Article by
Jim Rowland
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CLIMATE CHANGE EXCLUSIVE!!
Jim Roland’s second of his 3 part series Hi-lighting the humanHi’s and lo’s of climate change – Green Tax
Solving the 'green tax' conundrum
Will opposition to 'green taxes' derail meaningful efforts to fight climate change, or is there another way?
We have a long way to go to cut our carbon emissions. The sort of cuts we need to make are in the realms of 80% worldwide by 2050, even as the number of affluent people in the world will have grown considerably. This is not just to avoid a few more heat-waves and hurricanes. Warming has already desertified large parts of Australia and is drying the south-western United States and southern Europe. Himalayan ice, the source of the great rivers of India and China, is receding, threatening the food supply of hundreds of millions if warming proceeds much beyond 2°C above scientists' baseline (or 1.2°C warmer than now). Such warming itself threatens rapid melting of the West Antarctic and Greenland Ice sheets, which could mean major sea level rises (of around 15 to 50 feet) within decades, rather than centuries.
But how do we persuade people to make the necessary cuts? It will mean leaving fossil fuels in the ground long before they are exhausted. Yet oil has now reached an inflation-adjusted record price in spite of near-record output, and recent European fuel price protests by hauliers and fishermen have led to the deaths of two lorry drivers in Spain and Portugal, while other fuel price protests have occurred in India.
Fuel taxes are an especially sensitive issue for industries that fear competition from elsewhere. But the wider question is this: how do governments effectively discourage polluting fuel use without provoking insurmountable wider public opposition, as was always a grave danger with directing taxation here? A recent survey for The Independent found that over 70% of Britons opposed increased 'green taxes' even if used to pay for 'green' projects. The difficulty is amplified in the United States, which accounts for nearly 50% of all world vehicle CO2 emissions. Home energy is taxed far less than motor vehicle fuel; aircraft fuel is not taxed at all. How do we further discourage polluting fuels for home energy and transport without hitting the poor hardest, if we are to bring about a revolution in energy use?
The principle of personal carbon allowances, including carbon 'rationing', suddenly starts to make sense. Governments ration other commodities such as food and water when there are limited amounts to go round, as a positive step to ensure everyone gets a fair share. In the same way, we could allocate everyone a certain amount of emissions they would be permitted to cause, each month or year.
The main contention is how this would work practically. We pollute directly when driving a car or using gas, oil or coal in the home; and less directly when using public transport and buying electricity or most new goods. How, then, does one administer a personal allowance to pollute when this can be exercised in such diverse and sometimes indirect ways?
One way to do this is to have separate allowances to pollute in different ways, e.g. home energy, flying. Last year, the Conservative Party proposed that each individual would receive an annual quota of cheap air travel equivalent to a return flight to Malaga, above which they would pay extra flying duty. The idea was instantly rubbished by the Mail on Sunday, who reported that over a third of people in their poll thought this allowance too draconian. Presumably, then, nearly two thirds didn't think it was unfair!
This approach has one or two limitations for flights, e.g. the UK would not do well to tax all of a journey from London to New York unilaterally, or that could lead to flights stopping-over in Dublin so as to exempt the Dublin-New York leg, causing even more pollution. However it could also work for home energy or petrol, so that less extravagant consumers would be taxed less in proportion, and families could pool family members' allowances.
A second option, known as 'carbon rationing', would involve each individual receiving a carbon allowance card, which he or she would use when purchasing any goods or services so that 'carbon credit' would be deducted for the emissions involved in the goods or services. People would be able to buy and sell unused credits.
Championed by policy analyst Mayer Hillman in his co-authored book "How We Can Save the Planet", this and closely related approaches have been examined by the Department of Environment, Food and Rural Affairs (Defra), an initiative of David Miliband while he was Defra secretary.
In April, his successor Hilary Benn shelved plans for a trial of the idea, describing it as "ahead of its time" and costly. But just weeks later, the cross-party Environmental Audit Committee urged the government to press ahead, saying that the idea "could be essential" for driving down emissions and changing behaviour, which it would do better than pollution taxes. Hillman is more indignant. "In 1939, would he have said that taking on Hitler was an idea "ahead of its time"?" he asks.
Some have sought ways to simplify the administration of carbon rationing while achieving the same net flow of funds and cost effects. One such model is called "Cap and Share". Each individual would receive an annual set of permits to pollute which they could sell to financial institutions, who would ultimately sell them to coal, gas and oil suppliers who would need to acquire them for all fuel supplied.
In other variations of this third approach, permits are required for other man-made contributions to global warming, for example the warming effects of aircraft contrails; or the permits would be auctioned directly by the government or a trust, which would distribute the proceeds to the public as as a windfall or negative tax. Cap and Share advocates argue that issuing the permits to the public to sell would remind them of their involvement in the fair distribution of permits to pollute, and their personal responsibilities.
Permits to pollute are already being bought and sold between companies in the European Emissions Trading Scheme (ETS), and similar schemes are being set up or planned in the United States, Canada and Australia. One problem highlighted by the ETS is called 'leakage': if manufacturing industries in one part of the world face a rising cost-of-carbon, what is to stop manufacturers elsewhere gaining unfair advantage? This may be happening already: David Workman of British Glass reports that a lot of glass manufacturing is now relocating in North Africa, the Middle East as well as China - ironically, given the environmental benefits of produce such as thermal glazing, photovoltaics and fibre for insulation and wind turbines.
Ways have been proposed to address this problem, but it suggests to me that emissions auctioning is the least appropriate way to carbon-price heavy industry that competes internationally, in view of the uncertainty it can create.
I think a further important consideration is helping individuals not to be caught out spending their windfalls before their fuel bills and travel costs present themselves. For example, the first kind of system could be administered so that people receive their personal 'lower carbon tax band' in the form of automatic deductions from their home energy bills, with any excess being spendable as a tax rebate on petrol taxes via a swipe card, more like in the second approach; any excess not spent in this way could be used against travel fares or redeemed, as desired.
A progressively rising carbon tax with a personal 'lower tax band' is easier for individuals and companies to plan ahead with, and for governments to promote to others as a tool until most countries are collaborating in the effort.
Overall, 'per capita' allowance based systems will also help the world cope with increasing scarcity of oil and gas. They mean that no country needs to price its poor out of using these commodities while others use them up. Conversely, they can discourage wealthy countries from gobbling up an excessive share of them leaving parts of the world even poorer, especially those least well-placed to develop the remedies such as electric vehicles.
Ultimately, countries' future rights to pollute will need to converge roughly toward equal per capita shares of a diminishing world emissions budget. This principle is now acknowledged by economist Sir Nicholas Stern, since time is now too short to try and do anything very different.
Jim Roland is a moderator of the Campaign against Climate Change activists' portal..
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