Macron’s Yellow Vests

Macron’s Yellow Vests: Implications

Paris tourists had a bad last week, and it’s not the early December weather. The “gilets jaunes,” or “yellow vests,” have given a new meaning to “climate change driven storm,” with their protests leading to cars burning in the streets and monuments closing in France’s capital. For those who have not been following the headlines, large numbers of street protesters in Paris (and elsewhere in France) wearing yellow vests (used in France to signal one’s car has broken down) have been protesting proposed tax hikes for diesel and gasoline, intended to pay for climate change initiatives. President Macron has now withdrawn the proposed hikes, but the protests have morphed into broader demonstrations against Macron, and turned violent.

Paris protestsThese protests, and the abandonment of the policies which triggered them, have some obvious implications now being widely covered in the press. Beyond this press coverage, for infrastructure, there are also some longer-range implications worth noting: less international cooperation on climate, growing pressure for climate action, eventually higher risk of large, abrupt policy changes, a new direction for climate funding, and higher projected needs for investment in climate adaptation infrastructure.

Starting with the more obvious implications, aside from tear-gas not fitting tourists’ images about the romantic air of Paris. First Macron, clearly, is in trouble. The protests would not have mushroomed had it not been for his low popularity, and the introduction of the “climate taxes” he proposed followed the script which has been a big factor in his plummeting support: lack of consultations before announcing policies, and lack of any apparent understanding of potential adverse consequences or reactions. He has yet to show that he can learn from these reactions. Second, this is not good for the broader “progressive” politics of which Macron had become a champion in the West, and opens more political space for nationalist and populist movements across Europe. Third, for climate-related policy action, it also doesn’t look good (Donald Trump’s twitter account was positively gloating on the riots). As Brett Stephens framed it in the New York Times (“France’s Combustible Climate Politics”), an inviting way to look at the Paris protests is that “perhaps the only thing worse than doing nothing about climate, politically speaking, is doing something about it.” It’s not like the “yellow vests” are extremist reactionaries, in some kind of denial about science, or worried about their shares in oil and coal stocks – they’re for the most part working-class, and seem to enjoy widespread support among the French public. Stephens’ excellent article goes on to make the important larger point that this is not about politicians being afraid to enact policies to combat climate change, but rather about failing to come up with good and/or well-executed policies – and that this is getting to be a distressing pattern. He lists several policy attempts that have failed to gather support, or to achieve intended climate objectives: the 95-0 US Senate rejection of the Kyoto Protocol, biofuel subsidies, the apparent failure of 95% of the signatories to stay on target for their Paris Accord goals, reducing coal emissions in China and India, and carbon sequestration.

It’s a sobering list.

But let’s leave those points where they are, and move beyond the current press coverage and look at some less obvious implications.

Yes, a weaker Macron means less political leadership, and the “gilet jaune” experience will give pause to other governments thinking of political actions to slow climate change. Yet as Infrastructure Ideas and others have been increasingly noting, renewable energy at least will continue to increase, driven more by economics than by politics. Wind and solar generation costs have dropped below those of new thermal generation in the majority of places already, and plummeting energy storage costs are beginning to make renewables plus batteries a low-cost solution. Technology is on a one-way track here, with more carbon-intensive electricity becoming more expensive, rather than cheaper, compared to renewable energy (if anything, what political action is needed to save is expensive coal and oil-fired generation, as we’re seeing on the part of the Trump administration in the US). So what are some of the more important lessons from Paris, for climate change mitigation?

1. When people are affected by policy, consultation matters – a lot. This is an old, old lesson. Infrastructure practitioners have known this for decades. Consultations with affected people has long been a hallmark of approving financing for infrastructure, especially since the advent of the Equator Principles in 2004, led by the International Finance Corporation (IFC). Macron’s government missed this lesson entirely, and the absence of consultation was a major factor in the popular reaction, and in the government’s being caught by surprise by the reaction. Governments looking to take action against climate change will need to find ways to get their people on board with policies.
2. We can expect to see less international cooperation on climate in the near term. The climate denial position of the US administration has made it this difficult already for some time, but the weakening of Macron will make it more difficult. The first days of the ongoing COP24 meeting have already seen US-led attempts to deny the science under discussion. A broad trend in Europe, interrupted by Macron’s election in France, has been the rise of nationalist parties, and most of these have positions on Climate Change similar to the Trump administration’s “America First” platform: Climate Change doesn’t exist, or it may exist but you can’t trust those trying to lecture you on how to act about it, or it may exist but it’s less important than [fill in the blank – immigration, jobs, etc…]. Pessimists are pretty safe with their predictions in the near term.
3. More political pressure will come. Nature is not terribly interested in politics, and recent reports (see Infrastructure Ideas’ post “The Climate Apocalypse Reports”) make it clear that ongoing news will only show climate prospects getting worse and worse. It is predictable that at some not too distant stage, the impacts of climate change on people and countries to “do something” will get overwhelming. Only now it will somewhat later rather than somewhat sooner, and because of that the urgency to act will be more immediate.
4. When enough momentum to act builds, policy changes will be much more abrupt than would have otherwise been the case. With less international cooperation, more nationalist governments uninterested in climate policy, and denialism in the US and elsewhere, the world is likely to get hotter sooner. A “technology fairy” may appear to make it all go away, but in spite of the remarkable advances on wind, solar, and energy storage (among others), current technology trends still leave the world on an emissions curve which will make most coastal cities disappear under water. And as is true for most processes, the longer you wait the more you have to do in a shorter time. Therefore another implication is that “stranded assets” scenarios for hydrocarbons may become likelier as time goes by: the longer it takes for greenhouse gas emissions to come down, the more aggressive the policies needed later will have to be. And the higher the switching costs involved will be.
5. Money may start going to unexpected places. In many countries, politicians seem to be behind economics – and still arguing for public money to subsidize renewal energy. Even Macron was still intending to use the proceeds from the now-abandoned fuel taxes for renewables. What we can predict, instead, is that the relative value of taking out existing high-emission sources will become greater than the value of subsidizing new technologies. Renewables need less and less help to be cheaper, and if anything we see in some countries government efforts to invest directly in renewables actually being a hindrance to further price reductions. It is easy to imagine that soon renewables will account for the vast majority of new electricity capacity: they already do for about half globally. The world’s problem will increasingly be with existing, rather than new, facilities. The economic case for replacing existing capacity is far more difficult than the one for choosing renewables over thermal sources for new capacity. We can therefore expect – in the not too distant future — growing public interest in subsidizing exits of existing coal and oil-fired capacity (and in due course, natural gas). Watch for future columns on this topic.

Finally, an implication for climate adaptation infrastructure. That’s an easy one. The longer it takes to reduce emissions, the more investment will be needed for climate adaptation… For that, we’ll be able to thank Emmanuel Macron, and his yellow vests.

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