Concerns about a possible 50c per liter will increase diesel prices by 2030
The price of a liter of diesel could rise by as much as 50 cents by 2030 if the EU plans to use international carbon markets to continue pricing.
This is the conclusion of the Cambridge New Thinking in Business Trust. The Trust, which was originally founded by economist and environmental activist Terry Barker, has warned that “the potential exists to leave low-income households” stranded “due to the high up-front costs of heavily taxed fossil fuel technologies as well as low-carbon alternatives or energy renovations other barriers to use such as B. the lack of incentives for landlords to invest in these technologies. “
According to the study, diesel price increases of 50 cc per liter and a doubling of household heating costs could be seen in 2030 if the EU relies only on carbon markets to achieve emissions reductions in road transport and in private households. Under such a plan, the EU carbon price would reach an estimated EUR 180 per tonne by 2030.
Low carbon economy
While higher fossil fuel prices are likely to be inevitable in the coming years, both as a result of the transition to a low-carbon economy and as some sort of means to further encourage that move, such a sharp rise in prices could devastate Irish families.
“The AA has seen steady increases in gasoline and diesel prices since the pandemic began, due to a combination of the end of the temporary VAT cut earlier this year and the steady rise in crude oil prices,” said Paddy Comyn, Ireland’s chief communications officer.
“The global average price for diesel is 85 cents per liter, and in Ireland it’s 136 cents per liter, which is 60 percent more, which is almost all due to taxes. Any further increase, especially to the level we are talking about here, would be devastating for the typical Irish motorist.
“We have to remember that in 2008 Irish motorists were effectively taxed by the then government for choosing diesel cars. The latest data we had on the Irish national fleet showed that there were almost 2.2 million cars on Irish roads and 54 percent of them have diesel engines.
“Taxed by the Street”
“Ten years ago, 71 percent of new car sales in Ireland were diesel. At a major Irish used car location today, 56 percent of the 36,000 used cars for sale are powered by diesel engines. There are many motorists out there who are already paying some of the most criminal taxes to operate a car and now face the prospect of being taxed off the road as a result. This would only help to increase the cost of living for people across Ireland who depend on their ordinary, humble cars. For example, the cost of refueling a standard Volkswagen Golf diesel with a 50 liter fuel tank would increase from 68 euros to 93 euros. ”
The consequences would not only be that refueling a family car would be far more expensive, according to the Trust – there would also be problems at home as it negatively affects the cost of heating the house. “Such costs have a significant impact on poorer households. both because they spend more of their income on heating and because the reduction in demand for these households is more likely to lead to underheating and the resulting adverse social and health consequences. “
The Trust says that such impacts could potentially be avoided by combining CO2 limits with a “recycling” of tax revenues from more expensive fossil fuel products, such as car parks. B. Greater incentives and support for the switch to electric vehicles or renewable heating products for domestic use. “When the revenues from the Emission Trading System (ETS) are recycled, the direction of the impact changes. because the higher cost of carbon emissions is offset by revenue used for tax cuts and other supportive measures, meaning that revenue ultimately ends up back with consumers, who can spend it on goods and services across the economy.
“The ‘rebound’ effect in consumer spending and ultimately GDP also puts upward pressure on the ETS price as higher economic activity is forced to use a fixed emission cap in both existing ETS sectors and current non-ETS sectors. Sectors are struggling, “he told the Cambridge report.
Sofie Defour, climate manager at environmental think tank Transport & Environment (T&E), said: “This study shows how stupid it would be to rely solely on carbon markets to clean up traffic. Carbon pricing does play a role, but this mainly supports more effective measures like auto emissions standards, and certainly not at these price levels. The EU Green Deal can set an example to the world of how a quick and equitable transition can be achieved, but only if the right tools are used. “
Raising national climate targets, which would force governments to phase out fossil fuel company cars, invest in clean modes of transport like rail, and take other measures, is a much more effective and fairer way to meet the 2030 climate targets according to the study. The EU could increase the disposable income in society and the economy by 2% (GDP) if it relied more on national climate targets to meet its 2030 targets.
T&E said a capped carbon price – at EU or national level – could help reduce emissions from road transport, but only in conjunction with legally binding and ambitious national targets under the effort-sharing law. Revenue generated by a capped carbon price would have to be invested in low-carbon technologies – such as building retrofits – but should also be “returned” to citizens through discounts on electricity bills or climate dividend payments.
Ms. Defour said, “The heavy lifting has to come from things like zero-emission cars, fast electrification, and building a world-class charging system. This can be achieved through increased national climate targets, tough pollution limits for cars and buildings, and a carbon price that gets people on board by starting slowly and giving the money back. “