Averting catastrophic climate change: confronting wealth more

Int. J. Innovation and Sustainable Development, Vol. 2, No. 1, 2007 63 Averting catastrophic climate change: confronting wealth Victoria Hurth* School of Geography, Archaeology and Earth Resources and School of Business and Economics, University of Exeter, Exeter EX4 4RJ, UK Fax: +44 (0)1392 263342 E-mail: vmfh202@exeter.ac.uk *Corresponding author Peter Wells Centre for Automotive Industry Research and ESRC Centre for Business Relationships, Accountability, Sustainability and Society, Cardiff University, Cardiff CF10 3EU, UK E-mail: wellspe@cardiff.ac.uk Abstract: In the context of potential catastrophic climate change, it is vital that fundamental drivers of carbon dioxide emissions are pinpointed and addressed. One of the key drivers of these emissions is shown to be increased economic wealth. This paper highlights that links between wealth and carbon dioxide must be addressed, and that although highly debated, the links are not well considered, especially at the detailed level of what drives consumption preferences of the global wealthy. In the context of increasing wealth concentration and poverty gaps, this subject is central to issues of social justice as well as environmental integrity. Keywords: wealth; climate change; social justice; consumption; carbon dioxide; affluence; identity; consumer behaviour; socio-cultural; environmental. Reference to this paper should be made as follows: Hurth, V. and Wells, P. (2007) ‘Averting catastrophic climate change: confronting wealth’, Int. J. Innovation and Sustainable Development, Vol. 2, No. 1, pp.63–78. Biographical notes: Victoria Hurth is a PhD candidate at Exeter University. She was a management consultant specialising in marketing retail strategy before studying a Master’s in environmental management at the University of Kwa-Zulu Natal. She is currently researching a socio-cultural approach to promoting sustainable lifestyles of high-income households, in partnership with Global Action Plan. Peter Wells is a Reader in the Centre for Automotive Industry Research at Cardiff University and was a founder member of the ESRC-funded Centre for Business Relationships, Accountability, Sustainability and Society (BRASS). He is a specialist in the automotive industry and is editor of Automotive Environment Analyst. Copyright © 2007 Inderscience Enterprises Ltd. 64 V. Hurth and P. Wells 1 Introduction As our scientific understanding of climate change processes grows, the certainty of human’s role in creating climate change is reinforced and the estimates of the time we have available to prevent catastrophic consequences of climate change shorten (IPCC, 2007; Hansen et al., 2007). Carbon dioxide is the most prevalent greenhouse gas (IPCC, 2007) and if global warming is to be tackled effectively and urgently, the significant causes of this pollutant must be isolated and directly confronted. One of the key drivers of energy use and carbon dioxide emissions is shown to be increased economic wealth (Vringer and Blok, 1995; Schipper et al., 1997; Lutzenhiser and Hackett, 1993; OECD, 2002; IEA, 2004; Pachauri, 2004; Cohen et al., 2005; Moll et al., 2005; Lenzen et al., 2006). Although the topic is widely researched at an aggregate level, the nature of this relationship is not well understood or widely considered, especially at the detailed level of what drives the consumption behaviour of wealthy individuals. There has been much research and discussion about the ways in which wealthy nations have contributed disproportionately to carbon dioxide and have a moral responsibility to reduce their emissions (WCED, 1987; Agarwal and Narain, 1991; Redclift, 1996). Additionally, there has been a range of empirical research, which underlines the statistical links between growth in wealth and growth in carbon dioxide emissions, again mostly at a country level (Schipper, 1998; EIA, 2004; IEA, 2004; Lenzen et al., 2006). These studies highlight the capacity and moral responsibility of rich countries to reduce their impact on climate change through carbon dioxide reductions. However, there is a notable need for research and policy intervention that addresses the important capacity and moral responsibility of wealthy individuals or households, who exist in both rich and poor countries, to reduce their carbon emissions. Data indicate that carbon significant consumption continues to increase as people reach the higher levels of wealth, and can even increase disproportionately at these levels (Mendelsohn Media Research 2006). Consumption may also change qualitatively, as after certain levels of wealth, particular high-energy consumption practices become feasible, such as use of a private jet. Furthermore, the financial means and social influence of the wealthy makes them able to influence the adoption of carbon dioxide intensive consumption practices in other indirect ways. Research that considers how the link between wealth and carbon dioxide might feasibly be changed is particularly important in light of the exploding number of wealthy individuals in rich and poor countries, who exist in the context of increasing poverty gaps worldwide. In this paper, we argue that because wealthy groups are critical to climate change, wealth structures and the consumption behaviour of the global wealthy must be much better understood by researchers and governments and addressed as a critical opportunity to mitigate against climate change. Furthermore, wealthy consumers need to accept the moral reality that how they choose to exert their consumption power and influence environmental resources is likely to be of disproportionate consequence to everyone, particularly the poor. The paper initially highlights the growing number of wealthy and then presents a brief account of the links between wealth and carbon dioxide emissions. This is done first at a macro level and then by highlighting the consumption categories of cars and meat. The next section looks more closely at how current trends in consumption patterns at different levels of wealth appear to impact negatively on climate change, and argues that much more perceptive data in this area are needed. In light of the links between wealth and carbon dioxide emissions, the paper then highlights the implications of Averting catastrophic climate change: confronting wealth 65 current wealth structure trends for climate change and social justice. The paper concludes with a brief discussion of the potential policy implications for government. Opinions on the relative ineffectiveness of traditional policy instruments, such as taxation and (product) regulation, are then used to highlight the need for more innovative socio-cultural solutions. 2 Consumption patterns and carbon dioxide emissions There are many measures of economic wealth, variously referring to measures of assets (physical and financial) and income. Assets and income are generally strongly correlated and as such both can be seen as measures of economic wealth (Davies et al., 2006). Wealth represents resources and ultimately energy: put in another way, wealth could be defined as the potential to influence resources and energy flows (Stern et al., 1997). Wealth, therefore, represents the power to purchase and use environmental resources, including fossil fuels. The more wealth one has, the more power one has to consume and pollute. It is, therefore, of great importance that there has been a recognised explosion in the number of wealthy in recent decades. In the USA, the figure has grown steadily since the 1970s (Michman and Mazze, 2006) with the number of households classed as affluent growing from 3% of the population in 1977, to 21% in 2006 (Mendelsohn Media Research, 2006). Between 1995 and 2001 alone, the number of US households with annual incomes of over US$200,000 had doubled to 3 million and between 1990 and 2004, the number of billionaires grew from 55 to 313 (Michman and Mazze, 2006). This growth situation is mirrored worldwide. Merrill Lynch and Cap Gemini have for several years undertaken a survey of the global wealthy (Lynch, 2006). Their definition of High Net Worth Individuals is for people with net assets of at least US$ 1 million excluding their primary home and consumables; this group showed an aggregate wealth of US$ 33.3 trillion in 2005, an increase of 8.5% over 2004; they numbered some 8.7 million people, an increase of 6.5% in one year alone. One source estimates that there are approximately some 80,000 ultra-high net worth individuals with annual incomes of more than US$ 20 million (Hutton, 2006). It is clear that those with greater wealth have greater capacity to influence carbon dioxide emissions and other environmental factors through consumption, but it is important to understand whether this potential is exercised and how strong the relationship between wealth and carbon dioxide is. At a high level, discussions of this kind are not new. The topic is in fact a controversial one that has been highly debated. Many have argued that there is a connection between increased wealth and increased environmental degradation, including climate change (WCED, 1987; Agarwal and Narain, 1991; Redclift, 1996). Conversely, some others have argued that in the long-term, increased wealth actually tends to result in better environmental conditions both at a macro country level (Hollander, 2003; EIA, 2004) and a micro personal level (Beckerman, 1992). These latter views have been very influential and have even led to energy policy conclusions about the environmental benefits of growth and the dangers of growth-inhibiting environmental protection measures (Perrings and Ansuategi, 2000; EIA, 2004). Such arguments are based on an extrapolation of empirical evidence of Environmental Kuznet Curves (EKCs), in other words an inverse-U relationship between per-capita income and environmental pollutants, where pollution increases up to a certain 66 V. Hurth and P. Wells income level and then decreases (Grossman and Krueger, 1993; Selden and Song, 1994; Panayotou, 1997). Lenzen et al. (2006) suggest the four main theories used to explain EKCs are first, that environmental quality is consumed as a luxury good and is increasingly demanded with increased wealth. Second, that structural changes in the economy as a country develops reduces environmental pollution. Third, income distribution, democracy and civil rights increase environmental protection, or fourth, that technological progress overcomes pollution issues. However, EKC data have been widely critiqued as empirically inadequate to conclude a positive link between wealth and environmental quality at an overall level, or even at the level of individual pollutants (Arrow et al., 1995; Barbier, 1997; Cole et al., 1997; de Bruyn and Heintz, 1999; Deacon and Norman, 2004). This is particularly true for the case of carbon dioxide where research has consistently shown no inverse-U relationship to exist between carbon dioxide emissions and wealth (Shafik, 1994; Holtz-Eakin and Selden, 1995; Roberts and Grimes, 1997; Perrings and Ansuategi, 2000; Lenzen et al., 2006). Where decreasing energy intensities have been found as wealth rises (Moll et al., 2005; Lenzen et al., 2006) these results are likely to have been affected by the difficulties of calculating indirect consumption impacts (York and Rosa, 2005), particularly because as wealth grows the proportion of energy use related to indirect consumption grows (Lenzen et al., 2006; UNESA 2007). Furthermore, these studies show that any energy intensity reductions as wealth rises are consistently outweighed by dramatic increases in overall energy use. This second point highlights that when considering the links between wealth and energy use, the structure of wealth concentration and the social systems that mould it are often more salient discourses than those around the level of incremental changes in energy intensities. In fact, there is a wide range of evidence concluding that rising incomes are strongly related to rising carbon dioxide emissions at both a country and individual level. High-profile organisations have consistently reported strong correlations (OECD, 2002; EIA, 2004; IEA, 2004, 2007). A number of studies confirm that wealth is the strongest driving factor for carbon dioxide emissions and energy consumption at a household level (Vringer and Blok, 1995; Schipper et al., 1997; Pachauri, 2004; Cohen, et al., 2005; Moll et al., 2005; Lenzen et al., 2006). A study of electricity consumption in 93 countries showed per-capita income to be the most significant driver (Burney, 1995). Perrings and Ansuategi (2000) concluded that GDP and consumption, as two separate measures of wealth, both increase monotonically with carbon dioxide emissions and Lutzenhiser and Hackett’s (1993) study of mixed income Californian residents revealed that those on the highest incomes (more than US$40,000) on average consumed more than twice the direct household energy than the lowest, had twice the amount of large energy using appliances and used over twice the amount of energy for automobile use. Their results showed that variations in energy use at the lower income levels were adequately explained by other independent variables, but at the higher income level, income became a vital driver of energy consuming practices. These and numerous other data concur with international statistics on the links between wealth and particular high carbon consumption activities. For example, automobiles have been assessed as the world’s fastest growing energy consumer, and within this, private car use is the biggest factor (Worldwatch Institute, 2004). Studies show a strong correlation between car ownership and wealth, which is consistent across countries but with varying strengths of relationship (IEA, 2004). In the USA, car ownership is believed to be the strongest statistical predictor of total national energy Averting catastrophic climate change: confronting wealth 67 needs (EIA, 2005). The country has shown not only a high-income elasticity for cars but also a seemingly insatiable demand, with the country now containing more cars than people (IEA, 2004). Income and vehicle miles travelled in the USA since 1983 have followed a ‘near lock-step formation’ with a growth in income of 3.2% average per year between 1983 and 2001 and a growth in car travel of 3.6% (EIA, 2005, p.18). Sports utility vehicle ownership and fuel inefficiency has also increased with income levels. Additionally, wealth had a ‘dramatic effect’ on the number of cars per household with around 0.1 cars being added for every US$5,000 increase in income (EIA, 2005, p.12). Meat consumption is another high carbon dioxide category that correlates with income. In general, meat consumption requires up to ten times the resources in terms of water, land and energy of plant-based foods (York and Gossard, 2004; Durning and Brough, 1991; Pimentel and Pimentel, 1996; Harrison and Pearce, 2000). In terms of carbon dioxide, intensively produced beef in the USA has an estimated input of 34 fossil fuel calories for every one food calorie produced, and for pork this is 68 : 1 (Manning, 2004). As with cars, the literature indicates strong links between meat consumption and wealth at an aggregate level (Brown, 1995; Rosegrant et al., 2001; York and Gossard, 2004). York and Gossard (2004) show that the link between wealth and meat consumption is statistically significant, but that the strength of this relationship depends on ecological and cultural conditions. The effect of consumption practices by wealthy households cannot be underestimated. When considering all direct and indirect consumption of energy, households are considered to be responsible for between 70% and 80% of total energy demand (Moll et al., 2005). Some interesting work has been done at a household level to analyse the links between income and total energy consumption, using a household metabolism approach. These studies underline the conclusion that household income is the most influential of the assessed factors which may drive household energy use (Moll et al., 2005; Lenzen et al., 2006). However, studies of this scale are highly complex with many data assumptions, and by their nature cannot always consider detailed variances in real-life consumption particularly indirect consumption, which may impact significantly on a household’s energy intensity or overall carbon dioxide emissions. For example, how goods were delivered to the home, large variances in carbon intensities of similar products, or the impact of hobbies or holidays. With reports of those in higher wealth groups flying in clothes on the day of purchase and heli-skiing on vacation, these details can be important (Wilson, 2002; Foroohar, 2007). Furthermore, the relationship between income and energy use is neither directly proportional or the same across countries, cultures or households and is mediated by a variety of structural, social and cultural factors (Hackett and Lutzenhiser, 1991; Lenzen et al., 2006; Carlsson-Kanyama et al., 2002). Specifically, notions of status, success, identity, power and ‘the good life’ will all critically influence the energy intensity of ‘luxury’ consumption and the strength of relationship between energy and wealth. All of these crucial yet subtle data will be very difficult to pick up in aggregate data analyses. It is at this level of detail and with greater attention to important socio-cultural influences that much more research is needed. It is with the wealthy, either on a global level or within a country, that targeting behaviour change can provide great reductions in carbon dioxide emissions and, therefore, where research efforts should be focused. One reason that energy consumption of the wealthy, despite being particularly important, are largely unexplored, may be that wealthy groups are inherently difficult to research. 68 V. Hurth and P. Wells They are known to be less likely to fill in questionnaires about their income and consequently are often underrepresented in analyses of wealth (Banks et al., 2000; Davies et al., 2006). The very wealthy are also often able to obscure the details of their personal financial position, or in the case of successful criminals and corrupt politicians such measures are of course necessary. Where more detailed information exists, it is normally held and designed by those seeking to exploit the wealthy in order to market more goods and services (Danzinger, 2004; Mendelsohn Media Research, 2006; Michman and Mazze, 2006). Although not generally employing robust socio-cultural methodologies, these marketing data do provide useful insights into potential carbon dioxide impacts of wealthy lifestyles for sustainable consumption purposes. They indicate that the carbon-intensive activities and purchases not only continue to increase with wealth, but can increase disproportionately. The Mendelsohn Affluent Survey has been running in the USA since 1977 and is one of the few comprehensive surveys of the wealthy with a sample size of around 26,000. The data are unfortunately only for the USA and do not explore motivations of consumption, but they do give an important indication of the potential consumption trends resulting from increased wealth. The survey splits the wealthy population into three groups of wealth. For 2006, the least wealthy are considered to have an annual household income of between US$85,000 and US$99,999, the middle wealthy have between US$100,000 and US$199,999 and the wealthiest have incomes of over US$200,000. The aggregate consequences of these consumption tendencies are not slight as the wealthy in the USA represent 21% of the national population (Mendelsohn Media Research, 2006). Figure 1 summarises the change in consumption as incomes rise across some key consumption activities that are likely to have high carbon dioxide intensity, although the levels of energy intensity will vary. Figure 1 is indexed to the group size so it shows, for example, that those in the highest income bracket are twice as likely to own or lease a luxury vehicle as would be expected for the size of the group. Just as consumption can change dramatically as income rises, it can also change with assets accumulated. Figure 2 is indexed and shows that those with a net worth of at least a million dollars, who are present across all income segments, are likely to consume more when compared with the rest of the wealthy population for some key consumption groups. It is not only disproportionate increases in volumes of consumption that can result from increased wealth, but with different levels of affluence, consumption can take on qualitatively different forms. The example of piloting and owning a plane is one example where the activity only becomes feasible above a certain level of wealth. Another example is not only that increased hotel stays can follow increased wealth (Figure 2) but the fact that luxury hotels generally use considerably more energy and water and create more waste (ITP, 2005). Apart from the clear benefits of targeting those who have the opportunity and propensity to engage in carbon dioxide heavy consumption, there are other unique opportunities to targeting consumption behaviour change in the wealthier groups. They have the financial means and often the inclination (Rogers, 1995), to be early adopters of often expensive environmental products and technologies that need help to become established, especially as they frequently compete with powerful and sometimes subsidised traditional industries (Sawin, 2004). These products can be monetarily out of the reach of less wealthy consumers early on, but with the patronage of the wealthy may become more affordable as economies of scale are created and critical mass reached Averting catastrophic climate change: confronting wealth 69 (Rogers, 1995). Additionally, the wealthy are often socially and professionally influential. They can exert authority both structurally and politically through their public activities and providing visual stimulus to each other and aspiring others as to which consumption norms distinguish them from ‘the rest’ (Veblen, 1899; Bourdieu, 1984; Dittmar et al., 1989). The environmental and social implications of wealthy consumption signals, for example by high-profile wealthy such as Roman Abramovitch, the Hinduja brothers, Paris Hilton, Warren Buffet, and of course Bill Gates, are as potentially impactful as the actions themselves. Figure 1 2006 consumption activity likelihood by household affluence group compared with level expected for the size of group Source: Mendelsohn Media Research (2006) Figure 2 2006 consumption activity likelihood of households with net worth of at least $1,000,000 compared with the total affluent population Source: Mendelsohn Media Research (2006) 70 V. Hurth and P. Wells From an aggregate down to an individual level, wealth can be seen as a major driver of carbon dioxide emissions. Because access to wealth influences carbon dioxide emissions, the distribution of global wealth can also have important consequences for climate change. Furthermore, the power of the wealthy to influence the environmental futures of the less wealthy means the growing inequality of wealth distribution has important moral and social justice implications. 3 Wealth, climate change and social justice When considering wealth distribution, the wealthy have traditionally been considered under the banners of north and south or developing and developed. However, evidence suggests that this may be an inadequate way to assess or deal with issues of wealth and climate change. There are a growing number of wealthy across developed and developing countries, who can theoretically locate and move their money globally. Furthermore, within developed and developing countries where the global rich are being created, large and growing poverty gaps mean wealth is being concentrated into a relatively small but growing number of people. As described in Section 2, the number of wealthy worldwide has been growing rapidly. Although the majority of wealthy individuals still reside in traditionally wealthy countries, according to Merrill Lynch’s report the fastest rates of growth of high net worth individuals in 2005 are to be found in Korea (21.3%), India (19.3%), Russia (17.4%), and South Africa (15.9%) (Lynch, 2006). Myers and Kent (2002) have analysed the growing number of wealthy consumers who they define as those who can afford the pre-requisites of a wealthy way of life, such as cars, higher levels of meat consumption as well as a range of household technologies such as computers and air conditioning. They estimate that the 850 million established wealthy consumers have recently been joined by over a billion new ones across 17 developing and three transition countries (who are between developing and developed). Although still lagging behind the spending capacity of the established wealthy, the number of emerging consumers and their associated environmental impacts are growing all the time. It is estimated that these new consumers already have the aggregate purchasing power to match the USA (adjusted to purchasing power parity) (Myers and Kent, 2002). It is only since the 1980s that these new consumers have emerged (Myers and Kent, 2002) and their existence could be seen as a measure of development success. However, these wealthy represent an elite group that are holding an increasingly disproportionate share of the new wealth in their respective countries, and are consuming in ways that can disproportionately influence climate change. In all of the 20 countries Myers and Kent analysed, income was skewed with at least 62% of the wealth being held by 40% of the population. In 16 of the countries, 50% of national income goes to the top 20% of the population. These figures reflect poverty gap issues worldwide. Utilising a wide range of available data, a recent report published by the World Institute for Development Economics (WIDER) produced a first effort at roughly estimating global wealth distribution (Davies et al., 2006). It confirmed that wealth is highly unevenly distributed, with the top 10% of the world’s adult population owning 85% of the world total wealth, the top 2% owning over half and the top 1% owning 40% of the world’s wealth. Meanwhile, the poorer half of the world population is likely to own barely 1% of global wealth. The study’s authors note that this means that an average Averting catastrophic climate change: confronting wealth 71 adult in the top 1% is more than 13,000 times richer than an average person in the bottom 10%; and an average adult in the top 10% is 3000 times richer. To put this into perspective, total individual assets of only US$61,041 is needed to qualify as a member the top 10%. Just as there are growing poverty gaps in developing countries, there are also large poverty gaps, and absolute poverty in wealthy countries. All OECD countries, for which inequality data exists, are considered to have wealth that is very unequally distributed with the wealthiest 5% of households owning between 25% and 50% of a country’s wealth (Cagetti and Di Nardi, 2005). Furthermore, there are high child poverty rates, as an indication of absolute poverty, in some of the wealthiest countries. An analysis of 26 countries using the US-defined household poverty threshold (with incomes converted to reflect purchasing power parity), ranks the USA and the UK as having second and third worst child poverty rates behind Russia (Bradbury and Jantti, 1999). Although not immediately apparent, wealth disparity trends can also have distinct and additional implications for climate change. Increased wealth inequality can increase the importance of status symbols in a society through restricting social mobility (Wilk, 2002). If wealth inequality enhances the desire in society for items such as powerful cars, large houses and private planes, then wealth inequality is likely to further enhance carbon dioxide emissions, as well as heighten the role of the wealthy as the key people who embed status symbols with social value. However, the implications of increased wealth disparities are not just physical, but deeply moral. Wealth concentration puts the power, and therefore responsibility over sustainable resource use into the hands of a small but significantly growing number of people. Therefore, there is enhanced moral burden for the wealthy to actively understand the implications of their consumption and to use their wealth responsibly. Apart from the wealthy themselves, governments and those in positions to influence how the wealthy choose to consume and how wealth is distributed in the first place, also have a responsibility to face such issues as a matter of urgency. However, governments, perhaps owing to the cultural significance of wealth, have shown to be reluctant to face up to the real impacts of increased wealth. 4 Accounting for wealth and achieving carbon dioxide emissions reductions If concentrated wealth and carbon heavy consumption patterns are locally produced yet globally felt, they should be addressed at both global and local levels. In the case of intangible global pollutants such as carbon dioxide, it is difficult for consumers to alter their consumption behaviour because there is no clear connection between the consumption practice and the associated environmental issue (Perrings and Ansuategi, 2000; Lenzen et al., 2006). One issue with pollutants such as carbon dioxide is that negative externalities are globally dispersed and are often felt by the poor, other countries or future generations. Consequently, the associated incentives for behaviour or institutional change are very low (Perrings and Ansuategi, 2000; Shafik, 1994; Holtz-Eakin and Selden, 1995; Roberts and Grimes, 1997). Therefore, governments have a critical role in reducing the ‘distance’ between consumption choices and environmental impacts by making the links between the two explicit, particularly for wealthy groups. To do this, the real carbon impacts of wealth must be assessed. For governments to take a 72 V. Hurth and P. Wells lead in this, they must first be willing to accept the full extent of carbon emissions related to their wealthy inhabitants, and not only that which can be traced to national boundaries. This is especially important, and complicated, because the issue of ‘distance’ between a polluter and their emissions is enhanced as wealth increases, due to the increasing proportion of indirect energy consumption at a household level (Lenzen et al., 2006; UNESA, 2007), which is reflected at a national level as wealthy countries often shift from agricultural and manufacturing, to service industries (Ekins, 1997; Rothman, 1998, Heil and Selden, 2001). As a result, the wealthy can effectively outsource carbon emissions to the poor, giving the impression of reduced emissions through indirect energy consumption (Bullard and Herendeen, 1975; Rothman, 1998). Hence the UK in its draft Climate Bill states its greenhouse gas emissions are 2% of the global total (DEFRA, 2007), although the real figure that would include the impact of its indirect emissions and investments is estimated to be much higher (Henderson Global and Trucost, 2005; Christian Aid, 2007). Until governments such as the UK’s can own up to their true carbon dioxide emissions, it is unlikely that they will be able to help their wealthy inhabitants to do the same. Beyond the initial step of recognising the true carbon dioxide impacts of wealth, governments must also recognise the potential for behaviour change campaigns targeted at the wealthy to achieve carbon dioxide reductions. South Africa is one country where the critical opportunity presented by the wealthy is understood. In the highly wealth unequal city of Cape Town, it is approximated that poor un-electrified households produce 146 kg of carbon dioxide per month and poor electrified households 193 kg, compared with 751 kg for wealthier households (COCT, 2003a). Such figures have helped local and national government conclude that the wealthy are a logical target group for climate change programmes. Yet, at the same time they admit that almost nothing has been done to address energy use of the wealthy (DME 1998; COCT, 2003b). Research shows that one reason for the inaction in South Africa is because the wealthy are perceived as unfathomable, not motivated by financial savings and difficult to persuade to be more energy efficient (Hurth, 2005). Furthermore, it is considered politically difficult for government to be seen to divert funds to the wealthy, even if it would ultimately address social justice issues and be for the benefit of everyone (Hurth, 2005). Possibly as a result of such perceived barriers, the desire to achieve combined goals or possibly due to the cultural difficulties of highlighting issues with wealth accumulation in a market economy, energy efficiency programmes in South Africa are almost exclusively aimed at the ‘fuel poor’ (those who spend at least 10% of their income on fuel) (Hurth, 2005). This situation is mirrored in other countries such as the UK. Between 2004 and 2005, a budget of £166 million was dedicated to reducing fuel poverty through the Warm Front programme in England alone (DTI, 2005) with no funding focused on reducing the carbon dioxide emissions of the wealthy. Although increasing the energy access of the poor is a vital social issue, it is misleading to consider such an approach a viable, or fair, strategy for climate change mitigation. Furthermore, if the poor are targeted exclusively, energy efficiency could become symbolically associated with poverty. This may reduce the chance of energy efficiency measures being implemented by wealthier groups and could result in the poor discarding energy efficient practices if their economic situation improves (Hurth, 2005). A further reason for inaction by government in this area may be that when dealing with the carbon dioxide impacts of wealth, the traditional measures of taxes or regulations are unlikely to be appealing or appropriate. Taxes are traditionally politically Averting catastrophic climate change: confronting wealth 73 unattractive, and the fear that climate change is an excuse for higher taxes is one used by those sceptical about the issue. Moreover, increases in the direct cost of fuels tend to be regressive in terms of social impact and affect the fuel-poor (DEFRA, 2003; Dresner and Ekins, 2006). Additionally, it has become clear that the very rich non-domiciled elite pay little or no taxes at all through the use of tax havens. It is estimated that the current amount held that avoids tax is US$ 11.5 trillion (Spicer, 2006). If one country decides to reduce its attractiveness as a tax haven through increased taxes, the wealth can be easily moved to a more attractive country. Research also shows that tax is generally ineffective at reducing energy use. Energy demand is largely resilient to price change fluctuations with households displaying an inelastic response in respect to overall energy consumption and energy saving measures (DEFRA, 2003; IEA, 2004). More specifically, a recent survey of air travellers in the UK showed that the wealthy contribute to the majority of carbon emissions from air travel and are unlikely to be affected even by a substantial increase in taxes (Brand et al., 2006). Regulations to improve the energy efficiency of consumer products have also been cited by governments as holding great potential for carbon dioxide reduction. However, it has been shown that efficiency measures are undermined by consumption levels with increases in worldwide energy use from appliances and vehicles, despite significant efficiency advances in these areas (IEA, 2004). Some have observed that energy efficiency can actively spur energy use because the reduced cost of inputs created by efficiencies effectively stimulates demand. This phenomenon has been termed the boomerang effect, or, after the economists who observed it, Jevon’s paradox or the Khazzoom–Brookes postulate. Others have argued further that the relationship has resulted in energy efficiencies being the major driver of economic growth (Ayers and Warr, 2005), and consequently, carbon emissions. The issues with tax and regulation does not preclude the use of such measures entirely, with some form of ‘progressive’ taxation on gross polluting products clearly possible (as is the case for company car taxation in the UK, where the taxation bands are structured according to the level of carbon dioxide emissions generated by the vehicle). More innovative forms of regulation are also potentially viable, such as personal carbon allowances (e.g., Tradable Energy Quotas), which would effectively prevent aggregate emissions above a certain level and provide a base level of equity (Fleming, 2005). This would not only help to explicitly connect consumption with carbon dioxide, but would make clear to the wealthy, and others, how far above the equitable rate of emissions they are living. Even in light of the most promising fiscal measures, a multi-layered, multi-levelled approach to consumption change will be needed. As part of that, many, including governments conclude that approaches to behaviour change must include far more innovative methods (DEFRA, 2003; Perrings and Ansuategi, 2000; Brand et al., 2006). One area that needs to be explored in much more detail is that of socio-cultural drivers of change. The variances in energy use between and within countries discussed earlier, as well as other research, indicate that socio-cultural environments are vital to understanding the drivers of energy use (Hackett and Lutzenhiser, 1991; Vringer et al., 2007). Particularly in the case of the wealthy, where consumption is heavily bound up with issues of status, success, class, identity and ‘the good life’, it is likely that much deeper socio-cultural analyses and interventions, will be necessary if sustainable wealthy lifestyles are to be created and maintained. At a broader level it seems necessary that socio-cultural ‘value’ based barriers to addressing wealth, are brought to the level of 74 V. Hurth and P. Wells public debate. This is vital because on a political and social level it is likely to be extremely difficult to reduce emissions by addressing the link between income and energy use (Moll et al., 2005). 5 Conclusion The first point of this emerging discourse is that the complex and contentious issue of concentrated wealth needs to be confronted. Although increasing wealth is linked to many areas of environmental degradation, this paper has concentrated on the issue of climate change. In order to avert catastrophic climate change, we are faced with short time scales to make large reductions in carbon dioxide emissions, and at the same time the projected increases in carbon emissions under business-as-usual scenarios are great. The large amount of evidence showing very strong statistical links between carbon emissions and wealth as well as evidence of large and growing wealth disparities means that as part of a multi-dimensional approach, a logical and ethical place to target change is with those global consumers with disproportionate amounts of wealth. The concentration of wealth is shown to overpower structural decreases in energy intensity that may occur as household wealth rises. Additionally, trends towards energy intensive consumption practices can undermine technical efficiency gains. Therefore attention must be paid to the social and economic systems that drive affluent consumption preferences and wealth distribution. There is also the need for an open and urgent consideration of questions such as: At what social, moral and physical price are we willing to value the acquisition of wealth and consumption status as the basis of a successful life? Do we have time to reconsider what has arguably become such a central pillar of identity formation? Can we perhaps defer this issue by shifting the carbon and environmental intensity of those products which symbolise an affluent identity? If so how? Ideological and cultural barriers to discussing such questions and targeting behaviour change at the wealthy groups means broaching such questions and confronting the issue of wealth will not be easy. Additionally, wealth brings with it unique policy problems for government, and therefore innovation in the policy arena is both urgent and vital. To inform such policy, much more research is needed into the nature and structure of wealth and how it relates to energy-intensive consumption in particular socio-cultural contexts, as well as the ways in which increased wealth can, or cannot, be translated into sustainable modes of consumption. Even with such research, a moral determination to address wealth distribution and consumption is needed. Besides governments and other institutions, the wealthy themselves need to accept the moral reality that how they choose to exert their consumption power and influence environmental resources is likely to be of disproportionate consequence, particularly for the poor. With perhaps ten years to avert catastrophic climate change (Hansen et al., 2007), the moral responsibility for addressing the structure of wealth and consumption behaviour of the wealthy has never been so great. 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