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Let’s Put a Carbon Tax on Just About Everything

By Aneta Popiel

The UN’s Climate Champions have dedicated the “built environment” as today’s theme during the COP26 climate conference, which rightly highlights the significance of the responsibility this sector plays in how we achieve Paris agreement’s goals. In the end, the built environment is contributing to almost 40% of GHG emissions.

Unsurprisingly, there is a great deal of paradox happening within this landscape: whilst the UK government is leading the word in terms of net zero carbon commitment (net zero by 2050), the policy and legislation supporting this is yet to materialise. On the other hand, over the last 12 months the majority of UK developers, contractors and consultants have made similar or even more aspirational commitments (net zero by 2030), some of the players are trying to create shortcuts and use creative accounting (including government redevelopment projects!) to appear on track with their pledges, but in reality this will only undermine the effort to achieve our target of staying within 1.5ºC of global warming.

So whilst these grand slogans and promises from both public and private sectors are a good marketing trick, very recently highlighted by Greta Thurnberg’s ‘Blah Blah Blah’ speech, there is still very little clarity, transparency, and governance on how these commitments will be achieved. Yes, there are some genuine efforts coming from industry organisations and we are making strides to reduce, reuse and recycle, what we really need is for every single world leader in attendance to urgently start legislating carbon reduction in the built environment, both embodied and in operation, making every single party of the process accountable and transparent!

There is a lot of information out there from real experts with more knowledge than me on what should be the target for embodied carbon per square meter of a building as well as caps on energy consumption for building in use, so I will not go there in detail, but I would like to bring the attention to another piece of the puzzle of getting to net zero.

The truth is that in reality being net zero carbon is virtually impossible. To be truly net zero would mean not building at all, not retrofitting at all, and not running any business at all. So how one might say they have or will have a zero-carbon footprint? The answer simple. The only way of cancelling out carbon emissions is by paying carbon tax on pretty much everything.

At present, the UK is a participant of the Emissions Trading System (ETS), which is a cap-and-trade system, putting a limit on total GHS emissions allowed by its participants. Power stations and industrial plans are required to participate in ETS, however there are no taxes for consumers explicitly levied on goods and services that we buy and consume on daily basis. Similarly, commercial real estate as a sector are not yet obliged to participate.

After the plastic bag tax, now is the time for the government to impose carbon tax on more industries, which according to the Zero Carbon Campaign could raise £27bn a year by 2030 and contribute to funding the green economy. The UK government is now considering how to place a price on carbon, which will affect the cost of goods and services, so we all must expect to pay the price for saving our planet.

Despite the lack of unilateral policy, the built environment as one of the biggest polluters has already started to pay voluntary carbon tax, but the current market landscape of internal carbon pricing is pretty polarised. It currently ranges from €25/ tCO2e (German government), through £70/tCO2e recommended by the UK Green Building Council to US$100/tCO2e required by the UN Global Company for all companies to align with the Paris agreement.

As with any forecasting there are no easy answers and many economist are now debating what the price of carbon should be globally, but so far any attempts to coordinate this pricing at an international level have failed to take off. Just like the UK, the EU is considering levying taxes on imports of high-carbon goods, called Carbon Boarder Adjustment, which is a cause of concern for countries such US, China and Australia.

So what we need is an institutional and statutory framework across industries and countries with consistent and transparent obligations to create the new green international economy.

This is a big job! But the stakes are too high, higher than the value of money!

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