Should sectors that ‘win’ from climate change be taxed?

We might all agree that climate change is bad, but think for a moment about the winners from a heating planet. In the short to medium term, Ireland may gain from inbound tourism as the Mediterranean becomes uncomfortably hot. Home retrofitters face a cash bonanza as the cost of energy climbs.

Acknowledging such benefits might seem like the work of a climate denier, but Kian Mintz-Woo believes it's necessary to bring about a more mature debate on what should be done.

Climate sceptics "only hear negative stories about climate change and think it's overblown and say 'there must be some benefits'. We think that scepticism is maintained when we don't have a discussion that includes all the effects," says the University College Cork philosophy lecturer, who has been working on the subject with the economist Justin Leroux.

Mintz-Woo is one of a number of philosophers who have been trying to widen the conversation about climate change, attempting to draw in people who might otherwise block their ears or put their heads in the sand.

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In the years before his death in January 2020, Roger Scruton sought to reposition environmentalism as a conservative philosophy – inherently bound up with a love of place and heritage.

'Whenever possible, emitters should fully compensate the harm their emissions cause and, provided they do so, should be rewarded for the positive effects their emissions generate'

From a more liberal tradition, Philip Kitcher – a philosopher who is participating in an Irish-led research project on trust in science – argues that one of the drivers of climate scepticism is a belief that certain groups will suffer more than others under any transition to carbon neutrality.

“Many nations and many people reasonably fear that their own futures will be devastated by the kinds of action proposed, unless serious efforts are made to protect and aid them – and they do not expect those efforts to be made,” says Kitcher.

Mintz-Woo shares this concern about inequity and believes tax and subsidy measures should be designed in ways that are seen to be fair. Part of that would mean taxing not just carbon emitters but also those who are making undeserved gains from climate change. Controversially, he and Leroux say that, so long as emitters have fully paid for the effects of their polluting, they – the emitters – “rather than the climate losers” should benefit from any tax on climate winners.

“Our main claim is that, whenever possible, emitters should fully compensate the harm their emissions cause and, provided they do so, should be rewarded for the positive effects their emissions generate.”

They call it the PPTR – or “Peter” – principle, for “Polluter Pays, Then Receives”.

“To be clear, we are not climate sceptics,” says Mintz-Woo who plans to attend next month’s UN COP26 climate conference in Glasgow with a UCC delegation. “The harms are overall much greater than the benefits, but not all of the effects of climate change are negative, even though their global net effects are very costly and damaging to people.

“For instance, while we should expect to see tourism fall in warm southern Europe, we might expect it to rise in cooler northern Europe. A very few countries, like Canada and Russia, might even be net climate winners.”

His thinking is rooted in “desert-based justice”, a fancy way of saying that rewards should be proportionate to contributions. Of course, deciding exactly who deserves what is highly contentious – just look at the fraught debate over a proposed “pandemic bonus” for front-line health staff.

Ireland is probably not a net climate winner, since the ease of living here is highly dependent on the Atlantic Meridional Overturning Circulation system

The Peter principle may create a greater “symmetry between gains and losses” than the current polluter pays principle but who exactly would decide how much to tax the climate winners? Mintz-Woo envisages a “clearing house” at a global, or governmental, level that divvies out rewards on a sector by sector basis.

If agriculture were to benefit from a heating planet, and construction were to lose because of flooding and storm damage, the former would have to reward the latter for its undeserved “win” from climate change.

Some will object to the use of the term "winning" in the context of potential human annihilation, but Mintz-Woo cites research showing, for example, the UK may have "reduced requirement for indoor heating and a reduction in cold weather related deaths" as a result of climate change.

What about Ireland?

“Ireland is probably not a net climate winner, since the ease of living here is highly dependent on the Atlantic Meridional Overturning Circulation system, a large conveyer belt of water that brings warm water to keep Ireland temperate. If it wasn’t for this system, we would be roughly as cold as Greenland.

“While we don’t know for sure, there is reason to believe that climate change may slow or weaken the system, at least over many decades. While unlikely, especially in the short term, if that is even a possible outcome of climate change, that would be a major threat to the success and liveability of the island.

“However, assuming the Irish climate does not change much while the globe warms, some Irish sectors could be net winners from climate change. Perhaps tourists who are less interested in going to Italy or Spain might wish to visit West Cork.”

Mintz-Woo distinguishes between two types of winners: those who make passive gains – for example hotel operators who are simply benefiting from a change in local climate – and those who make active gains such as windfarm operators. The former would fall under a Peter tax scheme – since they don’t deserve their added rewards – while the latter would stay outside.

Notwithstanding the logistical hurdles, Mintz-Woo believes such a system would be “more acceptable” to the public and would be seen as fairer than one that “only uses sticks”. Moreover, “we think getting incentives right is part of a broader social programme”. The health sector, for example, is seen as a money-pit but that’s only because we don’t properly budget for the economic and social benefits that accrue from a healthy population, he suggests.

It’s food for thought - even if it’s unlikely to influence Budget 2022 at this stage. What we will see next week is another hike in the carbon tax – meaning motorists will now pay about €7 in carbon tax for every 60-litre fill of petrol.

Just what to do with such revenues – or future revenues from emitters under the Peter principle – is another question. Mintz-Woo advocates a “hierarchy of claims”, aimed first and foremost at compensating the victims of climate change – which from a domestic perspective can be seen as ordinary citizens struggling to meet rising energy bills.

“The resources should be used to help those who are harmed. In this case, this should be for general support for welfare services, which are disproportionately used by those least well-off in society.

“This is more valuable than using resources directly to subsidise energy costs, which is a political winner but does not help generate incentives to protect us from climate change and could benefit those who already are socially advantaged.”

Given the global shock of the past 20 months, Mintz-Woo believes the hierarchy of claims points in a particular direction. "In the current context, I would prefer to see these resources helping essential workers or those who were laid off due to Covid."

It could be a runner – so long as we don't call it a bonus.

Philosopher Philip Kitcher will talk about why climate action is so hard on November 2nd as part of a series of online lectures, cohosted by UCD Centre for Ethics in Public Life, on "trust in an age of disinformation"