Climate change is becoming less of a battle between nations than the rich against the poor
As political leaders argue ahead of the UN COP26 conference on climate change in November, the main cleavages regarding greenhouse gas policies lie between states: rich versus poor, fossil fuel exporters versus importers and green countries – the Scandinavians, for example – against less green ones. , like Australia.
But it might not last much longer. The struggle for the protection of the planet is evolving in ways that could soon exacerbate conflicts within countries, especially between social classes. Or, to put it bluntly, between the rich and the rest. According to United Nations data, the wealthiest 1% of the world’s population accounts for around 15% of emissions. This is more than double the share of the poorest 50%.
Limiting temperature rises to 1.5 ° C, as foreseen by the 2015 Paris Agreement, would require the richest 1% to reduce their footprint, according to the UN report on the 2020 emissions gap carbon by 2030 “by at least a factor of 30”. Almost everything the rich do involves higher emissions, from living in bigger homes to driving bigger cars and more frequent thefts, especially in a private jet. Eating meat comes into play, as does owning a swimming pool. Not to mention a vacation home. Or houses.
Green activists have long denounced environmental inequalities, pointing to what they call “the polluting elite”. But, so far, governments have largely avoided policies of social division. Instead, they focused on changing the energy mix for all by reducing fossil fuel consumption and boosting renewable energy. And, selectively, they added to the regulatory burdens on the industry.
Consumers have borne some costs, such as green levies on electricity bills, environmental airport taxes, and device disposal fees. They have also been encouraged to reduce their carbon footprint through subsidies for electric vehicles, solar panels and home insulation. But these policies are not enough. As they announce much stricter emissions targets ahead of COP26, governments will need to reduce emissions directly. Additional taxes on everything from automotive fuel to household gas are an obvious option. But they would affect the poor as well as the rich. And, to be high enough to alter the behavior of the super-rich, these taxes would have to impose unbearable costs on the less well-off.
Thus, carbon taxes aimed at the rich will climb the political agenda. But will fiscal policies be enough? For the richest, no normal level of carbon tax will be a deterrent. They can swallow frequent flyer surcharges, taxes on large cars, and surcharges on household energy bills. Governments may need to move beyond tax policies and impose limits on activities. On the use of private jets, perhaps, or domestic swimming pools. In most democracies this would be considered extreme. But people are already tolerating rules like banning garden hoses.
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Moreover, if the action is confined to fiscal policies, there is a risk of creating a world in which the benefits of the super-rich – who can pay without pain – will expand even further. Will it be politically viable in advanced democracies such as the United States, European countries and Japan? Anyone who thinks nothing will change should consider the radical approach Joe Biden has pledged to take with climate policy. The American president is also not afraid to promise tax increases for the better-off.
What can the rich do to prepare? Well, it makes sense to intentionally reduce the carbon footprint before it becomes mandatory. It is not enough to invest more in sustainable development or to donate money to green causes, even if such actions make a difference. What is needed are reductions in consumption, especially the lavish type which produces both a lot of carbon dioxide and unwanted titers.
There will be a charge for those who appreciate a glamorous lifestyle. But we have seen in the pandemic that change is possible. It is not about altruism but enlightened self-interest.
Stefan Wagstyl is editor-in-chief of FT Wealth and FT Money. Follow Stefan on Twitter @stefanwagstyl
This article is part of FT Wealth, a section offering in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investing.