Carbon pricing must become the pivotal point of ecological transition. This means turning our backs on ideologies.
The Covid-19 epidemic has made leaders and ordinary people even more schizophrenic about ecology. Firstly, the health and economic crisis has in no way removed the threat of climate change. Lockdown has merely been an interlude, temporarily reducing emissions by 4% to 7%, without changing the way they are headed, i.e. a temperature rise of about 4 degrees by the end of the century instead of the 1.5 degrees targeted by the Paris Agreement. At the same time, there have been more and more extreme phenomena linked to global warming: huge fires in California, Siberia and Australia, and floods that have devastated valleys in the Alpes-Maritimes region of France.
Secondly, the emergency situation demands that first priority be given to healthcare, to the collapsing economy and to support for purchasing power, particularly in a France weakened by lasting damage to production, jobs and income, and still suffering from the open wound left by the Gilets Jaunes [Yellow Vests] protests. The painful experience of lockdown has encouraged households to focus on individual housing and private cars, at the expense of collective housing and public transport. The growing tensions that are placing the environment on the opposing side to preservation of the economy, jobs and lifestyles has been illustrated by the fact that, on 6th October, parliament restored permission to use neonicotinoids in growing sugar beet, in the absence of any effective substitute.
Ecological transition, economic rescue, social justice and the preservation of public freedom can be compatible, but only on condition that strategies for ecological transition take a completely new direction. These strategies have been based on authoritarianism, statism and Malthusianism and, as such, are doomed to failure both in France and in the rest of the world, for the developed countries reject a command economy and emergent nations refuse degrowth.
The perfect example of what not to do was provided by the Citizens’ Convention on Climate, an indisputable indictment against the vagaries of direct democracy. It did not deal with the role of nuclear energy (with a level of emissions four times lower than solar energy) or with a carbon tax, without which there is no possibility of reaching the objectives of the Paris Agreement, like attaining carbon neutrality in Europe by 2050. On the contrary, its condemnation of science and the market economy has led to a raft of measures that are demagogical, ruinous and repressive, without any evaluation of their benefit in terms of decarbonation or their economic and social cost. This type of ecology, which is anticapitalism and illiberalism with a new dressing, brings no new solution to climate change and helps speed up the crisis in democracy.
We must have clear and simple ideas in moving towards ecological transition. The mortal danger threatening us is that of climate change. Therefore our sole priority must be to reduce greenhouse gas emissions, and carbon emissions above all. The rest follows behind, beginning with the preservation of biodiversity. Our aim cannot be degrowth – which inevitably goes hand in hand with impoverishment of the masses and a rise in violence – but a new development model the combines high returns, social inclusion and decarbonation.
There are three tools we can use to stimulate and direct decarbonation of the economy. The first two are regulation and taxes. These continue to be favored in the recovery plan although they have only had limited results. The third is the establishment of carbon pricing. This is based on the principle that the market is the best antidote to malfunctions resulting from the fact that carbon can be discharged freely – the best example still being the intensive use of fossil fuels. Pricing is the most powerful and most universal signal. Furthermore, the announcement of a long-term roadmap would mean that environmental constraints would be integrated into decisions taken by companies and investors. The effectiveness of carbon pricing has been demonstrated in Sweden and the UK, where its introduction in 2011 brought about a 15% fall in emissions from 2012 to 2015 (as compared to 5% in the rest of the EU) and the eradication of coal from the production of electricity.
In order to meet the objective of carbon neutrality by 2050, the EU must therefore set up a decarbonation agency, with five tasks to fulfil.
- To strengthen the European market with emissions quotas, by fixing a floor price maintained by the actions of a reserve fund, so as to avoid price collapse.
- To announce and support a target floor price of 50 euros a metric ton by 2025 and 100 euros a metric ton by 2030 – the prices retained by most large groups for the purpose of strategic planning.
- To set up carbon alignment with countries bordering the EU in order to guarantee a competition framework that is fair to European companies.
- To introduce carbon pricing into accountancy standards and in the valuing of portfolios and assets, together with measurement of global warming.
- To allocate the moneys collected to innovation, particularly to carbon sequestration technologies.
Ecological transition is much too serious an issue to be left to ideologists. It can only succeed if it is sustainable in terms of state finances, company profitability, standards of living and people’s freedom; and if it manages to realign human, economic and natural capital. Therefore, not only must it be integrated into the economy, but also into geopolitics. In announcing its objective of carbon neutrality by 2060, China has the intention of making this a weapon to set it apart from the West and, following on the pandemic, demonstrate once again the superiority of the totalitarian capitalism model over liberal democracy. For Europe, ecological transition is therefore a decisive issue in terms of development, sovereignty and values. This will be done by means of the carbon market or not at all.
(Article published in Le Point, 15th October)