Climate Change and Inequality: Avoiding The Harmful Potential Of Environmental Policy

Climate Change

The poor are the ones most at risk from climate change. They have the least capacity to adapt, and globally, they are projected to be hit the hardest by droughts, floods, and other environmental impacts. Policies such as a carbon tax have the potential to reduce harmful emissions, but also place undue stress upon the living standards of the poorest in society.  This is not only a perverse outcome but one that will lead to backlash and the ultimate failure of climate policy. If we are to effectively thwart ecological disaster, climate policy must incorporate economic justice.

First, we must take stock of the climate situation. As things stand, states are far from doing enough to tackle global warming. A UN report released in November 2018 revealed that, following 3 years of stagnation, global carbon dioxide emissions rose by a record amount in 2017, leaving the world way off track in meeting the 1.5°C warming limit set out in the Paris Agreement. The current progress of  countries’ emissions reduction is projected to lead to more than 3°C of warming by 2100 – a catastrophic level of change.

Even at 2°C of warming, the effects would be devastating. The IPCC states they include an increased incidence of extreme weather events (flooding, droughts, severe storms); increased food insecurity resulting from reduced agricultural productivity; higher rates of illness and mortality from extreme heat levels and disease; a higher likelihood of conflict resulting from climate-induced displacement of people; and a rapid rate of loss of species and ecosystems. And some climate scientists fear the IPCC is being too optimistic in these predictions. Durwood Zaelke, of the Institute for Governance and Sustainable Development, claims the IPCC fails to consider the very real possibility of climate “tipping points” – beyond which warming and its consequent damage to the planet becomes irreversible.

States clearly must increase their efforts to cut emissions. They need to commit to meeting, or improving upon, their carbon targets set out in the 2015 Paris Agreement. And one frequently touted mechanism through which they can do so is a carbon tax. Yet in promoting such a tax, environmentalists must be careful to ensure it does not weigh too heavily on the poorest in society – otherwise, they may find they do more harm than good.

A carbon tax works to reduce emissions by putting a price on the emission of carbon dioxide. The tax may be levied on producers, consumers, or at some other stage in the production process. Ultimately though, it will be passed on to consumers in the form of higher prices proportional to the carbon content of the good in question. This incentivizes consumers and producers to shift their consumption and production respectively, away from carbon-intensive goods towards those that are more environmentally-friendly. For instance, in theory, if the U.K. were to impose a significant carbon tax, the price of petrol for cars would rise, and the demand would fall; consumers would shift their consumption to other forms of transport – trains, bicycles, electric vehicles. Producers would make a similar shift in the goods they produce.

So far so good? Well, perhaps not. The problem with measures that raise the price of emissions in this manner is that they represent an unfair burden on the poorest in society.

This may seem counterintuitive. After all, the richest in the society consume the most, and this is true in their consumption of carbon dioxide as well – according to the Centre for Sustainable Energy, in the U.K. the richest 10% are responsible for 3 times more emissions than the poorest 10%. So, if they consume more carbon, they will pay more in tax. We must remember, however, that the richest 10% possess far more than 3 times the wealth of the poorest 10%. So, in proportion, the tax would have a much smaller impact upon the standards of living of the rich in comparison to the poor.

There is great potential then, that in fighting climate change, environmentalists may inflict harm upon the poorest in society: raising their consumption costs and placing stress upon their incomes and living conditions, whilst having a relatively benign impact upon the standards of living of those most responsible for climate change in the first place. If this proves to be the case, policies that seem necessary in saving our planet may ultimately crash against the walls of public opinion – and make our societies much more unequal and unjust in the process.

This possibility lies behind the recent failure of attempts to introduce carbon-pricing regimes. The Gilets Jaunes protests seen in France beginning at the end of 2018 were sparked by President Emmanuel Macron’s imposition of fuel tax and ultimately led to its removal from the government’s 2019 budget. France’s plans to wean voters off polluting fuels were met with violent demonstrations in the streets of Paris and other major cities, as citizens felt the policy was symptomatic of a government that cares more for the interests of the rich in society than the poor (notably, the measure came shortly after Macron’s abolition of a wealth tax levied upon those worth more than €1.3m).

Similarly, in Canada, Prime Minister Justin Trudeau’s federal government has faced significant backlash for its own carbon tax policy. In the recently concluded provincial elections, Alberta elected the Conservative Party, whose top priority is to abolish the carbon tax. And several provincial leaders have provided vocal opposition to the measure. Scott Moe, the Saskatchewan Premier and prominent critic of the tax, claims it is in “[no] way, shape or form, an effective policy”, and is one that “costs families money unnecessarily”.

The backlash is understandable. So is the tax itself. We do need to do something about carbon emissions, and urgently. But we also need to make sure that in doing so we are conscious of the effects climate policy may have on the less wealthy in society. We cannot expect people to fall into line behind a policy that presents a very real threat to their living conditions.

The planet needs a transition from carbon, but it must be a just transition. Environmental policy and economic justice cannot exist in policy silos – the former must take account of the latter.

Fortunately, there is a way in which it can do so. As the Citizen’s Climate Lobby explained at the recent UN Environmental Summit in Katowice, Poland, the negative effects of carbon taxes and the resultant public resistance to them can be overcome by returning the revenue to the people.

“People worry about worsening climate impact costs, but they are also genuinely concerned about the economic impact carbon pricing will have on their lives,” Joe Robertson, CCL’s Global Strategy Director said. “We can allay these fears by taking the revenue from carbon fees and allocating it to the people.”

In recycling the revenue a carbon tax generates, the stress it places upon the standards of living of the poorest in society can be mitigated, or even reversed. A recent report from the People’s Policy Project found that in the US a significant carbon tax of $230 per ton of CO2 would not only limit global warming to below 2.5°C, but if its revenues were equally distributed to each citizen, it would result in an annual net benefit to each member of the poorest 10% of $1,371. Conversely, the richest 10% of people would incur a net cost of $2,501.

Such a policy would not only avoid unfairly punishing the poorest in society, but it would ask the rich to pay their fair share given their contribution to carbon emissions. Providing its revenues are fairly redistributed, a carbon tax then can not only play a vital role in fighting climate change but can be a worthy tool in combatting societal inequality.

It must also be noted that a carbon tax is not a panacea for climate change. The level of tax needed to fully eliminate net carbon emissions on its own is unlikely to be implemented. Therefore, such a policy must be combined with comprehensive government investment into clean energy, transport infrastructure, energy-efficient building upgrades, and so on. On this front, emerging policies such as the ‘Green New Deal’, offer particular promise. There is a central role for carbon taxes in these plans. But in their implementation, policymakers must be careful that they do not unfairly distribute their burdens. Otherwise, they will not only cause harm to the poorest in society but risk undermining efforts to tackle climate change. If we are to succeed in limiting warming and avoiding catastrophe, environmental protection, and economic justice must go hand in hand.