The new politics of targets... ...instead of policies

The doomsday issues we face need practical solutions — not just good intentions, writes Colm McCarthy

THE threat to jobs and pay cheques from Covid-19 dominates the shortterm agenda but the programme for the new government must tackle the other doomsday issue — the inevitable costs of climate action. Last autumn during the Extinction Rebellion protests people obsessed about the end of the world, but now worry more about the end of the month.

The response of the Green Party to the framework document presented by Fianna Fail and Fine Gael is focused on climate action, which is no bad thing. Little can be asserted with any certainty about the eventual ending of the Covid-19 crisis, but unless the pharma companies are grievously mistaken, there should be a vaccine, or at least a therapy, within a year or two. Whenever it passes, Covid will bequeath longterm economic damage and expectations of a sharp and V-shaped recovery have proven misguided. The post-Covid agenda will include the repair of the public finances and the reduction of unemployment, but the climate emergency has more staying power than the pandemic and will impose substantial adjustment costs for longer.

Coverage of the Green Party response has focused on the figure for annual reductions in greenhouse gas emissions. They want a 7pc cut each year and party leader Eamon Ryan has described the figure as his key red line. But the 7pc figure is not a policy, it is a target. It is higher than the 3pc FF/ FG figure but is no closer to a policy than the vapid debate about housing during the unlamented general election three months ago.

The parties competed on targets for public housing, claiming essentially ‘‘my target is bigger than your target’’. A policy on combating climate change needs a specified set of measures involving instruments such as taxes, subsidies or regulatory changes, designed to reduce emissions at lowest economic cost. The substitution of targets for policy is popular with politicians the world over and facilitates the evasion of decisions and the concealment of trade-offs.

The acceptance by the media and the voting public of targets in lieu of policies is not countenanced in everyday decision-making. Imagine you were being interviewed, along with five or six others, for the job of managing an inter-county football or hurling team. You are asked to outline your policy, and you declare ‘‘to win the All-Ireland’’. Would you expect to get the job? How about ‘‘drop the goalkeeper, fire the physio, get a few quicker players up front’’, the ingredients of a policy?

Both Fianna Fail and Fine Gael have accepted a 3pc annual reduction target, taken from the Climate Action Plan released last July. But that plan was itself long on targets and short on costed policies. Last week researchers at UCC argued that the 7pc target favoured by the Greens is at the limit of what is technically feasible — even if it contained only cost-effective components, and that has not been demonstrated either.

In last October’s budget the minister increased the carbon tax by less than the Green Party would have wished. Increasing the charges to consumers over time for carbon-intensive purchases, even from a low base, was identified more than 30 years ago by Yale University’s Bill Nordhaus, who won the 2018 Nobel prize for economics, as the key to an effective worldwide climate policy. Had his advice been followed, the world would already have slowed the accumulation of greenhouse gases in the atmosphere and the consequent climate deterioration. Instead the world’s governments, where they have acted at all, focused on inefficient national-level emission targets. The result has been an accumulation of stranded assets (the wrong cars, too many coal-fired power stations) and an adjustment bill which rises the longer settlement is deferred.

Eamon Ryan, as a minister in the government appointed in 2007, pushed for carbon taxation in Ireland — and it is a pity that the carbon tax, a policy rather than a target, has not featured more prominently in the Green Party’s demands. The carbon tax adds to the price of diesel, petrol and home-heating fuels — and both FF and FG accept that it will have to add considerably more in time. The sharp reduction in retail prices for diesel, petrol, gas and home-heating oil in recent months provides the perfect platform for faster progress.

There is an excise duty differential in favour of auto-diesel in Ireland, as in many other European countries. This is harder to justify when diesel in cities is acknowledged to cause low-level emissions, additional to carbon, which are injurious to human health, leading many European cities to implement or threaten restrictions. If the excise gap is to be closed, next October’s budget would be an inviting time to start. Once the Covid emergency ends, there will have to be a return to budget balance in due course. If carbon taxes do not contribute, that means higher income tax, higher USC, higher Vat, or magic, take your pick.

The Greens have sought a ban on new exploration licences for offshore gas — new licences for oil have already been ended. Since oil and gas are often encountered together, this was never very coherent, and it was unlikely that new licences would be much sought after.

With the recent collapse in oil and gas prices, exploration in waters with high costs and poor prospects may well be over, and there may be little downside in extending the exploration ban to gas.

The Greens also want to scrap plans for an importation terminal for liquefied natural gas (LNG). Since power generation and home-heating demand for gas will be with us for some considerable time, this may not be conceded so readily. Fracked gas from the USA has raised concerns about emissions through the production cycle, but much LNG comes from conventional fields in the Middle East where these concerns are moot. Irish production from the Corrib field is in decline and sole reliance on interconnector imports is risky. Would it be possible to let the private sector build LNG import capacity (with their own money) and ban imports of fracked gas?

Ireland has become the location of choice for energy-gobbling data centres, discussed at length by Marie Boran in an Irish Times piece last Thursday. There is no clarity as to why so many are keen to locate here, well beyond any natural demand arising in Ireland. They are placing pressure on the electricity generation and transmission system. The Greens should be asking if these companies are paying the full system costs and should be sceptical about press releases that promise exclusive reliance on renewable power.

There are some other omissions. The aviation industry has led a charmed life as regards indirect taxation. There is no excise tax on jet kerosene and airline tickets are exempt from Vat. The European Commission has proposals to introduce a tax on jet fuel over the next decade, to which the Taoiseach has lent support in the past.

And there will be no widespread adoption of electric cars, which cannot enjoy Exchequer subsidy indefinitely, until manufacturers scale up, prices fall, and the State delivers a nationwide network of fast-charging points, initially uneconomic for private sector providers.

‘Last year at the Extinction Rebellion protests, people obsessed about the end of the world. Now they worry more about the end of the month’