Transcript Towards Progressive Climate Change Policies

Can Climate Change Policies
be Fair?
Nicholas Bardsley: University of
Reading and Walker Institute
Milena Büchs & Sylke Schnepf:
University of Southampton
Can Climate Change Policies
be Fair?
Outline:
- regressivity challenge
- effects of redistributive CC policy by area
- implications of data problem for policy analysis
- limitations of static analysis, and of redistribution
Regressivity of Emissions Taxes
mean % of income
CO2 Tax (£100/t) as % of hh income
Assumptions:
18
16
14
12
10
8
6
4
2
0
total
home energy
transport
Prices increase
proportionally to
CO2 emissions
for each good /
service;
indirect
1
2
3
4
5
6
7
8
9
10
Decile of Equivalised Household Income
EFS/LCF + REAP + other sources 2006-2009
Behaviour
unchanged
Is Transport Different?
Transport: £100/t CO2 Taxes as % of income
mean % of income
2.5
2
1.5
total
motor fuels
1
public transport
0.5
air travel
0
1
2
3
4
5
6
7
8
9
10
Decile of Equivalised Household Income
EFS/LCF + REAP + other sources 2006-2009
Cf. Dresner &
Ekins (2004)
CO2 taxes on
motor fuels not
progressive
Est .48% of
households in
lowest income
decile had a
vehicle by 2009
Cf 33% in 1990s
“Rebate” Options
• Reduced fossil fuel use implies an increased
scarcity rent - an unearned income transfer
• To avoid regressivity and fuel poverty, the rent
can be:
– predistributed (tradable permits) OR
– redistributed (tax rebates)
– Examples:
• Cap and Share, Cap and Dividend (Douthwaite, Barnes)
• Personal Carbon Trading (Flemming)
• Tax and Dividend (Hansen)
“Rebate” Schemes by Emissions Area
• Assuming implementation issues are soluble (Sorrell
2007, AEA 2008) …
Net Financial Burden of £100/t CO2 Tax and
Rebate
Annual rebates of
mean per adult
revenue to each
adult in a HH
mean % of income
4
2
total
0
-2
1
2
3
4
5
6
7
8
9
10
home energy
-4
transport
-6
indirect
-8
-10
Decile of Equivalised Household Income
EFS/LCF + REAP + other sources 2006-2009
Assumptions:
No behaviour
change
Border tarrifs or
general adoption
Non-EUETS= transport + indirect aviation
mean gain as % of income
Net Financial Gain from £100/t CO2 Cap/Tax &
'Rebate' scheme
8
Annual rebates of
mean per adult
revenue to each
adult in a HH
6
Assumptions:
4
2
transport
0
Non-EUETS
-2
1
2
3
4
5
6
7
8
9
10
Decile of Equivalised Household Income
Interim conclusion: fair climate change policy is possible
No behaviour
change
Border tarrifs or
general adoption
Households below the Poverty Line
Households with <60% of Median Income
17% lose
10
20
83% gain
0
Percent
30
40
• Motor Fuels £100/tCO2 Tax Rebated
-.3
-.2
-.1
gains_mf_prop
0
.1
40
Low-income, rural motorists
20
Mean CO2 tax =
3% of income
0
10
Percent
30
£100/t
CO2 Tax
motor
fuels
0
.1
.2
.3
tax_mf_pro100
30
20
10
0
Percent
Mean net burden
= 0.3% of income
£100/t CO2 Tax
motor fuels +
rebate
-.1
0
.1
netadonly_mf_prop
.2
.3
Mean for nonEUETS
emissions
scheme = -1.2%
of income
Data Problem: Range Extension from
Infrequency of Purchase
• National Travel Survey contains:
– 1 week fuel purchase diary (litres and £)
– Interview mileage question (last year’s mileage)
• It is therefore potentially useful for exploring infrequency of
purchase issues
?
• In a world in which low income drivers all had below
average mileage, range extension would:
a) exaggerate numbers of low-income losers, from rebated CO2 tax
b) understate numbers of low-income losers, from rebated CO2 tax
NTS Diary vs Interview: Motor Fuels
Policy
Motor Fuel Policy: Erroneous
Winners & Losers
25
20
15
% of Quintile
20022008
10
err. losers
5
err. winners
0
-5
1
2
3
4
5
difference
-10
-15
Quintile of Gross HH income
Higher income hhs more likely to have a vehicle; range extension
concentrates there
LCF vs NTS: Motor Fuels Policy
2006-2008
4
6
Est. Financial Effects as Multiple of Permit Values, <3 adults HHs
Q1, %
win
lose
win
lose
NTS
87
13
35
65
LCF
83
17
42
58
2
0
Q5, %
-2
Differences significant at 1% level
1
2
3
LCF_diary
4
5
NTS_interview
excludes outside values
Note: typical effects of an aviation policy might also be affected for this reason
with LCF data: we don't observe the rate of flying with a 1-year window.
Limitations of "Static Microsimulation"
• Assumes behaviour does not change
• But the point of CC Mitigation Policy is changed
behaviour
• "SM yields estimates of “initial effects” of policies only"
– Dynamic inferences, therefore, are not licensed
• What else is there ..?
– Economists’ (computable) ‘general equilibrium’ models
• Misleading assumptions, poor track record, resource
requirements
– hybrid economics / engineering models e.g. E3ME
• assumption-heavy, significant resource requirements …
“Trophic Methods” in Ecological Economics
Liebig’s
“Law of the
Minimum”
industrial / agricultural; degrowth / growth; sharing / individualist; money system
Source: Mario Giampietro and Kozo Mayumi: “The Biofuel Delusion” (2009)
Conclusions
• Progressive Climate Change policy is possible
• Infrequency of purchase may obscure progressivity of
rebate schemes, in survey data
• But redistributive measures cannot offset reduced fossil
energy throughput. Effects of that reduction may not be
explorable at high resolution
• Climate change social policy agenda needs to join with
debate over far-reaching transformation (e.g. ‘degrowth’
movement)
• That is a political debate over how to live & organise society
across the board