Letters From The Earth

Crisis and commitment

April 8, 2008

There was a great editorial in one of the trade publications that I read that wondered if "concerns for the earth is a passing fad." It caused me to speculate about the pending transfer of the world champion polluter title. Part of my thought was: Who really cares whether it's China or the United States? Is green, like the editorial suggests, a fad?

There's a lot of talk about environmentally friendly energy and fuels in the West, which is great until you consider the entire footprint. Take the latest focus on converting Canadian oil sands into oil for gasoline. This process is much more energy intensive and produces more carbon dioxide than converting good ol' oil into gasoline. What about PLA and ethanol? Have we considered the entire process and cost and ramifications that affect our global food chain? While the US (not that current gang in Washington) is trying to reduce greenhouse gases, China fires up coal fired power plants every other day to try to take care of demand. The dilemma here is if the ruling party doesn't respond to the demand, they're going to have a revolution. What an incongruity we have on earth.

Talk about dilemma: When I went through my mail at home the other evening I came across an "Environmentally Friendly Guide to Lent 2008". I thought I was safe in church. Not so. Earthlings, as I have said so many times, are a peculiar race. When they find a focal point they can be relentless. Not necessarily intelligent, just impossibly obsessed. And political combatants in the US give the environment short shrift. Apparently, solutions to Iraq and the economy will solve all of the country's problems. Let me tell you, I disagree.

If the leaders of this world will get on the same page and focus on issues that affect everyone, this will allow us to pass on the beauty of what we have today to the next generation and the one after that, and so on. If we don't get our act together, I mean everyone – China, America, Africa, the whole world – I honestly believe we will create an incredibly serious environmental crisis, so serious that we may not survive.

I'm influenced by my friend and (I suppose) mentor, Lester Brown. After reading that Lenten message I reread several chapters of his book, Plan B: 2.0. I have urged some of you to read this, as well as his Eco-Economy. Lester makes so much sense. His first premise is that the "Western economic model – fossil-fuel based, automobile centered, throwaway economy" doesn't work any more. The new economy has to be based on energy generated from renewable resources. Lester talks about earlier civilizations that declined and collapsed; many such demises were caused not by intangibles like morality and ethics but because they lost the focus of harmony with natural systems. I really think this is the root of many of our economic and environmental issues today. We don't apply harmony and balance with natural systems when we build our economic platforms. Still, the environment is a subset of the economy.

Lester Brown has a solution. It makes sense to me and I want to take a moment to try to summarize his ideas. I think his new economy can very easily apply to our industry, every bit of it, every link in the value chain. This means when we build a product, a substrate, an adhesive, an ink, an overlam, paper or film, anything, we have to design first with cradle to cradle in mind. This has to be our first objective, not any other focus.

Lester's theory is that our current accounting systems don't tell the whole story. "Our modern economic prosperity is achieved in part by running up ecological deficits, costs that do not show up on the books," but costs that someone else has to pay. In other words, if we build a product that meets all performance criteria but don't include the cost of landfilling by-product or the cost of disposing the product at the end of its life, we are not considering the entire cost. If we have to landfill by-product, that's part of the cost.

Please, don't get paranoid. Lester continues with his economic design by developing a solution for cleaning up the environment with tax shifting. Once all costs, direct and indirect, of a product or service are calculated, they should be incorporated into market prices in the form of a tax, offsetting this with income tax reductions. This isn't as radical as you might think. Lester's plan is supported by many business executives. In 2001, Oystein Dahle, former vice president of Exxon for Norway and the North Sea, at a State of the World Conference in Aspen, CO, USA, pointed out: "Socialism collapsed because it did not allow the market to tell the economic truth. Capitalism may collapse because it does not allow the market to tell the ecological truth."

Economists generally endorse Lester's ideas. "For example, a tax on coal that incorporated the increased health care costs associated with breathing polluted air, the costs of damage from acid rain, and the costs of climate disruption, would encourage investment in renewable sources of energy such as wind or geothermal." The neat part about tax shifting is that coal gets taxed, but wind, solar and geothermal get tax relief.

Look what Great Britain is doing with landfill taxes over the next five years. In 2007 the government taxed £27 per ton above transportation and tipping fee costs. In 2008 it has increased to £32 per ton. By 2012 the tax is legislated to be close to £80 per ton. Based on today's exchange rate, that's about US$160 per ton. Punitive taxing will reduce landfill volume, which reduces greenhouse gas, which causes methane. It encourages recycling. It creates a more ecological balance, harmony.

By the way, the US imposed a stiff tax on chlorofluorocarbons in the 1980s. Eventually these were phased out and, as mentioned in an earlier column, DuPont and others developed friendlier products.
In Plan B: 2.0, Lester Brown notes, "The Economist strongly endorses environmental tax shifting. On environmental grounds, never mind energy security, America taxes gasoline too lightly. Better than a one-off increase, a politically more feasible idea, and desirable in its own terms, would be a long term plan to shift taxes from income to emissions of carbon."

In the paper industry we're seeing some pretty dynamic environmental changes. Pratt Industries will install a waste-to-energy wastewater treatment plant. They will build a system that turns mill wastewater into renewable biogas, a mix of carbon dioxide and methane, that fuels the mills' boilers. This project will generate 156 million BTUs per day of biogas. In Wisconsin, NewPage, which recently purchased Stora Enso's North American business, will build a biorefinery that will use biomass to produce 5.5 million gallons per year of fuel. The plan includes a thermal gasification and gas-to-liquids plant that will produce liquid biofuels that are ultimately converted into diesel fuel. This is fuel that has more net energy than corn based ethanol and, of equal importance, relies on non-edible crops and agricultural residues that don't compete with the food chain.

Part of the funding is from the US Department of Energy. Maybe I'm too harsh on Washington, because this is really good stuff.

Our industry has created wonderful technology. We have created jobs and an entire infrastructure in which we should be proud. Now we have to change our priorities, look at the entire truth of product costs and develop solutions that have ecological significance to us all. As I view it, we can do it if we want to.

Another Letter from the Earth.

Calvin Frost is chairman of Channeled Resources Group, headquartered in Chicago, the parent company of Maratech International and GMC Coating. His email address is cfrost@channeledresources.com.
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