"A refreshing addition to the world of think-tanks" Daily Telegraph, 18/10/2007

CLIMATE CHANGE REGULATION

Last updated: 26/03/2008

Climate change is being used to justify unwarranted regulation, while ignoring common sense solutions.

Regardless of the debate about the fact or attribution of climate change, we should all be concerned about the use of climate change to implement policies that have been seized upon by individuals and organisations as an opportunity to justify any manner of interventionist policy proposals that are motivated by more than climate change.

Recent discussions about “green taxes” are a good thing and moving taxation away from incomes and profits to target negative externalities such as pollution are a good thing.  However, these taxes should not be greater that the actual harm done by the polluter and should maximise the ability for innovators to develop technology to address climate change.

Climate change is being used by people who see the issue as a way of implementing policies that they would otherwise be unable to justify.  People who hate cars and large cars in particular wish to ban cars with a fuel economy less than that prescribed.  Those opposed to free-trade seek to curtail international trade.  Opponents of capitalism seek to regulate the retail industry by opposing out of town shopping centres and utopian urban planners use climate change to prescribe the type of houses we can live in, driving up the costs of new homes.

The disingenuousness of those who take these positions is that they tend to oppose nuclear energy in principle and support tax breaks for heating fuels. Whilst the European Union continues to impose tariffs on energy efficient light bulbs imported from outside the Eurozone, they still haven’t decided whether to locate the European Parliament permanently in Brussels or Strasbourg. Putting an end to the vast unnecessary travel between these two locations would at least show some sort of lead.

Plans by EU Environment Commissioner Stavros Dimas to introduce legislation that would require new cars to have average CO2 emissions of 130 grams per kilometre is a classic case of using over prescriptive legislation to address a public policy measure.

Such a proposal is reminiscent of the US policies introduced in the wake of the oil crises of the 1970s which produced “Corporate Average Fuel Economy”, a set of regulations prescribing fuel efficiency.  This restriction led to the development of the SUV industry as they were classified as light trucks and therefore exempt from the restrictions imposed on cars.  Undoubtedly Mr Dimas is aware of this and will have closed this loophole in his propose legislation.  However, a fundamental feature of the law of loopholes is that they are not apparent to lawmakers at the time they draft their legislation.  An unintended consequence of this legislation could well be a new category of vehicle that will bypass such a law.

All such a proposal will achieve is an increase in the price of new cars and large or high performance cars in particular – either through increased use of technology to achieve the targets or through the charges directly levied on manufacturers.

More likely though is that people who drive affected cars will delay their purchases of replacement cars.  This will keep older, more polluting cars, on the road rather than replacing them with more modern vehicles.  In the event of an outright ban on such cars, you will see a substantial increase in the price of older cars and an industry to keep them on the road well beyond normal lifetimes.

This is not to argue that people should not pay for their choices that affect wider society.  Progressive Vision believes that a better solution would be to increase fuel taxes, encouraging people to not only purchase more efficient vehicles, but also to drive economically and consider their need to travel by car at all. 

Regulating large or high performance cars is one of the more expensive ways of lowering carbon emissions, compared with alternatives such CO2 capture and sequestration or driving efficiently with correct tyre pressure at the chart on this page demonstrates. 

Restrictions on the type of car or discriminatory taxes can create unfair outcomes.  For example a person owning a large family car purchased for occasional travel may in a given year emit less carbon than an owner of a hybrid who drives their car every day.  Politicians should not seek to prescribe behaviour of citizens, people should be free to choose, as long as they face the real costs of their actions

Restrictions on fuel economy may result in fewer of these…

…but also more of these:

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KEY POINTS 

• Climate change should not be used as an excuse to advance other agendas

• Proposals to set maximum fuel economy levels should be abandoned

• Such proposals will keep older, more polluting vehicles on the road and discriminate unfairly against those with genuine need for a large car.

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