Carbon pricing is a social divider

We have caused all this climate change for profits, but turns out, we’re still at a loss. And while we face the ire of nature for abusing it as we build empires of industry, not all of us pay the same price. According to the IMF, poor households in Germany and France pay up to US$2 more per ton of emitted carbon dioxide than their higher-income compatriots. Reason, products and services that wealthier people are likelier to consume, like imported goods and travel outside the European Union, are exempt from carbon pricing. In other words, carbon pricing is regressive, meaning the poor pay proportionally more than the rich, as a share of their income.

Carbon pricing is regressive, meaning the poor pay proportionally more than the rich, as a share of their income

New IMF research suggests that correcting that distortion, or equalizing carbon prices across countries can help spread the economic burden of emission reductions more evenly across households and consequently alleviate the weight on poorer Europeans. This can be a socially fair objective that’s also economically more efficient as well as one that can ensure that cheaper emissions reduction options are implemented first. This would lower the cost of achieving European countries’ emission targets while distributing the cost of emissions reduction across firms, sectors, and countries.

While this suggestion makes sense, it’s not easy to implement. After all, countries are still at an impasse over how to fund conservation and other key decisions even as nations pledged millions of dollars rather than the billions needed at the UN COP16 biodiversity summit.

People must understand that in the long run, climate change will target everyone on the planet regardless of our social status in human society. A new study predicts a 19% income reduction for the global economy by 2050 owing to climate change, based on data from more than 1,600 regions. These economic damages, estimated at $38 trillion annually by 2050, are mostly because of past emissions affecting agriculture, labor, and infrastructure, and are six times greater than the costs of limiting global warming to two degrees.

Maybe, viewing climate change and the losses it causes as a business or economic problem could help arrive at a solution that benefits all economic classes in a fair way. For example, BESS (Battery Energy Storage Systems) can be an answer.

As per a study from Juniper Research, the savings potential from smart grids will increase by 249%, up from $84 million in 2024,  benefitting utilities and consumers. How? By increasing investment in solutions from governments, including the US, China, and Europe, with BESS (Battery Energy Storage Systems) becoming a focal point for the market. 

“Not only is the demand for BESS at an all-time high from grids, institutions, and even consumers, but investment in battery research is accelerating at an unprecedented rate. Future market leaders will be those developing improved batteries capable of integrating numerous energy sources whilst mitigating energy decay; saving money for utilities and consumers.” — Research author Matthew Purnell

The need to meet climate goals and reducing reliance on fossil fuels is leading to a market shift to prioritising BESS efficiency and solutions. Since renewable energies do not meet current demand, ensuring excess energy is not wasted is crucial for reducing carbon emissions.

Research author Matthew Purnell remarked, “Not only is the demand for BESS at an all-time high from grids, institutions, and even consumers, but investment in battery research is accelerating at an unprecedented rate. Future market leaders will be those developing improved batteries capable of integrating numerous energy sources whilst mitigating energy decay; saving money for utilities and consumers.”