The idea of the carbon tax is not new, but is still relatively little used in the economy in general as well as in companies. However, some specialists see it as a great weapon to reduce the emission of greenhouse gases: in collaboration with MIT, the organization Climate Interactive has created a climate simulation called EN-ROADS, which makes it possible to virtually activate various levers to slow rising temperatures. It turns out that the most effective lever is a (very) high carbon price. So what could a carbon tax on business travel look like?
Why a carbon tax?
As NASA climatologist Peter Kalmus writes: “Global warming is a failure of the market economy. Fossil fuels generate an additional cost to society (global warming, respiratory diseases, etc.), not included in the fuel price”. More generally, negative externalities are never taken into account in the price on a commodity or in the calculation of GDP. Destroying a forest, burning coal, emptying the oceans…all good ways to increase GDP. Even an oil spill is beneficial as the costly cleanup will contribute to the increase in the sacred indicator .
Many economists are therefore now investigating the creation of more global indicators that will take into account societal and environmental aspects in the definition of wealth. And for the environmental part, putting a price on carbon seems to be one of the preferred routes.
Additionally, a carbon tax on business travel would (partially) remedy a situation that is now grotesque, as let’s remember that petroleum is still not taxed at a time of climate emergency…
What would it look like for business travel?
Today, the prevailing logic is price and the famous “lowest logical fare”. On a Paris-Shanghai flight, we sometimes take a connecting flight to pay less. But if the direct flight emits 2 tonnes less CO2, isn’t that data to be assessed? If we assume that direct is €150 more expensive, and by setting a carbon price of €100 per ton, we can estimate that the “environmental costs” are €200 higher with online flight. So the “real” total cost (conventional price + environmental impact) of the trip is €50 more expensive for the connecting flight. Establishing an internal CO2 price is therefore an excellent way to decide between costs and CO2 emissions.
This is why LinkedIn has just introduced an internal carbon price of $60 per journey (and which was soon to develop into a price per tonne of around $100). As its head of travel Leslie Hadden points out, “ it is time to stop looking at price as the only tangible indicator, but to consider environmental externalities “. She also believes that this treasure is ” an excellent way to educate travelers to make them realize the impact of their travel and ultimately travel less. It is also a good way to raise funds to finance sustainable development projects within or outside our value chain. “.
Finally, by establishing an internal CO2 price, we are potentially preparing for the future. It is possible (probable?) that in the near future companies will have to pay for their CO2 emissions. This is already the case for energy companies in Europe (ETS system) and the system may soon be extended to the transport sector. And if the next step was a generalization of this tax to all companies?
A sometimes complex implementation
Although the potential of the CO2 tax is beyond doubt, its implementation may encounter a few pitfalls:
First, the price of carbon must be high to be useful, around 100 euros per ton. Too low can give the false impression that a few euros allow us to be “neutral” and that our environmental impact is ridiculous. Moreover, this price must be completely decorrelated from CO2 compensation, the market price, which is often far too low today. Two CO2 prices must therefore exist side by side, one for compensation and the other for the internal tax.
Then the collection of this tax can turn out to be complex, as the usual booking tools cannot necessarily show it correctly, especially since the calculations of emissions are generally very approximate. It is therefore sometimes better to collect it a posteriori, after having calculated its emissions precisely (taking into account the type of aircraft in particular).
Finally, and this is probably the key: We must create a collective momentum, create internal support, so that the interest in this tax is understood and adopted. The funds collected must be clearly marked so that everyone understands what this money will be used for – and besides, it is definitely better to forget the term “tax” and prefer the term “contribution”.
To quote Leslie Hadden in closing: We want to create real support for this project. This tax should not be seen as a punishment, but as a contribution. This positive side is absolutely crucial for the success of this project and for the fight against climate change. “.