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What could happen if we tax goods and services based on their "greenness"?

I have seen this idea here and there, but good discussions about it are scanty. Would it be possible to create a "greenness index" for virtually all goods and services available for tax-payers on earth? This index would take into account the ressources needed to manufacture, use, recycle, and dispose of the product, but also its long-term pollution potential, some measure of social impact, etc. In summary, an evaluation of the ethics behind that product. Then, the percentage of taxes perceived by the goverment would be a function of that index, ranging from tax-tree for "super-green" products to 100% tax for the more polluting ones.
I expect that such a system would immediately drive the economy towards more ethical products, while boosting the research and development of new technology, creating jobs, etc. We could make this system neutral for the goverments by adjusting how we calculate the index.
One example of such a system is the car market system (at least in Europe): when buying a environment-friendly car, you get a substantial discount, while annual taxes for the most energy-inefficient cars are not affordable for the average consumer. I think it works pretty well...

Dear TED contributors, who love simple ideas that can reshape the world, do you think the implementation of such a system would be beneficial? How will it fit in our current economy? What will be the obstacles and how can we overcome them?

Closing Statement from Sebastien De Landtsheer

I expected a more general discussion than that. Only specific things about US, while I was talking about all tax-payers in the world. I will restate the idea with an example:
Coca-Cola and Pepsi are audited and are determined to be 10% green. So taxes on these soda rise suddenly to 90%. Finding this situation unacceptable, Coca-Cola massively invests in green energy, social plans for its workers and sustainable agriculture. So on the next audit they score 50%. But Pepsi goes further, by replacing aspartame by natural sweeteners and capturing all CO2 emissions in the factories. So they score 80%. Next month, Coca-Cola discontinues high-calories sodas, invests in electric trucks, and plants forests on 10% of the land they own. They score 95% etc...

The goal is to not force people, it would not work indeed. But if suddenly the nice SUV (vrrrm!) you wanted to buy is taxed 70%, but the (less cool-looking maybe) electric car comes tax-free, you might not like it but you will go for the electric one, most likely (especially since the price for oil tripled).

I see the market like this: there is one force that keep pollution lox (regulations) and one force that keep pollution high (consumers choices). So they have to conflict in a dynamic equilibrium that is not maintained in the long-term. If we direct both forces in the same direction we get the desired effect. If consumers WANT to pollute less, not because of their conviction but for their own profit, the economy is driven, by the natural laws of the market, towards a more resilent model. Naturally, people will use less energy, consume more locally and expell less CO2

I hope such a law gets voted in the near future...

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    Jun 12 2012: You could start by getting Al Gore (one of America's largest carbob footprints) to practice what he preaches. That is the problem we cannot even get people to do this voluntarilly so the next step is to force it. Bad strategy. The US Administration tried to legislate Cap and Trade and Congress refused it( a democratic majorty of both houses). Our President then ordered it through Executive Order. Our local power plant has already said when it goes into effect they will shut down all of the coal fired plants. Thousands of jobs, cost of power increases up to 5 time the current cost, and no back up plan by the administration. The US power grid will be over taxed and there will be brown outs and black outs everywhere. The US Government invested trillions in green power and lost all of the tax payers money in really bad poorly thought out and unplanned intervention.

    If 'GREEN" was profitable and effective then it would be in demand. It is not. I suggest that the engineers and scientists start developing green technology that will meet the publics demand.

    Demands are better heard went a cost effective and viable alternative is available.

    All the best. Bob
  • Jun 10 2012: Interesting that you would bring this up. In fact, the idea of cap and trade has already been in circulation and is basically your applied to only the greenhouse gas problem. First, I do believe this type of regulation by the government is better than most ideas, and at least it achieves some level of decentralisation, which is important to keep one person from abusing the system. The biggest problem with this system is the subjective way in which "greenness" determined. If you put some extremely quantitative definition of "greenness", otherwise, this great idea will be screwed over by bureaucracy.

    However, I believe that such a system will still be redundant for several reasons. Given the exponential rate of expansion of the prominence of photovoltaic cells, it will soon be cheaper than petrol, and at this point, businesses will switch to this greener energy without being asked twice. Secondly, a better way to go about conservation is to make the average consumer extremely aware about the issues. Thus, it will pay a company in terms of PR to be green, efficient, and not wasteful. What has and will continue to happen is that the internet will make reputation increasingly important to companies, thus making issues solvable by reputational enforcement rather than bureaucratic taxes.