Airport taxes are one way in which consumers have shouldered the burden of climate change
Airport taxes are one way in which consumers have shouldered the burden of climate change © GC Images
Stefan Wagstyl, Steven Bernard and Chelsea Bruce-Lockhart
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As political leaders argue in advance of this November’s COP26 UN climate change conference, the key divides over greenhouse gas policies run between states: rich versus poor, fossil fuel exporters versus importers, and green countries — the Scandinavians, for example — versus the less green, such as Australia.
But this may not last much longer. The fight to protect the planet is shifting in ways that could soon exacerbate conflicts within countries, particularly between social classes. Or, to put it bluntly, between the rich and the rest. The top 1 per cent by income of the world’s population account for about 15 per cent of emissions, according to UN data. That is more than double the share of the bottom 50 per cent.
CO2 emissions for the wealthiest 5% have surged. The poorest 50% are responsible for just 6% of total emissions growth The middle 40% are responsible for 49% of total emissions growth The richest 10% alone are responsible for 46% of total emissions growth
The UN’s 2020 Emissions Gap report says that limiting temperature rises to 1.5C, as envisaged by the 2015 Paris Agreement, would require the richest 1 per cent to cut their carbon footprint by 2030 “by at least a factor of 30”. Almost everything the wealthy do involves higher emissions, from living in bigger houses to running larger cars and flying more often, especially by private jet. Eating meat comes into it, as does owning a swimming pool. Not to mention a holiday home. Or homes.
Differences in emissions of rich and poor highlight inequalities, Chart showing Household lifestyle consumption emissions (tonnes of CO2 per capita)**
Green activists have long railed against environmental inequality, pointing the finger at what they call “the polluter elite”. But, so far, governments have largely steered clear of socially divisive policies. Instead, they have focused on changing the energy mix for all by reducing fossil fuel use and boosting renewables. And, selectively, they have increased the regulatory burdens on industry.
The carbon footprint of US households is larger away from city centres, according to a 2013 University of California Berkeley study which examined which locations contributed most to household CO2 emissions. The results show that the suburbs of the largest cities help to increase emissions compared to smaller cities.
Consumers have shouldered some costs, such as green levies on electricity bills, environmental airport taxes and appliance disposal charges. They have also been nudged into reducing their carbon footprint with subsidies for electric vehicles, solar panels and home insulation. But these policies are not enough. As they announce much tougher emissions targets in advance of COP26, governments will have to curb emissions directly. Extra taxes on anything from car fuel to household gas are an obvious option. But they would hit the poor as well as the rich. And, to be high enough to alter super-rich behaviour, these taxes would have to impose unbearable costs on the less well-off.
Larger cities exhibit a similar pattern: with the centres populated by poorer people, while wealthier residents live in suburbs. Income and household size contribute to larger consumption-related emissions in suburbs, creating distinct rings of higher emissions around urban cores.
So carbon taxes aimed at the wealthy will climb the political agenda. But will tax policies be enough? For the really rich, no normal level of carbon-linked tax will be a deterrent. They can swallow frequent-flyer supplements, levies on big cars and surcharges on household energy bills. Governments may have to go beyond tax policies into imposing limits on activities. On use of private jets, perhaps, or domestic swimming pools. In most democracies, that would be seen as extreme. But people already tolerate rules such as hosepipe bans.

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Moreover, if action is limited to tax policies, there is a risk of creating a world in which the advantages of the super-rich — who can pay up painlessly — will grow even greater. Will this be politically sustainable in advanced democracies such as the US, European nations and Japan? Anyone who thinks nothing will change should consider the radical approach Joe Biden has pledged to take with climate policy. Nor is the US president afraid of promising tax increases for the better-off.
What can the rich do to prepare? Well, it makes sense to cut carbon footprints voluntarily before it becomes compulsory. It is not enough to invest more in sustainable development or give money to green causes, though such actions do make a difference. What is needed are cuts in consumption, especially the lavish sort that produces both a lot of carbon dioxide and unwanted headlines.
There will be costs for those who value a glamorous lifestyle. But we have seen in the pandemic that change is possible. This is not about altruism but enlightened self-interest.
Stefan Wagstyl is editor of FT Wealth and FT Money. Follow Stefan on Twitter @stefanwagstyl
This article is part of FT Wealth, a section providing in-depth coverage of philanthropy, entrepreneurs, family offices, as well as alternative and impact investment.

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A simple solution : use property tax. With a standard deduction  for "x" square meters per dweller. Then a creeping rate for excess square meters per capita. Should take care of McMansions.
Flying is more tricky : most private plane flyers do not just do it to indulge, it is mostly for operational convenience. Likewise frequent fliers in business class.   

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