The international economics of resources and resource ... - Index of

182 P.J.J. Welfens et al.
pessimistic, on the contrary, with a world-wide common interest to control global
warming there is a new field that might trigger more useful international cooperation
among policymakers in general, and among environmental policies, in particular.
From an innovation policy perspective there is, however, some reason for pessimism
in the sense that the Old Economy industries—most of them are highly energy
intense—are well established and have strong links to the political system while
small and medium sized innovative firms with relevant R&D activities in global
climate control typically find it very difficult to get political support. Thus one
should consider to impose specific taxes on non-renewable energy producers and use
the proceeds to largely stimulate green innovative firms and sectors, respectively.
Competition, free trade and foreign direct investment all have their role in
technology diffusion, but without a critical minimum effort by the EU, Switzerland,
Norway, the US, China, India, the Asian countries and many other countries it is not
realistic to assume that a radical reduction of CO2 emissions can be achieved by
2050. Emphasis should also be put on restoring stability in the financial sector and
encouraging banks and other financial institutions to take a more long term view.
Here it would be useful to adopt a volatility tax which would be imposed on the
variance (or the coefficient of variation) of the rate of return on equity of banks
(Welfens 2008, 2009).
It is still to be seen whether or not the Copenhagen process can deliver
meaningful results in the medium-term and in the long-run. If the financial sector in
OECD countries and elsewhere remains in a shaky condition, long-term financing
for investment and innovation will be difficult to obtain in the marketplace. This
brings us back to the initial conjecture that we need a double sustainability—in the
banking sector and in the overall economy. The challenges are tough and the waters
on the way to a sustainable global economic-environmental equilibrium might be
rough, but the necessary instruments are known: to achieve a critical minimum of
green innovation dynamics will require careful watching of standard environmental
and economic statistics, but it will also be quite useful to study the results and
implications of the EIIW-vita Global Sustainability Indicator.
Appendix
Eigenvalues and components
Figure 11