Although the risks posed by climate change have been known for more than 30 years, governments have been much slower to wake up to the threat. The European Commission was alert to the dangers to the planet from early on, proposing a carbon tax in 1992 to address greenhouse gas emissions but that sense of urgency was not shared at the time by member states, including Ireland.
The three decades since have been a huge wasted opportunity to drive down carbon emissions at relatively low cost. Now that the climate agenda is finally a priority, we have to do much more, in a shorter time and at higher cost, than if we had tackled it earlier.
There are broadly two strategies we can adopt to halt global warming. One is to turn back the clock to 19th-century levels of energy consumption, and accept a reversion towards 19th-century living standards. The other is to harness technology and alternative energy sources to replace fossil fuels, while maintaining our current lifestyles. Given that no government or society wants to turn the clock back a century, we are going to have to make the second strategy work.
Transport is a challenging area to decarbonise, and particularly air transport, which is so important for island nations such as ours, for families separated by continents and for global economic activity.
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Taxes
Road transport offers important lessons. Concerns about the dependence of our lifestyle on oil go back to the 1970s. Since then, significant taxes have been levied on motor fuels, which encouraged vehicles with increased fuel efficiency. In more recent years, the threat of higher taxes on fossil fuels has encouraged manufacturers to invest in developing and selling electric cars.
The European Union has also imposed a serious levy on motor manufacturers who sell too many fossil fuel cars, relative to their sales of electric vehicles. When Volkswagen’s electric Golf was delayed last year, they had a narrow escape from paying a big tax penalty. In the Obama era in the United States, similar threats of penal charges for producing too many gas guzzlers had the intended outcome of more fuel-efficient cars.
It’s not so much the behaviour of motorists, it is more the response of car manufacturers that is the main channel through which carbon taxes achieve their aim of curbing emissions. For every 10 per cent rise in the price of motor fuel due to increased taxes, we reduce our driving by only 1 to 2 per cent. However, the high cost of driving thirsty cars provides the incentive for manufacturers to develop and produce more climate-friendly models.
The cost of running a fossil fuel vehicle, particularly as these costs ratchet up, will encourage us to switch to electric when we next change our cars. Those car manufacturers who don’t shift production towards electric vehicles could go out of business as the market shifts decisively towards decarbonised models by 2030. To protect their livelihoods and their future business, the car industry across Europe, Asia and the US has already begun to make that switch.
Tesla
As one of the first companies out of the blocks on electric cars, Tesla provided a huge shock to the traditional car industry and helped accelerate the production of alternative electric models by its competitors if they were to hold market share. While Tesla is still only a niche producer, the financial markets had faith in its vision of a future with electric motoring. As a result, although it was a company without an established record as a car producer, Tesla’s value on the stock market rose above that of most established firms in the industry. To compete, the traditional car makers needed to catch up and not leave Tesla with the electric vehicle market to itself.
We haven’t yet seen similar innovation in aviation away from fossil fuel models. Boeing and Airbus have got subsidies over the years, without any regard to the impact of air travel on climate change. Aviation fuel remains untaxed. So there has been little or no incentive to develop climate-friendly planes. And because it’s such an expensive industry to enter, there is no disruptive Tesla on the horizon to shake that up, or push the big two to work on carbon-free alternatives.
Sensibly, the EU is now proposing a tax on aircraft fuel. However, this will only really affect internal EU flights. A worldwide tax would work but will not happen. The EU may need to provide other incentives to develop carbon-free aviation technologies. The rewards could be a world-beating industry – and saving the planet.
