Altruism isn’t enough

Britain’s environmental performance is not good. According to Yale University research, the UK ranks 65th out of 146 countries for environmental sustainability, behind such paragons of ecological sensitivity as the USA, Brazil and Belarus. To improve that performance we must find more effective controls and incentives.

In terms of incentives we have altruism, the short-term kudos of being seen to be green, grants and tax incentives, or disincentives. However, these piecemeal measures alone are unlikely to prove sufficient. Consider altruism. Despite the widespread appreciation of climate change and the need to use less fossil fuel, many people think nothing of regularly flying to second homes in Europe or shamelessly using large cars. And England and Wales produce 400 million tonnes of waste a year, much of it fly-tipped.

It is hard to weigh up the pros and cons of alternatives when designing a building. For example, off-site manufacture may offer reduced defects and better thermal performance, but it usually involves high transport costs. Perhaps it is better to use materials that are locally sourced, made and assembled by local craftsmen, but even if we identify the best alternative, what incentives are there to choose it?

The ODPM has supported the development of a Code for Sustainable Buildings. It has been sensibly suggested that the code be based on the good work of the BRE and its environmental assessment method. Presumably, this will use the research on eco-points associated with each component. This approach does have its problems, however. The calculation of eco-points is complicated and the BRE keeps the base eco-point data to itself. Although the reliance on eco-point data for “typical” components would be fine for providing guidelines, it could be unfair if enforced, as it would fail to incentivise manufacturers to source and manufacture in an environment-friendly way.

We therefore need a new environmental impact tax, or EIT, on construction materials. This would replace a number of existing taxes like the aggregates tax, and would either wholly or partly replace VAT. Like VAT, it would be collated and tracked automatically as materials are brought together as part of component assembly. It would comprise at least a landfill tax and a virgin materials tax, which would apply to all materials not re-used, recycled, downcycled or obtained from a plentiful and sustainable source.

Tax relief on the landfill element could be sought according to the potential to reconstruct and re-use. For example, components that are bolted or screwed on may be eligible for tax relief, whereas those that are riveted, welded or glued may not. It could work like this:

• Re-usable materials would attract the highest level of relief. These are things such as steel beams, precast concrete floors or roof slates that can be reused with little or no reprocessing.
• Recyclable materials would attract less relief as they would need some reprocessing. For example, certain types of carpet and metal roofing.
• Downcyclable materials such as concrete, which can be broken up to form hardcore, or timber that can be reconstituted into chipboard, would attract little or no relief.

If these taxes were introduced, the whole supply chain would have an incentive to design to avoid waste by facilitating deconstruction and recycling or repair and refurbishment.

Consider altruism. Despite the widespread appreciation of climate change and the need to use less fossil fuel, many people think nothing of regularly flying to second homes in Europe or using larger cars than they need

Occasionally, from a global perspective, recycling is not worthwhile. Transporting recycled products long distances may only trade landfill for air pollution. Chemicals used to clean up, refurbish or recycle materials can be another pollution problem that needs addressing. The resolution of such conflicts is not helped by

the government’s fragmented allocation of departmental responsibilities; energy usage belongs to the DTI, pollution to DEFRA and recycling to the ODPM.

The EIT would need to take account of:

• Global effects, for which internationally agreed principles would be needed
• National effects
• Regional effects, which may be the responsibility of central or local government.

• International agreements would be needed to create a level playing field, in which goods from countries that do not tax their manufacturers would attract a high environmental import duty, potentially making them uneconomic. The onus would be on suppliers to prove their environmental credentials.
• So here in a nutshell is the argument for bringing in an EIT:
• Revised pricing will encourage the purchase of environment-friendly products
• It would stimulate demand for second-hand materials
• It would be easy to track and difficult to evade, as it is only levied on materials, not labour
• It eliminates the incentives for fly-tipping
• It provides a good test for the introduction of EIT in other sectors of manufacturing and the wider economy.

I don’t purport to have a solution to all concerns about practicality and potential loopholes, but I urge that this approach be thoroughly investigated. Taxes based on environmental impact rather than on current price – the basis on which VAT is levied – must be better for our descendants and our planet.