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Can Climate Change Policies be Fair?

Can Climate Change Policies be Fair?. Nicholas Bardsley: University of Reading and Walker Institute Milena Büchs & Sylke Schnepf: University of Southampton. Can Climate Change Policies be Fair?. Outline: - regressivity challenge - effects of redistributive CC policy by area

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Can Climate Change Policies be Fair?

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  1. Can Climate Change Policies be Fair? Nicholas Bardsley: University of Reading and Walker Institute Milena Büchs & Sylke Schnepf: University of Southampton

  2. Can Climate Change Policies be Fair? Outline: - regressivity challenge - effects of redistributive CC policy by area - implications of data problem for policy analysis - limitations of static analysis, and of redistribution

  3. Regressivity of Emissions Taxes Assumptions: Prices increase proportionally to CO2 emissions for each good / service; Behaviour unchanged EFS/LCF + REAP + other sources 2006-2009

  4. Is Transport Different? Cf. Dresner & Ekins (2004) CO2 taxes on motor fuels not progressive Est .48% of households in lowest income decile had a vehicle by 2009 Cf 33% in 1990s EFS/LCF + REAP + other sources 2006-2009

  5. “Rebate” Options • Reduced fossil fuel use implies an increased scarcity rent - an unearned income transfer • To avoid regressivity and fuel poverty, the rent can be: • predistributed (tradable permits) OR • redistributed (tax rebates) • Examples: • Cap and Share, Cap and Dividend (Douthwaite, Barnes) • Personal Carbon Trading (Flemming) • Tax and Dividend (Hansen)

  6. “Rebate” Schemes by Emissions Area • Assuming implementation issues are soluble (Sorrell 2007, AEA 2008) … Annual rebates of mean per adult revenue to each adult in a HH Assumptions: No behaviour change Border tarrifs or general adoption EFS/LCF + REAP + other sources 2006-2009

  7. Non-EUETS= transport + indirect - aviation Annual rebates of mean per adult revenue to each adult in a HH Assumptions: No behaviour change Border tarrifs or general adoption Interim conclusion: fair climate change policy is possible

  8. Households below the Poverty Line • Motor Fuels £100/tCO2 Tax Rebated Households with <60% of Median Income 17% lose 83% gain

  9. Low-income, rural motorists £100/t CO2 Tax motor fuels Mean CO2 tax = 3% of income Mean net burden = 0.3% of income £100/t CO2 Tax motor fuels + rebate Mean for non-EUETS emissions scheme = -1.2% of income

  10. Data Problem: Range Extension from Infrequency of Purchase • National Travel Survey contains: • 1 week fuel purchase diary (litres and £) • Interview mileage question (last year’s mileage) • It is therefore potentially useful for exploring infrequency of purchase issues • In a world in which low income drivers all had below average mileage, range extension would: • exaggerate numbers of low-income losers, from rebated CO2 tax • understate numbers of low-income losers, from rebated CO2 tax ?

  11. NTS Diary vs Interview: Motor Fuels Policy 2002-2008 Higher income hhs more likely to have a vehicle; range extension concentrates there

  12. LCF vs NTS: Motor Fuels Policy 2006-2008 Differences significant at 1% level Note: typical effects of an aviation policy might also be affected for this reason with LCF data: we don't observe the rate of flying with a 1-year window.

  13. Limitations of "Static Microsimulation" • Assumes behaviour does not change • But the point of CC Mitigation Policy is changed behaviour • "SM yields estimates of “initial effects” of policies only" • Dynamic inferences, therefore, are not licensed • What else is there ..? • Economists’ (computable) ‘general equilibrium’ models • Misleading assumptions, poor track record, resource requirements • hybrid economics / engineering models e.g. E3ME • assumption-heavy, significant resource requirements …

  14. “Trophic Methods” in Ecological Economics Liebig’s “Law of the Minimum” industrial / agricultural; degrowth / growth; sharing / individualist; money system Source: Mario Giampietro and Kozo Mayumi: “The Biofuel Delusion” (2009)

  15. Conclusions • Progressive Climate Change policy is possible • Infrequency of purchase may obscure progressivity of rebate schemes, in survey data • But redistributive measures cannot offset reduced fossil energy throughput. Effects of that reduction may not be explorable at high resolution • Climate change social policy agenda needs to join with debate over far-reaching transformation (e.g. ‘degrowth’ movement) • That is a political debate over how to live & organise society across the board

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