Transcript Carbon Mitigation Policies

CARBON MITIGATION POLICIES,
DISTRIBUTIONAL DILEMMAS AND
SOCIAL POLICIES
Ian Gough
CASE, LSE
Goals of paper
• Contemporary policies to reduce emissions of
greenhouse gases will have distributive
consequences
• Thus implications for the scope and remit of
‘social policy’.
• This paper studies current carbon mitigation
policies and their distributive impacts. It
considers a range of current and proposed social
programmes to ameliorate these impacts, before
proposing alternatives.
The triple injustice
Developed first to explain global environmental
injustice, but can be applied within countries (Pye
at al):
– households situated in the upper part of the income
distribution contribute more to CO2 emissions in
absolute terms than lower income households;
– poor households suffer most from environmental
degradation;
– common environmental policy measures tend to have
regressive effects, burdening lower income
households more
Goals
• My research is on climate change and carbon
mitigation policies (CMPs).
• Ignore the second of Pye’s three aspect - the
direct impacts of climate change within the UK,
such as flood risks, drought risks and heat waves,
and their unequal distribution
Thus:
Climate mitigation policies ->
distributional dilemmas ->
countervailing social policies
From ‘PAP’ to ‘CAP’
This argument is pursued in two parts
1. a production accounting framework (PAP) – the
current Kyoto policy framework
2. a consumption accounting framework (CAP): study
all GHGs emitted by UK consumers, whether direct
or embodied in goods and services
It makes a big difference:
– UK ‘consumes’ 17%-36% more CO2 emissions than it
produces
– China consumes at least 18% less than it produces
Growing case for CAP
1. Ethical: responsibilities for GHGs should rest
with consumers not producers
2. Political: moving to CAP would ease the
emissions problems facing large exporters
and thus the potential conflict between
climate change and socio-economic
development, and the obstacles to global
agreement on GHG emissions
Social policy implications of CAP
• To target consumption-based emissions in the West requires
more radical policies to modify preferences and behaviour,
and to constrain total consumption demand.
• Speculate on ways to combine these goals with social equity.
• Conclude this will require novel forms of policy integration:
new proactive, investment-focussed eco-social policies
Climate mitigation policies -> distributional dilemmas -> countervailing social policies
Eco-social policies
1. PAP: current CMPs in the UK
• 3 main goals:
– explicit pricing of emissions
– promoting clean energy
– improving energy efficiency – my main focus.
• Main programmes here:
– A few direct government programmes
– Majority ‘oblige’ energy companies to promote energy
efficiency with some targeting of lower income groups
– Total spending 0.24% of GDP in 2010-11 (less than
cost of Winter Fuel Payments)
PAP policies: distributional
consequences
• In a word regressive, especially when financed
by bills paid by domestic energy consumers
• Offset by energy cost savings – but these will
mainly accrue to higher income households
• Hills Report provides much evidence
– Eg. Green Deal with modest Energy Company
Obligation (ECO) will likely increase fuel poverty
PAP: ameliorative social policies
Hills’ three alternatives
1. Better compensation
– Can do better than WFPs but not much due to
heterogenous dwellings and households
2. Variable energy prices
– Eg. new Warm Home Discount: ‘challenging’
– Why not rising block tariffs?
3. Energy efficiency policies: the only secure way
forward which can combine sustainability and equity
goals. But how?
Green Deal or Green New Deal?
• The government’s Green Deal is ambitious, but
will shift costs still further on to private sector.
• Much criticised by Committee on Climate Change,
Hills Report etc
• Will require direct tax-financed subsidy and more
regulation to avoid social inequity: Power on
German example
• Will require justification using an alternative
political economy, emphasising investment
leverage (Stern), Green New Deal (UNEP, ILO etc)
2. From PAP to CAP: our study
CASEPaper 152
• Links together data from two datasets: the
Stockholm Environment Institute’s (SEI’s)
Resources and Energy Analysis Programme
(REAP) which calculates UK carbon emissions
at a per capita level, and the UK 2006
Expenditure and Food Survey.
• Reveals scale of total embodied emissions
• Shows direct household emissions only one
fifth of total
Composition of total household
emissions
Other
0%
Public Services
12%
Direct emissions
20%
Domestic Energy and
Housing
26%
Transport
25%
Food
14%
Indirect emissions
80%
Private Services
11%
Consumables
12%
Distribution of CAP emissions by
income, and emissions per £ of
income:
CAP: distributional implications
• So the usual picture; but regressivity varies:
less so for consumer goods and services and
transport
– Ratios of emissions of top to bottom decile:
• Energy, food: 1.8:1
• Consumer goods and services: 3.6-3.8:1
• Transport (incl foreign holidays): 4.5:1
• Thus moving from PAP to CAP reduces, but
does not remove, conflict between
sustainability and equity.
Policies to reduce CAP emissions
• Price based:
– Broad-based carbon taxes: now waning and usurped by
– Cap and trade: the EU Emissions Trading System and
others
– This will be less regressive than current policies
• Directly influencing consumer behaviour:
–
–
–
–
–
Providing information
Nudging
Citizen engagement
Regulation
‘Why retreat to nudge, where other influences may shape
choices?’ (Taylor-Gooby)
3 policies for equitable carbon
reduction
1. Taxing consumption, eg. Frank.
– Inequitable unless selective taxes on ‘luxuries’
2. Personal carbon allowances and trading
– Directly progressive (though still some low
income losers)
– Direct impact on consumer behaviour likely
– But would require carbon labelling of thousands
of goods (and services?); Tesco experience
suggests unlikely without regulation
3 policies for equitable carbon
reduction (cont)
3. Reduced working hours (Schor)
– Likely ‘scale effect’ on emissions, but also
‘composition effect’
– Incremental by taking out productivity increases in
‘leisure’:
• Change in annual hours of work 1980-2010: US -33 hours,
Germany -300 hours
– Some European examples
• Belgian Time Credit Scheme
– But would require ancillary ‘traditional’ social
programmes to avoid low pay and ‘time inequality’
Summary of policies
Climate mitigation target
Climate mitigation goals
Policies to combine with
social equity
1.Current policy framework
PAP, and within this direct household
carbon emissions
Pricing carbon
Promote clean energy
Improve energy efficiency
Improved compensation
Social energy tariffs
Thermal efficiency: Green Deal
Green New Deal
2.Enhanced policy framework
CAP: All embodied
consumption emissions
Develop low carbon
consumer preferences
Restrain consumer demand
Modify consumer preferences
Tax consumption
Ration carbon
Reduce working time
Conclusions: Reconciling equity and
sustainability (re climate change)
• In the household sector, radical energy saving policies
only secure solution, but
– Will require more subsidy and regulation
– Will entail different economic model (Green New Deal)
and a switch in arguments for public spending from
compensation to eco-social investment
• An ethical and political case for monitoring and
targeting the total consumption-based emissions of
rich countries like the UK
– These would challenge consumer sovereignty and
economic growth
– Again a move from compensatory social policies to
integrated eco-social programmes.