Environmentally conscious critics of contemporary capitalism often highlight the system’s permissiveness toward egregious pollutant activities, typically enjoyed by the ultra-wealthy. Using private jet ownership as an example, Alessio Terzi argues that rather than outright banning these activities, policymakers should nudge the wealthy through taxation and regulation to spur innovation that leads to the development and cheaper production of green technology and renewable energy to the benefit of wider society.

Criticisms of contemporary capitalism are omnipresent, typically focusing on the fact that the system is leading to widening inequalities, profligate consumption by the rich, and the destruction of the environment. In an effort to jointly address these three problems, many critics are calling for outright bans on lavish polluting activities such as private aviation. However, rather than ban environmentally harmful activities such as private aviation, policymakers should parlay these luxury goods into leading decarbonization in their broader sectors, revealing in the process the types of fixes that capitalism requires in the era of climate change. 

With their huge carbon footprint, and being the purview of the ultra-wealthy, private jets represent the perfect lightning rod for critiques of modern-day capitalism. After all, the average jet owner has a net worth of €1.3 billion, many VIPs have been shown to take flights under 20 minutes, and private jets emit between 5-14 times more carbon dioxide per passenger-kilometer than commercial aviation. Within Europe, private jet usage peaks during the summer, with some of the most popular destinations being Ibiza or the Côte d’Azur, suggesting their use hardly qualifies as a social priority. Several commentators, activists, and scientists have therefore called for an outright ban on private jets, based on the principled stance that they are useless and marginally beneficial to the few to the detriment of the many and the planet. The ban would act as a symbol at a time when the wider population is being asked to make daily sacrifices like reducing their meat consumption or taking public transport for the sake of the environment.

But like many symbols, a ban on private jets would prove to be a largely immaterial gesture. Overall aviation makes up approximately 2.5% of global greenhouse gas emissions, and private jets account for just around 4% of that. In other words, a ban would hardly make a dent in a sector that is expanding at a fast clip (5% per year, between 2000 and 2019), due to the broadening use of commercial flights, which account for 88% of total emissions. Certainly, given the scales involved, it is not as if the carbon budget of the private rich jetsetters can be simply redistributed to the rest of us.

Defenders of private jet bans might claim that a theory of change following a private jet ban would lead to progressively wider parts of the population following suit by voluntarily sacrificing flying or otherwise be compelled to do so by regulation. By extension, voluntary abstention or bans could apply to other extravagant sources of pollution, be they large SUVs, excessively large houses, far-away holidays, or cruise ships. These critics, part of the broader camp that believes a sustainable society requires economic degrowth, maintain that the sum of these bans and voluntary abstentions would be meaningful.

Voluntary abstentions in the pursuit of sustainability are honorable, but such practices cannot represent the bulk of the green transition. Waiting for everybody to embrace a principle of sufficiency is a road to nowhere. It leads to a post-growth world where a jungle of bans and prohibitions can quickly turn dystopian.

“Fortunately, some of capitalism’s perverse dynamics can instead be co-opted for virtuous results”

Fortunately, some of capitalism’s perverse dynamics can instead be co-opted for virtuous results. Specifically, the great riches of the few can be leveraged to ease the green transition of the many. For this to happen, however, the wealthy must be nudged towards investing in pioneering green technologies through a mix of taxation and smart regulation. In this respect, private jets represent a perfect example.

The median distance for intra-EU private flights is less than 500km (about 310 miles), with an average of 4.7 passengers per flight. What this implies is that private jets are the ideal entry point for zero-emission aviation, whether it be electric or hydrogen, as use of these energy sources will be initially limited to flying small planes over short distances. To favor these nascent industries, one could envision an eclectic mix of policies, ranging from an increase in jet fuel taxation to an obligation of using (the more expensive) sustainable aviation fuels. Eventually, even a ban on short-distance fossil-fuel private jets could be envisioned, in line with the spirit of California’s ban on the sale of internal combustion engine cars from 2035.

Once private funds start flowing to zero-emission aviation, and production ramps up, efficiency gains will be observed along so-called “learning curves.” Innovative solutions will be developed and scaled to larger planes, helping to crack the difficult task of decarbonizing aviation. And prices for these technologies will start falling, too, along so-called “cost curves,” eventually allowing the green option to coincide with the cheap one. This is the exact dynamic we have observed for wind and solar energy, which were initially much more expensive than the fossil-fuel alternative, but are no longer so. This is also what we are observing with electric vehicles, currently the purview of the better off, but likely to reach price parity with internal combustion engine cars within the next one to two years, in what will effectively amount to technology-induced redistribution from the rich to the middle-class.

As economic historian Roger Fouquet has documented, most energy transitions of the past have followed this exact logic, be it from animal power to steam, from steam to electricity, or from residential coal to gas in heating. A new, better technology becomes available but is initially more expensive. A small portion of the market is willing to pay more for it. As this small portion invests in the new technology, it gets refined to the point where it can compete with the incumbent energy source. When price parity is reached, the transition spreads across society at an exponential rate. There is no reason to believe decarbonization in the twenty-first century will follow a different path.

This is hardly a call for the magical forces of the market to solve climate change alone, nor an endorsement of laissez faire capitalism. As illustrated by the example of private jets, taxation, regulation, and occasionally even bans can be part of the policy toolkit. However, they should serve the purpose of greasing the wheels of innovation, fast-tracking decarbonization towards the objective of net zero by mid-century. Capitalism has proven to be efficient at fostering innovation in general, but it must now be enrolled to join the fight against climate change.

The views expressed there are those of the author and do not necessarily represent those of the institutions with which he is affiliated.