Carbon account and public services financing

abril 2023

Association Escape Jobs pour l’Emploi sans Carbone (EJ)

Carbon account: your system causes a decrease in GDP, so how can we continue to finance public services under these conditions?

The carbon account does not lead to a decrease in the economy, nor therefore in GDP. It is an optical error to think so.

The reduction of greenhouse gas emissions is an imperative that does not depend on the system adopted to ensure it. The idea that this reduction necessarily leads to a decline in the economy as a whole is the result of two errors of reasoning stemming from the past : we deduce from the close link between the evolution of the economy and the consumption of fossil fuels during specific shocks that this link will remain for ever ; and we remain trapped in the current conception of money. With the predictability of emissions reductions for thirty years, we give the economy and society time to restructure, and by making fossil energy a currency in its own right, we create the disconnection between economic prosperity and GHG emissions. So there is no reason why we can’t take on the financing of public services, but they, like the rest of the economy, must reinvent themselves because it is their carbon footprint that is unsustainable.

The carbon account does not lead to economic decline

It is a misperception to think so.

It results from an indisputable fact: for more than a century, the development of the economy and the growth of fossil fuel consumption have gone hand in hand and, in the short term, the scarcity of fossil fuel or the increase in its price cause a contraction of the economy because the economic system does not have time to adapt to this shock and to rebuild itself on other bases.

But this intimate link between economic development and fossil energy consumption is not « a law of nature » that would be inevitable. It is the consequence of two particular historical circumstances. The first was the abundance of fossil energy resources which made the search for renewable energy sources useless or uneconomic. The second was the use of the same currency to pay for human labor and to pay for fossil energy, which means that fossil energy has very normally replaced human and animal labor, just as the labor of Chinese workers has replaced the labor of French workers.

Now, in the context where the massive use of fossil energy threatens our future and that of future generations, we must redevelop the use of human labor and human creativity and at the same time reduce the consumption of fossil energy. Under these conditions, using the same money to pay for what needs to be stimulated and to pay for what needs to be reduced is like using a vehicle that has only one pedal for the gas pedal and for the brake.

Taken as a whole, the term « degrowth » is meaningless because it does not specify what should be reduced. But decreasing the use of fossil fuels is not even a political option, it is an absolute necessity. On the other hand, we must finally disconnect the consumption of fossil fuels from the development of everything that contributes to the well-being of people and society, and the decrease in this well-being is neither a necessity nor, of course, an objective.

Let’s forget the term of degrowth which implicitly refers to this absolute correlation between economy and fossil energy consumption and let’s attach ourselves on the contrary to disconnect them by using two different currencies for what must be developed and what must be reduced.

This is why it is essential, as the individual carbon budget allows, to recognize that fossil energy is actually a currency in its own right. This will not be the first time that we have had to discard beliefs in order to resolve a seemingly insoluble contradiction : in the past, when money was equated with gold, the quantity of metal determined the possible extent of exchanges, and money had to be conceived differently in order to overcome the economic crises linked to the scarcity of precious metal. The same thing will happen with the introduction of the « carbon currency »: it will remove the inevitability of a decrease linked to the decrease of fossil energy consumption.

The fact remains that with the economy as we know it, the consumption of fossil energy amounts, if we compare it to human or animal energy, to several hundred slaves or horses at our service day and night. The coming oeconomy, i.e. the art of ensuring the well-being of all while respecting the limits of renewable resources and the integrity of the biosphere will reorient both the modes of production of non-human energy and the modes of consumption.

The other misperception comes from the fact that we deduce from conjunctural events a structural truth : the correlation between economic development and fossil energy consumption is obvious during short-term political shocks, such as the two oil shocks at the end of the twentieth century, the financial crisis of 2008, the war in Ukraine, because this occurs with an unchanged production and consumption structure.

But when we manage the long term, as the carbon account allows us to do, with the predictability over thirty years of the annual reduction of the global ecological footprint, a structural transformation of the production system, of international exchanges, of consumption models, of alternative modes of energy production, takes place. The case of Russian gas is a good illustration of society’s capacity to adapt when the new political context created by Russia’s aggression against Ukraine is perceived as sustainable.

The movement will be much broader with the prospect of reducing emissions over thirty years, with land use planning being the most important factor of inertia. But even here, the containment linked to Covid has revealed an unsuspected plasticity of our societies: who would have predicted that containment would not result in an economic collapse but in the materialization of possibilities that were only in germ before Covid, such as the generalization of remote work, at least partially? The predictability of the annual reduction of the ecological footprint is precisely the condition for the emergence of new disruptive technologies and a vast movement of investment to restructure the production apparatus. From this point of view, the carbon account will only help to achieve the relocation of the economy and social relations that everyone is calling for.

Public services will not escape this restructuring effort and a vast movement of reinvention. There is no reason why the monetary resources of households should be reduced, and therefore new difficulties in financing public services should arise.

The problem lies elsewhere: current public services represent a per capita ecological footprint of 1.6 tons, or 80 % of what we should emit in total in 2050, all consumption combined. Our public services as currently conceived are even less sustainable than our way of life or production! And when we will have to pay taxes in two currencies, euros and carbon units, or even in three, if we add complementary territorial currencies, taxpayers will discover the enormous drain that taxes represent on their carbon budget, and this will obligate public services, as well as companies, to reinvent themselves in order to drastically reduce their ecological footprint : education, health, local public services, defense, security, all the big items of the ecological footprint will then be subject to a radical revision, not in a context of immediate crisis of their financing but in a context of radical transformation over thirty years, leading there too almost certainly to an effort of relocalization, for example in health and education, of substitution of remote services for physical services, etc.