"If the Federal Council is now considering abolishing the program — or at least withdrawing the federal contribution — it is mainly because of the windfall effects it generates," explains Philippe Thalmann, professor of environmental economics at EPFL.
"Today, 70% of our results come from abroad, while 70% of our investments are made in our historic service territory in Switzerland," says Cédric Christmann, Chief Executive Officer of Primeo Energie.
"In an ideal world, high-income individuals, aware of their responsibility, would voluntarily give up highly greenhouse-gas-emitting activities," explains Philippe Thalmann, professor of environmental economics at EPFL.
According to the data from the World Inequality Database dating from 2019, the top 10% of the Swiss population by income are responsible for 29% of our country's carbon footprint. These people often fly, live in large housing, travel a lot in high-powered cars, etc. It is therefore important that they also reduce their emissions. How to get them to do so?
Basic economic theory recommends making them pay for their emissions through orientation taxes. However, for these people to respond, these taxes would have to be very high. The problem is that it is difficult to target them so as to affect only this part of the population. If we do not, they will strongly increase the cost of living for many far less wealthy people. In certain areas, such as travel by private jet, in first and business class, cars above a certain engine size or some very exclusive sports, targeting is possible. It is, however, not possible to do so for many other areas, such as the use of fossil energy or food.
Proportionally to their income, lower-income households pay more for the existing CO₂ tax than wealthier households. If one nevertheless relies on non-discriminatory orientation taxes, it will be mainly lower-income households that will have to reduce their emissions. This would reinforce a trend observed in the data: in the 1990s, the top 10% of the Swiss population by income were responsible for some 22% of our country's carbon footprint (compared with 29% today).
The impotence of current solutions
Our climate policy relies less and less on orientation taxes and more and more on subsidies. Now, while it is generally delicate to subsidize the "polluter" to encourage them to pollute less, it is even more so when the polluter is wealthy. I can hardly imagine taxpayers accepting subsidizing electric private jets.
While it is generally delicate to subsidize the "polluter" to encourage them to pollute less, it is even more so when the polluter is wealthy.
The third family of climate policy instruments is that of prescriptions: obligation to do this, prohibition of that, minimum or maximum values, etc. The targeting issues are the same as for orientation taxes. One could ban or limit private jet flights (for example, by limiting the number of time slots at airports for this kind of flight) or cars emitting more than x grams of CO₂ per kilometer. For emitting activities also practiced by lower-income people, the principle of equal treatment and practical considerations oppose targeting high earners.
In short, traditional instruments can be used to encourage high-income people to reduce their environmental footprint only for greenhouse gas–emitting activities that are almost exclusively practiced by these people. For their other polluting activities, it is practically impossible to target them.
How to define sobriety
What remains then is sobriety. In an ideal world, high-income people, aware of their responsibility toward those who are less able to protect themselves from the effects of climate change and toward future generations, give up highly greenhouse gas–emitting activities of their own accord.
This gives a precise definition of sobriety in the environmental context: giving up a consumption in order to reduce one's environmental footprint. A person who gives up eating meat because they do not like it, because they are allergic, because they cannot afford it, because their religion forbids it or because they think it is bad for their health, does not do it out of sobriety. On the other hand, someone who does not have any of these reasons to give up meat, but does so because they know the heavy environmental footprint of meat production or because they care about animal welfare, is sober. There is necessarily altruism in sobriety.
Charging an urban toll or removing parking spaces falls under a sobriety policy. For me, these are coercive measures, whereas sobriety is based on volunteerism.
Other definitions of environmental sobriety are found in the literature. Often, they emphasize the result rather than the motivations. Thus, it is considered sober to travel by bike rather than by car, without distinguishing whether one does so because one does not have a driver's license, cannot afford a car, has no place to park it or out of concern to pollute less. From then on, charging an urban toll or removing parking spaces falls under a sobriety policy. For me, these are coercive measures, whereas sobriety is based on volunteerism.
Another classic example of sobriety is a relatively small number of square meters per person for housing. A family of four occupying a 60 m² dwelling is sober according to this definition. In my view, they are only sober if they are content with such a small home for altruistic reasons, while they would prefer and could occupy a larger dwelling.
Thus sobriety is a lever distinct from the other levers of environmental policy – taxes, subsidies, prescriptions – which can all also lead consumers to occupy fewer square meters or to travel by bike. These other levers should be used to get the highest-income people to reduce their consumption that is particularly damaging to the environment and that is practically reserved for them (luxury goods and services). For their other consumptions, there are not many other means than encouraging them to sobriety.
"If the Federal Council is now considering abolishing the program — or at least withdrawing the federal contribution — it is mainly because of the windfall effects it generates," explains Philippe Thalmann, professor of environmental economics at EPFL.
"Today, 70% of our results come from abroad, while 70% of our investments are made in our historic service territory in Switzerland," says Cédric Christmann, Chief Executive Officer of Primeo Energie.