How can fuel consumption be fairly regulated in order to limit CO2 emissions?


The increase in the tax on fuel prices was the trigger for the movement of the yellow vests, believing that this tax weighs too heavily on the wallets of the poorest. Moreover, they consider that this tax was only very partially attributed to environmental protection. "But this tax is nevertheless one of the instruments for limiting global warming," say some of the green jackets! So, how to reconcile fiscal justice and ecology?

The idea of a carbon card may be one of the solutions. It consists of planning by means of oil quotas per individual. There are at least three methods of limiting CO2 emissions from individual vehicles. There is the current incentive regulation of the market through fuel price taxes, planning through individual consumption quotas and market regulation of individual quotas.

In the 1990s, David Fleming and Mayer Hillman, two British intellectuals, proposed the first drafts of what would later become known as the "carbon card". They advocated the idea of a public policy, conducted at the national level, in which each person would be given an annual quota of CO2 emission rights that would condition all primary energy consumption (gas, electricity, fuel oil, gasoline, etc.). These emission rights would be broken down into units or points and would appear on a smart card, hence the name "carbon card".

The annual carbon budget, i.e. the total quantity of emission rights distributed each year per country and therefore per individual, would follow the country's CO2 emission commitment levels. The allowances distributed would be strictly equal from one person to another.

The carbon map is therefore based on quota-based planning. It allows an egalitarian effort between individuals.
But is this form of quantitative economic equality fair? Indeed, some people, depending on their occupation, need to travel more than others. In this case, equality is not fair because the needs are different.
The French government, for example, has allocated bonuses (subsidies) in 2019 for low-income citizens who travel long distances to work. In this case, this was a compensatory regulation, aiming to act on incentive regulation by the market, via fuel taxes. This therefore reinforces equality and equity to a certain extent, while maintaining a certain framework, consisting of a global willingness to regulate CO2 emissions at national level, through individual consumption.

The other method consists in the creation of a market of individual quotas, in order to promote equity, since the needs of each person are not identical, not equal, in terms of travel for the use of his or her personal vehicle.
This method is an attempt to combine the principles of justice, freedom and equality. Indeed, "not everyone has the same energy consumption". This is why Fleming and Hillman proposed to set up an exchange, where those who wanted to consume more than their quota could buy additional units from the most economical, who would have surplus. Their price would evolve according to supply and demand.
This amounts to organising a sort of progressive tariff, but here only in two tranches: the initial allocation of emission rights is free of charge and beyond that, additional units are paid for. Overruns of individual allowances would therefore be limited and conditioned by the availability of surplus allowances. In any case, the national carbon budget is strictly unaffordable.

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However, isn't there a risk that the market of individual quotas will drift towards the current system of the international market for pollution rights of companies, delimited by country? The latter allows companies to continue to pollute at will, when they have sufficient financial means to buy back the rights from countries or companies that do not consume them themselves, generally due to a lack of financial resources.

The market for quotas by individuals within a nation is therefore likely to suffer the same types of abuses. The richest individuals buy back the quota from those who do not have a vehicle or buy back the quota from those who drive little. Consequently, the individual quota market brings freedom to complement egalitarian planning, but it must be strongly limited or controlled so as not to destroy the overall system.
The market of individual quotas allows the richest to consume more, while regulation by subsidizing the poorest allows them not to be penalized for access to their jobs.

In order to control CO2 emissions by individuals when they travel by car, there is therefore a balance to be found between incentive regulation of the market with fuel price taxes, which is equal but inequitable; egalitarian planning by individual quotas for all; the quota market for the needs of richer individuals; and the allocation of individual subsidies for the poorest.

An equitable policy for the poorest could combine these four levers. It would first favour incentive-based market regulation with taxes on fuel prices, along with equal quota planning. Then, it will allocate individual subsidies for the poorest, in order to restore equity for the poorest. It will nevertheless leave a small share for the market of quotas for the needs of richer individuals, in order to maintain flexibility and avoid the excesses of rigid planning alone.

Indeed, the quest for equity implies introducing a component of freedom in the search for equality. In contrast to egalitarian communism, this policy aims rather at equaliberty, named after Etienne Balibar.

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