Redistributive policy

free green services – Milena Büchs

How to avoid that ecological policies have harmful social effects? Make related services (partially) free.

As energy prices rise, all the more important as in the green transition the energy poor are protected (Viktor_IS/shutterstock.com)

We urgently need new approaches to combine ecological and social objectives. Time is running out to tackle climate change: drastic action must be taken quickly. However, this is only possible if this action is socially just, ensures that everyone’s needs are met and enjoys public support.

Energy prices are skyrocketing in Europe, threatening to dramatically increase energy poverty. Offering a minimum of “green” services free of charge to all members of society could combine ecological and social objectives: it could significantly reduce greenhouse gas emissions, improve the satisfaction of needs and reduce fuel poverty, and increase social justice.

Free universal green services could include a base amount of renewable electricity (fed into the grid) or public transport per person, funded by carbon or energy taxes. This would reverse the regressive redistributive results of household energy or fuel taxes, which weigh much more heavily on poor households than on rich ones, relative to household income.

Regressive impacts

Many climate-focused policy packages propose increased carbon or energy taxes. the European Green Deal is no exception. But the regressive distributional impacts of taxes on necessities such as household energy are problematic from a social justice perspective, given that the poor generally have fewer emissions than the rich, despite a lower ability to invest in energy-efficient homes, appliances or vehicles. .

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Results of the European Social Survey 2016 also show that fuel taxes face strong opposition in most European countries, especially from low-income households. If such taxes are introduced or increased, steps should be taken to avoid socially unfair impacts.

Free green services are just one option to address the socially unfair distributional impacts of carbon taxes. Another could be an equal per inhabitant redistribution of tax proceeds. We looked at which of these might be best – from a distribution, emissions reduction and need-meeting perspective – in a recent to study which covers 27 European countries and is based on data from the European Household Budget Survey.

In the study, we defined cashback and green service options as financially equivalent: everyone in society would receive the same amount, whether in cash or in kind. We find that an equal per capita redistribution in the two schemes has highly progressive distributional results: the poorest households earn, relatively, more than the richest households.

The financial equivalence of the devices allowed us to focus on comparing their impacts on emissions and fuel poverty. Providing all members of society with free green services was associated with significantly higher emissions reductions and fuel and transport poverty than giving everyone a cash tax refund.

direct investment

Guaranteeing all members of society access to a free basic quantity of renewable electricity and/or public transport would create the need to rapidly expand renewable electricity generation and public transport infrastructure, in order to meet to increased demand. In practice, everyone’s electricity consumption would still be the mix produced by different means and injected into the grid, but the proportion of renewable electricity would have to increase to cover the basic amount of renewable electricity per person.

This could be done more efficiently and quickly if governments invested directly in expanding renewable electricity generation and public transport. The higher emissions reductions in the green services scenario result from replacing the standard mix of grid electricity with renewable sources and fuels with public transport for the amount covered by the per capita allowance. While in theory the cash tax rebate scenario could also work in a context in which renewable electricity generation and public transport systems have rapidly expanded and replaced their dirtier counterparts, it would be little likely at current rates of decarbonization and without additional government intervention. .

Providing all members of society with a free basic amount of renewable electricity and/or public transport can also contribute significantly to meeting needs. The study applies the ‘low income, high cost‘ definition of fuel poverty. This does not take into account households that consume insufficient amounts of energy because they cannot afford it. But it is quantifiable and has been applied in various studies and the compilation of official statistics.

The study shows that carbon taxes lead to increased fuel and transport poverty because they increase household spending on these essential goods. Reimbursing tax revenues in cash does not solve the increase in spending and therefore does little to reduce the increase in fuel and transport poverty caused by carbon taxes.

Only the alternative option of providing all members of society with basic amounts of free renewable electricity and public transport reduces fuel and transport poverty, as it reduces household expenditure on these essentials. Providing everyone with basic quantities of energy and transport would also help to fight against energy poverty involving under-consumption resulting from a lack of financial accessibility.


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Maximize Adoption

The uptake of free green services could be encouraged in several ways. For example, electricity providers could be required not to charge a base amount of kilowatt-hours (kWh) per person, so that consumers do not have to actively “claim” their allowance. The amount of electricity supplied could be expressed in a number of vouchers, equivalent to a fixed amount of kWh, to facilitate the understanding of the system, but no real “voucher” should be redeemed.

Maximizing the use of public transport is more complex and difficult, especially in areas that are not already well served. Expanding supply would be essential in these areas to increase usage and amenities should be made available more locally to reduce the need to travel longer distances to city centres. Everyone in society could be assigned an online public transport account, with a prepaid amount to be charged when entering a bus or train. Allowances could be tradable (and/or redeemable for carpooling schemes and similar schemes) to reduce disadvantages for people living in remote areas.

There was no room in the study to discuss ownership and governance of energy and transport infrastructure. But previous research on ‘universal basic services‘ and the ‘basic economics‘ indicates that these would be important issues to address.

Developing appropriate social policies to deal with the climate emergency will be one of the most important tasks in the years and decades to come. Rethinking the way basic services such as energy and transport are provided – to ensure everyone’s needs are met and emissions are reduced in a socially equitable way – must be a central part of the transition to net zero emissions. Providing a basic amount of free green services to all members of society could be a promising avenue to contribute to these goals.

Milena Büchs is Associate Professor of Sustainability, Low Carbon Economy and Transitions at the University of Leeds. His research specializes in sustainable well-being and just transitions.