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Gilets Jaunes: Is the Energy Transition Possible while still Reducing Inequality?
OFCE Le Blog
Carbon taxes, Energy transition, Fuel prices, Yellow vests, Industrialisation
The gilets jaunes (“yellow vests”) movement offers a striking opportunity to ask whether the Sustainable Development Goals for achieving an energy transition and reducing income inequalities are fundamentally incompatible. Our answer is no! Both objectives must and can be met simultaneously: the political acceptability of environmental policies, such as carbon pricing and subsidies for green technologies, crucially hinges upon their distributional effects. While the concept of the ‘just (fair) transition to low-carbon energy’ for workers has figured in the climate debate at the annual COP meetings, the issue of how to spread the cost burden of this transition among end-consumers remains somewhat out of the frame. Clear guidelines on the design of energy transition policies that have adverse effects on low-income households are still needed in France. To give some context, the yellow vests movement began in November 2018 in response to a programmed rise in carbon taxes, which coincided with a 25% increase in car fuel prices (see the figure below) and followed previous hikes in oil prices and fuel taxes. The government ended up cancelling this measure in December in response to street pressure.