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Pedro Linares (Economics For Energy): “It Does Not Make Sense To Give Public Aid To Buy An Suv”

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Pedro Linares is a professor at the ICAI Higher Technical School of Engineering, vice-rector for Research and Internationalization at the Universidad Pontificia de Comillas, and an associate researcher at the Harvard Kennedy School. He also directs Economics for Energy, a private research center focused on the relationship between energy, economics, and the environment. Hisanalyzes different strategies for the decarbonization of land transport in Spain.

Is this decarbonization going to entail an additional cost for homes and families?
In monetary terms, it is going to be expensive. That is to say, it will cost us money out of our pocket and the bank balance will normally go down, but at the same time we will save many environmental and health problems that we now pay for without realizing it. There are indeed cheaper things and more expensive things.

Some will have to be done now, and others will have to wait depending on the advancement of technology. There will be an uneven cast, with winners and losers. Who will be those winners and losers? An example would be the issue of professional transportation. We should start moving more goods by train and less by truck. Some truckers now live on that and will no longer be able to do it. In other words, decarbonization is not something that will only affect 3,000 miners. These people will have to leave their activity and enter another sector. On the other hand, those who invest in renewables will win. Transformations are never smooth, what you have to try is not to leave anyone behind. Another example is the electric car. Here the danger is that the aid can go to high incomes and those who cannot change cars or enter the cities with their old model may be harmed. Car sales fell 32% in 2020. Is the crisis going to accelerate these changes or slow them down?

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There is a very positive part linked to the arrival of European funds, which will allow us to do things that we would not have been able to do otherwise. Another advantage is that if we want to introduce a tax on diesel it is a good time because, as there is less demand, the prices of raw materials are cheaper and the impact is not so high. What obstacles stop decarbonization? The vehicle fleet, which is very old and consumes a lot. Although technology improves and vehicles emit less and less, the demand for transport continues to increase. We must try to reduce mobility and rejuvenate the fleet. The average age is 13 years, if you manage to bring it to six years the potential for improvement is tremendous. Is it reasonable to change a car at six years?

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The problem is that this is very expensive and, realistically, value is destroyed by scrapping a car that is less than eight years old. The second drawback is the way you do it. Public aid sometimes only serves to finance those who already had the conviction to buy a car and can lead to the manufacturer ending up incorporating them into the price. It also does not make sense that they give you help to buy an SUV. The ideal is to find an optimal combination of different measures, it is not enough to just make an aid plan without looking.

Will teleworking help reduce mobility? When it is forced as it was during confinement, yes, but in other studies, it is seen that when people telework it does not reduce mobility as much. What is reducing the pandemic is the use of public transport. In an ideal world, we should have more public transport, more telework. I am very afraid of the rebound that we are going to see in the demand for transport. Can you convince most people to leave their car in the garage?
It is very complicated, but its advantages are spectacular and it is worth studying.

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Why do people take the car even though it is more expensive? Because it is more comfortable. You have to be able to have public transport that gives you a service similar to that of a private vehicle. For this, the design of cities is fundamental, and we have created cities, where people live outside and work, is inside. This takes time, but if you don’t start doing it now, meeting your emission reduction targets is impossible. The problem is that companies take their headquarters to the suburbs to cut costs. Companies can be held responsible for the CO2 emissions of their employees. That would force them to look for public transport formulas for their staff. Another problem in Spain is that since we buy instead of rent, they change your job and they have destroyed you.

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Is Pedestrianizing Cities With More Than 50,000 Inhabitants As Proposed By The Government With More ‘Madrid Central’ Is A Good Solution?

You have to be careful. We did a study in which it was seen that the impact of this measure to reduce emissions had nothing to do with Madrid or Barcelona other than with Girona or Seville. In these cities, they have no alternatives because travel cannot be replaced by public transport. I applaud the pedestrianization of central almonds, but I am not so clear that it will have a significant impact on emissions, and it may end up causing problems for people.

And shared transportation? In cities, the official average occupancy is 1.2 passengers for each vehicle. If we raised it to two, it would reduce transport emissions by 5%. If you force the company to make mobility plans with an incentive, it is very easy to achieve it using technology.
Will the latest registration tax increase help decarbonize? There are two ways to discourage me from buying an SUV. Raise the price of fuel or raise the registration tax. If the tax is not visible, the consumer does not react. In the registration, the impact is much clearer because you have to pay much more for the car. The problem is that if you raise it, you disincentive to buy a new car, so you have to play with both. You only have to have a pan if you buy a car that you don’t need, that is, if you want a car weighing 2,000 kilos, you have to pay for it.

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And The Famous Diesel Tax?

I do not understand why it did not eventually rise, but I do not think it represents a big change in emissions either. It has many exemptions to professional transportation and you cannot expect miracles. Instead of occurrences like raising the diesel tax, you have to pass the cost of CO2 to everything, be it fossil energy or burning waste. The environmental tax is to discourage attitudes with environmental impact. However, its collection can be used for other purposes, such as in a country with so much unemployment like Spain reducing contributions so that more is hired or to finance pensions. You also have to look at the distributive part, who it shakes the most. Tax reform is not raising the cost of diesel by three cents.

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Will The Government Dare?

The key is to explain it well and for people to understand that they are not going to lose out. This will be good for everyone because the environment is very important. You can stop using the truck, but compensating the trucker.

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