Enrolling capitalism in the fight against climate change

Critiques of current capitalism are omnipresent, typically focussing on the fact that the system is leading to widening inequalities, lavish unnecessary consumption by the rich, and the destruction of the environment. In an effort to combinedly address the three problems, many are calling for outright bans on lavish polluting activities such as private aviation. A clear understanding of how decarbonisation will credibly play out in this sector also holds the key to our green future, and the type of fixes that capitalism requires for the era of climate change.

With their huge carbon footprint, and being the purview of the ultra-wealthy, private jets represent the perfect lightning rod for the critiques of modern-day capitalism. After all, the average jet owner has a net worth of €1.3bn, many VIPs have been shown to take flights under 20 minutes, and they emit between 5-14 times more CO2 per passenger kilometre than commercial aviation. Within Europe, private jet usage peaks during the summer, with some of the most popular destinations being Ibiza or the Côte d’Azur, suggesting indeed their use would hardly qualify as a societal priority. Several commentators, activists, and scientists have therefore been calling for an outright ban on private jets, based on the principled stance that they are useless, marginally benefitting the few, for the detriment of the many, and the planet. The ban should act as a symbol, at a time when the wider population is being asked for daily sacrifices like reducing their meat consumption or taking public transport for the sake of the environment.

While overall aviation makes up for approximately 2.5% of global GHG emissions, private jets account for just around 4% of that. In other words, a ban would hardly make a dent in a sector that is expanding at a fast clip (5% per year, between 2000 and 2019), due to the broadening use of commercial flights, which account for 88% of total emissions. Certainly, given the scales involved, it is not as if the carbon budget of the private rich jetsetters can be simply redistributed to the rest of us. On the other hand, on the path to net zero, the theory of change accompanying a private jet ban is that progressively wider parts of the population will voluntarily sacrifice flying, or otherwise be compelled to do so by regulation. By extension, voluntary abstention or bans should apply to other blatant sources of pollution, be they large SUVs, excessively large houses, far-away holidays, and cruise ships. In other words, this is a worldview that sees voluntary demand reduction, and coercion when that is not sufficient, as the chief way to restore the balance with nature, often framing it as a critique of ‘never-ending economic growth’.

On the other side of the fence sit those who believe that, while voluntary behavioural change is commendable and to be encouraged, it will hardly represent the bulk of the green transition. Waiting for everybody to embrace all of a sudden a principle of sufficiency is a road to nowhere. When that is the case, a jungle of bans and prohibitions awaits us in a post-growth world that would rapidly turn dystopian.

Luckily, some of the perverse dynamics of capitalism can be turned virtuous. Specifically, the great riches of the few can be leveraged to ease the green transition of the many. For this to happen, however, the wealthy must be nudged towards investing in pioneering green technologies through a mix of taxation and smart regulation. In this respect, private jets represent a perfect example. The median distance for intra-EU private flights is less than 500km, with an average of 4.7 passengers per flight. What this implies is that private jets are the ideal entry point for zero emission aviation, be it electric or hydrogen, which initially will need to fly small planes over short distances. In order to favour these nascent industries, one could envision an eclectic mix of policies, ranging from an increase in jet fuel taxation, to an obligation of using (the more expensive) Sustainable Aviation Fuel. Eventually, even a ban on short-distance fossil-fuel private jets could also be envisioned, in line with the spirit of California’s ban on the sale of internal combustion engine cars from 2035.

Once private funds start flowing to zero emission aviation, and production ramps up, efficiency gains will be observed along so-called ‘learning curves’. Innovative solutions will be developed and scaled to larger planes, helping to crack the difficult task of decarbonising aviation. And prices for these technologies will start falling too, along so-called ‘cost curves’, eventually making the green option and the cheap option coincide. This is the exact dynamic we have observed for wind and solar energy, which were initially much more expensive than the fossil-fuel alternative, but no longer so. This is also what we are observing with electric vehicles, currently the purview of the better off, but likely to reach price parity with internal combustion engine cars within the next 1-2 years, in what will effectively amount to technology-induced redistribution from the rich to the middle-class.

As economic historian Roger Fouquet has documented, most energy transitions of the past have followed this exact logic, be it from animals to steam, from steam to electricity, or from residential coal to gas in heating. A new better technology becomes available but is initially more expensive. A small portion of the market is willing to pay more for it. As it invests in it, the new technology gets refined to the point where it can compete with the incumbent energy source. When price parity is reached, the transition spreads across society at an exponential rate. There is no reason to believe decarbonisation in the 21st century will follow a different path. This is hardly a call for the magical forces of the market to solve climate change alone, nor an endorsement of laissez faire capitalism. As illustrated by the example of private jets, taxation, regulation and occasionally even bans can be part of the policy toolkit, but should serve the purpose of greasing the wheels of innovation, fast-tracking decarbonisation towards the objective of net zero by mid-century. Capitalism has proven to be an efficient machinery at fostering innovation in general, but it must now be enrolled to join the fight against climate change.

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Photo by Chris Leipelt on Unsplash​