The High Price of Political Correctness

​Cop26 and the government's new climate action plan flatter to deceive

Instead of a genuine discussion on climate action, Cop26 is playing host to political opportunism and guff. The war on carbon is as phoney a war as they come. Tackling climate change should be part of every government’s key policy over the next decade, but how credible can recent events in Glasgow be when two of the largest carbon emitters, China and Russia, fail to attend?

​How genuine is Boris Johnson, the host at Cop26, who in 2015 spoke of climate change as "primitive fear"? In 2019 he referenced demonstrators as "uncooperative crusties" who should stop blocking the streets of London with their “heaving hemp-smelling bivouacs.” Given the mess of Brexit and the UK's on-going threats to abandon the Northern Ireland protocol, which it agreed late last year, the public need little reminding about taking political promises with a pinch of salt.  ​

The unveiling of the Climate Action Plan last week by the Irish government comes with promises of their own. Financial commitments to the tune of €125 billion are proposed to tackle climate change between 2022 - 2030. This roughly represents twice the annual national tax take for a small country of 5 million with an  inconsequential carbon footprint.

Being a low carbon "offender" isn’t an excuse to sit back and do nothing about climate change. Smaller nations can play their part. But the government’s new climate plan places a disproportionate burden on Irish taxpayers when the costs of living are already spiralling. The climate bill will represent the third largest government expense behind social welfare and housing.  

Given the emotive issue of climate change, the public risks being blind sided by ideology, or worse paying a very high price for political correctness in the meantime. If higher costs of living are not an agreeable trade-off for climate action, will people admit it? Being politically correct will play into the hands of politicians who can overpromise, underdeliver, but still receive public support. How achievable are long term goals when political careers are so short anyway? If a week is a long time in politics, 2030 seems like an eternity. On many practical levels, the climate plan could soon unravel in farce. 

Take for example the plan to retrofit homes at a cost of approximately €50,000 per household. Even with the promise of low interest loans and token grants, 70%  of the costs fall on the public. Who, realistically, will be willing to pay these costs? With the housing market already stretched, and the government’s new housing programme set to be unveiled next year, where is the economy going to find enough tradesmen to carry out the retrofitting in the near term? Construction costs could rise even higher.

While the government can tax petrol and diesel cars “out of existence”, as many people would like, where are the alternatives? The electric vehicle (EV) market is still in its infancy and offers very little by way of consumer choice. Higher carbon taxes are not an incentive to transition to EV’s therefore, rather an unnecessary burden on ordinary citizens. If the government is serious about tackling carbon emissions on the road, taxes should be replaced by subsidies for EV producers until an adequate supply of EVs encourages more demand. Currently, there is low supply and low demand for EVs which speaks for itself.

Government funding for subsidies could come from the extra 2.5% corporation tax soon to be available from multinationals as part of recent OECD minimum tax agreements. This money could go towards providing abundantly available electric charging points across the country. When the global supply of EV's reaches adequate levels, Ireland will be ready. 

At such an early stage of the transition, however, increasing carbon taxes on the public makes very little sense. Taxes reduce purchasing power from the public at a time when inflation is already a concern. The irony is that Budget 2022 promises to support lower incomes in the face of rising energy costs. So on one hand carbon taxes are increasing and the other hand the government is offering badly needed hand outs. Clearly, carbon taxes are not effective policy tool. 

The suggestion that public transport offers alternatives to commuters is also disingenuous. Despite more people working from home, adequate bus and rail links are not available to the vast majority of workers in Ireland who still need to travel to work. Surely there is a need to prioritise basic infrastructure first before real gains from reducing carbon emissions are achieved. Projects such as our national broadband plan, for example, should be completed along with upgrades to transportation if work-from-home measures can reduce carbon emissions in the long term. 

The projected €125 billion investment in the climate action plan will need to be revised considerably, therefore, to rebalance the reality that the government faces. A proposal that asks for the lion’s share of investment to come from the private sector is naive to say the least and should be a major red flag. Realistically, for any meaningful transition towards a low carbon economy to occur, massive on-going government borrowing will be required.

While current conditions are favourable in financial markets and EU rules on spending are suspended, the government’s ability to borrow or spend the required investment in future could be a challenge. Inevitably fiscal and monetary conditions will tighten once again as interest rates rise. Small countries like Ireland who are tied to the Euro cannot expect the European Central Bank to monetise their debts indefinitely. The majority of Irish debt is owned by foreign investors. Continuously rolling over Irish debt into the future isn’t a long term option. 

There will be growing pressure on the government over the next number of years, therefore, to reduce deficit spending and increase taxes generally. If the government proceed with their climate plan, will trade-offs in other key public services be acceptable to the electorate? 

The climate plan is estimated to cost €14 billion per year until 2030, over three times the size of the annual budget for housing (€4bn). Given the need for immediate action in other key areas, how serious can Ireland be about its climate commitments if and when faced with these trade-offs?

The approach to climate action for a country Ireland's size should be measured, and one where the economic and social costs are proportionate to its priorities and the reality it faces. Ireland can't save the planet but with a bit of luck it might save its healthcare system or build affordable houses. €14 billion will be a considerable burden on households and the state alike when a more manageable figure of say €3 billion to match transport spending would be more sustainable.

​Climate change is undoubtedly an issue we need to address. Cop26, however, is a giant PR spoof and an exercise in spin to gain public support. It’s clear from the government’s climate plan that they aren’t being honest or realistic about climate action. Perhaps the public aren’t either. 

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