idea of economic sustainability is central. In the
prosperous and hip English city of Bristol, the local
economy is supposed to be bolstered by a local currency that can also serve as the city’s brand. Similarly,
in London’s borough of Brixton, the Brixton Pound is
supposed to support independent traders and shops.
Further secondary currencies emphasise ecologic sustainability, like in the northern German city of Kiel,
where a currency for the state of Schleswig Holstein
has been developed with the primary aim of boosting
regional production and the consumption of organic
products. The goal of supporting “sustainability” is
common to many more regional currencies across
Europe—but can they actually achieve their grand
goal and contribute to a more sustainable society?
Economic dimension
From an economic perspective, a first point used to
argue the case for regional currencies is that they
strengthen regional economies (Kennedy, 2012). This
point of view is based on the assumption that regional
business networks and trade relations gain importance when regional currencies are adopted. The new
currencies can only be used within the region and
therefore incentivise regional investments.
Regional currencies mean that
valuable economic potential is not
wasted in the absence of “hard
money”.
The idea is that higher regional currency velocity
boosts regional economies. In order to ensure a high
circulation of money, some regional currency initiatives, like the Chiemgauer in Southern Germany and
the TEM in Greece, have introduced a demurrage system, meaning that they work without positive interest
rates and instead to devaluate the money on a regular
basis (Kennedy, 2012). If every four months the bills
in the wallet lose, say, 5% of their value, users have
little incentive to save the money but instead spend it,
which in turn increases consumption in that region.
A second argument in favour of regional currencies
is that the resilience of monetary systems increases
when a variety of currencies exist. A “double-net” of
secondary and primary currencies can assure the stability in times of financial crises as economic actors
have a “back-up-option” to satisfy their liquidity and
credit needs. As the example of the WIR in Switzer-
18
land proves, secondary currencies can have an anticyclical effect and therefore even gain the support of
the central bank (Stodder, 2000). In fact, the WIR is
one of the largest complementary currency systems
worldwide, with total assets of around 4 billion Swiss
francs. At times when banks reduce the credit supply in the primary currency (e.g. Swiss Franc) due to
factors such as stricter capital requirements or risk
management, a secondary currency such as the WIR
can substitute the official currency and thus cushion
liquidity and credit problems.
It is questionable, however, whether regional monetary systems alone have the potential to lift the
regional economy. Similar to official currencies,
secondary currencies can merely contribute to an efficient economy, but not eliminate structural economic
problems. Moreover, the transferability of one currency into another is a bureaucratic and costly endeavour. As a prominent example serves the pre-Dollar era
in the United States, where transaction costs and the
risk of fraud rose because of the variety of currencies
in use. In addition, strong regional currencies could
potentially have negative external effects for nonparticipating regions. These were after all the main
arguments that fostered the development of national
and even continental currencies in order to enhance
trade and social and political integration. In fact, it
is unclear if regional currencies can make the local
economy more resilient—one has to bear in mind that
regional currencies play a negligible role in current
economies: in Germany for instance, they account for
only 0.0000001% of the overall money in circulation
(Schuster, 2012).
Ecologic dimension
The ecologic dimension of regional currencies is not
necessarily a characteristic of the currencies themselves, but rather represents a widespread motivation of the currency founders. Economic growth is
blamed for extensive use of natural resources and
causing environmental burdens. The post-growth
argument is often based on the premise that interest rates trigger economies to grow (Kennedy, 2013).
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However, no empirical research exists as to whether
regional currencies without interest rates reduce economic growth or whether demurrage systems in fact
increase the velocity of consumption.
Yet, regional currencies can have both indirect and
direct effects on ecologic sustainability. They can
support the consumption of regional products by only
including businesses that have an environmentally
friendly supply chain and offer regional products.
Particularly regional agricultural products entail
fewer emissions in transportation and hence on
average present a better carbon record. Nevertheless,
it could well be that regional currencies are used by
consumers who, in any case, already consume regionally and organically.
Furthermore, regional currencies such as the
Chiemgauer often directly support local ecologic projects. Gains from currency exchange or demurrage are
given to projects dedicated to concrete environmental
causes. Critics, however, argue that these projects
would be supported even without the currencies
being in place. The currencies therefore become a
“quasi-status symbol” for sustainable action despite
not directly or significantly effecting eco-friendly
behaviour.
To what extent only a small proportion of the well-off
middle class can afford to use regional currencies in
order to buy the more expansive organic and regional
products heavily depends on the specific currency. It
is subject to an ongoing debate whether the social
dimension of sustainability is compromised by this
and whether regional currencies explicitly focus on
richer segments of society.
Social dimension
If we look at what regional currencies can contribute
to the realm of social sustainability, it has been suggested that they can help further social interaction
among its users, thus enhancing the identification
within the group of people using the currency. On
the one hand, they can bring users together. At the
local market in Volos, Greece for instance, people are
Almost any regional currency
has the aim to make the world more
sustainable.
coming together twice a week, every Wednesday and
Saturday, to trade goods and services in the local currency TEM. Goods can also be paid for with services
and vice versa—people are able to purchase apples
in exchange for, say, yoga lessons. The point is that
everybody can offer something even if the person has
no money available; all people can offer something
that is valuable to somebody else. Due to this, regional
currencies mean that valuable economic potential is
not wasted in the absence of “hard money”.
On the other hand, the organisers of the currency
have to make important decisions about the functioning of the monetary and decision-making processes.
Regional currencies are, in a way, civic engagement
projects that teach participants many things about
how a society works on a micro-level. Regional currencies can support social interaction between the
users and also among the organisers. It is questionable, though, how much influence the projects have
on people outside these groups. It remains to be discussed to what extent regional currencies contribute
to the development of stronger regional identities at
the cost of national and European feelings of identity.
Particularly, in extreme conservative and right-wing
groups regional currencies find an echo—not to
strengthen regional social integration in accordance
with European integration, but in opposition to it.
In sum, the side effects of the projects, such as the
social interaction between project volunteers and
users, frequently have deeper implications for the
community than the direct monetary functions of the
project—despite the small scale of most projects, and
the relatively small number of people being involved.
What big money can learn from small money
As laid out, the connections of regional currencies to
the concept of “sustainability” are manifold. In fact,
we can go so far as to say that almost any regional
currency has the aim to make the world more sustain-
19
22.04.14 10:36
Lukas Fesenfeld studies
at the Hertie School of
Governance. He is the founding member of the initiative
“NAHhaft—natürlich nachhaltig”, aiming to increase the
share of organic, regional and
seasonal food in public canteens. He studied at the University College in Maastricht
and Seville law, economics
and politics. He worked for the
Wuppertal Institute and the
GLS Sustainable Bank.
able, be it in an economic, ecologic, or social way, or
even all three taken together. Yet, regional currencies
in Europe vary widely with regard to their aims and
organisational structure.
First, it is crucial to distinguish what the regional
currencies aim for and what they actually achieve.
Many regional currencies want to boost the regional
economy, they want to build a more resilient local
economy, they want to support organic food production and ecologic projects, they want to strengthen
identification and social interaction (Stuckatz, Fesenfeld, Kiesgen, et. al 2013). Despite the noble aspirations, it remains more than doubtful if they succeed
in doing so. In many respects, secondary currencies
often fail to meet their aim to solve some of today’s
pressing challenges. Structural economic crises are
not prevented by secondary currencies, and their
importance in today’s economies is marginal. Despite
this, it is possible to imagine a monetary system in
which primary and secondary currencies supplement
each other.
Thomas Kiesgen is a Double
Degree Master student at the
Hertie School of Governance
and Bocconi University and
also works as a regulatory
affairs consultant at NIKE
Consulting, Milan, Italy. He has
a strong interest in comparative education and environmental policies, and holds a
Bachelor’s degree in political
science from the University of
Konstanz.
That secondary currencies can work is only observable at the micro level. They construct a new economy
on a small scale, and are actually able to undertake
ecologic projects. In their confined territory, it also
seems that it is in the social sphere where regional
currencies can make their most valuable contribution.
People pay with the money, organise events, and get
together to discuss the future of the currency projects
and how they can help achieve a better future. Especially in those countries hit by the current financial
crisis, the currencies made a clear difference at the
micro-level. In Volos for instance, users of the TEM
were able to trade, even though income in Euro was
lacking as a result of the crisis. The attempts often
seem unfinished, incremental and experimental,
however, they succeed in questioning economic, ecologic and social relationships.
Rethinking the concept of money enables us to fundamentally scrutinise the interactions between people
in our economic system and the very basis of what our
economic system is supposed to achieve. Integrating
the knowledge gained in these small currency projects
into big official monetary policy could be beneficial to
the society as whole. Not only does it reveal some of
the fundamental faults in the current monetary and
financial system, but it also offers a starting point for
sustainable solutions. Public debate should therefore
be aware of the small money while turning to the big
money.
Sources
Degens, P. (2013): “Alternative Geldkonzepte—ein Literatur
bericht“. MPIfG, Discussion Paper, 2013/01.
Kennedy, M. (2012): “People money: the promise of regional
currencies”. Axminster: Triarchy Press Ltd.
Schuster, L. (2012): “Regiogeld—eine gute Idee? Versuch
eines Perspektivwechsels“. Mehr Wissen.
Stodder, J. (2000): “Reciprocal exchange networks: implications for macroeconomic stability”. International Electronic
and Electrical Engineering, Engineering Management Society,
Conference Proceedings, 2000/08.
Stuckatz, J., Fesenfeld, L. Kiesgen, T. et. al. (2013):
“It’s the motivation, stupid! The influence of motivation of
secondary currency initiators on the currencies’ success”.
The 2nd International Conference on Complementary
Currency System, Working Paper, 2013/06.
20
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How Pension and Health Insurance Contributions
Can Solve the Climate Problem: Involving Institutional Investors
to Finance Clean Energy Technology
by Michael Schulze
In recent years, international climate negotiations can hardly be seen
as a success story when it comes to preventing dangerous climate
change. While it is likely that a post-Kyoto agreement will be concluded
in 2015, it is far from clear that the agreement will be ambitious enough
to meet the 2°C target, which was politically agreed to during the 2010
UN Climate Conference in Cancun. In the face of slow and uncertain
progress on the political level, there is however, a promising avenue
that has not received as much attention in the public debate as it should
have—the role institutional investors, such as public and private
pension funds, or insurance companies could play in addressing the
climate problem.
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Institutional investors are the largest shareholders
of market-listed fossil fuel companies, such as Exxon
Mobil or BP. The latter’s website, for example, states
that 82% of the company’s shares are owned by institutional investors. In addition, according to the Carbon Tracker Initiative (2012), the top 200 listed fossil
fuel companies possess around 20% of global coal
reserves, 50% of conventional gas reserves, and 10% of
global gas reserves.1 Overall, this amounts to almost
30% of global proven reserves and 745 Gt (gigatons) of
potential CO2 emissions.
sion holders” regarding their investments in fossil fuel
companies. Acting on their fiduciary responsibility,
institutional investors are left with two options. Firstly,
they could use their shareholder voting rights to push
fossil fuel companies to evaluate the vulnerability
of their business model to climate change and take
appropriate steps to mitigate risks. Secondly, investors
could decide to divest from fossil fuel companies and
to move their money elsewhere.
One possibility to re-direct investments are clean
energy technologies, in which an additional investment of $36 trillion is needed until 2050 to meet the
2°C target, according to the International Energy
Agency (2012). In terms of annual investment this
is tantamount to an additional $1 trillion compared
to the business-as-usual scenario. Comparing these
At the same time, researchers (Meinshausen et al. 2009) figures to today’s investments of less than $300 bilcalculated that the amount of CO2 that can be emitted lion, this means doubling investments until 2020 and
from 2000 to 2050 if global mean temperatures should quadrupling them until 2030. Currently, most investnot rise more than 2°C above pre-industrial levels with ments in clean energy technology are made by utility
a probability of 80% is 886 GtCO2. In the first decade companies as well as development and commercial
of this century alone 282 GtCO2 were emitted already, banks. While it is beyond their capacity to close the
which leaves another 565 GtCO2 for the four decades observed investment gap, institutional investors who,
to come. Comparing this to the 745 Gt of potential according to the Climate Policy Initiative (2013), manCO2 emissions owned by the largest fossil fuel com- age around $71 trillion3 are able to do so.
panies, it becomes more than clear that not all of their By investing in clean energy institutional investors
reserves can be used if the 2°C target is to be met (Car- cannot only reduce their exposure to climate change
bon Tracker Initiative 2012).2
risks but also improve their portfolio performance.
As a consequence, if large parts of the carbon in the Investments in clear energy infrastructure, for
ground cannot be burned, the fossil fuel companies instance, are often indexed to inflation, promise lowshould be prepared to experience a major revaluation volatility cash flows and are only weakly correlated
of their market value. A 2013 report by HSBC Global with the development of other investments. On top of
Research estimates that the value of fossil fuel compa- that, they obviously help to mitigate climate change
nies will decrease by 60-80%. As a result, shareholders and also promise the creation of many new, well-paid
will lose a lot of money. The Japanese Government jobs for workers of almost all skill levels as for instance
Pension Investment Fund or the US Civil Service the ILO has shown in a 2013 report.
Retirement and Disability Fund, for example, will lose
money that is needed to finance current and future
pensions. Over the past couple of years, revaluations
of US coal companies could already be observed. Given
the large risk this involves, even World Bank President
Kim said during the 2014 World Economic Forum in
Davos that “the so-called ‘long-term investors’ must
recognise their fiduciary responsibility to future pen-
Institutional investors are the largest
shareholders of market-listed fossil
fuel companies, such as Exxon Mobil
or BP.
22
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Michael Schulze holds a
BA in Liberal Arts from the
University College Maastricht.
Next to his studies at the
he is active in the school’s
Green Office and works at the
Mercator Research Institute on
Global Commons and Climate
Change.
Today there are many encouraging engagements
to be observed already. For example, the California
Public Employees Retirement System, the largest US
public pension system with a total market value of
more than $237 billion, has committed $1.2 billion to
alternative energies. In total, however, institutional
investors only account for 2.5% of global clean energy
asset finance and allocate 0.1% of their assets to clean
energy infrastructure projects as OECD researchers
have calculated. In order to increase these numbers
and to enable institutional investors to direct more
investments to clean energy technologies, several
hurdles need to be overcome. These include the need
for governments to design credible long-term lowcarbon development strategies, reduce trade barriers
to green technologies, and establish a functioning
carbon market with a strong price signal. On top of
that, appropriate risk insurances need to be developed
and key investment terms like “green bond” need to be
defined in a standardized manner. Thereby, due diligence requirements for investors and thus transaction
costs are reduced. If these issues are addressed, institutional investors, who manage and invest pension
and health insurance contributions, can become a key
to keep climate change within manageable bounds.
References
Ceres (2014): “Investing in the clean trillion: Closing the clean
energy investment gap”. Ceres, Boston.
Climate Policy Initiative (2013): “The challenge of institutional investment in renewable energy”. CPI, San Francisco.
HSBC Global Research (2013): “Oil & carbon revisited”.
HSBC, London.
International Energy Agency (2012): “Energy technology
perspectives 2012”. OECD/IAA, Paris.
International Labour Organization (2013): “Sustainable
Currently, most investments in clean
energy technology are made by utility
companies as well as development
and commercial banks.
Development, decent work, green jobs”. ILO, Geneva.
Kaminker, C., Stewart, F. (2012): “The role of institutional
investors in financing clean energy”. OECD working papers of
finance, insurance and private pensions no 23, OECD, Paris
Meinshausen, M., Meinshausen, N., Hare, W., Raper, S.,
Frieler, K., Knutti, R., Frame, D., Allen, M. (2009):
“Greenhouse-gas emission targets for limiting global warming
to 2C”. Nature, vol. 459, no. 909, pp. 1158—1162
1 The figure for coal is rather low since the largest reserves
are located in the US, where the Federal Government owns
over 40% of the reserves. The percentage of gas owned
by listed companies is low because of the concentration
of reserves in the Middle East and in Russia, where the
majority of companies is state-owned.
2 This is only referring to the potential emissions of listed
companies, while around two thirds of the world’s fossil
fuel reserves are owned by National Oil Corporations and
other state-owned firms.
3 Around $42 trillion are managed directly by pension funds
and insurance companies.
23
22.04.14 10:36
Population Demographics and
the Sustainability of the Welfare State
Interview with Prof. Dr. Michaela Kreyenfeld
by Meilin Moellenkamp and Katrina Lampert
Demographic trends and sustainable development have a synergistic
relationship. Population growth combined with unsustainable
consumption patterns places increasingly severe stress on our planet,
especially when taking into account the finite nature of resources.
We are confronted with the paradox, that on the one hand further
population growth exacerbates major environmental problems, and on
the other hand, the functioning of our welfare state systems depends
on high birth rates—so that upcoming generations can carry the
existing financial burdens.
Let us begin with a question directed towards the
bigger picture: The world population is at a little over 7 billion people now and is projected to
exceed 8 billion in 2020. According to the United
Nations, current population projections say that
the world’s population is going to peak in about
25 years. However, the global total fertility rate
(average number of children each woman gives
birth to) has already been rapidly falling over
the last 40 years. When talking about population demographics, should we currently be concerned about the world being threatened by overpopulation or de-population?
For decades discourse has focused on the issue of
over-population, but since the turn of the century discussion has changed. Now, there is concern in parts
of the world, such as Europe, that population size is
declining—although it has not declined yet.
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The majority of scholars do not believe overall population decline is a problem, but that it can be a problem
regionally. It can especially be a problem in places like
eastern Germany, where there is a shrinking population and migration away from the region.
However, I would say that the main issue is not
population decline but population ageing! We are
living longer and with better health—life expectancy
is increasing. A female child born in Germany today
is expected to live, on average, 104 years according to
estimates from James Vaupel, the director of the MaxPlanck-Institute for Demographic Research.
The fact that people are living longer and that there
is a higher number of elderly people in society corresponds with an increase in the number of diseases
related to old age, like dementia for example. These
diseases require particular treatment and are a big
challenge for the families and for our society. It has
also to be considered that among the aging babyboomers there are many who don’t have children who
can take care of them.
Firstly, migration could help to even out population
decline. Germany, for example has had a low birth
rate for the past fifty years and has done fine economically. This is partially due to high immigration into
Germany that counteracted population decline. It is
still unclear, however, how much immigration a society can cope with. According to the UN-projections,
migration is part of the solution but might not solve
everything. The amount of immigration needed to
balance out over/under populated regions is assumed
to be so large that most countries would be unable to
take that many immigrants into their societies. Switzerland, for example, has recently voted by nationwide referendum to cap the number of immigrants
entering the country despite retaliation by the EU.
A second solution could be to raise the retirement age.
Germany has the oldest population in Europe and
soon the baby-boom cohort is about to retire. This
creates big problems for the pay as you go pension
system we have in place. Generally speaking, the genIn terms of the sustainability of the welfare state, eration currently reaching retirement age is relatively
“economists say the main problem is that coun- healthy and could theoretically work longer. This is
tries facing massive public debt have borrowed not the case for everyone though, and an issue that
against the potential earning power of future arises with this solution, is what to do with those
generations who are no longer being born”. Does elderly people whose health declines early.
this mean our systems cannot adapt to regional Thirdly, another solution that should be considered is
population decline and instead we must try to if we can push more women into the labour market.
This is not a fool-proof idea, though. Even if we look
increase birth rates?
It is true that population decline is especially a to Sweden, often named as a best practice state for
problem for countries with pay-as-you go pension effective gender policies, their system shows us that
systems like we have in Germany, however, it can even the majority of their women there do not work
be questioned if decreasing birth rates and popula- full-time. Interestingly, if you search for a country
tion growth are indeed such a big problem for our with high shares of women in the workforce, and
economies. Furthermore, increasing birth rates is not where many women reach high-income positions,
necessarily the only solution; institutions can adapt you have to look to the US—although their family
and compensate for the regional population decline policies are much less well established.
we are currently facing.
Institutions can adapt and com
pensate for the regional population
decline we are currently facing.
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22.04.14 10:36
From these three possible solutions it can be seen that
while all are good ideas to be implemented, it still will
not be easy for our institutions to adapt to population aging. To conclude, however, it is important to
realise that solutions other than ideas to increase
birth rates should be taken into account. Even if we
tried to increase birth rates now, it is already too late
to solve the welfare problems we are going to face ten
to fifteen years from now.
We recently found an article quoting the head of
the Vatican Bank Ettore Gotti Tedeschi, who said
“the true origin of the current economic crisis is
Europe’s population decline and low birth rate”.
Do you agree that the economic crisis in Italy,
Spain and Greece might be the result of Europe’s
low birth rates?
In my opinion, Europe’s economic crisis is not a result
of low birth rates, but of the structure of the southern
European labour markets. The southern European
countries do not offer stable employment positions
for the younger generation. In Germany, young
people coming from the vocational training system
have a smoother transition into the labour market.
Whereas in Italy for instance, the labour market is
more tailored towards the older workers.
Even if we tried to increase birth rates
now, it is already too late to solve the
welfare problems we are going to face
ten to fifteen years from now.
Prof. Dr. Michaela Kreyenfeld is Professor of Sociology
at the Hertie School of
Governance and head of the
Research Group Life Course,
Social Policy and the Family
at the Max Planck Institute
for Demographic Research
in Rostock. Further, Kreyenfeld
is a member of the editorial
board of the Journal of Family
Research and the Journal
Comparative Population
Studies (CPOS).
so before entering the working world there is a clear
preference for one day having a family. We have seen
that in countries where family life is more compatible
with work life, birth rates are higher. In countries like
France and Sweden also highly educated women have
children. In Germany, many stay childless.
It can be concluded that public policy needs to
find a way towards more sustainable population
growth while taking into account interactions
between demographic changes, environmental
concerns, and regional variations deriving from
different levels of development. Partial solutions
such as migration, raising the retirement age,
and encouraging more women into the labour
market are important to consider, but creative
ideas must be found to make sure our welfare
state systems can adapt to actual population
demographics.
I believe that a low birth rate is indicative for a society
that something is going wrong. Some demographers,
especially in the Netherlands, argue that the choice to
be childless is part of living in a free and liberal s ociety.
That may be. However, in many cases women stay
childless because they do not know how to combine
work and family life. When you ask young people at
age 20, most of them say they want to have children—
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Ones and Zeroes: The Sustainability of Labour Policies
in the Face of Sweeping Technological Change
by Sebastian Campos Groth
In 1987 the American economist Robert Solow famously wrote “you can
see the computer age everywhere but in the productivity statistics”.
In the last 30 years since his remarks, things have changed dramatically.
Not only have productivity figures reflected efficiency gains attained
through the investments in computerisation, but they have done so rather
quickly and at an accelerated pace. While it took around 40 years for
electric motors to increase the productivity of factories, information
technologies accomplished it in less than 10 years.
What once was almost exclusively a feature of offices,
today finds computers, sensors, and all sorts of manifestations of digital technologies practically everywhere in urban areas of developed economies. This
expansion of technologies is also a big change from
the situation experienced by Solow in 1987 and one
that is very likely to be exacerbated in the near future
by the rising interest from private and public sectors
in measuring and quantifying human behaviour in
the form of ‘big data’.
Perhaps because of the notoriety of changes brought
about by advances in technology there has been a
delayed interest in the directions and effects of such
changes for society. Various business consultancies
have focused on “The future of work in advanced
economies”, “Disruptive Technologies”, or “How digital technologies change the way we work” (McKinsey
2012, 2013; Accenture 2013), while articles and special
reports have sprung up telling of “The future of jobs”,
“Technology and work”, and “The great mismatch”
(The Economist, 2014, 2011).
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arisen from increased computational speed, developments in the fields of computer science, and natural
user interfaces that allow computers to carry out tasks
which until now were believed only to be realizable
by human beings. The automation of knowledge work
is expanding from high frequency trading floors to
hospitals and law firms. This is understandable, since
knowledge worker employment costs amount to 27%
of global employment costs and the potential savings
are in the billions of dollars (McKinsey, 2013).
One prevalent theme in these publications is how the
labour market will adapt to technological changes.
There seems to be an increasing anxiety about labour
and education policies not being able to keep up with
the speed of transformations brought about by these
changes, not to mention the potentially large number
of workers likely to be displaced from their jobs and
replaced by machines.
Viewed in this light, preoccupations about the future
of labour are well justified. Small numbers of highly
skilled workers whose talents are complimentary
to computers will fare well in the new knowledge
economy, but the middle-to-low skilled will struggle
to find adequate jobs. In the ‘old’ economy, big companies like General Motors used to create thousands
of jobs directly. Nowadays, rising stars of the tech
Employment in the manufacturing sector has tra- industry are responsible only for a fraction of the jobs
ditionally been the most affected by technological available. WhatsApp, an instant messaging service
change. From the industrial revolutions in the 18th with 450 million users employs only fifty people. Faceand 19th centuries, manufacturing has constantly book, which recently purchased WhatsApp, is likely to
seen the incorporation of machines result in some employ around six thousand people to provide social
job losses in both the short and the medium term. networking services to its 945 million users.
Increased automation of production lines first
and more recently 3D printing have contributed to Economists, however, have long been sceptical about
important lay-offs of workers but past experience has Luddite views and scenarios where the technological
allowed policymakers to know which policies work progress renders masses of workers jobless for good.
First, they argue that the effects of knowledge techand which do not.
nologies on labour markets might be overestimated.
Current concerns stem not from the effects of digital A great deal of criteria, apart from technical feasibiltechnologies on manufacturing, but from their conse- ity, comes into play when companies determine which
quences on sectors that have been much more resilient jobs are automated. In some countries, for example,
to a technological change than the manufacturing firms use humans to do the same jobs that they have
one. Previously ‘safe’ professions such as account- relegated to machines in other countries, even though
ing and auditing, real estate dealing, commercial they could have easily been automated.
piloting, and law-clerking are just a couple of professions of the 47% expected to experience significant Second, economists point out that in the long term,
job losses in the next two decades (Frey & Osborne, technological displacement does not lead to perma2013)—not even musicians are safe. The music genre nent unemployment because the productivity gains
featuring the fastest growth rates in the music indus- will be spent on goods and services, and, according to
try is not one requiring a large or even small number past experience, will be reinvested in firms that will
of musicians. Rock or pop bands consisting of singers, then hire labour. During the Industrial Revolution,
guitarists, and drum-and-bass players are stagnating, the number of “old” jobs declined significantly only to
while DJ’s play alone, using only music programs like be replaced by “new” jobs, so that the unemployment
Ableton Live and turntables, and as a result driving figures did not rise dramatically in the long term.
the incredible popularity of Electronic Dance Music.
The susceptibilities of many of these professions have However true, there are at least two crucial differences between the previous technological revolutions
and the current one. First, thanks to Moore’s Law, the
speed of current technological change is exponential,
making timely labour market adjustments much
less likely. Second, the policies put into place to help
This time around, what is needed
are investments in higher education,
and these are much less likely to
materialise.
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Sebastian Campos Groth
studied International Relations
in Mexico City and Public
Policy at Hertie School of Governance. He focuses on New
Knowledge Economy, Policy
Evaluation and Transatlantic
Relations. He is currently
writing his Master Thesis on
the Creative Industries Cluster
in Berlin as part of Hertie
School’s 10th anniversary
Jubilee Projects.
humans compete against machines during the previous revolutions are unlikely to yield the same benefits
as before. Large investments in basic education will
not give humans the same edge over machines that
they did in previous centuries. This time around, what
is needed are investments in higher education, and
these are much less likely to materialise.
Far too little attention has gone to
address the impending wave of layoffs as a product of technological
progress, making the sustainability of
current labour policies questionable.
As the Global Employment Trends 2013 report from
the International Labour Organization shows, labour
policy changes around the world are primarily focused
on dealing with the aftermath of the 2008 financial
crisis. Developed economies are focusing on how to
address the ‘great mismatch’ between unemployed
workers eager to work and employers eager to hire
but not finding the adequate skill set in the pool of
applicants, as well as the mitigation of youth unemployment. In developing economies, the focus rests
on establishing regulations to protect worker’s rights
while the labour force becomes more flexible.
Policymakers should invest more effort preparing
institutions and society for the upcoming technological transformations. If labour policies do not
anticipate the great changes to come, welfare systems
and the public purse will find themselves strained
by unemployment. Even more worrisome, we might
soon find ourselves in an increasingly unequal society
resembling that of the binary code, where the skilled
ones get all the spoils of technological innovations
and the low-skilled have zero chances of employment.
References
Brynjolfsson, E & McAfee, A (2012): “Race against the
machine: how the digital revolution is accelerating innovation, driving productivity, and irreversibly transforming
employment and the economy”. Research Brief, Sloan School
of Management, MIT: pp.8.
Benedikt Frey, C & Osborne, M A (2013): “The future of
These labour market problems are undoubtedly employment: How susceptible are values to computerisaimportant, but far too little attention has gone to tion?”. Oxford University Press.
address the impending wave of lay-offs as a product The Economist (2011): “The future of jobs”. The Economist
of technological progress, making the sustainability Special Report, from the print edition, 2011/09.
of current labour policies questionable. Furthermore, The Economist (2014): “Technology and work. Learn and go.
even if the effects of the coming technological revolu- How quickly can people learn new skills?”. The Economist,
tion on the unemployment figures were not drastic, from the print edition, 2014/01.
the consequences in terms of job quality and income Feistein, D & Ramsay, C (2012): “The rise of EDM”. Music Busidisparity certainly will be.
ness Journal, Berklee College of Music, Boston.
Manyika, J et. al. (2012): “Help wanted: The future of work in
While digital technologies have greatly increased productivity and skills, institutions have not been good
at keeping up with them. This is one reason behind
income distribution becoming more uneven. Current
labour trends where people with college degrees take
the jobs previously consigned to the low-skilled will
be exacerbated by technological change, pushing
those with medium skills into underemployment and
those with low skills into long-term unemployment.
advanced economies”. McKinsey Global Institute: pp. 28.
Manyika, J et. al. (2013): “Disruptive technologies: advances
that will transform life, business, and the global economy”.
McKinsey Global Institute: pp. 176.
31
22.04.14 10:36
The Sustainability of Carbon Taxes in the Political Process
by Johanna Arlinghaus
The 2009 Conference of the Parties (COP) 15 that took place in Copenhagen
was a disappointment for many, since no agreement was made on a postKyoto international commitment to limit the increase of global temperatures.
Similarly, the most recent negotiations in Warsaw during November of 2012
also did not produce any long-lasting commitments, leaving ample room for
countries to conclude a new international climate agreement after 2020 at the
COP21, scheduled to be held next year in Paris. As a result of this international
negotiation gridlock, countries increasingly revert to national approaches
to tackle climate change in their attempt to achieve sustainability and limit
emissions.
Background
Carbon taxes, like emissions-trading schemes (ETS),
are a way to put a price on carbon emissions. A carbon price is a market-based approach designed to
provide static and dynamic incentives for carbon savings. Static incentives for carbon savings result from
the increased price that is put on emitting carbon.
Dynamic incentives, on the other hand, result from
the search for more efficient and less pollution-intensive technologies, which ultimately lower marginal
abatement costs for firms (Barde and Godard 2012).
Next to being used as a tool for environmental policy,
carbon taxes can also be a tool to fill gaps in government budgets. Despite the potential of environmental
tax revenues, their revenues account for only 2-3% of
GDP in OECD countries according to 2010 figures.
From an environmental perspective, carbon taxes are
most effective if the carbon price is levied in a uniform manner across all industries, fostering pollution
abatement where it is most efficient and equalising
marginal abatement costs across countries.
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Australia, Ireland, and the Canadian province of British Columbia introduced carbon taxes in 2012, 2011,
and 2008 respectively. The Australian carbon tax was
introduced in 2012 in the midst of a resource boom
associated with rapidly rising emissions and was
meant to help the country reach its Kyoto Protocol
commitments. Overall, the tax covers about 60% of
Australia’s greenhouse gas (GHG) emissions (Jotzo
2012). Industry assistance is provided in a number of
ways, which resulted in the most emissions-intensive
Substantive political economy implications can arise industries receiving free permits, and assistance to
from the introduction of carbon taxes, from their cover 66% to 94.5% of industry average carbon costs
effects on distribution, to their effects on industrial during the first year after carbon prices were implecompetitiveness. By increasing the price of pollu- mented (ibid.). On these grounds, the Australian
tion, carbon taxes indirectly increase the price of carbon pricing scheme was heavily criticised as it
production, making politicians and industries fear was said to have provided distortionary subsidies via
for the loss of competitiveness of national industry the free allocation of emission permits through the
vis-à-vis countries without a carbon price. A loss of grandfathering to EITE industries (Spash 2012). This
competitiveness would ultimately cause carbon leak- contradicts the standard economic theory of emisage—the relocation of industries to countries with sions taxes, which would have required a uniform
little or no environmental regulation. This argument price of emissions across industries.
is often advanced prior to the introduction of carbon
taxes, making politicians very susceptible to lobby- The Australian carbon tax issue is said to have decided
ists’ demands for exemptions, rebates, and compen- the outcomes of two elections since their implemensation for a carbon price. An argument in favour of tation, demonstrating the heated political debate
carbon taxation, despite these inefficiencies, could surrounding this topic. During the September 2013
be the smart recycling of carbon revenues to affected elections, the tax had been regarded as one of the
groups in order to remedy the competitiveness and major political issues that the elected Coalition Govdistributional implications of carbon taxes. Such ernment proposed to abolish. At the time of writing,
a scheme could even improve the efficiency of a tax it was unclear whether this promise would translate
system by shifting the emphasis from direct taxation into law. In the face of an uncertain future, the carbon
towards indirect taxation. In this context, the Porter tax is thus unlikely to produce any sustainable change
Hypothesis prominently states that a price on carbon in Australian production and consumption patterns
might bring about economic gains, stimulating green since companies are unlikely to take the price into
innovation (Porter and van der Linde 1995). As will be account in their investment decisions.
discussed later, it has so far been difficult to prove
either the existence of lost competitiveness or the The circumstances surrounding the Irish carbon tax
beneficial consequence of the Porter Hypothesis for differ substantially from the Australian case. The
economies. As a consequence of carbon taxes’ ambig- Irish Coalition Government including the Green Party
uous implications, it sometimes proves difficult for introduced a carbon tax in the midst of the Financial
politicians to introduce uniform carbon taxes or to Crisis, associated itself with large fiscal problems
make carbon taxes sustainable once they have been and decreasing emission levels. The introduction of
successfully introduced. The next section thus takes the carbon tax was accompanied by a programme of
a look at three distinct cases of countries, which have heavy fiscal reform and spending cuts, among other
measures, with the objective of maintaining excepintroduced carbon taxes with differing experiences.
tionally low corporate tax levels. The carbon tax was
viewed as “just another measure” putting pressure on
individual spending and has, therefore, not received
the attention of the larger public (Convery 2013). In
addition, the most emissions-intensive Irish sectors
had already been covered by the EU ETS—accounting
for 45% of the country’s emissions—and have not
put up substantial pressures for exemption from the
government (ibid.). All of these factors have certainly
made it easier to introduce the tax, but also to ensure
that the Irish carbon tax is here to stay.
Next to being used as a tool for
environmental policy, carbon taxes
can also be a tool to fill gaps in
government budgets.
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The influence of lobbyists on carbon taxes could be
decreased if it could be demonstrated that carbon
taxes do not harm the competitiveness of firms,
industrial sectors, or even the national economy.
Unfortunately, it is difficult to collect evidence on the
arguments against or in favour of carbon taxation
such as the Porter hypothesis, the effects on industrial competitiveness, or carbon leakage.
A third remarkable case is the Canadian province of
British Columbia (BC), where in 2008 the provincial
government introduced a carbon tax despite fears
of substantial competitiveness effects on domestic
agriculture and manufacturing (Rivers 2010). The
political discussion surrounding the BC carbon tax
was initially very favourable. Its introduction was
facilitated by rising public concern for climate change,
a committed leadership, and a right-of centre government with support from the business community
(Harrison 2013). Of most concern was the agricultural
sector, which worried about difficulties adapting to
the new tax by decreasing fuel-use in the short run
(Rivers 2013). BC’s high-tech greenhouse vegetable
and horticulture growers were thus given a one-time
$7.6 million relief from the carbon tax to enable BC
growers to better compete with US and Mexican producers (Harrison 2013).
Ex ante economic modelling studies, often undertaken with the help of Computable General Equilibrium Models, mostly predict losses of market shares
for industries. In contrast, the small amounts of
empirical ex post evaluations of carbon taxes that
have been undertaken do not find any competitiveness losses. Empirical evaluations, however, are complicated since the introduction of carbon prices tends
to be accompanied by other policies or developments.
This makes it difficult to identify any causal effect
with respect to the influence of carbon taxes on emissions, industrial competitiveness, or distributional
effects on the macro-level (OECD 1997, Baranzini et
al. 2000). For instance, in Europe the Financial Crisis
and accompanying economic slowdown have led to
substantial emissions reductions. The reduction cannot be attributed to have a causal relation with the EU
ETS. Even current research cannot establish which
trajectory national competitiveness would take if the
policy had not been introduced, which makes it difficult to establish a baseline against which to measure
losses of competitiveness.
A backlash on the carbon tax emerged from rural
households who perceived the tax as unfair for those
regions of the province with a colder climate due
to their increased expenses on energy for heating.
Furthermore, the introduction of the carbon tax was
accompanied by a spike in gasoline prices, making
energy even more expensive and thus increasing the
visibility of the carbon tax. Taking up the mood, the
opposition British Columbia New Democratic Party
launched their “Axe the Tax” campaign, which argued
that the carbon system disproportionately added
costs on households rather than making big polluters pay. The survival of the carbon tax owed much to
the Premier’s personal support for the policy, coupled
with a fall in gasoline prices, which took the carbon
tax out of the public’s attention (ibid.). Five years after A recent study by Martin et al. (2011) contains a very
its introduction the carbon tax has proven sustainable convincing research design that addresses the proband the 2014 budget has even announced the intro- lems mentioned above. The authors compare companies under the Climate Change Levy (CCL) with those
duction of a tax on liquefied natural gas (LNG).
under the less stringent Climate Change Agreements,
but cannot find any causal effects of the CCL on the
Discussion and Conclusion
While there are strong economic and environmental competitiveness of manufacturing industries. In an
arguments in favour of uniform carbon taxes the attempt to evaluate the effects of the BC carbon tax,
cases outlined above provide evidence of the strong Rivers & Schaeufele (2013) cannot find any effects of
influence of lobbying and political considerations in the carbon tax on the international competitiveness
their design. They also demonstrate the difficulties in of the agricultural sector in British Columbia.
sustaining this environmental, and ultimately, economic instrument in the political process.
A loss of competitiveness would
ultimately cause carbon leakage
—the relocation of industries
to countries with little or
no environmental regulation.
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Overall, evidence of decreased industrial competitiveness in response to carbon taxes is scarce at best,
yielding inconclusive results. This places business
claims for exemptions and refunds of carbon taxes on
very shaky grounds. Nonetheless, as the case studies
exemplify, arguments associated with lost competitiveness can be very effective in changing the design
of carbon taxes. Strong and committed political leadership, as was the case in BC, along with claims of the
achievement of a double dividend by keeping other
taxes low, as was the Irish case, can help carbon taxes
become sustainable in the political process. At the
same time, international commitments on multilateral emissions reductions could greatly help political
leaders to justify the introduction and persistence of
carbon prices domestically. Once all or most countries
are obliged to reduce carbon emissions, political fears
of unequal competition with their trading partners
are alleviated. In addition, once carbon taxes mature
and more data becomes available it will also be easier
to support arguments with scientific evidence. The
future fate of carbon taxes thus remains to be seen
both at the international level—with respect to the
upcoming COPs—and at the national level. While
even China is discussing the introduction of either
an ETS or a carbon tax to limit air pollution (The
Economist 2013), at the end of February 2014 South
Africa postponed the introduction of a carbon tax to
“address concerns on international competitiveness”
following a public consultation process (Greve 2014).
Johanna Arlinghaus finished
her Master of Public Policy
at Hertie in 2013 and is now
a Trainee at the Organisation
for Economic Co-Operation
and Development on Environmental Taxes. Johanna holds
a Bachelor in Economics from
Maastricht University and has
worked as a consultant for
Public Finance at the Gesellschaft fuer Internationale
Zusammenarbeit in Germany
and Tanzania.
References
Barde, J.-P.; Godard, O. (2012): “Economic principles of environmental fiscal reform”. In: Milne, J. E.; Andersen, M. S. (Ed.)
(2012): Handbook of Research on Environmental Taxation.
Baranzini, A.; Goldemberg, J.; Speck, S. (2000): “A future
for carbon taxes”. Ecological Economics 32 (2000): 395—412.
Bushnell, J. B., Chong, H., Mansur, E. T. (2012): “Profiting
from Regulation: Evidence form the European Carbon
Market”.
Convery, F., Dunne, L., Joyce, D. (2013): “Ireland’s carbon
tax and the fiscal crisis: issues in fiscal adjustment, environmental effectiveness, competitiveness, leakage and equity
implications”. OECD Environment, Working Papers No. 59,
OECD Publishing.
The Economist (2013): “Tepid, timid: Climate-change policy
in America, Europe and China”. The Economist, from the print
edition, 2013/06.
Greve, N. (2014): “Carbon tax postponed to 2016”. The
Mining Weekly.
Harrison (2013): “The political economy of British Columbia’s carbon tax”. OECD Environment, Working Papers No. 63,
OECD Publishing.
Jotzo, F. (2012): “Australia's carbon price”. Nature Climate
Change 14 (2): 475–476.
It is difficult to collect evidence on
the arguments against or in favour of
carbon taxation.
Martin, R., dePreux, L., Wagner, U. (2011): “The impacts
of the climate change levy on manufacturing: evidence from
Microdata”. NBER, Working Paper No. 17446, 2011/09.
Porter, M.E.; Linde, C. (1995): “Toward a new conception of
the environment-competitiveness relationship”. Journal of
Economic Perspectives 9(4): 97—118.
Rivers, N. (2010): “Impacts of climate policy on the competitiveness of Canadian industry: How big and how to mitigate?”
Energy Economics 32(5), 1092—1104.
Rivers, N., Schaeufele, B. (2013): “Carbon taxes, agricultural competitiveness and trade”. Department of Economics,
Faculty of Social Sciences, University of Ottawa, Working
Paper #1302E, 2013/08.
Spash, C. L; Lo, A. Y. (2012): “Australia’s carbon tax: a sheep
in wolf’s clothing? “ Economic and Labour Relations Review
23(1): 67—86.
35
22.04.14 10:36
Understand Today, Green Tomorrow:
Why Universities Need an Institutional Structure
to Foster Their Sustainability Record
by Regula Hess and Lukas Fesenfeld
At the Hertie School of Governance we learn to think: proudly analyse
climate change mitigation policies, debate how to turn the German
Energiewende into a success, study ways to reduce deforestation, and develop
strategies to protect human rights. We study, analyse, and devise effective
governance structures, which will make our world a better place. These
activities are highly valuable as most people follow common rules within
a society, and thus, by learning how to change these rules, we can have
a major impact.
Thinking is not all we do at the Hertie School, however, we also learn to act, which is why students take
internships, pursue extracurricular projects, spend
a year gaining work experience, and, every once in a
while, start initiatives in support of grander goals—
the Green Office at the Hertie of Governance is one
such initiative. The vision of the Green Office is that
the Hertie School does not only reach new frontiers in
sustainability policy development, but also its implementation. As shown in countless papers and master
theses, many students at Hertie School are supportive
of policies to foster sustainable development. As such,
the Green Office is committed to turn this ideal into
practice: it is committed to act.
A small group of students initiated the Green Office
at Hertie School in 2012 based on previous experiences gathered at various universities in the U.S., and
at Maastricht University in the Netherlands. In the
U.S. all of the top universities have an institutionalised structure with upwards of fifteen employees
to address challenges of sustainability. These offices
36
manage both practices by the university itself—such
as saving resources or sustainable purchasing—and
coordinating student initiatives. At Boston University
more than twenty student organisations are active
in the field of sustainability—the BU Bike Club, the
Organic Gardening Club that hosts a green house on
top of a building, the BU environmental law society
etc. Columbia University even supports student initiatives aiming at greening the campus with up to
$10,000 through a green financial fund. These offices
bring together faculty, staff and students and make a
link between the content of curricula, research, and
everyday life. Moreover, so-called “green weeks” uniting activities and actors are popular in many universities all over the world. Obviously these universities
differ in many ways from the Hertie School, like their
student bodies being about one hundred times larger,
and that they encompass the entire life of students
and therefore have a greater impact on their overall
lifestyles. Yet, varieties of good ideas grow in those
settings and have inspired and motivated students to
lay the foundations for the Green Office at the Hertie
School.
Schlossplatz3
22.04.14 10:36
In Maastricht, the Green Office was set up in 2010 by
a group of students and staff members passionate
about sustainability, after the management of the
university positively received their proposal. It agreed
to extend its half-time sustainable ombudsman to an
office employing both staff and students. The Green 3. Inspiring Future Leaders: University represents a
Office became an institutionalised actor of the univer- laboratory for new ideas. If sustainability is present in
sity and has been supporting sustainable policies of curricula and campus’ everyday life, new ideas emergthe institution from the operational, organisational, ing from universities are likely to be more valuable
community, educational and research perspective. and viable. Graduated students will act as multipliers
Maastricht University followed the American exam- of these ideas. Today, every leader in politics, civil
ples as it saw the advantages of not merely saving society, or the business sector will be confronted with
energy and resource costs, but also receiving positive challenges to both foster the sustainability of their
public feedback, and living up to its role as societal own institution as well as to contribute to sustainable development of the local and global community
shaper and innovator.
and habitat on which each of us ultimately depends.
Just as sustainability initiatives have achieved real Educating and motivating people how to contribute
results elsewhere, the Green Office intends to flour- to sustainable development is therefore the most
ish at the Hertie School, creating mainly three direct crucial task. Sustainable development is a complex
and normative subject; many authors have suggested
benefits.
that educating students and citizens to be problem
1. Fostering Community: Sustainability is often a solvers, change agents and transition managers
common ideal of various actors at university and can should concentrate on teaching competences rather
only be successful if implemented with a joint effort. than merely acquiring new knowledge. In essence,
To give some examples, the facility management education for sustainable development can be sumcontrols the purchase of electricity and infrastruc- marised as “complexes of knowledge, skills, and
ture that regulates its use; the IT-team sets default attitudes that enable successful task performance
options for printing; and the caterer makes the choice and problem-solving with respect to real-world suswhether the coffee served is fair trade or not. Nudg- tainability problems, challenges, and opportunities”.
ing is a key instrument for effective sustainability Project-oriented learning and practical action are at
policies, but fortunately people still enjoy freedom to the heart of the Hertie School’s curriculum and the
act. Academic staff and students collaborate jointly Green Office work—tangibly realising education for
on policies to foster sustainability—they come up sustainable development.
with new, innovative solutions. Based on a common
interest, public debates with global experts can be
organised, which helps facilitate students pursuing a
career in the field of sustainability. Hence, pursuing
the goal of sustainability both on practical and on
intellectual levels overcomes borders between different functional actors within the university.
2. Attracting Future Leaders: As universities compete
globally for the most thriving students, a good sustainability record and an active student, faculty, and
staff body in this field can attract students who truly
care about good governance being a valuable asset
for the institution. In today’s world, “sustainability
know-how” is a key asset for professional success.
The vision of the Green Office is
that the Hertie School does not only
reach new frontiers in sustainability
policy development, but also its
implementation.
37
22.04.14 10:36
38
Schlossplatz3
22.04.14 10:36
Regula Hess (MPP 2014) studied International Relations at
Geneva University and Boston
University and co-designed
the class “Environment
and Development in Latin
America”. She gained practical
experience in project management in the field of corruption
and gender equality working
for civil society organisations.
She is currently employed at
the Federal Ministry of Labour
and Social Affairs.
For the Green Office to fulfil the functions outlaid
above, an institutionalisation is vital. It ensures that
the Green Office becomes independent of individual
characters. Furthermore, it allows the integration
of all actors, student, faculty, researchers, and staff.
Equally important is support by the management, as
many actions need their approval. The Green Office
at the Hertie School therefore aspires to become an
integral part of the University in the long run and to
engage everyone to eventually fulfil all functions.
So far, the Green Office at the Hertie School of Governance has started with small and practical steps.
To give some examples: the sustainability reminders
in classrooms jog students’ and staffs’ memory how
to act more environmental friendly, the Back2School
sale of sustainable staple materials encourages aware
consumption, and the new ‘community shelf’ will
support the idea of reuse and sharing, while at the
same time strengthening community. The next steps
should therefore concentrate on bringing together
students, professors and staff—setting up a visible
and practical forum to understand today and green
tomorrow.
These offices bring together faculty,
staff and students and make a link
between the content of curricula,
research, and everyday life.
Lukas Paul Fesenfeld (MPP
2014) studied at the University
College in Maastricht and
Seville law, economics and
politics. He is a founding
member of the initiative
“NAHhaft—natürlich nachhaltig” aiming to increase
the share of organic, regional
and seasonal food in public
canteens. He worked for the
Wuppertal Institute, the
GLS Sustainable Bank and
the Green Office Maastricht.
Reference
Dale, A., Newman, L. (2005): “Sustainable development,
education and literacy”. International Journal of Sustainability and Higher Education, 6(4): 351–362.
Kemp, R. & Martens, P. (2007): “Sustainable development:
how to manage something that is subjective and never can be
achieved?”. Sustainability: Science, Practice, & Policy, 3(2):
5—14.
Martens, P (2006): “Sustainability: science or fiction?”.
Sustainability: Science, Practice, & Policy, 2(1): 36-41.
Rowe, D. (2007): “Education for a sustainable future”. Science, 317(5836): 323–324.
Wiek, A., Withycombe, L., & Redman, C.L., (2011): “Moving
forward on competencies in sustainability”. Environment:
Science and Policy for Sustainable Development, 53(2): 3–13.
Willard, M., Wiedmeyer, C., Flint, R.W., Weedon, J.S.,
Woodward, R., Feldmand, I. et al. (2010): “The sustainability professional: 2010 competency survey report”.
International Society of Sustainability Professionals.
World Commission on Environment and Development
(1987): “Report of World Commission on Environment
and Development: Our Common Future”. Oxford: Oxford
University Press.
39
22.04.14 10:36
IMPRINT Schlossplatz3
Spring 2014·Issue Sixteen
Publisher:
Hertie School of Governance GmbH
Helmut Anheier
Anna Sophie Herken ( V. i. S. d. P. )
Quartier 110 · Friedrichstraße 180
10117 Berlin
Copies: 1500
Co-Editors in Chief:
Katrina Lampert, Meilin Möllenkamp
Events and Communications:
Sienna-Yiling Pan, Heike ten Den
Content Editors: Katrina Lampert,
Alex Odlum, Sienna-Yiling Pan,
Kyle Ott, Clement Nocos,
Meilin Möllenkamp, Heike ten Den,
Paulyn Duman, Nate Basset,
Isabel Bucknall, Johannes SchulzKnappe, Whitney Clark
Art Direction & Graphic Design:
Plural, Berlin
in association with
basics09, Berlin
Illustrations: bitteschön.tv, Berlin
Visit Schlossplatz3 Online
All Schlossplatz3 content is available online. You can read articles
and download back issues in PDF format at the Hertie School of
Governance website. Just go to
http://www.hertie-school.org/schlossplatz3/
Preview
25 years after the fall of the Berlin wall, Schlossplatz3 wants
to talk about Walls:
Overcoming Walls | Protected by Walls | Surrounded by Walls |
Looking at Walls | Walls in our Minds | Dismantling Walls |
Painting Walls | Firewalls | Going beyond Walls | Bordering Walls |
Political Walls | Post-Wall Eras | Separating Walls | Physical Walls |
Sacred Walls | Climbing Walls | Emotional Walls | Wallpaper |
Empty Walls | Language Walls | Stonewalling | Doors without Walls |
Walking through Walls | Preserving Walls | Bricks in the Wall |
Obvious Walls | Hidden Walls | Functional Walls | Social Walls |
Wallflowers
Photos: Schlossplatz3
Print: Brandenburgische Universitäts-Druckerei und Verlags
gesellschaft Potsdam GmbH
Printed in Germany
Schlossplatz3 is printed on
Munken Lynx, a wood free paper
produced according to the
stipulations of the “Nordic Swan”
Eco-label.
Disclaimer: The material contained
herein is property of Schlossplatz3,
Berlin 2014. Opinions stated within
are those of the respective authors
and do not necessarily reflect the
views of the editors of the magazine.
Address:
Redaktion Schlossplatz3
Quartier 110 · Friedrichstraße 180
10117 Berlin
[email protected]
Hertie School of Governance—
founded and supported by
Gemeinnützige Hertie-Stiftung.
Recent events such as the declaration that multiculturalism had
failed, and the spread of the Euro crisis, have brought the question
of unity back into public debate. Is integration always a strength,
or does it sometimes become a liability? This broad question
can be answered in countless ways, whether one is examining
the barriers immigrants face when joining new societies, the
perverbial glass-ceiling women face in the labour market, the
integration of private sector ideals in public-private partnerships,
or even the function of security that digital firewalls can provide
to our data? It seems that while idealistically we might assume
that a world without walls is something to strive for sometimes
walls can offer us necessary protection. In addition, many
undesirable walls found in the mind, such as prejudices, fear, and
ignorance, can be difficult to tackle.
We are left with the question, are we truly better off with or
without walls when addressing the challenges of the 21st century?
The seventeenth issue of Schlossplatz3 will appear in fall 2014.
22.04.14 10:36

it now - Hertie School of Governance

Transcription

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