Sunday, 28 September 2008

September 2008 - Planes, (no) trains and automobiles

The European parliament surprised eager environmental pressure groups and bullish BMW lobbyists this week by voting in favour of a legal framework that will ensure the greenhouse gas emissions of new cars across Europe will be reduced. Any vehicles made after 2012 will have to be (on average) 17% more efficient, with deeper reductions in emissions required by 2020. Fines will be levied against manufacturers that flout the legislation - the higher the emissions, the harsher the fine. Environmentalists could hardly contain their excitement, with Greenpeace claiming that "climate change campaigning works" and Lib Dem environment spokesman Chris Davies declaring "this is a good day for democracy".

And, after years of vacuous greenwash from the motor industry, concrete emissions reduction targets, a firm but fair time frame within which to enact them, and punitive measures for those who choose to keep on truckin', are small reasons to be cheerful. Despite the economic muscle of the automobile industry, environmental values seem to have taken precedence on this occasion.

What the EU giveth, however, the UK does its best to taketh away. Leaked documents from the European council ( suggest that Britain is determined to push for aviation to be excluded from European targets on renewable energy use. This mirrors the current domestic agenda of the British Government, who are simultaneously expanding the capacity of the world's busiest airport by a third AND leaving aviation out of the doesn't-do-quite-what-it-says-on-the-tin Climate Change Bill.

This deference to the increasingly profitable airline industry is not entirely surprising. Despite the death of a few ropey budget operators (so long Zoom, you will not be sadly missed), civil aviation is a growing market. It is also sufficiently disassociated in the mind of the public from the suddenly villainous financial wheelers and dealers. Hence, aviation is likely to weather the threat of a recession for now, and cement its place as the fastest growing source of carbon dioxide emissions.

And the apparent ease with which restrictions were slapped on the automobile industry demonstrates that the problem is not primarily one of regulatory ability, but of political desire. Cars are profitable in Germany, and noticeably, it was Germany's Chancellor Merkel who lead the call to water down the EU legislation. It was in Germany's short-term economic interests to avoid regulating their powerful car industry too stiffly. So, despite the imminent threat of environmental tipping points being reached within the next 99 months, Chancellor Merkel chose to place economic prosperity before ecological welfare, as if the former were not contingent on the latter.

But it is not just the natural environment that contains tipping points - as the events of the past few weeks have shown, markets too respond abruptly to cumulative sequences of small changes, reacting in extreme and unpredictable ways. In the same way that positive feedback mechanisms will, unchecked, ensure that dangerous climatic change is locked into place without urgent ameliorative action, so too can changes in markets be difficult to reverse.

Unlike environmental changes, however, this is a feature of markets that cuts both ways. The EU legislation that will financially penalise car manufacturers that emit more than they should, will create a powerful driver for a market in genuine efficiency: there is now a definite cost associated with over-emitting, rather than vague consumer brownie points based on appearing as green as possible.

When manufacturers compete with each other on grounds of fuel efficiency, we are starting to harness the much-celebrated ability of markets to grope their way towards the 'best' solution. Only this time, they are not groping in the dark; the path is lit by legislation that ensures that profit is contingent on environmental efficiency. And that's a small step towards an economic model that values people and planet.


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