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Chapter 5
overview, criticism
and advantages of
conventional accounting

5.1 Criticism and advantages of conventional accounting

5.1.1 Basis of criticism

Accounting systems are one of the most important management tools for every company.
The function of accounting is to provide relevant, reliable and accurate information to
guide the decisions of managers, investors and other stakeholders.Yet reality is so complex
that this function often cannot be achieved at a reasonable cost. Hence, accounting
systems are based on conventions about how to reflect something—a transaction, an
internal transformation or an external event. In particular, the convention of using money
and monetary calculation is among the greatest simplifiers of complex affairs (Chambers
1999: 122).
Although some conventions are necessary in order to manage complex reality, those
used in conventional accounting have been heavily criticised. Some of the most extreme
criticisms go so far as to maintain that all the conventions and the information collected
by today’s accounting systems mirror only what business and political leaders currently
consider to be important for the economy and society, from their own perspective.
Conventions reflect the distribution of power between different stakeholders such as
shareholders, managers, future generations and others (see Section 7.1). Since power
relations between stakeholders are constantly changing, accounting systems, too, are
generally under constant pressure to change, expand or adapt to provide the information
that the most powerful stakeholders wish to be reported. As society changes, new
information and new stakeholders also become important. This puts accounting systems
under additional pressure to change. Consequently, pressure grows for economic activ-
ities to be reflected through other, more appropriate, conventions. Growing concern over
company environmental impacts has generated criticisms of accounting conventions that
are in general use. An environmental twist to conventional accounting provides the
hallmark of a new aspect of stakeholder concern and involvement.The following sections
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5. overview, criticism and advantages of conventional accounting 77

point out the main criticisms made by stakeholders concerned about environmental
aspects of company activities and also draw attention to other related criticisms of
conventional accounting.
The last main section of this chapter concludes that in spite of criticisms aimed at
conventional accounting the system has shown itself to be resilient and to provide a
number of uncontested advantages that any future accounting system can build on.

5.1.2 Environmental criticism of conventional accounting

Historically, the first complex accounting systems evolved in the Renaissance period in
the sixteenth century. One of the most extreme criticisms directed at accounting points
to the influence of this historical period. The belief that humans are distinct from nature
and, indeed, able to manage nature in a rational manner is still reflected in contemporary
accounting practice. Although not immediately evident, this belief has led to some
weaknesses in conventional accounting. In particular, the fundamental outlook of conven-
tional accounting, with its focus on the accounting rather than on the ecological entity,
has been criticised (see Maunders and Burritt 1991: 11; Wainman 1991).
The significance attached to events happening within an entity and the convention of
ignoring events that take place outside an accounting entity lead to major problems when
one tries to account for environmental damage. From a legal point of view, corporate
environmental impacts often occur outside the transactional boundaries of a company, so
that these environmental impacts are often treated as ‘externalities’ (Section 6.1.4). As they
fall outside a company’s legal boundary they have to be addressed by a company only in
limited circumstances.Today, in general, accounting systems do not reflect environmental
impacts caused directly or indirectly by a company. This situation will remain the same
as long as organisations are treated as ‘semi-closed systems with hard (legally based)
accounting boundaries’ (Maunders and Burritt 1991: 16). For example, if adverse environ-
mental impacts occur because of the particular types of material used in production this
is not directly shown in the company’s accounts. Nevertheless, in some cases, customers
may be able to sue the company or ‘punish’ it indirectly by not buying the company’s
products because of their adverse environmental impacts.
In other cases product or other potential liabilities will lead to internalisation of the costs
of environmental impacts. Society also has other means for internalising environmental
costs; for example through environmental taxes and regulation of pollution control
devices. Yet it might take several years before some environmental impacts, for instance
those flowing from products sold in the past, are recognised and the associated liabilities
become material for a company, its suppliers or clients (see Box 5.1).
Conventional accounting systems do not provide information on how much the
environment is harmed, no matter how high the social costs and no matter whether the
damage is irreversible or whether carrying capacity is exceeded. If management relies only
on conventional accounting information it will very often not even recognise that the
environment has been harmed because:

A Natural and environmental resources are not included in balance sheets.

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78 contemporary environmental accounting

in the following two cases environmental costs have not been

reflected in the accounting systems of those who caused them, although many years later the
negative financial consequences are internalised in the accounting systems of others (see also
Section 3.1). The bulk of the consequences (financial and health effects) has not been paid for
by the companies that caused the costs.
A In the 1960s the asbestos industry sold products that caused tremendous health
damage in the 1980s and 1990s. Today, asbestos as a product has mostly been phased
out, and insurance companies (which did not caused the damage) are having to foot the
financial bill. The financial liabilities for pollution, illnesses such as asbestosis, clean-up
liabilities and related claims have to be borne by the insurance industry (i.e. by today’s
premium payers).The claims are estimated to be US$2 trillion alone in the USA, of which
US$11 billion is covered by reserves and provisions.
A The reinsurance industry faces a similar problem. It argues that it faces huge cash out-
flows because of more frequent and severe storms that might be significantly correlated
with the global warming effect. However, the insurance industry has never earned
premiums to cover these costs.

Box 5.1 Postponed internalisation of environmental externalities

Source: Knight 1994: 48ff.

A Depreciation of natural capital is not internalised.

A Environmental damages are not considered, unless reflected in fines, penalties,
licences and enforced clean-up costs.

Therefore, it has been argued that adverse effects on the environment can be seen—to a
certain extent—as resulting from current accounting practices (see Maunders and Burritt
1991). Regardless of the accounting system in place, it will never be possible to reflect all
environmental effects. At the time when the product is first developed or a new activity is
initiated, it is impossible to estimate accurately every possible future risk.
Given that accounting has a dominant function in information systems, partly because
it quantifies and simplifies a complex reality and partly because it can be used by
businesses to downplay ecological impacts, adverse ecological impacts arise as a result of
the use of conventional accounting information (Maunders and Burritt 1991: 12). Impacts
of current accounting practices can be divided into two categories:

A Direct effects on the environment. As accounting information is used for

decision-making both by internal and by external stakeholders, comprehensive
information, as correct and as complete as possible, becomes crucial. Decision-
making and evaluation of activities that have an environmental impact must rely
on accounting information that often conforms to generally accepted account-
ing standards that are based on the conventions of financial accounting.
Exclusion of externalities in these forms of accounting results in misleading
accounting information being used by managers for financial and strategic
decision-making. In short, internal costs appear too low because some costs are
passed on to external parties and are not included in decision-making. As a
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5. overview, criticism and advantages of conventional accounting 79

result, managers favour products and processes with the lowest internal costs—
not the ones with the lowest total costs to society, as represented by internal and
external costs combined.

A Indirect effects on the environment. Indirect effects of conventional account-

ing on the environment are connected with the mental framework unconsciously
used when viewing the world. Conventional accounting, for example, although
measuring income and financial wealth, does not question their distribution.
Instead it accepts existing interpersonal, interregional and intergenerational
distribution regardless of their moral or ethical flaws. For example, conventional
accounting systems do not show who received the money spent by a company
(interpersonal distribution), nor do they show the region in which company
suppliers are situated (interregional distribution) or whether money is spent with
the needs of future generations in mind (intergenerational distribution).

A further criticism points out the inherent discrepancy between conventional account-
ing systems and natural ecosystems. For accounting, no upper limit to financial resources
exists—the word ‘enough’ is never translated into numbers—whereas the natural environ-
ment has such a limit reflected in the notion of ‘carrying capacity’. From a macro-
economic perspective this argument has been used as a criticism of the concept of gross
national product (GNP) as a measure of wealth and the related constant striving for higher
GNP (Gray 1992; Lutz and Munasinghe 1991). Environmental damage is not considered
in this quest for higher monetary income and wealth, because no value is put on most
(‘priceless’) environmental goods. The same critics also see it as undesirable to give
environmental goods an artificial price (Hines 1991). Nature reacts according to com-
pletely different laws than those assumed under the rules set down for conventional
accounting systems; it is based on the interconnectedness and interaction of all substances
and beings. Accounting systems, on the other hand, divide, separate and count everything
independently.They use special accounts for every accounting item and finally aggregate
many different items together in a standardised format such as a balance sheet, an income
statement or a cash flow statement in ways that just do not add up even though the figures
are relied on by managers and stakeholders (Chambers 1966).
The interdependence of time is also ignored in most conventional accounting systems.
For example, outlays that are expected to produce future ecological benefits (e.g. pollution
abatement expenditures) reflect negatively on current economic performance if the
expenditures are considered to be expenses.
These procedures are not only seen to contribute to the problems alluded to above but
also cause problems for financial analyses of companies, products, investments and
production processes (Chapter 7).
Maunders and Burritt summarise their criticism of conventional accounting in the
following way: ‘By providing the only quantified analysis available, it is not decision
support which is provided [by conventional accounting], but rather conditioning’ (1991:
13). Conditioning that facilitates further exploitation and plundering of ecological systems
is neither sustainable nor acceptable for the business of the future. Likewise, accounting
systems that facilitate that conditioning must be changed.

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80 contemporary environmental accounting

5.1.3 Other criticism of conventional accounting

Criticism of conventional accounting is not limited to environmental argumentation. For
several decades there has been a passionate discussion about the shortcomings of conven-
tional accounting. Shortcomings are underlined by the long and continuing debate about
how to calculate the relevant income figure, how income figures need to be adjusted for
capital maintenance and what the correct earnings per share might be. Such discussion is
dealt with extensively in the literature and is therefore not repeated here. See, for example,
Chambers 1966, Johnson and Kaplan 1987a or Rappaport 1986 and 1998. One criticism
has for instance resulted in the development of the concept of the ‘shareholder value’
which is based on free cash flows. The shareholder value concept still uses the financial
information collected. However, the fundamental idea is that the value of a company
should not be based on a multiple of its earnings but on its financially quantified strategic
value. Free cash flows concentrate strictly on real cash inflows and outflows as a conse-
quence of a company’s strategy which leads to investment activities and future returns.
In former times management was dedicated to maintaining liquidity. When it was
recognised that liquidity today does not necessarily lead to liquidity tomorrow, new
indicators were created. The result is countless books on accounting, and many different
accounting standards and conventions. For further discussion see Rappaport 1986 and
1998.
Some particular aspects of the general criticisms of conventional accounting are
brought into focus through discussion of environmental accounting. First, conventional
accounting has become too complex in its dealing with a complex world. Simon’s theory
of bounded rationality recognised that one mind cannot grasp more than a limited number
of objects or phenomena at a given time, especially when solving a problem or making a
choice (Simon 1957: 218). Conventional accounting should address the need for making
a choice between serviceable and useless information requirements, thereby restoring a
simplified focus on ‘a common mode of calculation for prudent administration, the
economical conduct of affairs, the pursuit of gain and the avoidance of financial disaster’
(Chambers 1999: 123). Such simplification would facilitate the integration of relevant
financial and biophysical data in decision-making rather than trying to add a complex
veneer of biophysical data to an already overly complex set of financial data.
Second, output from double-entry book-keeping represents that borrowing should be
shown as a debt on the liabilities side of a balance sheet and at the same time as cash on
the assets side. It can be argued that this procedure enables companies and individuals to
live beyond their means or, in other words, at the expense of the natural environment and
future generations. A company that wishes to expand despite having an insufficient
operating cash inflow can finance its debt as long as contracted debt ratios and rules are
met. However, these additional financial resources lead to an increase in activity and sales
and thus (in most cases) to an additional use of natural resources and to higher emissions.
Consequently, fewer resources would have been used if debt financing had not been
allowed. However, it is important to recognise that one of the main functions of debt
financing is to bridge time differences between savers and investors and thus to contribute
materially to the wealth accumulated by many nations and individuals.
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5. overview, criticism and advantages of conventional accounting 81

Feminist criticism takes a slightly different view (see e.g. Cooper 1992a, 1992b; Gallhofer
1992). Accounting is seen to be a predominantly masculine (not necessarily male)
discipline, used to control and suppress others. Conventional accounting lacks the
strengths of the feminine way of dealing with life, such as non-competitiveness and giving
(Cooper 1992a, 1992b). The masculine way of thinking, which stresses the utility-
maximising goal of the unified, rational and self-centred being, has been blamed for the
environmental destruction we witness today (Cooper 1992a: 27). One solution has been
to propose the creation of a feminine libidinal economy, where feminine qualities, for
example plurality, caring and harmony, flourish. Cooper summarises the feminine
perspective in the following way (1992a: 37):

we could perhaps imagine an accounting which is multiple, no debits or credits;

which allows for many differences, these could not be added, therefore there
would be no totals; it would not be concerned with profits, and even less afraid
of loss; it would be concerned with gifts, what was given; it would contain no
phallocentric economic terms; and it would not be competitive.

With the exception of Chambers, most points of critique detract from the actual
function and use made of accounting. To overcome the environmental problems com-
panies and society face today, practical concepts for actual improvement are necessary.
In order to build a system of environmental accounting that addresses the need for
simplicity, decision-relevant information, accountability and equity between masculine
and feminine views, between minorities and majorities and between present and future
generations, this book focuses on concepts that build on the strengths of accounting.
Nevertheless, the critique and shortcomings of conventional accounting systems and
the information produced can motivate stakeholders to a variety of reactions.

5.1.4 Stakeholder reactions

In principle, three possible reactions exist whenever stakeholders do not agree with the
present situation (Hirschman 1970):

A Resignation and loyalty. Stakeholders can accept (or ignore) the deficiencies
of conventional accounting and ‘indulge in the sweet side of life’.With this reac-
tion, no improvements are possible as no energy is expended on changing the
current situation.

A Voice. As already discussed, academics, professional accountants and managers

have drawn attention to the weaknesses of conventional accounting for many
years. Even at annual company meetings shareholders have raised environ-
mental issues having an impact on business. Many suggestions have led to
changes in existing practices and systems and have contributed to a gradual
improvement in accounting practice. ‘Voice’ requires initiatives of important
stakeholders and the readiness of all involved parties to contribute in a
constructive way towards solving existing problems—something also cham-
pioned by the feminist perspective.
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82 contemporary environmental accounting

A Exit. Investors and creditors can withdraw their financial resources whenever
they do not appreciate a company’s accounting practices. In practice, this would
lead to a reduction in demand for the shares of a company and a reduction in
its share price. Investors that are concerned to make ‘ethical investments’ will
effectively withdraw their funds from companies that do not come up to
expectation. With ethical investment, exit is caused by company activities that
do not comply with the environmental expectations of the shareholder. Ethical
investment is a small, but rapidly growing, sector of the global investment market
(Cummings and Burritt 1999; Knörzer 1995; Schaltegger and Figge 1999). In
addition, there are in existence different models and groups that represent an
escape to a separate social and/or economic system (colony model) with
different conventions of accounting. One way to exit the existing economic
system is, for example, to live in a remote area. Another way is to establish
‘colony currency and accounting models’. These models often work with
negative interest rates to prevent people from striving for growth and to give
incentives not to hoard money but to put it into circulation. For example, the
Wirtschaftsring (economic circle) system in Europe is based on a special
currency (called WIR).This currency is used only between traders and retailers.
It has a different interest structure from market rates. Loans are credited with
only very low interest rates. Mortgages can be raised with substantially lower
than market interest rates. Other exponents of this colony model propose
charging interest for debits (e.g. the Taler Community focus on a separate closed
system of payments; see also e.g. Binswanger 1991; Binswanger and von Flotow
1994; Kircher 1994; Lauener 1994).
As we move into a new millennium it is becoming clear that many environmental
problems are too severe to be neglected and too global in nature to allow a successful
escape. Hence, loyalty and resignation to existing accounting systems are unlikely to be
acceptable. Changes to existing systems, either incrementally or radically, will depend on
the exercise of voice. It has been argued above that, in practice, incremental change is more
likely to be feasible than radical change because:

A There are high costs associated with radical change to accounting systems.
A Many critiques of existing systems do not specify their preferred alternatives to
those existing systems.

Finally, ‘exit’, encouraged by the discriminatory use of regulatory systems by govern-

ment to favour ‘good’ performers, and through growing stakeholder awareness of the need
to avoid environmental problems, might also provide an incentive for a ‘green’ change to
conventional accounting systems. In practice, such change, whether caused by voice, exit
or a combination of both, will build on existing strengths of conventional accounting
systems and try to eliminate their weaknesses rather than destroy all conventional
accounting systems and replacing them with de novo systems.
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5. overview, criticism and advantages of conventional accounting 83

5.1.5 Uncontested advantages of conventional accounting

Given these relevant criticisms of conventional accounting, it must nevertheless be
acknowledged that existing accounting systems offer certain uncontested advantages for
all stakeholders:

A Over time, accounting systems provide systematic sets of financial information

about a company to stakeholders. Internal and external stakeholders need
information systems that reduce the complexity of the world to help them make
decisions in conditions of bounded rationality. In this connection, quantification
can be seen as a widely accepted way to add precision to reasoning about the
world but, more importantly, quantification permits a basis for comparing
alternative courses of action. Of course, quantification cannot deal with issues
of morality, beauty and love, but it is a powerful instrument when a society seeks
to examine alternatives available to overcome poverty, fiscal deficits or environ-
mental degradation. The accepted rules of today’s conventional accounting
systems are used by businesses throughout the industrialised world.

A Conventional accounting systems purport to represent to outsiders an organ-

isation’s financial position at a stated date and changes in its financial position
over a specified period of time, given a set of transactions, physical transfor-
mations and external events. In particular, conventional accrual accounting
systems recognise, measure, disclose and facilitate management of assets and
liabilities.The challenge for environmental accounting is to incorporate into the
accounting process and associated statements the financial aspects of company
activities that have an impact on the environment.

A The accountancy profession is represented throughout the world and any

changes in accounting practice have the potential to produce a flow-on effect to
all countries. Accounting can therefore be regarded as one of the most inter-
national ‘languages’ spoken by many different stakeholders worldwide. This is
reflected in the growing economic importance of the accountancy profession.
The importance and influence of the accountancy profession is reflected by its
size. For example, in 1994 the ‘big six’ accountancy firms employed more than
400,000 people and achieved a turnover of approximately US$30 billion.
The message is that existing accounting systems need to be substantially improved
rather than completely eliminated. Similarly, the business form and business activities
remain to be worked with, to be improved, rather than entirely destroyed because they
have an impact on the environment.
Conventional accounting systems reflect the human trait of accumulating fortune,
wealth and power measurable in monetary terms. No accountant would suggest that
changes to conventional accounting systems are sufficient to solve the enormous environ-
mental problems of today and the future. Nonetheless, accounting is a necessary and
important part of a pragmatic approach to the recognition and resolution of environ-
mental problems by business. Of course, necessary incremental changes in accounting
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84 contemporary environmental accounting

practices will redefine and enforce new power relationships between stakeholders in an
organisation.
Among the main benefits to be derived from adjusting conventional accounting for
environmental issues are:

A The provision of base information for considering the actual and potential
economic consequences of environmental issues

A Provision of information that can facilitate adaptation by business in the face of

imposition of new environmental regulations, and new economic instruments
designed to influence environmental outcomes

A Facilitation of a management philosophy designed to make transparent and

encourage economically advantageous measures of environmental protection

A Improved responsiveness to environmental issues raised by stakeholders

Given these strengths, criticisms and potentialities of accounting, the following questions
remain:

A How can conventional accounting systems be changed so that they effectively

reflect environmentally induced financial impacts (Part 2)?

A How can conventional accounting systems be extended so that they consider,

in an effective and efficient way, impacts of company activities on the natural
environment (Part 3)?

The first of these questions is dealt with in the following chapters of Part 2. First, an over-
view of conventional accounting systems is provided. Then, ways that environmental
issues influence conventional management, financial and other accounting systems are
illustrated.

5.2 Accounting for environmentally induced financial impacts

Business managers and other stakeholders look to conventional accounting to help provide
relevant information about the growing economic consequences of environmental oppor-
tunities and environmental costs, such as those related to measures to prevent pollution
(see also Chapter 2).
Only with relevant information can managers, shareholders and creditors consider the
actual and potential economic consequences of environmental issues, adapt to the
economic effects of new environmental regulations and have a mutually fruitful discus-
sion with stakeholders about how best to implement pollution prevention (e.g. to reduce
greenhouse gas emissions) and how to address opportunities linked with rising demand
for clean products and processes (e.g. how electricity companies should respond to
imposition of a government policy and signals for the future that by a set date 2% of
electricity supply must be sourced from renewable sources).
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5. overview, criticism and advantages of conventional accounting 85

Conventional accounting that incorporates environmentally induced financial infor-

mation is called environmentally differentiated conventional accounting (see also Part 1,
Chapter 4). It brings together environmental issues in management accounting, financial
accounting and in other accounting systems (see Fig. 5.1).
Ideally, all impacts, including those borne by society and the natural environment, would
be included in conventional accounting systems. In practice, as only a few externalities
are internalised, either voluntarily or through direct and indirect regulation, strategic
management decisions may be based on incomplete information that, from a societal
perspective, may be economically misleading (e.g. when external costs are internalised
following a lag in policy).
However, it would be even more misleading if management internalised externalities in
its conventional accounting when they were not part of the actual economic effects on a
business. Conventional accounting is an information system designed to measure the past
economic performance of a company (i.e. the economic profitability, liquidity and
solvency—in short, a cluster of financial circumstances of relevance to stakeholders).
Mixing external and internal financial transactions (i.e. external and internal costs) in the
accounts of a business would distort the actual figures so that they would lose their
relevance for economic decision-making and accountability purposes. Some external
events do have an impact on business. For example, inflation reduces the purchasing
power of a company’s capital over time and so adjustments need to be made to the capital
base to reflect this situation. However, conventional accounting has not been very adept
at addressing the impact of these external events in the accounts. Indeed, the accountancy
profession’s performance with inflation accounting has been inconsistent and slow, in spite
of considerable ‘voice’ being expressed over a 70-year period, even though the usefulness
of ‘real’ (inflation-adjusted) economic figures for analysis is unchallenged.
Environmental management accounting deals with environmentally induced costs,
revenues and, where appropriate, asset values (e.g. for defining a controllable capital base
in an investment centre). Environmentally induced costs will be examined in detail in

Figure 5.1 Environmentally differentiated conventional accounting

Environmentally differentiated
conventional accounting

Environmentally induced
financial impacts

Environmental issues in Environmental issues in Environmental issues in

management accounting financial accounting other accounting systems
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86 contemporary environmental accounting

Section 6.1. Environmentally induced costs can be increased or reduced through efforts
to achieve environmental protection.Typical financial costs related to environmental issues
include: increased costs of environmentally benign raw materials; regulatory costs such as
fines, fees and clean-up costs; and the increased production of waste. On the other hand,
savings might be achieved through the better use of resources, a decrease in waste and
fewer fines and licence fees.
Environmentally induced benefits or revenues can be divided into direct and indirect
benefits or revenues. Direct revenues, for example, include the gains from sales of
‘recyclables’ (recyclable items), increased sales volumes of consumer products and higher
prices of the products sold, sales of environmentally benign technology and even gains
from trading in pollution credits (e.g. sale of sulphur dioxide credits, related to air quality,
or sale of salt credits, related to water quality). Indirect effects are intangible and can, for
example, include an enhanced image, increased customer and employee satisfaction, the
transfer of know-how (intellectual capital) and the development of new markets for
environmentally benign products.
Environmentally induced assets are not frequently recognised as important in manage-
ment accounting but, in practice, expenditure on assets forms a critical part of investment
appraisal systems, and asset bases can also be treated as part of the financial responsibility
of divisional managers in larger companies. To the extent that asset bases could include
natural capital, environmental management accounting needs to take assets into account.
Environmental financial accounting deals with revenues and expenses (shown in a
periodic income statement, also called a profit-and-loss account) and with assets and
liabilities (shown in a dated balance sheet).
Under the historical cost convention, costs are classified as expenses if they have
provided a benefit that has now expired. Unexpired costs that can give future benefits are
defined as assets, whereas property rights of creditors are classified as liabilities. Liabilities
that can only be estimated are commonly called ‘provisions’. If their occurrence is uncertain,
liabilities are disclosed as ‘contingent liabilities’ (also called ‘potential liabilities’).
Environmentally induced expenses include, for instance, fines for illegal waste disposal,
or clean-up costs required to restore land. For example, a scrubber can be recognised as
an environmentally induced asset if it secures future economic benefits (through con-
tinued production, according to IASC 1995, IAS 14 and IAS 16).
Environmental liabilities are future costs, such as those incurred for future remediation
of landfills or for defending legal actions brought against the company.
Other environmentally differentiated conventional accounting systems establish special,
mostly regulatory, accounting relationships. Tax accounting, the most important exam-
ple, deals with tax implications of environmentally induced expenses (including the topic
of fiscal neutrality), assets, provisions and tax expenses (taxes) and tax subsidies. They
also serve other purposes: for example, provision of the basis for reimbursement of costs
by clients or customers.
Environmentally induced taxes include, for example, expenses for a carbon dioxide
(CO2) emission tax, whereas subsidies for clean technologies are classified as environ-
mentally induced tax revenues. Other issues include the accelerated depreciation of clean
technologies.