Germany discusses the introduction of a CO2 price. In the best case, this would mean that the consumption of CO2-intensive fuels and products will decline because they become too expensive. But does this ultimately lead to a social split, because only rich citizens can afford the energy transition? Tom Krebs pursues this question, who teaches economics at the University of Mannheim.
For many policy observers, it is a foregone conclusion that on 20 September the Climate Cabinet will decide to enter into CO2 pricing in the areas of transport and heat. From an ecological and socio-political point of view, however, this decision makes sense only if climate-friendly, public investments are widened. Without such accompanying measures, CO2 pricing runs the risk of weakening social justice and of missing its ecological impact.
The societal problem of CO2 pricing becomes clear when you look at a commuter driving the classic way to work by car. An increase in the fuel tax will increase gasoline and diesel prices and thus increase their travel costs - the price of using high-carbon means of transport has increased. In response, the commuter is likely to change her behavior, but how exactly does it depend heavily on each life situation.
A typical example is the low-middle-income policewoman, who lives on the outskirts of the city with poor rail links and has to travel to work almost daily to work in the city. She will be unable to change her behavior and has to accept the increased fuel costs. A proposal is now to repay the revenue from the special tax on mineral oil to the citizens as climate bonus. But even with such a climate bonus, the facts remain: Without a well-developed range of public transport, there will often be no climate-friendly alternative for the policewoman - the CO2 rating misses its ecological steering effect.
Quite different is the situation of a well-established, high-income lawyer who also has to commute to work in the city center. Firstly, it is often the case that such a lawyer lives in an area with a good rail connection to the workplace. Secondly, the well-paid lawyer has the opportunity to sell her fuel-powered car and switch to electric cars such as the Tesla S. In contrast to the policewoman, the lawyer is therefore much easier to change her lifestyle and the CO2 pricing can unfold its ecological steering effect. Moreover, only the high-income lawyer can protect herself against the additional costs of rising gasoline prices by changing her behavior - in this sense, carbon pricing weakens social justice.
Whether you can adapt depends on the income
The examples show that the possibilities to adjust the behavior correlate strongly with the income. As a result, carbon pricing alone is neither socially just nor ecologically sensible. CO 2 pricing should therefore only be introduced together with measures that improve the alternatives of low- and middle-income people. In transport this requires the development of climate-friendly public transport, so that people can change to rail or e-bus. At the same time, strong public housing is needed so that the necessary energy renovation does not displace low-income households from their homes.
Frequently, there is also a demand for an expansion of research funding in the energy and climate sector. Promoting private and public research in these areas is economically viable, but it should not be seen as a substitute for public investment. Only the expansion of local public transport can ensure that ecologically inefficient private transport is reduced. In addition, research funding can even weaken social justice. For example, if research funding for e-mobility remains too general, then the currently very expensive Tesla S may be slightly cheaper, but the development of the relatively inexpensive Tesla 3 will falter. This would benefit the established lawyer, but not the young policewoman.
The societal problem of carbon pricing stands for a much larger problem: the ecological transformation of society must go hand in hand with a strengthening of social justice. Such a task of the century can only be accomplished with a state that is present in three key areas: infrastructure, housing and research. Unfortunately, Germany is relatively weak in this area and a massive expansion of public investment is needed if socio-ecological transformation of society is to succeed.
A wealth tax would have many advantages
Remains the question of how the additional capital expenditure can be financed. A new debt of the state would be a possibility, but sets the debt brake here narrow limits and political high points for a constitutional amendment are not (yet) in sight. Revenue from a reactivated asset tax would provide an alternative source of finance and would have the added benefit of directly sharing effort and benefits: wealthy households and partnerships help finance all of society's tasks, which in the long term benefit them most.