Threat of higher fuel prices resurrects Yellow Vest fears

Threat of higher fuel prices resurrects Yellow Vest fears

EURACTIV — 2023-10-24

News from Brussels

A recent analysis suggests that the EU’s carbon market for road transport and buildings (known as ETS 2) may see prices rise far above the €45 promised by the European Commission, provoking fears that protests against fuel price hikes will follow.

As Halloween approaches, a spectre has returned to haunt EU politics, which strikes terror into the hearts of transport policymakers in particular.

It is currently dormant, but its slumber may soon be disturbed, awakening its bloodlust for green legislation.

I’m talking, of course, of the Gilet Jaunes (the Yellow Vests).

To briefly recap, the Gilet Jaunes was a movement in France formed in late 2018 in opposition to environmental taxes on petrol and diesel. Protestors donned high-vis jackets, which became their sartorial calling card.

The movement embraced the idea that wealthy political elites were piling ever-increasing taxes onto the common people in the name of the climate.

These green taxes on fuels meant that the ordinary person had to pay more to drive, impeding their ability to work and complete basic errands. The protestors took to the streets to demonstrate to the Élysée that it had gone too far.

The protests turned violent, with cars burned, windows smashed, and buildings vandalised (famously, the Arc de Triomphe was graffitied).

The movement spread across Europe, with fed-up citizens in other countries donning yellow vests and taking to the streets, though their protests didn’t quite have the same vitalité as their Gallic cousins (the continent’s foremost protesting experts).

Although relatively short-lived, the Gilets Jaunes’s effect on public consciousness was immense. The offending fuel tax was rolled back, embarrassing President Emmanuel Macron.

The entire chapter was seen as a lesson in the perils of green taxes, particularly green transport taxes. 

This must have been at the forefront of many politicians’ minds when reading the recent German think-tank Agora Energiewende analysis on the EU’s newly established carbon market for road transport and buildings.

The report found that when the ETS 2 comes into effect in 2027, prices at the pump could surge by 40 cents a litre – far above the 10 cents predicted.

Should the ETS 2 play a central role in achieving the climate targets when it starts in 2027, existing analyses show that prices of over €200 per tonne are to be expected,” the Berlin-based think-tank asserted.

So, presuming that happens, will 2027 see the Gilets Jaunes take to the streets again? The answer is not so straightforward.

While higher fuel prices sparked the protest, the movement itself was fundamentally a broad populist movement.

Populism tends to divide society into the “pure people” and the “corrupt elite”. 

The “common” or “ordinary” people are portrayed as noble and fundamentally good, yet they have little power despite comprising the majority. The elite are portrayed as small in number yet holding all the power, which they use to enrich themselves. 

As a populist movement, the Yellow Vests did not have a coherent set of demands regarding reining in environmental legislation – rather, their various grievances against the powers-that-be spanned the gamut of politics itself. 

Some protestors wanted to raise the minimum wage. Others called for educational reforms to be scrapped. One cohort wanted medicinal marijuana to be legalised. It was a hodgepodge of ideas from the left and right, difficult to summarise neatly.

The Yellow Vests are not just a movement about transport fuel prices, nor climate restrictions, or green taxes. And raising them as a spectre to stifle difficult transport decisions is misguided.

At its core, the lesson of the Yellow Vests is perhaps simpler: Financially overburdening the disadvantaged leads to a backlash.

Of course, any societal decision, be it on the climate or any other topic, should not disproportionately land on those already impoverished. Taxes that hit those least able to pay are poorly formed.

In the case of the ETS 2, mechanisms are in place to ensure that those that need support can access it – the €86.7 bn Social Climate Fund is the EU’s solution.

In the end, ETS 2 is just another tool in the EU’s climate mitigation toolbox. If it does not work, it can be scrapped or adjusted. The threat of provoking the ire of the Yellow Vests does not make it inherently wrong.

Indeed, climate change itself will disproportionately affect the poor, with no Social Climate Fund to offset the impacts.

And if disruptive protests are to be avoided at all costs, may I direct your attention to the men and women currently glueing themselves to the road, breaking into airports, and throwing paint at works of art. They may not wear yellow vests, but their societal impact is also difficult to ignore.