When it comes to taking environmental action, it is imperative to look at a broader picture. For the past decade or so politicians have been under pressure to deal with all kinds of environmental issues because, as they say, “something needs to be done”. Politician often act under this pressure and make decisions that have dramatic effects on the environment, and not necessarily those intended. The following cases offer the lesson of what a politician’s rule on environmental issues should be – don’t “just do something”.
Along with housing, the car is one of the biggest investments of the modern-day family. Cars offer freedom, and hugely improve the quality of life. They are relatively expensive, but almost everyone wants one at some point. Still, many politicians go out of their way to hinder car ownership by heavy taxes in the name of the environment.
True, cars do have an impact on the environment. There is the carbon dioxide (CO2) emission, soot and noise. The CO2 debate that started two decades ago has led to extremely high taxes on petrol in Europe. But trying to tax away the negative side of the private car is not likely to reduce cars on the street (because people think of them as necessities, not luxuries), it has led to different kinds of environmental problems, some more threatening to human health.
If only the regulator had just let consumers be in the first place. Who knows what kind of development the petrol car would have undergone by now, given the fact that, in spite of a hostile regulatory environment, the average petrol car is improving dramatically and becoming less and less polluting each year? The reason for that is not taxation but general consumer demand for more efficiency.
Taxing CO2 emission favours diesel fuel over petrol. In Iceland excise duties on vehicles are also linked to CO2 emission, making diesel cars more economical than petrol cars. The downside to that is that diesel car emissions, relatively low as they are in CO2, are high in NOX, which is said to be the cause of premature deaths in densely populated areas. Now politicians are reflecting on the option to take another “something must be done” approach and start taxing diesel fuel and cars heavily.
After having diverted consumers to diesel cars and lured manufacturers into investing more in the development of the diesel engine, the regulator now threatens to punish all association with diesel. If only the regulator had just let consumers be in the first place. Who knows what kind of development the petrol car would have undergone by now, given the fact that, in spite of a hostile regulatory environment, the average petrol car is improving dramatically and becoming less and less polluting each year? The reason for that is not taxation but general consumer demand for more efficiency.
Everyone is eager to support the Paris Climate Change commitment by reducing CO2 emissions. But how? Each country is now in the progress of putting together its agenda and there will surely be different approaches in different countries. But it is fair to state that the general political debate in Europe has had transport heavily under fire.
That is a bit odd considering that transport from passenger cars contributes only 12 per cent of all EU greenhouse gas emissions. Some politicians are even eager to make a rapid shift to electric transportation, in spite of electricity production being one of the chief contributors to the remaining 78 per cent of greenhouse gas emissions (though not in Iceland or Norway). Here, a politician needs to look at the bigger picture. In Iceland, the broad picture might be different from that in other countries. Still, it serves as an example.
Iceland’s wetlands are the biggest store of carbon on land. As a result of government subsidies in the last century a vast amount of the wetlands was drained in order to make cropland. Only 15 per cent of the drained wetlands, however, have been turned into useful cropland.
By draining wet soil containing high organic carbon content, access is given to atmospheric oxygen. The carbons accumulated in the soil for centuries are therefore oxidized. This oxidation leads to formation of vast amounts of CO2 and other greenhouse gases. Draining and degradation of wetlands turns them into a net source of greenhouse gas emissions. And this goes on for decades and centuries.
In the case of Iceland, annual emissions from wetlands alone are 72 per cent of annual anthropogenic greenhouse gas emissions, compared with the country’s automobiles (less than 4 per cent) and the big fishing fleet with only 3 per cent. At the same time politicians in Iceland are fixated on reducing CO2 emissions from cars. In addition to the heavy taxation mentioned earlier, the EU now mandates a minimum level of renewable energy at every sales point of fuel.
When deciding on a policy, especially when it entails relocation of resources by taxation, it is imperative to take into account all the relevant facts and not let the end justify the means.
In Iceland, this has led to a subsidized imports and blending of ethanol and other biofuels to gasoline and diesel fuel, with dubious environmental results. Even if we believed that 5 per cent blending of expensive biofuels reduced CO2 emissions by 5 per cent, overall reductions for Iceland would be only 0.2 per cent. Meanwhile, 85 per cent of the drained wetlands are just waiting to be restored, which, it is estimated, would cut the total annual CO2 emissions by more than half.
The Kyoto protocol has, up until 2013, been somewhat indifferent on the emission figures for drained wetlands. According to the protocol, emissions from wetlands drained before 1990 are not included in national emission figures. This flaw became apparent after the Intergovernmental Panel on Climate Change agreed in 2013, upon Iceland’s initiative, to take into account restoration of wetlands when estimating reduction in submission of greenhouse gases. Restoring wetlands can now rightly be counted as an offset to meet national targets even if emissions from drained wetlands are still not included in emission numbers.
The lesson to learn from this is that when deciding on a policy, especially when it entails relocation of resources by taxation, it is imperative to take into account all the relevant facts and not let the end justify the means. Those who are really serious about reducing greenhouse gas emission should be looking into the predominant causes of emissions and tackling the problem at its roots. War on car owners and the free market in general has highly distorted the task at hand.