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'People's payout' gathers steam as a fairer way to tax carbon

by Megan Rowling | Thomson Reuters Foundation
Monday, 4 February 2019 12:35 GMT

A protester wears a yellow vest at a CGT labour union demonstration to protest against the French government's reforms in Paris, France, December 14, 2018. REUTERS/Gonzalo Fuentes

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How the revenues from levies on fossil fuel are used - and communicating the benefits of a greener economy to citizens - are essential to gain public acceptance, experts say

By Megan Rowling

BARCELONA, Feb 4 (Thomson Reuters Foundation) - At the mouth of a picturesque rural valley in southern France, near the Spanish border, Odessa Roitg has a tough job: trying to get people to use private cars less and greener transport more.

The area of 10 communes, with its base in the arty town of Céret, approved a new climate change plan in December that aims to improve the public bus service and encourage car-sharing for people to get to work, the young bureaucrat said.

The administration itself uses electric bikes and vehicles for some of its operations.

But in this less-prosperous part of France, with few transport alternatives to driving a car, Roitg can understand why some people support ongoing protests by the "gilets jaunes" (yellow vests), sparked in November by a planned hike in diesel taxes.

"People get a bit annoyed when (the government) speaks to them about the environment and sustainable development because it comes with taxes and things costing more, when it should cost them less," she said.

The "yellow vest" protests caused concern among officials gathered at the annual U.N. climate talks in Poland in December, many of them looking for ways to curb planet-warming emissions without stoking social discontent.

Growing pressure to slash emissions - to meet global warming limits set in the 2015 Paris Agreement and prevent the worst impacts of climate change - means more governments are considering pricing carbon.

Usually that is done by taxing fossil fuels, or by capping industry emissions and setting up a scheme to trade allowances.

Mathilde Bouyé, an associate with the climate programme at the Washington-based World Resources Institute, said France's aborted attempt to hike fuel prices came on top of a tax cut for the wealthy, and was the last straw for hard-up families.

"What is behind this is a matter of equity," she told the Thomson Reuters Foundation. "There is no opposition in principle to carbon pricing."

But citizens are unwilling to bear the brunt of the costs when they feel the burden should be shared with large corporations, she added.

She noted that the "gilets jaunes" have called for higher taxes on shipping and aircraft, for example.

Another problem in France was that the extra income from fuel price hikes had been earmarked for the French state budget rather than to support concrete projects to help people adopt clean energy.

In response to social unrest, France has now launched a nationwide "Grand Debate" on four themes, including the "ecological transition" and taxation, to which anyone can contribute online or at municipal meetings.

Laurence Tubiana, CEO of the European Climate Foundation, said French voters had little trust in the government on climate change policies - but all may not be lost.

"I think the Grand Debate will offer the possibility for the government to reshape its policy because it will give (the president) a new legitimacy to do that," she said.


George Marshall, a lead author of a World Bank guide issued in December on communicating carbon pricing, said consulting the public was crucial - though often skipped - in designing policies to make people pay more for fossil fuels.

Including a wide range of views from the outset is key, he told a briefing on the guide.

"We cannot sell something that is a poorly constructed policy," said Marshall, founder of Climate Outreach, a UK-based organisation that works to improve communication around climate change.

Addressing people's most immediate concerns - which may well not include climate change - is crucial too.

The top environmental issue for many responding to France's "Grand Debate" online survey is air pollution, for instance - and action on that could also help reduce emissions.

Marshall said the public often responds badly to a conventional narrative that lays out the threats and costs of climate change, then goes on to explain in economic terms why it is cheaper to act now than cough up for the damage later.

Instead, "the benefits have to be put first and foremost", he explained.

How the money raised from a carbon levy will be used is also key to gaining public acceptance, he said.

In Canada's British Columbia province, revenue from its carbon tax, introduced in 2008, is given back to individuals via a "climate action tax credit".

The tax has proved largely successful, both in terms of curbing per-capita emissions and public buy-in. A similar policy is now being rolled out at national level.

In the United States, meanwhile, a bi-partisan bill has been introduced in the House of Representatives and the Senate calling for a fee on fossil fuels, with the money collected paid back in equal shares to Americans each month as a "carbon dividend" - an idea that is supported by eminent economists.


Researchers at Georgia State University and the Oslo-based CICERO Center for International Climate Research surveyed nearly 5,000 people in five countries - Britain, the United States, Australia, South Africa and India - in 2017 on how funds from a hypothetical global carbon tax ought to be used.

The three methods that garnered more than 50 percent approval in all five countries were lowering income taxes, redistributing revenues domestically to each citizen, and investing the funds in renewable energy projects in every nation worldwide.

Reporting their findings in the journal Nature last month, the researchers wrote that returning revenue in the form of a "people's payout" is becoming increasingly popular.

It appeals to the political right because it does not swell state coffers, and the left is happy because the average tax burden is unchanged and low-income households end up better off.

Co-author Stefano Carattini, assistant economics professor at Georgia State University, urged countries and jurisdictions with carbon taxes or emissions trading schemes - which now cover about a fifth of global emissions - to form an international club aimed at harmonising systems and raising the carbon price.

Such a club could also lobby the World Trade Organization to reform rules to allow carbon taxes to be levied on imports, he said.

Eventually, if enough states came onboard, the existing messy system of each nation setting an emissions target in the hope of keeping global warming in check could be jettisoned for a single global carbon price, he argued.

U.N. climate chief Patricia Espinosa, meanwhile, called for a more positive narrative on the benefits of a green transformation.

"Yes, we are fighting climate change, but we are working towards a sustainable, resilient, low-carbon world that is good for health, for nutrition, for the quality of life of people," she told the Thomson Reuters Foundation.

(Reporting by Megan Rowling @meganrowling; editing by Laurie Goering. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, climate change, women's and LGBT+ rights, human trafficking and property rights. Visit http://news.trust.org/climate)

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