A Solid-Waste
Solution to Climate Change? A Macro-Financial Strategy around
Sovereign Gold and ESH Bonds
GangaPrasad Rao
Energy, Environmental and Mineral Economist
gpra64@gmail.com
gprasadrao@hotmail.com
Disclaimer: This manuscript explores an industrial policy from a
wider, Social-Finance perspective, for which reason, it is necessary
to examine the matter without the horseblinds imposed by PV-Finance.
The author makes no claim about reliability of the proposed design,
or the assuredness of indicated outcomes.
Introduction
Plastics have turned an ubiquitous raw-material, intermediate- and
consumer ‘product’ in our society. Its quality, diversity, and
niches have expanded the breadth of applications, but engendered a
large and exacerbating solid waste externality. Concomitantly, iron
and steel-making, a primary resource and infrastructure sector across
the world, continues to be a pollution-intensive industry despite
significant gains in recycling of iron scrap. The significance of the
environmental footprint from these sectors cannot be over-stated as
societies around the world pursue an infrastructure-intensive,
LQ-maximizing, nominal economic paradigm.
In recent decades, many technologies have sprung up that have, on one
hand, increased the feed-flexibility of blast-furnace based iron
making, and on the other, enhanced the recycle, and re-use of
processed and composited plastic waste a technical feasibility.
Together, these technical developments present a hitherto
unrecognized opportunity for policy makers to devise financial and
economic strategies that ‘hatch’ these technical developments in
to the market by defensibly manipulating lumpsums, lines, rents and
prices through an appropriate macro-mechanism. This paper broaches
one such design centered around a resource-prudential, macro-societal
and micro-pricing strategy. The strategy exploits a 3-way, induced
strategic pareto between iron-makers, plastic recyclers, (tyre
recyclers) and coal interests to put together a Sovereign Gold and
Bond-centered strategy that leverages market forces to re-align
incentives and secure multiple goals concomitantly and efficiently.
The
Challenge
Many recent innovations and technologies – from nano-science and
IT, to robotization, are indiscriminate in bestowing their benefits
between the Closed-cycle and the Open Cycle. The Open Cycle economy,
characterized by production inefficiency, use of fossil fuels, and
hence environmental externalities, is, paradoxically, benefited more
than is the Closed-cycle by such technologies that enhance its
efficiency, reduce costs, turn it more competitive, and hence extend
the longevity of constituent firms and industries1,
albeit at the cost of exacerbating externalities. Thus, Steel-making,
or rather its intermediate product, iron-making with Pulverized
Coal/Coke as fuel/reductant – one of the more
environmentally-injurious processes, has turned more
production-efficient for the myriad technological innovations and
reliability-enhancements, and consequently, has leveraged its status
as a crucial infrastructure sector within and across nations.
Similarly, Coal mining has expanded scale and lowered costs with new
technologies, and successfully countered, both, its environmental and
economic disadvantage relative other fuels. Reductions in costs of
iron-making and coke manufacture due the new wave of innovative
technologies, would, logically, enhance profitability, and extend, if
not enlarge externalities associated with these processes.
The above context presents a challenge, even an opportunity. The
opportunity lies in devising a strategy that leverages societal
values for Closed-Cycle and Climate Sustainability by ‘closing’
the iron-making production cycle, that simultaneously resolves the
exploding solid-waste externality due plastics, and which also
compensates Coal interests for the de-classification of their proved,
economic reserves. The challenge involves the design of a
macro-strategy that turns iron-making 3-way sustainable - a) by
enhancing the economics of recycling plastics and its composting in
to coal- and coke substitutes, b) by offering financial incentives to
iron-makers to adopt these substitutes, even if it means varying
operational and quality parameters, or adding to costs, and c)
ensuring further, that Coking Coal interests are compensated for the
consequent loss of economic reserves. Such design, if successful,
would incentivize sustainable recycling of Plastic solid-waste
globally, and abate externalities associated with mining of
metallurgical coal, and its processing in to Coke. But how’d one
placate Coal for the loss of production and its not inconsiderable
reserves, incentivize recyclers to recycle plastics in to composites,
and persuade iron-makers to substitute coal fines and coke with
plastic composites, while taking on the risk of cost increments and
product quality variations? This manuscript outlines a strategy that
anticipates the financial and economic stumbling blocks that might
confront policy-makers, and offers a defensible, ESH-prudent,
sovereign, macro-financial strategy that obtains desired outcomes
efficiently through market-based instruments.
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Interested in more than just the Intro and the Conclusions? Here's the pdf: GP Social Macro Finance
.
To
Conclude.....
The Nominal Paradigm, coupled to a per-capita economy administered by
a populist government comprised of Political parties in nexus with
stock market capitalists and purveyors of open-cycle technologies,
causes environmental and social externalities to explode and threaten
societal sustainability1.
Post producer- and post-consumer Plastics waste is a very obvious and
enlarging externality of modern times. Concomitantly, Coal mining and
Coke production, is beset with its own externalities in production,
processing, and in use. This manuscript perceives an emerging pareto
opportunity around, on one hand, developments in Plastics Recycling
and Compositing, and on the other, in the use of re-processed
Plastics waste as Reductants in Blast Furnace Iron-making. Though
demonstrated technically, these innovations remain largely in the
realm of niche, government-supported programs. This proposal offers a
financially-defensible, economically-robust, market-based design to
incentivize CC-technologies at multiple points in the economy, and
thus brings about a quantum jump in the recycling and re-use of
plastics beyond furthering Closed-Cycle goals.
References
1. Plastics convert iron-ore to Steel: Feedstock recycling in blast
furnaces, Plastics Europe.
2. Recycled Mixed Plastics as Reductant in Iron-making, Dankwah,
Amoah, Dankwah and Fosu.
3. Recycling of Waste Plastic Packaging in Blast Furnace System,
Yojiogaki, Koichi Tomioka, Watanabe, Koji Arita, Kuriyama and Tetsuro
Sugayosh, NKK Technical Review No. 84 (2001).
4. McKenna, Phil. ‘New Life for Old Tires’. MIT Technology
Review.
