A former chairman of Shell has argued that the European Union should ban cars that get fewer than 35 miles per gallon. The basic idea is that there is no reason for cars to be less efficient than that and the new ones that do more poorly are intolerable luxury items. Forcing all cars to meet the standard is presented as a way of making the rich “do their share” when it comes to climate change.
Similar arguments exist about lightbulbs. Should governments ban incandescent bulbs, impose extra taxes on them, or do nothing? The last option won’t help with climate change mitigation. The middle option risks dividing the world between an upper class nicely lit in flattering yellow hues and an underclass rendered corpselike by flickering green compact fluorescent bulbs. Banning the bulbs outright could prevent their use in the few situations in which they are genuinely highly valuable, as evidenced by the willingness of their owners to cut emissions in other areas in order to not have to give them up.
The ideal solution is sustainable, tradeable carbon allowances. Everyone on earth gets about 750kg a year, and are free to trade it between them. Yes, the poor will sell to the rich, but they will do so voluntarily because the money is worth more to them than their emissions are. This certainly isn’t perfect (people may sell under duress or still lack sufficient means for a decent life), but it’s better than the ‘grab what you can’ approach that dominates presently. Of course, this allowance approach is hopelessly unrealistic. The emissions of people in the rich world are so far above what’s sustainable, they would never sign on to a system that required them to cut back as far as is appropriate.
Another big question has to do with induced technological change. Automakers will howl to the moon if you demand that they make 35mpg cars across the board. Sputtering, they will swear that it is impossible and even trying will bankrupt them. Actually forced to do so, however, it is probable they would squeak over the line. The question is whether such a policy would have benefits that outweigh the associated costs – including the perceived loss of liberty on the part of car makers and car owners.
How then do policymakers reconcile the possible with the fair, the risks associated with climate change and the reality of other social and equitable issues? The idea of forcing manufacturers of luxury cars to turn out models that get 50mpg does have appeal, but it is probably a mistake to conflate the fighting of climate change with the desire to reduce the profligacy of the wealthy. Excessive emissions are the behaviour properly targeted by climate policies: not pompous displays of extravagance. Mandated standards do have a role to play in situations where elasticity of demand is weak and there are possibilities for structural change. Those, in combination with carbon pricing, do have the capacity to help us move to a low-carbon economy. The devil of that transition, as ever, is in the details.