26 December 2016   4 comments

Over a year ago, IMF researchers attempted to calculate the societal costs of fossil fuel consumption.  In economic terms, such costs are called externalities because the costs are not reflected in the price of the good consumed but are rather absorbed by society as a hidden cost paid for by something other than the market mechanism.  The IMF researchers state it this way:

“We define energy subsidies as the difference between what consumers pay for energy and its “true costs,” plus a country’s normal value added or sales  tax rate. These ‘true costs’ of energy consumption include its supply costs and the damage that energy consumption inflicts on people and the environment. These damages, in turn, come from carbon emissions and hence global warming; the health effects of air pollution; and the effects on traffic congestion, traffic accidents, and road damage. Most of these externalities are borne by local populations, with the global warming component of energy subsidies  only a fourth of the total.”

When these hidden costs are finally quantified and totaled up, their price is astonishing: $5.3 trillion a year.  The authors conclude:

“The fiscal implications are mammoth: at US$5.3 trillion, energy subsidies exceed the estimated public health spending for the entire globe. It also exceeds the world’s total public investment spending. The resources freed from subsidy reform could be used to meet critical public spending needs or reduce taxes that are choking economic growth.”

If we were to take these externalities into account, the costs of renewable energies would fade away.

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We only have vague references to climate change by President-elect Trump who had earlier called the claims of climate change a “hoax”.  Some of his cabinet appointments, such as Pruitt to the Environmental Protection Agency and Tillerson to Secretary of State, indicate that he prizes the opinions of skeptics as well.  For those of us who believe that the evidence indicating that climate change is highly likely, if not inevitable, without policy changes, the idea that efforts to prevent climate change might be delayed by at least four years is a terrifying thought.  Clare Foran has written an essay for The Atlantic that gives some guidance about how to think about the next four years. 

Bob Carr is a former Australian Foreign Minister and he has written an article for the Sydney Morning Herald on the UN Security Council Resolution condemning the Israeli settlements in the Occupied West Bank.    He lays out the legal arguments underpinning the resolution and develops the full implications of its passage.  Carr also develops the stark choices facing Israel if it continues to build settlements in violation of international law.

Posted December 26, 2016 by vferraro1971 in World Politics

4 responses to “26 December 2016

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  1. My understanding is that the IMF did the research mainly to run a test on the situation and didn’t mean to actually make a payment on the matter, correct?


  2. The IMF had not intention whatsoever of addressing the issue financially.


  3. Hi Vinnie – Rita and I continue to follow your blogs and are usually educated by them as we were by your classes this past fall. As you might also might have guessed, the last few blogs dealing with the recent vote of abstention in the UNSC by the US have caused some consternation, largely because of the one sidedness of the arguments you’ve chosen to present.
    Rather than try and lay out the arguments you left out, especially those dealing with the legalities of Israel’s settlements in the West bank and in Jerusalem, I would very much urge you to look at the last three issues of the Daily Alert(Sun., Mon., &Tues.) at http://www.dailyalert.org. In particular Monday’s pieces by Richard Cravatts(past president of Scholars for Peace in the Middle East) and Amb. Alan Baker(former legal adviser to the Israeli Ministry of Foreign Affairs). Linking to them should add some very strong evidence contravening the “common knowledge” that Israel’s presence in those disputed areas is illegal.
    I also wanted to add a few words to your earlier blog in which you pointed out that Israel is a huge recipient of American dollars for use as military aid. I don’t know of a single responsible Israeli official, especially including Netanyahu, who has not expressed their full appreciation for America’s help. That money, most of which is restricted to purchase American armaments from US companies, has been life saving and the people of Israel know it. I doubt if you would want Israel to grovel as a result and do things as a result which they would judge to be threats to their security.
    In any case, I trust you’ll give this issue a closer look than you have and get to see some of the informed opinions which get lost in the drama of the Netanyahu-Obama feud. I’d hate to see your good will toward Israel swept away by an issue which is a lot more complicated and contentious than your blogs seem to show.
    Best wishes for the New Year from Rita and me. Allen Kropf.


    • Dear Allen,
      Thank you for your note and the references to the Israeli position. They are useful complements to the link I provided on 23 December to the Israeli Ministry of Foreign Affairs interpretation of the Geneva Convention. I have actually studied the issue for much of my professional life and I respectfully disagree. I am absolutely committed to the existence of the state of Israel as both a Jewish and democratic state, and will never waver from that position. But the Israeli position that the West Bank belongs to the state of Israel for historical reasons is not a position I find persuasive nor could the international system exist for long if borders were drawn only according to history. There is not a single existing border on the planet that does not disregard some aspects of history. Israel is a stable, thriving Jewish democracy within the 1967 borders. I am not sure that Israel needs additional land to keep thriving.
      I would completely disregard international law if I were persuaded that Israeli control of the West Bank would lead to peace and a better life for its inhabitants. Israel has allowed more than 500,000 people to settle in the West Bank since 1967 and I see no basis for thinking that even more settlements would improve the situation. The US has stood by Israel since 1967 even though its own official position has opposed additional settlements. It stood by Israel even when the Israeli Prime Minister intervened in American domestic politics to undermine the nuclear agreement with Iran. There is no reason to believe that current Israeli policy has a peaceful and stable end point.
      The only possible end point to the current policy is the Israeli annexation of the West Bank, and I would even support that end if I were persuaded that all inhabitants in the West Bank would be treated as equal citizens in the Israeli state. I fear that the current politics in Israel would not allow equality for all in an annexed West Bank. My personal opposition to additional settlements is actually based upon my very strong desire to preserve a Jewish democratic state.


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