Genesis Morocco: Greening the economy. Part II.

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Genesis Morocco

Project Genesis is a strategic sustainable development framework for Morocco to translate from being a net importer of energy and a country facing water shortage issues, into the number one producer both of clean renewable energy and water in the region.

Friday, April 16, 2010    <<Home

Greening the economy. Part II.

Below is the link to a flow chart that I used to define and articulate my thoughts on the subject of a VAT on energy for the services sector. However, I have tailored it to the specific case of Morocco.

Flow chart 01 / Framework

To broaden the topic in more general terms, I would say that we transitioned to a service economy without paying respect to the context of energy scarcity. This was acceptable decades ago when energy was cheap and services where just developing, but not anymore.

Again, since services do not produce anything physical that can be recycled, reused and re-enter a production loop, the energy consumed by the services providers is well, total waste, you may not agree, but from a physical perspective it is. They are called after all, immaterial transactions.

This waste ratio of 100% has to have a price tag on it. The way I see this done is through taxing at the meter the main raw material of the services sector : electricity. (I am referring to electricity specifically here and not energy because energy implies a more complex accounting system, but it can also be done)

In the specific case of Morocco, my scenario sets that price tag at a 20% premium on electricity bills that can be deducted of income tax, so this actually raises the NOPAT, the thing is that this deduction can only be done over a 5 years period.

The additional tax income generated by the E-VATT (short for Energy Value Added Tax for the Tertiary Sector) is then targeted by a non for profit government fund at small green businesses that provide job opportunities and furthers the states green economy agenda.

As for the services sector, this actually provides them with an incentive to become more energy efficient, thus driving demand for state of the art technology and also engages them actively in corporate citizenship.

The E-VATT can be considered a viable, workable, alternative to carbon credit schemes as far as the services sector is concerned. It can be enforced globally by E-VATTing foreign services consumed locally.

Visual : Classical 2-Dimensional Electron Flow (computer simulation) © Eric J. Heller, Resonance Fine Art.