We are absolutely not on track and COP26 is likely to fail us, given the experience of top down approaches without the power to enforce. Here is what we need to do.
- We have started to decarbonise the UK, principally by phasing out coal, and increasing energy efficiency across a range of fields. UK based production emissions have indeed fallen by around half since 1990. But these measurements ignore flying and shipping, and we have largely exported our consumption footprint, much of it to China (as has much of Europe). The next stage is much harder, as it will impact our lives much more directly. No one notices the changes on the grid, but you will notice having your home taken off gas.
- We need a mechanism for driving carbon emissions out of UK production, but also UK consumption. That mechanism is an international framework of carbon tax – in other words, tax paid by the fossil fuel companies on all oil, coal and gas taken out of the ground or imported. This is an idea that is supported by a broad coalition of NGOs and civil society groups, both in the richer countries and the Global South. It’s an idea that embodies the ‘polluter pays’ principle, but even more importantly it would drive change: demand for carbon-free goods and services would go up as the carbon costs are properly reflected in prices. And, as it increases over time, a carbon tax would remove the ability of fossil fuel producers to profit from the destruction of our climate system.
- In the short term, a carbon tax would raise a very large amount for governments around the world to invest in the essential changes needed for the transition. The money raised is sometimes called the ‘dividend’.
- There are different ideas on how this money should be apportioned, but an essential part of any international framework of carbon tax is that a significant share of this should go to help poorer countries adjust to the transition. The richer countries have pledged £100 billion a year in such help for poorer countries, but so far only a tiny fraction of this has materialised. A global carbon tax would provide a mechanism to raise such dedicated finance. Poorer countries have put far less carbon into the atmosphere than richer countries, and funding to help them adapt and mitigate is an essential part of climate justice.
- Just as it is pointless vaccinating children in the UK against covid-19 whilst adults in much of the world continue to go without vaccines, so we – the wealthy nations with the biggest historic carbon deficits – have to enable the developing and poor nations to have a just transition so that they too can decarbonise.
- The G7 failed in many respects, but there was one very significant development – an international agreement on minimum levels of corporation tax. This suggests that an international framework for taxing carbon is now also feasible, and this was reinforced by the final communique of the G7 leaders, which stated: “We recognise the potential of high integrity carbon markets and carbon pricing to foster cost-efficient reductions in emission levels, drive innovation and enable a transformation to net zero, through the optimal use of a range of policy levers to price carbon.”
- But the fossil fuel lobbyists and their allies in government will be working hard to undermine or water down any carbon tax initiative. We need to exert all possible pressure to make sure that a strong international framework for carbon tax is at the top of the COP26 agenda.
- While a carbon tax – like a minimum rate of corporation tax – will not be adopted universally at first, if enough countries do adopt it, this will drive international change, very possibly more effectively than the Paris Agreement. Countries that fail to take part would face barriers to trade with countries that are part of the carbon tax framework, which will help to avoid a potential competitor advantage for non-compliant countries. Imports from such countries would be taxed at a higher rate, giving a strong incentive for these countries to come into line themselves (in addition to the fact that their governments would then share in the ‘dividend’ from carbon tax). Current carbon pricing based on ‘Cap and Trade’ is failing; it’s too complicated, too easy to distort or corrupt, or plead special cases. And the ‘polluter pays’ principle should be extended to include other forms of environmental damage, and be designed to produce real ‘offsetting’ and environmental gains.
- In the UK, a carbon tax, along with the right regulations and government investment, will drive changes that are actually good for our quality of life. But transitions are painful and prices will rise, so we have to have measures in place to ensure this is just – and for us a key such measure is a Universal Basic Income.
- Driving emissions out of agriculture and the food chain will mean healthier diets and a more efficient farming sector less reliant on dirty subsidies like red diesel.
- Driving emissions out of transport will mean shifting mode; more public transport is more equitable and reduces congestion and other forms of pollution; walking and cycling creates liveable neighbourhoods
- Driving emissions out of how we heat and power our homes will make them more efficient, cheaper to run (eventually), and thermally more comfortable.
All of these changes will require investment in R&D, skills and new jobs, which will be better than an economy based on housing booms for boomers and barista jobs for ‘boomerangers’ (young adults stuck back at home). This investment needs to happen now, not in the distant future, and a carbon tax offers the possibility of raising a large part of the funding needed to do it.
This combination of massive state-led (but not exclusively state funded) investment in life improving changes to our infrastructure, production techniques and the ways we live is what we call the Green New Deal. Government can fund much of this, and it can shape the markets to ensure private investment flows in the right direction.
- An international framework of carbon tax is not the whole solution to getting to net zero, but it is a very large part of it. Why? Because it would completely reshape the global economic landscape, which until now has been based on cheap fossil fuels. If fossil fuels remain cheap and companies remain able to make massive profits from extracting and selling them, there is no chance that we can avoid the rapidly accelerating climate catastrophe that is already unfolding in front of our eyes.
Julian was a speaker at our recent Big Tent event in Coventry.