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

2. 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 EFS/LCF + REAP + other sources 2006-2009 Assumptions: Prices increase proportionally to CO 2 emissions for each good / service; Behaviour unchanged

4. Is Transport Different? EFS/LCF + REAP + other sources 2006-2009 Cf. Dresner & Ekins (2004) CO 2 taxes on motor fuels not progressive Est.48% of households in lowest income decile had a vehicle by 2009 Cf 33% in 1990s

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

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

8. Households below the Poverty Line Motor Fuels £100/tCO 2 Tax Rebated 17% lose 83% gain Households with <60% of Median Income

9. Low-income, rural motorists Mean CO 2 tax = 3% of income Mean net burden = 0.3% of income £100/t CO 2 Tax motor fuels £100/t CO 2 Tax motor fuels + rebate Mean for non- EUETS emissions scheme = -1.2% of income

10. 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: a)exaggerate numbers of low-income losers, from rebated CO 2 tax b)understate numbers of low-income losers, from rebated CO 2 tax Data Problem: Range Extension from Infrequency of Purchase ?

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

12. LCF vs NTS: Motor Fuels Policy 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. Q1, %Q5, % winlosewinlose NTS87133565 LCF83174258 2006-2008 Differences significant at 1% level

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

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