High fossil fuel prices are good for the planet – here’s how to keep it that way

High fossil fuel prices are good for the planet - here's how to keep it that way

In the United Kingdom, now costs more than 100 pounds to refuel a typical family car with petrol and oil prices it can rise even higher. But are such high fossil fuel prices a bad thing? While the focus is on measures to tackle the global cost of living crisis, there is much less attention on a very uncomfortable truth – that resolving the climate crisis requires fossil fuel prices for consumers to remain high forever.

Saying such a thing may seem deaf. Millions of households in rich countries are faced with a choice between heating and eating. In poorer countries, the situation is immeasurably worse. Rising gas prices have dramatically raised the price of fertilizer, while the war in Ukraine is hampering its wheat exports.

Together, they are leading to a spiraling rise in world food prices, causing inflation to skyrocket and worsening difficult food security situation in places like Yemen, the Horn of Africa and Madagascar. We are already witnesses widespread leg riots just like those between 2008 and 2011, when citizens around the world protested against failure of their states to secure their most basic right – the right to food.

To mitigate the impact of high prices, we have seen a sharp reversal of energy policies around the world. In November 2021, the governments of the COP26 climate conference in Glasgow pledged taxes carbon emissions and eliminates subsidies for fossil fuels. But facing drastic increases in the price of fuel and electricity, these same governments have struggled reduction of energy taxesto introduce price ceilings and introduce new subsidies.

However, maintaining global warming below 1.5 ° C will require a drastically reducing the use of fossil fuelsstarting now. The unfortunate reality is that one of the most effective ways to get people to use less fossil fuels is to make them expensive.

Of course, the best way to move away from fossil fuels is to have better (and preferably cheaper) alternatives. But investment in these renewable alternatives will only happen if people obviously switch to them, and that requires consumer prices of fossil fuels to remain high.

Feeding riots

Of course, high fossil fuel prices are usually unpopular and can even lead to riots. Between 2005 and 2018 41 countries there was at least one riot directly related to the mass demand for fuel. In 2019 alone, there were major energy protests in Sudan, France, Zimbabwe, Haiti, Lebanon, Ecuador, Iraq, Chile and Iran – many of which turned into riots.

Colleagues and I recently published research which shows that these riots are caused by price jumps, often after the abolition of fuel subsidies. These price spikes sparked fuel riots when citizens felt they had no other options to express their anger against government policies and actions (or when states have tried to forcibly suppress them).

High prices, satisfied citizens

Is it possible to maintain high fossil fuel prices without provoking riots? The key is to maintain high consumer prices by raising fuel taxes when international oil and gas prices eventually fall. To make this politically acceptable, two things must happen.

First, consumers will not accept high prices if it means high profits for fossil fuel companies. Maintaining high prices for consumers must be complemented by a radical overhaul of the tax regime facing fossil fuel companies, not just one-off contingencies. These taxes will keep consumer prices high, although fossil fuel companies will not actually get much – enough to cover reasonable costs, but not enough to invest in further fossil fuel production. As pointed out by the International Energy Agency, to be achieved net zero by 2050the amount of necessary investments in new oil and gas production is zero.

Second, consumers will be much more likely to accept higher fossil fuel prices if the additional tax they pay is returned to citizens as equal aid for carbon. Alaska did something similar by investing a share of its oil revenues inpermanent fund“Which is then distributed by check to each household each year (although this approach can be confusing – in Alaska, politicians find themselves reduction of public services to maintain payments from the state fund).

Receiving an annual payment equal to the taxes imposed to maintain high fossil fuel prices would mitigate the damage from higher prices. It would also be progressive, as those who consume the most fossil fuels will pay more taxes, while those who consume less will pay less, but will receive the same payment from the fund and will therefore make a profit. . There may also be additional compensation for poor groups with high fossil fuel consumption, such as lower-income people who have to use their cars for work.

Rising energy costs are a disaster for poor consumers around the world. But ironically, they also provide an opportunity to displace the world from fossil fuel addiction. If we use this opportunity to keep fossil fuel prices consistently high, we can accelerate the transition to cleaner energy in a way that is fair to all and prevent deeper crises in the coming years.The conversation

This article has been republished by The conversation under a Creative Commons license. Read on original article.

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