John FitzGerald: Tackling climate change a high-wire act

Policy changes could help shift the behaviour of businesses and households

“If the price of damaging emissions is not fully reflected in the prices we pay, the unconscious tendency will be to overconsume what is harmful, and underinvest in the greener alternatives.”

“If the price of damaging emissions is not fully reflected in the prices we pay, the unconscious tendency will be to overconsume what is harmful, and underinvest in the greener alternatives.”

 

A few policy problems facing the State may be fixed using one or two levers, such as taxation or public investment. Others, such as housing, have many moving parts, making solutions difficult to find.

Tackling climate change is a particularly tricky challenge. The easier bit is where we can get a big impact from actions by a couple of companies, such as changing how we generate electricity. Although ending generation from peat is easier to wish for than to deliver, because of the impact on local communities.

The current levers for making the business sector change its behaviour include taxes, charges and regulation. Companies are probably initially more responsive to environmental tax changes than individuals. Companies which face a carbon tax, and know it is going to increase over time, have strong incentives to invest in energy efficiency, and to seek renewable alternatives. Regulation can also play an important role, for example by banning use of coal.

Cement

Consumer choices can also influence corporate behaviour. If consumers are serious about preferring hybrids or electric cars, business will respond. Take cement, whose production process is one of the heavier emitters on the planet. If house purchasers were happy to buy and live in timber-framed housing – as they do in the United States in much more extreme climates – the building industry would respond and our demand for cement would fall, and with it our emissions.

However, while corporate actions are part of the solution to climate change, they are only a minority part. The biggest share must come from significant changes in behaviour of every individual living here. We all have to amend our lifestyles if Ireland is to stop emitting greenhouse gases.

Some 60 per cent of Irish greenhouse emissions are directly controlled by individual farmers or consumers. Farming is responsible for about 35 per cent. Cooking, heating and lighting our homes counts for 15 per cent, and driving our cars to 10 per cent.

So while it may be relatively easier to get business to do its bit, persuading each of the five million of us living here to eliminate our emissions of greenhouse gases from heating our homes or travelling to work is essential and it is a much bigger political challenge. Managing an orchestra of 80 individuals is a challenge for a conductor, but managing an orchestra where five million individuals must change together over a period of decades is an order of magnitude more difficult.

Changes in farming practice must form a major part of Ireland’s response to climate change. Already, the price mechanism is signalling that intensive beef farming is no longer economically viable, but there is also a strong cultural attachment to traditional ways of farming. A multi-pronged approach is needed that is sensitive to the difficulties individual farmers face, and that provides a viable, alternative way of farming sustainably.

A lot of people feel strongly motivated to do something in their own lives to help make the planet a better place. But research has shown that harnessing that goodwill is not enough if we are to achieve the scale of the changes we need to make.

If the price of damaging emissions is not fully reflected in the prices we pay, the unconscious tendency will be to overconsume what is harmful, and underinvest in the greener alternatives.

Carbon taxes

Building in the environmental cost via carbon taxes can nudge us towards the more sustainable alternatives. If we know for certain that the price of carbon will continue to rise for the future, then it makes sense to invest in insulating our homes, and in buying a hybrid or electric vehicle when we change our car, because we know it will ultimately save money.

The prices we pay can form a key mechanism in orchestrating more sustainable behaviour by all consumers. A classic example was the plastic-bag tax, which overnight reduced the use of plastic bags for the weekly grocery shopping.

Governments can also nudge individual and household behaviour through providing planet-friendly alternatives such as public transport. They can make life simpler for citizens by removing some of the hassle factor.

For example, helping households select competent contractors to retrofit their homes and helping manage the implementation of a retrofit could help the fainthearted.

Here is an area where the State needs to ensure we have a sufficient skilled workforce, and sufficient regulation and oversight of work quality, to persuade Irish householders on a large scale to insulate our homes to a standard where our domestic energy use and emissions fall dramatically.

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