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 ?

All Quiet On The Policy Front

Where’s Climate Change at ?

Behind closed doors. Swept under the mat.

I think a number of people are coming to terms with the fact that carbon pricing cannot possibly sort the problem of emissions. The only way forward is regulation, legislation, rules, laws.

So, where are the policymakers ? And what are they saying ?

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Pat Michaels is Right

Of course, Pat Michaels is “right-wing”, but that’s not what I meant.

Some folk will be surprised that I agree with anything that Patrick Michaels says, as he is consistently inaccurate about the Science of Global Warming.

However, he is right that a Carbon Tax is the wrong way to proceed.

Carbon pricing, whether by direct taxation or by a trading scheme, effectively creates a double disincentive for change.

We have a large number of companies and organisations that are highly dependent on the use of Fossil Fuels. Carbon pricing will make these companies and organisations less financially efficient, and they will try anything they can to pass on the costs of Carbon to their consumers and clients, in order to remain profitable.

Carbon Taxation will therefore stimulate cost offsetting, but not Carbon reductions.

Moreover, if companies that make and sell energy are forced to pay for Carbon, they will have less funds available to deCarbonise their businesses; less capital to invest in new lower Carbon technologies.

Carbon Pricing will not alter the patterns of emissions significantly, if at all.

We have to face facts : the economists are largely wrong about environmental taxation. Record fines and levies demanded of Fossil Fuel companies in the last ten years have not stopped the spills, the leaks, the poisonings of waterways; nor have they helped the companies change course and start to develop Renewable Energies.

The pricing of large scale environmental pollution is a failed disincentive.

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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.

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The Price of Carbon

The Price of Carbon

by Jo Abbess
20 April 2010

1.   Introduction

Policy strategy for controlling risky excess atmospheric greenhouse gas (Gowdy, 2008, Sect. 4; McKibben, 2007, Ch. 1, pp. 19-20; Solomon et al., 2009; Tickell, 2008, Ch. 6, pp. 205-208) mostly derives from the notion that carbon dioxide emissions should be charged for, in order to prevent future emissions; similar to treatment for environmental pollutants (Giddens, 2009, Ch. 6, pp. 149-155; Gore, 2009, Ch. 15 “The True Cost of Carbon”; Pigou, 1932; Tickell, 2008, Ch.4, Box 4.1, pp. 112-116). Underscoring this idea is the evidence that fines, taxes and fees modify behaviour, reigning in the marginal social cost of “externalities” through financial disincentive (Baumol, 1972; Sandmo, 2009; Tol, 2008). However this approach may not enable the high-value, long-term investment required for decarbonisation, which needs adjustments to the economy at scale (CAT, 2010; Hepburn and Stern, 2008, pp. 39-40, Sect. (ii) “The Consequences of Non-marginality”; MacKay, 2008, Ch. 19; Tickell, 2008, Ch. 2, pp. 40-41). Read the rest of this entry »

Sidetracked

Sidetracked
by Jo Abbess
19 February 2010

A number of prevalent ideological frameworks employed for constructing policy to address Global Warming appear to have faulty foundational analysis and are therefore ineffective in addressing Carbon Dioxide Emissions. Politically implementable options that could lead to effective action to combat Climate Change are being kicked into the long grass at every turn, in policy, in investment and in society.

Reasonable proposals are being made over-complex to implement, or delayed by every means possible. The dominant memes of economics hinder good decision-making; for example, not all natural capital can be valued as a commodity, and yet Carbon markets and Carbon tax regimes are the most ubiquitous proposals.

The cheapest options for efficiency are overlooked for subsidy-attracting large-scale projects; and wholescale sustainability approaches are being discarded in favour of focus on obsessional marginal issues such as recycling.

The imperative to deliberately orient investment towards Low Carbon energy is lost in the haze of planning based on non-solutions such as the renaissance of Nuclear Power and Carbon Capture and Storage in the pursuit of so-called “Clean” Coal.

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Copenhagen : “Meaningful Agreement”

As the world leaders start to slip away back to the airport, some commentators are hailing a “meaningful agreement” has been reached at the Copenhagen United Nations Climate Change talks. Others say that no deal of any significant kind has been struck.

Reaction from the Developing countries is general dismay. The Non-Governmental Organisations, “civil society”, feel they have been blocked from taking part. It’s been a complete shambles.

The time has come to start spelling out the future in graphic, technical detail – not just about the damages that Climate Change will bring – but about the only real solutions.

Real solutions do not include Carbon Trading, nor Carbon Taxation. They don’t include technofixes and technofudges like Carbon Capture and Storage and New Nuclear Power. They certainly don’t include partial commitment on Avoided Deforestation.

We have to say it and say it again : whether the leaders and corporations agree or not, the future is Carbon Emissions Reductions. The Consumer Economy is being eroded by the minute. Peak Oil, Coal, Natural Gas and Uranium are just around the corner.

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Carbon Taxation Is So Wrong

The theory behind Carbon Taxation is this : according to the “Principle of the Polluter Pays”, one of the guiding principles established by the global community in the early 1990s, environmental bads should be charged.

In other words, if you mess up, you should pay for it. And that includes Carbon Dioxide Emissions.

The trouble that arises is the cost “double whammy”.

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Making the Polluter Pay

A question repeatedly occurs to me. “Why are the cigarette manufacturers still in business ?”, I ask myself, when I look at how much effort, money and time goes into helping smokers become non-smokers.

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