As global energy prices spike, fertilizer shortages threaten food and agricultural supply, and food shortages loom on the horizon, the World Economic Forum (WEF) is calling for even higher gas prices to protect democracy.
WEF released a paper on July 11 arguing that climate policy and protecting democracy are not mutually exclusive policy priorities.
“Reducing reliance on fossil fuels and transitioning to low-carbon alternatives also make democratic economies more sustainable,” WEF says. “Major democracies should work together to achieve these two goals.”
Despite record high gas prices, officials at the WEF believe part of what is preventing a faster transition to renewable energy is the “underpricing of fossil fuels.”
In order to further accelerate the world’s pivot toward clean energy, the WEF is recommending countries phase out cost and tax breaks for fossil fuel production and consumption. They also recommend higher taxes and tradable permits to cover the costs of air pollution, global warming, and other unspecified economic damage.
The organization contends that countries that have taken steps toward green economies are largely free and more democratic than countries that have not, which, WEF states, are “more autocratic.”
WEF published a chart showing a correlation between countries’ freedom score, green spending, and fossil fuel dependency. However, it only relies on a correlative link, there is no evidence of causality in one direction or the other.
“This relationship between democracy and greenness matters, as what happens in G20 economies has important implications for the future of the world economy, including curtailing climate change and other global environmental risks,” the paper states.
Under the WEF’s direction, the United States, European Union (EU), and other nations around the world are speedily — and dramatically — overhauling their economies in an attempt to decarbonize a significant portion of their countries by 2030, representing a bid to slow the warming of the earth.
WEF says that G20 nations should join the EU in adopting their own version of a Carbon Border Adjustment Mechanism (CBAM), which is “a tax on carbon-intensive imports to reduce the risk of unfair competition for their domestic industries and to deter companies from relocating overseas to avoid compliance at home.”
They are also calling on countries to use revenue raised through increasing prices on the fossil fuel industry to fund green innovation, like “smart” electrical grid transmission systems and charging station networks.
WEF does acknowledge that there could be adverse tradeoffs during this “transition,” and recommended offsetting those effects by cutting payroll taxes, paying annual dividends, increasing the minimum wage, retraining displaced workers, and providing child tax credits to families.