Should we abandon the carbon tax?

By Stéphane Amant, Senior Manager at Carbone 4 and Head of the Mobility Division

In an effort to defuse the “Yellow Vests” crisis, the President of the Republic decided to cancel the planned increase in the Climate and Energy Contribution (commonly known as the carbon tax) scheduled for January 1, 2019. This tax primarily affected road fuels. That said, should we give up on the raise for good? Or even scrap it without a second thought? It is important to remember that we must absolutely prevent global warming from exceeding +2°C in order to limit the impacts of climate change on human societies.

To illustrate, it is very likely that with a temperature increase of +4 or 5°C, a very large part of Western Europe (including Occitanie, where I live) would no longer offer acceptable living conditions for the majority of the population, due to the upheavals affecting agriculture, health, water availability, migration patterns, and so on. It is therefore as a preventive measure for us and future generations that Humanity must phase out fossil fuels almost entirely within a few decades, and if possible before 2050. Yet our transportation system is 95% dependent on oil … which, in a way, means that We are collectively highly dependent on a form of energy that poses a real threat in the medium and long term. It’s a bit like a hard drug, really. To meet this challenge, several levers will need to be pulled—and not just taxation, of course (regulatory, technological, economic, organizational, etc.). Conversely, it would be naive to think that this transition away from oil could take place within these timeframes without affecting its price at some point.

When it comes to changing behavior, we may well regret it, but one of the most effective ways to bring about change does indeed involve: Without a signal regarding price, economic history shows that the vast majority of the population does not adjust its behavior. Only a more conscientious minority is willing to do so on their own. To collectively wean ourselves off a hard drug, we must therefore, logically, accept that it will become increasingly expensive. That is the whole point of carbon taxation! Because it is specifically designed to protect current and future generations, The debate should therefore focus primarily on how the revenue it generates is used, rather than on whether it is justified. And beyond that, on the tax system as a whole: It is entirely possible to give greater prominence to environmental taxation (which seeks to discourage practices that are most harmful to the community) while reducing the overall tax burden on households (on labor, housing, etc.). In short, let’s not fight the wrong battle: carbon taxes are an essential tool for the transition. By agreeing to pay them, we are, in a sense, consenting to finance an insurance policy against the most severe effects of climate change. However, it needs to be supplemented by support measures for the most vulnerable and dependent individuals, so as not to exacerbate social inequalities. Climate policies and social policies must be developed in tandem, not in opposition to one another.

Stéphane Amant, Senior Manager at Carbone 4, Head of the Mobility Division