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Friends of the Earth protest in favour of carbon tax in 2009 James Horan/Photocall Ireland

Carbon taxes won’t stop climate change – we need more radical action

Fossil fuels are already taxed to the hilt and people haven’t moved to electric vehicles for one simple reason – they cannot afford to, writes Brian O’Boyle.

ON MARCH 15 thousands of school children took to the streets in a magnificent expression of environmental solidarity.

Inspired by the example of Swedish school girl, Greta Thunberg, they organised demonstrations around the country to protest against the government’s inaction on climate change.

Leo Varadkar claimed to support the protests, but he was busy meeting the world’s biggest climate denier as they were taking place.

Donald Trump’s administration has pulled the United States out of the Paris Climate Agreement and consistently proclaims the virtues of coal.

Fine Gael are better at covering their tracks than Trump but they are almost as reckless in terms of the environment.

They have cut subventions to public transport, allowed the dairy herd to increase by 400,000 and issued new licences for oil and gas exploration.

This has made Ireland one of the worst emitters in Europe, as judged by the Climate Change Performance Index.

Now the government want to move the cost of climate change onto ordinary people – using cover from the Citizens Assembly.

Last year, the Citizens Assembly met with the aim of making Ireland a leader in tackling climate change. Their report contained 13 proposals, including more extensive cycling lanes, increasing forestry cover and expanding organic farming.

The Assembly also recommended increasing taxes on carbon, although this proposal won the least support from members who wanted the poorest 400,000 families exempted from the tax and all monies ring-fenced for climate initiatives.

On foot of this report, the government set up a Dail Committee on Climate Action which is due to report in the coming weeks.

All the indications are that a carbon tax will be their central recommendation, in what will be a regressive step in the fight against climate change.

The Case Against Carbon Taxes
The primary case against carbon taxes is that they don’t deliver anything like the reductions in Co2 emissions that we need.

Recent research by the International Panel on Climate Change estimated that to avoid the dangerous tipping point of anything beyond a 1.5% increase in global temperatures, we need to reduce Co2 emissions by 45% in the next decade and to zero by 2050.

This is an enormous task that requires a lead by the world’s governments in setting legally enforceable limits on corporations responsible for most of the emissions.

It also needs the government to tax corporate profits to fund a major investment in renewable technology.

In contrast, carbon taxes are socially regressive measures that target the consumption of individuals.

If people continue to burn fossil fuels as prices increase, emissions won’t fall even as governments take more money from people.

To make matters worse, petroleum products are defined as inelastic by economists, meaning that individuals tend to stick with them regardless of their prices.

This is because they are essential for everyday living and hard to replace with alternatives.

Hard pressed families are no less worried about climate change than anyone else, but it is very expensive to buy an electric car or to retrofit a house meaning that for many peoples these ‘options’ are really not options at all. 

Motorists currently pay 90 cent tax on a €1.50 litre of petrol. So fossil fuels are already very highly taxed but so far that hasn’t encouraged many people to switch their cars.
That is because most people simply can’t afford an expensive, new electric vehicle. 

The government are so certain of the revenue from petrol, that they lump it in with cigarettes and alcohol as ‘old reliables’ come budget time.

The major oil and gas companies are equally sure that these taxes don’t work.

A leaked report from Exxon Mobile estimated that an effective carbon tax would have to increase the cost of petrol by 300%, equivalent to €4.60 a litre.

The ESRI has calculated that an effective tax would add €1,500 to every person in the country or up to €2,350 if agricultural emissions are not tackled.

It is for this reason that companies like Exxon publicly support carbon taxes, while back in 2014 they privately reassured their shareholders that “world climate policies are highly unlikely to stop it from producing and selling fossil fuels in the near future”.

International evidence

The academic evidence also suggests that carbon taxes are not hugely effective. 

Norway is often held up as a pioneer in carbon taxes, but a study by Bruvoll and Larsen showed that in the decade after they were introduced, carbon taxes were responsible for a 1.5% reduction for onshore emissions and 2.3% overall – nowhere near enough.

British Columbia is another example put forward by carbon tax enthusiasts, but according to Food and Water Watch, overall reductions were between 1-2% with most of this down to the impact of the recession.

Other studies have been more positive, but even then the reductions are estimated to be in the range of between 5% – 9%. That is nowhere near enough.

Besides their relative ineffectiveness, the other key factor in the adoption of carbon taxes is the fact that they shift responsibility away from the major corporate polluters and onto consumers.

The problem with this is that just 100 global corporations are responsible for 71% of all emissions through the products they place onto the market.

Consumers can only choose what these corporations produce – and if big business continues to find it profitable to use oil and plastics then consumers will be stuck buying them.

Here at home, according to the Sustainable Energy Authority of Ireland households’ account for 15% of all emissions while agriculture is responsible for 32%. 

The SEAI found that using renewable energy for heat, electricity and transport reduced emissions by 4.2 million tonnes of CO2. That is the equivalent to the CO2 emissions of 1.4 million cars. 

But it is also equivalent to just one-fifth of agricultural emissions of greenhouse gases.

Despite this, the government are committed to increasing the dairy herd by 22% over the next decade and have resisted calls for major investment in public transport.

Fine Gael has also blocked a People Before Profit bill, to leave remaining fossil fuels in the ground.

At the same time as they issued licences for exploration in places like the Porcupine Basin off the west coast.

This shows the hypocrisy behind the government’s imposition of carbon taxes.

They have no interest in taking on their friends in the corporate sector but want to use the carbon tax as a way to cover their tracks.

Recent riots in France shows that carbon taxes risk alienating working people at a time when we need them on board.

To really tackle climate change, while protecting the poorest and most vulnerable in society, we need: 

  • Major investment in renewable energy
  • Massive investment in public transport to make all journey’s free.
  • Investment to shift agriculture away from dairy towards forestry.
  • Public housing to reduce commuter times in private transport.
  • A government scheme to retrofit houses.
  • No more licenses issued for fossil fuel exploration.
  • Move to a carbon neutral economy by 2035 through legally binding emission limits. 

Brian O’ Boyle is an economist with People Before Profit.

He holds a PhD in economics from the National University of Ireland, Galway and is currently working on a book about how Ireland is a tax haven. 

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