White paper explains how pollutant fees can finance transition

Stephen Hinton
Anders Höglund
Published online 17 June 2013

How Flexible Emissions Fees Can Drive Transition to Fossil-free and Sustainable Living


June 2013 Version 4.02

The latest version of the white paper connects the need to exert control of the economy’s handling of carbon,  phosphorus and nitrogen as well as ecological maturity with price. Updated from previous versions, this version now connects emissions fees with the transition to the circular economy and offers more in-depth coverage of ecological maturity and the process of introducing the fee mechanism.

Read the abstract below, or download for free


Economy and ecology CAN work together. This is the conclusion of several years of research and development by TSSEF fellows. Certain simple principles apply. Firstly, externalization of costs for business activities should not be borne by people not participating in  the  commercial relationship.

Secondly, business activities should never result in boundaries for nature being exceeded. The main elements to manage are carbon from fossil sources, phosphorus and nitrogen. All need managing  differently as they have different properties.


The economy can be controlled using techniques of control engineering: these include defining the behavior of the system desired, putting in place measurements, sensors feedback and actuators.

Economic control can be exerted using the fees and subsidies already available if combined with information from the market, and sufficiently fast feedback.

An emission fee is placed on introduction of a potentially polluting substance  into the commercial system, preferably a import or extraction. The fee is raised until the substance is under control.

The money from the fee is transferred back to taxpayers via a tax dividend. This ensures that the economy is kept vital.   Even though some services are more expensive, as the cost of the fee is passed on to the consumer, others that are more environmental become comparatively cheaper.

The fee is raised at regular intervals, by an amount that reflects market expectations of the rate of technological change.

The circular economy can be ushered this way: substances that are not biological of origin ( iron, other metals,  mined substances etc) cost to enter the system, and the price is raised until they do not leave it. Biological nutrients circulate too, but enter and leave the economy without burdening recipient or reducing ecological maturity of the source. At the same time, money to enable these transactions circulates freely in the opposite direction.


resilience,    power,     culture,     economic anthropology,     local money, externalisation

pdfDownload free version   whitepaperFE_V4.02

Visit the Swedish Sustainable Economy Foundation’s website

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