NationStates Jolt Archive

Here's my idea for encouraging energy efficient practices.

- Rank all businesses by their energy efficiency.
- Average tax for business stays the same (unless affected by an unrelated policy, of course), however, position in the ranking affects an individual business's tax rate.

So, the most energy-efficient business might only have to pay 75% average tax, whereas the least efficient could have to pay 125%*.

Businesses would then continually attempt to outdo each other in terms of efficiency in order to earn themselves a good position in the ranking.

* These percentages could be different, they're just the first figures I thought of.

Here's my idea for encouraging energy efficient practices.

- Rank all businesses by their energy efficiency.
- Average tax for business stays the same (unless affected by an unrelated policy, of course), however, position in the ranking affects an individual business's tax rate.

So, the most energy-efficient business might only have to pay 75% average tax, whereas the least efficient could have to pay 125%*.

Businesses would then continually attempt to outdo each other in terms of efficiency in order to earn themselves a good position in the ranking.

* These percentages could be different, they're just the first figures I thought of.


Sounds like a good idea in theory, but the lobbies in washington would shoot it dead before it got out of the womb.

The problem is, you'd have to have some significant adjustments in the tax schedule for it to be fair. Some industries nominally consume a lot more energy than others, for example steel or chemical producers, but in per-unit energy consumption they might be more efficient than other industries even if they consume more overall.

Another adjustment would be sources of energy; a company that gets most of its energy needs from renewables, natural gas, and nuclear should have to pay less than those who draw most of their energy from coal. Otherwise, you're rewarding people who use dirtier sources of energy because they will have lower energy costs with no effect on the taxes they pay.

However, the basic idea itself is sound. The main issues are the ones I've mentioned; it would probably make the most sense to calculate the amount of energy consumed per $1000 of output and then give tax credits to companies that use cleaner sources of energy to produce their output to balance it out.

Instead of ranking companies, a carbon tax would be easier to administer and more conducive to overall carbon reduction.

It sounds like a good concept, but until it succeeds in another country (like plastic bag tax succeeded in Ireland), I won't be either for it or against it.

And what, exactly, do you mean by energy efficiency?

I think you need to describe that concept before you start taxing it.

And what, exactly, do you mean by energy efficiency?

I think you need to describe that concept before you start taxing it.

I think he means the sum of electrical and water consumption, as well as how much waste and pollutants it creates. Then divide that by the sum of average energy efficiency rating (for that business type) and how much the business contirbutes back to the environment (does it produce its own electricity, does it recycle, etc.)

Energy efficiency naturally pays off. No need to encourage by taxes, but yes, I would support this kind of a system, if it was well-developed to take care of all the issues and yadda yadda yadda

And what, exactly, do you mean by energy efficiency?

I think you need to describe that concept before you start taxing it.

I thought it was a fairly well known principle:

Useful energy output / energy input.

As Vetalia points out, source of energy should be a factor too, although even with renewable sources, energy efficiency is good, because it makes the best use of what's available.

I thought it was a fairly well known principle:

Useful energy output / energy input.

That's correct, but it wouldn't work to measure energy efficiency like that for businesses.

Some industries are always going to be energy negative; for example, refining oil in to gasoline requires more energy than it produces. As a result, for this system it would make more sense to measure efficiency as the amount of energy needed to produce a given amount of product, adjusted for various factors in the given industry.

I thought it was a fairly well known principle:

Useful energy output / energy input.

As Vetalia points out, source of energy should be a factor too, although even with renewable sources, energy efficiency is good, because it makes the best use of what's available.

No. It is not a 'fairly well known principle': you can compare like as like efficiencies, but there is no broad brush. And even then, arguably, a Porsche 911 turbo is more efficient than a Toyota Prius, which is probably not your intention.

All you have done is replace a vague wording with an even more vague ratio.

I think you really need to rethink this policy.

That's correct, but it wouldn't work to measure energy efficiency like that for businesses.

Some industries are always going to be energy negative; for example, refining oil in to gasoline requires more energy than it produces. As a result, for this system it would make more sense to measure efficiency as the amount of energy needed to produce a given amount of product, adjusted for various factors in the given industry.

Anything that produced more energy than it used would break the laws of physics, unless you count the transformation/distribution of energy by powerstations as production.

But I see what you mean, some technologies are less efficient than others, which could result in certain industries always taking the top/bottom ranks.

No. It is not a 'fairly well known principle'
Really? Regardless, I agree with you that it is too simplistic to be appropriate for the purpose I had envisaged.

I think you really need to rethink this policy.

That's what I'm doing right now - I posted this thread so that flaws would be revealed.

That's what I'm doing right now - I posted this thread so that flaws would be revealed.

Well, to begin with I think you should start thinking about why you want "energy efficiency". What do you hope to accomplish?

Rather than just focusing on a process, why don't you think about what you actually want to achieve. Then we can refine the methods.

Don't get me wrong, I'm all for efficiency, it's the lazy man's choice. But you need to know where you are going with this.

Well, to begin with I think you should start thinking about why you want "energy efficiency". What do you hope to accomplish?

Rather than just focusing on a process, why don't you think about what you actually want to achieve. Then we can refine the methods.

Don't get me wrong, I'm all for efficiency, it's the lazy man's choice. But you need to know where you are going with this.

Well, the main idea of energy efficiency is to lessen the harmful environmental effects of generating energy by reducing the amount we need, without sacrificing the things we use energy for.

Furthermore, as it will take time to change over from non-renewable to renewable power sources, so it makes sense to use as little as possible of a limit resource to prolong the duration we have until it runs over.

Well, the main idea of energy efficiency is to lessen the harmful environmental effects of generating energy by reducing the amount we need, without sacrificing the things we use energy for.

So now we need to figure out what the harmful effects are. Are you more interested in carbon loads, nuclear waste, heat pollution, natural scenery, nitrogen oxides, sulphur oxides &c.

Saying lessen the environmental effects are all well and good, but it's too amorphous. Specific goals are needed before a big plan can be drawn up.

We do need to pay more attention to the environment, but we also need to know exactly how we are going to do that. Vague generalizations won't help.

So now we need to figure out what the harmful effects are. Are you more interested in carbon loads, nuclear waste, heat pollution, natural scenery, nitrogen oxides, sulphur oxides &c.

Saying lessen the environmental effects are all well and good, but it's too amorphous. Specific goals are needed before a big plan can be drawn up.

We do need to pay more attention to the environment, but we also need to know exactly how we are going to do that. Vague generalizations won't help.

Fair enough. I can see now how my idea wasn't very well thought through. How I failed to notice how ill-defined the proposal was, I'm not sure.

Fair enough. I can see now how my idea wasn't very well thought through. How I failed to notice how ill-defined the proposal was, I'm not sure.

Designing proposals is a lot of work...you do have a workable idea, which is pretty good in and of itself.

Designing proposals is a lot of work...you do have a workable idea, which is pretty good in and of itself.

Yes, the use of competition for tax rates is still useful, only the process by which ranking was determined was ill-defined.

Fair enough. I can see now how my idea wasn't very well thought through. How I failed to notice how ill-defined the proposal was, I'm not sure.

It's good to want to preserve the environment. I'm a big believer in not shitting in one's own nest. The trouble is there is no simple answer. Not your fault, though, politicians do this stuff all the time, then justify their actions after the fact.

I applaud the ethos of the whole effort though.

Whil coming up with ways to incite companies (and people) to become more energy efficient is a good idea, some of the notions raised beg questions. For example, looking at the form of power generation used. For most small companies this may be entirely at the mercy of the local power company, and penalizing them for what amounts to pure geography will cause many issues. The political ramifications of having companies change locations for tax reasons would be huge in regions affected by resultant job loss.

In point of fact, the biggest impediment to acheiving energy efficiency or adopting polution controls is usually the capital costs of initial implementation. Here in Ontario the government has a plan in place for residences wherby you can get cash rebates for improving the efficiency of your home. For many people, this lowering of the initial costs has provided all the incentive needed. Instead of a 10-year expectation of having that new high-efficiency furnace pay for itself, a 5-year recovery suddenly looks really attractive.

Something similar, perhaps targetted at specific industries at any given time, would probably be both more effective AND more efficient to administer. After all, imagine the costs of determining industry-wide efficiency rankings.

I am against this idea. Forced energy efficient on companies simply means increase production cost, which increase prices and promotes outsourcing. Ultimately coming back to hurt the everyday US population. It seems no different than "no child left behind".

Also, consider that bigger corporations already holds a huge advantages over smaller ones, to put an unequal distribution of tax base on the amount of investment a company can make on energy efficiency is simply driving small business out of existence all together.

I am against this idea. Forced energy efficient on companies simply means increase production cost, which increase prices and promotes outsourcing.

Not necessarily. US industries are already some of the most efficient in the world in terms of energy usage, so it's not likely there would be a significant additional investment to meet those targets.