George Osborne : Stealth Carbon Tax

Carbon Tax.

You knew it was coming in the end.

But you never reckoned a Conservative (if Coalition) Government would do it.

Everybody knew that the Carbon Reduction Commitment was going to reduce some people to tears. Something so labyrinthine was never going to work. But now it appears that this New Labour “challenge” is going to morph into a Carbon Tax.

The basic idea behind the New Labour Carbon Reduction Commitment or CRC was to encourage medium-sized businesses to lower their Carbon Dioxide emissions.

Everybody was to fully disclose their emissions the first year, and then make a report on their emissions in the following years.

At the start, they were told they would be judged on a “league table” of performance. At the start of a measuring period they would pay into a common pot according to their emissions levels, and then if they performed better than other companies in reducing emissions, they would get money back out of the pot.

But George Osborne has just waved the “league table” magically away, it seems. All revenues from the CRC will be considered as public money.

OK, OK, so all firms using more than 6000 megawatthours of power a year would be forced to take part, and maybe large companies do need a negative incentive to seriously consider how to keep their electricity use down – they seem to waste a lot, after all.

But what about those companies and organisations that don’t qualify for the CRC because they are already part of the European Emissions Trading Scheme (EU ETS) ?

Any player that’s large enough to be under the EU ETS scheme gets their Carbon permits for free, and can trade them for cash if they use less than their entitlement.

OK, so in 2013 EU ETS Carbon permits will be under an auction scheme, but between now and then there is a huge disparity in the way that medium- and large-sized companies will be treated.

In ETS ? Free permits until 2013.
In CRC ? Obliged to pay a Carbon Tax.

http://www.reuters.com/article/idUS367283376220101021

“…John Alker, director of policy and communications at the UK Green Business Council, spoke for many across the low carbon economy when he said he was surprised by the decision. “The announcement that government is keeping the money from Carbon Reduction Commitment allowance sales has come out of the blue,” he said. “It may make the scheme simpler but this is something you’ve got to consult with industry on before plunging into.” Speaking to BusinessGreen.com, Climate Minister Greg Barker said the decision had not been taken lightly and had been made as a result of the ” catastrophic” deficit inherited from the labour government. He admitted that the changes would increase costs for businesses, but argued that the structure of the CRC meant that “progressive businesses that act to improve energy efficiency will be able to minimise their exposure”. Harry Manisty, environmental tax specialist at PwC, said businesses would effectively view the change as an additional tax, which may cause carbon price discrepancies with the EU emissions trading scheme…”

My guess is that this ploy is the opening salvo in a game of political ping pong that will ultimately destroy implementation of the CRC.

Already there have been wars and rumours of wars that people won’t play this particular emissions cutting game. For example, the start date of various parts of the scheme have been set back, and there are reports that organisations have over-assessed their Carbon Dioxide emissions now so they can look good later when they “cut” them.

George Osborne has served the first (wrecking) ball. What will the response of business be ?

Naomi Oreskes & Erik Conway

Naomi Oreskes and Erik M. Conway recommend that grassroots Internet writers focus on Climate Change Policy, in this Climate Science Watch interview shot at Netroots Nation 2010.

The subject of government policies to deal with Climate Change borders on the excessively dull – which is why most Internet web loggers (or “bloggers”) don’t want to touch Policy even with a full HazMat suit on.

It’s the kiss-of-interest-death to try to open up discussions on Carbon Taxation, Cap-and-Trade, Cap-and-Share, Cap-and-Dividend, Cap-and-Giveaway, Contraction & Convergence, Kyoto2, Border Tax Adjustments, Clean Development credits, Carbon Intensity and the like.

Only really seriously geeky, mildly obsessive people really want to think about the Big Picture. And many of us get stuck in a corner of unworkable aspiration, where we know something has to change, we fix on just a snippet of the giant problem, and then we find we cannot communicate it well enough for others to understand.

For example – very public insistence that the Coal-burning power generation industry has got to cease trading doesn’t make it happen, despite excellent reasoning and even entire Climate Camps of resistance and protest amongst the activist community.

This is probably because (a) most people don’t understand how banning Coal fits into the bigger Carbon picture, (b) most people don’t know how to go about asking the right people to ban Coal and (c) most of the Coal-burning industry don’t want people to look into their business too deeply so they have invested lots of money in public attitude smokescreens. No, it’s not a “conspiracy”. It’s a documented public relations exercise. Just ask Naomi and Erik.

Continue reading Naomi Oreskes & Erik Conway

Bjørn Lomborg Concedes Defeat

Bjørn Lomborg has been struggling to suppress action on Climate Change for some time now. He has reasoned that it is not such a big deal, and we would be better spending our resources and attention on other global ills.

Now, however, he’s proposing a universal Carbon Tax, in order to promote Renewable Energy – both Wind Power and Solar !

What’s gotten into the economist-man ? Has he been poisoned by teeth-whitening chemicals ? Has he finally seen the light ? Or does he think that anything is more workable than Cap-and-Trade ?
Continue reading Bjørn Lomborg Concedes Defeat

Creating a Carbon Price Differential

Creating a genuine and effective Carbon price differential will be awkward, perhaps impossible. Carbon Taxes will stop working after a few years, and Carbon Caps are already strongly resisted.

As for Carbon Trading, the incentive to cheat, the “leakage”, will mean that most exchanges will be measured in “hot air” – virtual Carbon emissions.
Continue reading Creating a Carbon Price Differential

Money Can’t Buy You Carbon Control

In all the flurry of debate about how to control Carbon Emissions, it’s sometimes easy to lose sight of the goal : Carbon Control.

If we are to “keep our eyes on the prize”, we really need to check how we’re doing and where we are from time to time.

It’s no good submitting to the Uncertainty Principle.

If controlling Carbon is absolutely essential, we can’t put our efforts into policies that have fuzzy outcomes.
Continue reading Money Can’t Buy You Carbon Control