Carbon pricing: can Europe succeed where Macron failed?

(Transport and Environment, 30 Mar 2021) “The elites, they talk about the end of the world. Us, we talk about the end of the month”. This was the rallying cry of the gilets jaunes movement back in 2018.

Although the movement was about much more than the cost of driving, the proposed carbon tax did become a symbol for the disconnect between the ‘elites’ and working people outside big cities. In the end, French president Macron made a U-turn and abandoned the plan.

And yet, European Commission president Ursula von der Leyen has been beating the carbon pricing drum ever since she took office. At this very moment, her Commission is working on a European carbon levy on drivers as part of its big climate plan due in June. This is likely to please the orthodox economists and the powerful German auto lobby. For car industry executives like Volkswagen’s Herbert Diess, taxes on drivers are a great alternative to regulations forcing his company to sell cleaner cars. 

The EU executive is thinking about a carbon market where the cost of diesel and petrol would increase as much as needed to achieve Europe’s climate goals. But since people only change their behaviour after big fuel price increases, a “whatever carbon price it takes” scheme could easily lead to carbon prices of €250/tonne or more - pushing fuel prices up by 40-50%. This may work beautifully in theory but in practice it is more likely to cause a revolt.

For us the top priority right now is to require auto companies to sell affordable, high quality electric cars. People need a real and accessible alternative to polluting cars. This is about fairness but also about effectiveness. We won’t go green by taxing drivers in the hope that they’ll make a shift to cars that auto companies don’t actually want to sell. That doesn’t mean there is no place at all for carbon pricing but if we want to avoid political disaster, we need to heed the lessons learned in France.

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Transport and Environment, 30 Mar 2021: Carbon pricing: can Europe succeed where Macron failed?