The Carbon Bank of England

Debating about Carbon policy outside the Bank of England this rainy London afternoon, was, I thought, rather appropriate.

My opponent was weaving the great Al Gore, James Hansen, ExxonMobil line, “so…why don’t we just have a flat Carbon Tax ?”

“But…”, I remonstrated, “Carbon should be the currency in which to account for Carbon.”

“If you have a Carbon Tax, since the Economy is so dependent on Carbon Energy, within a few years, inflation will have wiped out any disincentive.”

“And anyway, a Carbon Tax may well affect Carbon Energy Demand for a while, but it won’t create the incentive to de-Carbonise Energy Supply.”

“And the end consumers will end up paying the Carbon Tax, not the Big Polluters. A Carbon Tax won’t stop anyone burning Coal, so it’s useless.”

“And the Canadians have done the research to show that a Carbon Tax that the Economy could support would lose its impact within 5 years and only impact 5% of emissions [paraphrased]”.

My opponent then laid into Carbon Rationing, specifically TEQs, Tradable Energy Quotas.

I headed him off at the pass about his fears of complexity, “Look, I’ve been in Information Technology for years. There are already shadow currencies in every banking system. That’s what Carbon should be.”

“It’s easy. Look at Reward Cards. A small amount will be added to the transaction costs, but it will be recouped in other ways.”

“Government IT systems never work”, he moaned. “But it won’t be the Government doing this”, I countered.

I fielded his attack about Personal Carbon Trading, “Yes, there has to be a certain element of people buying and selling Carbon. But that should not be the main thrust of the scheme.”

“It’s the Carbon Permit system that’s so important. You know about the Carbon Trust’s work in Carbon Supply Chain accounting ?…”

He did.

“Look”, I redoubled, “at the EU ETS [European Union Emissions Trading Scheme]. A compromise from start to finish. Even from the very beginning the companies were lobbying for free Carbon Allowances.” ”

“And you don’t think that a Carbon Tax system will suffer from the same kind of constant demands for compromise ?”

My opponent started mocking my position on supporting the Contraction and Convergence framework, “That’s all about technology and wealth transfer, isn’t it ? It’s all about Carbon Trading.”

I begged to differ. “You can’t trade away a negative commodity.” I rejoined. “It just doesn’t work.”

We’re going to get on like a house on fire, he and I.

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