A report released in 2017 found that over half of all global emissions since 1988 have been produced by just 25 companies. When you take into account the 100 most environmentally damaging companies, known as the ‘Carbon Majors’, that figure rises to over 70%. Even so, we are constantly told that individual actions like using canvas bags and taking the bus will be enough to avoid the catastrophic effects of climate change. The truth is that the onus is on the major greenhouse gas emitters like Exxon Mobil and Shell Oil to simply stop extracting and distributing fossil fuels. Unfortunately, the pressures of the competitive market mean that they are not going to do this without a push.
As things stand, it makes more financial sense to use fossil fuels than renewables. However, there are many ways that governments can curtail the emissions of Carbon Majors through financial and legal incentives. A fundamental of the modern nation state is that the legislator should tax practices which they aim to discourage in society. This is why smoking is so expensive. Governments realised that by taxing cigarettes at an extremely high rate, they could better public health and make some serious dough while they were at it. By raising the price of smokes, governments can gradually decrease the number of smokers which in turn decreases the amount they spend on the treatment of diseases like lung cancer and emphysema. In theory, the increase in revenue can be used for things like medical services and anti-smoking campaigns, meaning they can shift the costs smoking imposes upon society onto those who smoke.
Similarly, governments can tax the use of dirty fuels which emit CO2 and use the extra cash to invest in renewable energy research. Some form of ‘carbon tax’ has already been introduced in 46 countries, including Ireland, Canada and Australia. Carbon tax means that fuels which result in higher carbon dioxide emissions are taxed at a higher rate, a policy which is all ‘stick’ and no ‘carrot’. By taxing carbon, governments can cut into the profits of companies who would otherwise be making a killing on fossil fuels. The hope is that Carbon Majors will then be incentivised to move toward renewable energies like solar and wind power. While a higher carbon tax would mean an increase in the prices of fuels like petrol, coal and gas for the consumer, it would also mean that clean energy sources could become more competitive.
The other side of the coin is renewable energy subsidies; the ‘carrot’ to the ‘stick’ of carbon tax. The government invests money in order to lessen the costs of energy from sustainable sources. The top 6 countries that subsidize renewables spend a combined total of 40 billion dollars a year. Subsidies can go a long way towards decreasing the financial loss Carbon Majors and consumers suffer when switching to cleaner sources of energy. By both taxing fossil fuels and subsiding renewables, governments can gradually make it so that renewables are the sounder investment. Since financial considerations are the only considerations corporations are likely to take on board, the use of both of these policies could go a long way towards reducing the footprint of Carbon Majors.
While straight-up carbon taxes are gaining popularity worldwide, there is a similar but more widely used group of policies called carbon ‘cap and trade’ schemes. These schemes involve setting a limit on how much CO2 can be produced in total then auctioning credits to companies which equal the cap. If they go over their allowance, they are liable to incur very serious fines or even legal action. One way that companies can exceed their allowance is by buying (or trading) credits from other companies who are using fewer fossil fuels than they are allowed. With a carbon tax, companies can just take the hit and produce as much CO2 as they can afford. The advantage of cap and trade schemes is that while Carbon Majors still take a huge financial hit by using fossil fuels, there is a fixed upper limit on how much they can produce. Another advantage is that companies which can reduce emissions cheaply can then sell their remaining credits to companies which are struggling to meet their allowances and make a profit. In this sense, cap and trade schemes combine the carrot and the stick into one efficient bundle.
The main criticism of cap and trade schemes is that it allows Carbon Majors to carry on polluting as they’ve always done since it is still cheaper to pay for extra credits than to switch to 100% renewable energy sources. However, smart legislation such as lowering the upper limit on carbon emissions and thus raising the price of credits at auction should be enough to make these schemes workable. The main obstacle to these amendments, as with all climate-protecting plans, is that the companies who are profiting from the destruction of the environment can use their astronomical profits to lobby for the weakening or outright removal of cap and trade schemes in the countries in which they operate.
It is imperative that we do everything we can to curb the power of Carbon Majors to continue their crusade against the environment. Carbon taxes and cap and trade schemes are just two ways in which we can do this. In an ideal world, we would simply make it illegal to extract and burn fossil fuels. Unfortunately, no government is willing to take such drastic measures against entities that in many cases have more money, and thus more power, than the governments themselves. The CEOs of Carbon Majors are not necessarily evil people. In their eyes, the livelihoods of their many employees rests on their shoulders. What we need to convince such people is that while workers can probably find new jobs, it is very nearly too late to reverse the catastrophic effects of global warming. The question they must ask themselves is whether they would rather be responsible for a few lay-offs on one hand, or the destruction of animal life on earth on the other. The fact is that those are the only options.
By Adam Boland – Science Writer