The carbon account seems to put the effort solely on the citizens. What about companies?

April 2023

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

Put in a global way, this question is similar to the chicken and egg question : there is a demand because there is a supply and a supply is only maintained and developed because it meets a demand and a solvent demand. The purchasing behaviour of citizens and the supply of companies are intrinsically linked.

Can we put the burden on companies, how? the answer is yes, through laws, bans and standards.

Is this effective and, above all, is it sufficient to respond to the emergency in a timely manner? The answer is no. See dieselgate, the cafe owners who easily turned down the ban on heated terraces, the companies that do not all publish their carbon footprints (only 37%) even though they are obligatory, the 63% of offenders who prefer to pay the fine, etc.

However, this does not exempt public authorities from continuing to implement investment or regulatory policies.

The best way to make the economy evolve very quickly is to create carbon competition, just as there is price competition.

Consumers, constrained in their spending by carbon points, will naturally favour less carbon-intensive offers.

The obligation will therefore come from the consumer, which is a more powerful lever than normative constraints.

Companies that do not make the effort to decarbonise will be swept away by competition. For example, products from the other side of the world will be disqualified by their transport.

Of course, citizens will monitor their purchases, but the annual drop in quotas will push public services and companies to make massive efforts to achieve more sober channels, the challenge for the company being to keep its customers, for the community to get re-elected, for the citizen consumer to generate universal sobriety income : indeed, for the majority of French people who will be in surplus, it will be possible to sell them for a few hundred euros per month to the body in charge of regulating the carbon account.

But, like money, won’t this competition affect the behaviour of the most well-off, who will be able to continue to consume without worrying about the price of carbon?

No, even if the carbon account works like money, it is different in the sense that, thanks to individual quotas (reduced each year by 6%), the tons of carbon available for purchase will be limited (the total cannot exceed, for example in 2023, 610 M tons of CO2e). The wealthy will be able to buy carbon points if they wish to purchase more, but they will only be able to do so within the limit of the kg of CO2 available. Moreover, unlike money, carbon points cannot be accumulated, as the counters are reset to the new quota each year.

The carbon account system creates a virtuous loop between citizens and companies, guaranteeing a steady decline in GHG emissions.

Detailed answer by Pierre Calame :

Asked in a global way, this question is similar to the chicken and egg question : there is a demand because there is a supply and a supply only maintains and develops because it meets a demand and a solvent demand. Let us remember that with quotas, energy (and more broadly greenhouse gases) becomes a currency in its own right. When it comes to our consumption in general, paid for in euros, do we ask ourselves whether it is up to consumers to influence prices or to companies to make productivity efforts? No ; those who make the effort to reduce costs or who know how to differentiate themselves from their competitors manage to win over new customers.

As soon as there is an emissions ceiling, and even more so with a ceiling that is lowered each year, there is rationing. And the socially just management of rationing is to distribute the quotas fairly. So it is not the allocation of allowances that puts the burden on the backs of citizens. It was never said that this would dispense with public investment or regulatory policies, but on the contrary that this annual reduction in quotas would push public services and companies to make massive efforts to achieve more sober sectors.

Let us now go into more detail. If we accept that the figures published by the High Climate Council are the most reliable, the ecological footprint is divided into 50 % of emissions on national soil and 50 % abroad1. 16 % of the footprint corresponds to direct energy expenditure by households, mainly transport and heating, about 16 % to public services and the remaining 68 % corresponds to goods and services provided by companies for consumer and capital goods.

Let’s look at the dynamics that will take place for each of these consumption classes

For companies, the predictability of developments is the key factor for strategy and creativity. At present, as the discussions within the global PRI (Principles for Responsible Investment) network show, large companies do not take the discourse and commitments of governments seriously. With a global cap on emissions falling by 6 % per year, predictability is created. A new competition will immediately be created between companies and sectors, which will give rise to a new wave of disruptive technologies.

The entire mass retail sector, already faced with the decline of hypermarkets and fierce competition for good city-centre locations, will almost instantly reinvent grouped distribution, with orders placed via the Internet and distribution close to home, or even reinvent itinerant commerce; showrooms with 3D imaging will replace the need to go to a hypermarket, with all that this represents in terms of the « cost of the last kilometre », etc.

Car manufacturers, who today ensure their margins with heavy and expensive vehicles, will reorient themselves towards light vehicles.

Delivery by vans of parcels ordered via the Internet will be abandoned in favour of the post office, which makes rounds anyway and which, like the Swiss post buses, will be led to combine school pick-ups, general public pick-ups and parcel delivery.

The construction industry will be transformed to the benefit of new materials that only need the development of a market to impose themselves, to the detriment of companies that have not made the same effort to innovate and train.

The second-hand market, already active under the influence of new consumption models, will explode.

The circular economy will take hold, and industrial and territorial ecology will become widespread, because waste, especially heat waste or waste that provides raw materials for less energy-intensive production cycles, as we are already seeing with metal products, will suddenly have a high market value.

Non-repairable capital goods will no longer be able to be sold. The functionality economy will become the reference, etc.

Of course, there is nothing to prevent governments from accompanying the movement with standards, but the real incentive will come from competition between companies, where those who fall behind in their transformation risk losing their skin.

Those who imagine that the effort will be made by households are those who do not understand the permanent dynamic of transformation of the economy : one only has to observe how quickly the once dominant companies fade away and disappear in favour of newcomers, more adaptable or betting on new technologies.

The simple fact of displaying carbon content, not to mention payment in carbon money, will give rise to new companies and those that do not adapt will be swept away, even if they seem unassailable today.

New forms of standardisation will quickly appear, at the initiative of the public authorities (such as the recent European standardisation of mobile phone chargers) or at the initiative of dominant companies so that the spare parts needed for repair are adapted to all types of equipment.

This is all the easier since, as we can see in the automotive or digital sectors, these parts are often produced by companies that supply all manufacturers. This transfer of equipment renewal to their repair on multi-company sites will be extremely favourable to the relocation of economic activity in the territories.

In the field of leisure, intercontinental trips for eight-day stays will disappear and have already begun to do so with the covid, streaming videos will be replaced by other formulas that are much less costly in energy.

Companies will be faced, as they already are more and more, with the recruitment of labour. Who will pay for the carbon cost of commuting? This will be the subject of new negotiations, including the organisation of car-sharing, timetabling and teleworking. Who would have imagined before the covid epidemic that telework, which had been talked about for decades and was developing much more slowly than predicted, would suddenly explode and, it seems, quite irreversibly. This is an illustration of the malleability of the organisation of the economy, which makes it possible to anticipate the effects of the planned reduction of the ecological footprint.

Public services are the blind spot of the energy footprint. Who is aware that they represent as much as the direct consumption of households ? The fact that local and state taxes are paid in two currencies, euros and carbon currency, will suddenly make people aware of their ecological footprint. Let us remember that the consent to taxation is at the origin of modern democracies. We can expect a new kind of negotiation, notably for income tax: will the carbon currency tax be equal for all or indexed to the euro tax, in which case the wealthiest would exceed their quota just to pay their taxes? We can expect new thinking on reducing the ecological footprint of public services, defence, health, security, education. It will be difficult for administrations to explain to citizens that it is they who must make the effort. Even if the transformations are less rapid than in companies, the pressure will be very strong.

At the territorial level, especially if the first level of carbon currency trading is at the territorial or regional level, we will very quickly see a shake-up. A new and decisive stage of decentralisation is inevitable, allowing local authorities to organise their own energy system both to reduce the amount of local taxes to be paid in carbon money and to offer the maximum amount of renewable energy to all.

International experience already shows that where citizens are involved in the production of renewable energy, resistance to the establishment of new production sites disappears. The territories will have to prepare themselves to welcome new economic activities linked to the relocation of the sectors, which will go hand in hand with a major training and retraining effort.

Some regions will be more directly affected by the transformation of the economy, for example the Toulouse region, which is very dependent on aircraft construction. But some regions have been confronted in the more or less recent past with much more dramatic changes. Think of the mines and steel industry, which closed down tragically quickly, or agriculture, where the workforce represented 40% of the total before the Second World War and fell to 4% eighty years later.

In the past, our companies were able to accompany these reconversions and the new economy which will emerge as a result of the quotas will create a considerable call for air. And, above all, the situation of the Toulouse employment area is infinitely more favourable than that of the steel or mining areas: aviation is a combination of generic technologies, fine metallurgy, computer science, fluid dynamics, regulation systems, etc., corresponding to the needs of the new economy.

The case of schools is very emblematic of the transformations to come. With the generalisation of the car, a real vicious circle has been set up : parents take their children by car to the school gate, creating a danger which pushes other parents not to let their children go to school alone ; to the point where this loss of autonomy for children is becoming a real social problem. In reaction, we have seen in recent years certain municipalities transform the access to the school into a pedestrian area or create «  bicycle-bus ", accompanied by adults with a small caravan of children on bicycles, which they pick up as they pass.

The 3 points of conclusion

1. Whatever measures are taken by the public authorities, they must result in the capping of emissions, and therefore in quotas ; to say that quotas will make the effort fall on the citizens is therefore an optical error.

2. The introduction of quotas will bring about a tremendous transformation of the economy and businesses, and to believe that the sectors are fixed is a second optical error.

3. Thinking that standards will be able to influence the sectors and their ecological footprint directly, when the State can only legislate on its own territory, is a third optical error, given that most of the emissions linked to goods and services are produced outside the national territory.

1 voir les Assises du climat