Guest essay by Eric Worrall
h/t Dr. Willie Soon – The latest UN Emissions Gap Report provides psychological advice for defeating political opposition to carbon pricing, and suggests discouraging farming by taxing agricultural land.
6.3.3 Political and behavioural factors
Ensuring broad and stable support for carbon pricing and the phasing-out of fossil fuel subsidies requires more than addressing distributional, competitiveness and leakage impacts. A number of additional success factors can be identified (Klenert et al., 2018a) and table 6.1 provides country examples for addressing these. The challenge is particularly significant where trust in government is limited (Klenert et al., 2018a; Rafaty, 2018). And yet, where trust is strong, there is a tendency for citizens to question problems if policy solutions challenge their world views, e.g. on the State’s role in the economy (“solution aversion”) (Campbell and Kay, 2014; Cherry et al., 2017). Designing policies that are consistent with the prevailing world views of specific societal groups therefore requires extensive communication and consultation prior to implementation.
To secure popular support for carbon pricing, the public needs to be informed about its positive effect on emissions reduction targets, as well as the co-benefits of cleaner air, health and fiscal sustainability (Hsu et al., 2008; Bristow et al., 2010; Kallbekken et al., 2011; Baranzini et al., 2014; Baranzini and Carattini, 2017). Timing is also important: a gradual reform is more likely to be successful than sudden and drastic price increases. Similarly, if several fossil fuel subsidies are being reformed, this can best be done by sequencing the reforms (Beaton et al., 2013; Rentschler and Bazilian, 2017b). Language matters too, with terms such as ‘fee’ or ‘contribution’ likely to meet with popular support compared with ‘tax’ (Kallbekken et al., 2011; Drews and van den Bergh, 2016; Baranzini and Carattini, 2017).
Carbon pricing and fossil fuel subsidy reform generate public revenues, the use of which can strongly impact support for carbon pricing. This is discussed in the section 6.3.4.
6.3.4 Use revenues from carbon pricing to foster sustainable development
Raising revenue through energy tax reforms relaxes constraints on broader fiscal policy, creating opportunities to stimulate more productive and socially inclusive economic development. With respect to carbon pricing, its potential for contributing to public budget is illustrated in figure 6.2b. In developing and emerging economies, where tax revenue-to-gross domestic product (GDP) ratios rarely exceed 20 percent, an additional €60/ tCO2 carbon price on top of existing measures would generate revenues worth more than 2 percent of gross domestic product (GDP). These revenues would not be available under non-fiscal climate policies like emission standards or ETS that do not auction permits.
Better alignment of broad tax policy can help reduce carbon emissions. Subsidies or tax deductions related to commuting (Su and DeSalvo, 2008), company cars (Harding, 2014) and the aviation sector (Gössling et al., 2017) are common in many developed countries and tend to encourage carbon-intensive transport choices. Replacing property taxes with land value taxes can reduce urban sprawl and increase housing density, which in turn reduces the need for longer commutes (Banzhaf and Lavery, 2010).
Fiscal policies such as ecological fiscal transfers, contingent on environmental performance, can also play a role in the land-use sector. They could be a way to implement REDD+6 when international pay-for-performance or carbon market finance flows to the national or state government level (Loft et al., 2016). There is growing experience with ecological fiscal transfers, including transfers of tax revenues to support protected areas and forests in Portugal (Santos et al., 2012), several Brazilian states (May et al., 2011) and India (Busch and Mukherjee, 2018). Land taxes on agricultural land can also help reduce agricultural land use and deforestation (Kalkuhl and Edenhofer, 2017).
I’m horrified at the ongoing UN and green attacks on agriculture. The abundance we take for granted is politically fragile. We can all think of nations which rapidly fell from relative prosperity and security to utter desperation because they took a political wrong turn. The same thing could easily happen to any of us, if we let it.