By Paul Homewood
h/t Dennis Ambler
From Business Green:
Carbon tax could generate £27bn by 2030 that could be invested into Covid-19 recovery efforts, emerging green technologies, and cushioning against any rise in household bills, campaign group argues
As the UK prepares to leave the EU Emissions Trading Scheme (ETS) at the end of the Brexit transition period, it remains to be seen how the government will price carbon to incentivise different sectors to slash their carbon emissions in line with its 2050 net zero target.
While the Department for Business, Energy, and Industrial Strategy (BEIS) set out a plan earlier this summer for a UK ETS that broadly mirrors the EU’s cap-and-trade system, the Treasury is simultaneously consulting on the potential for a carbon tax.
While advocates of emissions trading systems – which set a cap on emissions within a sector and gradually reduce it over time – argue that the approach allows for a ratcheted reduction in emissions in line with decarbonisation targets, critics counter the mechanism is administratively complex, unfairly benefits politically influential sectors, and results in volatility in prices and weak emissions caps.
The Carbon Commission this week firmly placed itself in the latter camp, arguing in a major new report that economy-wide carbon pricing should be introduced from 2021 that rises incrementally across different sectors before universally settling on £75 per tonne of carbon dioxide by 2030.
The group, which brings together Greenpeace UK executive director John Sauven, former Committee on Climate Change Chair Lord Adair Turner, and Green Finance Institute CEO Dr Rhian-Mari Thomas, said that imposing a tax across the entirety of the economy from 2030 onwards would allow the nation to reach its aim of net zero emissions by 2050, while also offering investors and businesses with a simple price signal that provides long-term certainty and mobilises investment in net zero infrastructure.
The white paper, which collates eight months of public opinion research, expert witness testimonies, focus groups, and independent analysis from Frontier Economics, LSE, the Grantham Research Institute, Vivid Economics, and the University of Leeds, has been endorsed by a stellar line up of climate experts, including climate economist Lord Nicholas Stern, International Monetary Fund policy expert Ian Parry, and UK100 director Polly Billington.
"A higher, simpler and more broadly applied carbon price is a crucial element in the fostering of a post-Covid economic recovery that is consistent with net-zero emissions by 2050," said Lord Stern, who serves as chair of the Grantham Research Institute on Climate Change and the Environment. "The ZeroC report contains detailed, thoughtful and pragmatic advice which the government would be well advised to heed."
The Net Zero Carbon Commission estimates the revenues from the proposed carbon tax would reach £27bn by 2030 – funds that could go towards supporting the Covid-19 recovery, driving innovation and investment in clean technologies, such as carbon capture, electrification, and hydrogen, and cushioning rises in household energy bills, they said.
£27 billion a year amounts to £1000 per household, and this is on top of the current cost of subsidies paid out.
The idea that the money can be reinvested in coronavirus recovery is absurd and so utterly unscientific that it is hard to see how Lord Stern, who after call is an economist, can write such nonsense. (Well, actually I can see how, but it has nothing to do with economics!). Imposing such a tax on the economy would damage any recovery, not aid it.
As for using it to subsidise energy bills, where is the logic in taxing them, just in order to subsidise them?
In reality, most of the revenue will inevitable be wasted on subsidising green alternatives, which otherwise would not be economically viable. When fossil fuel use is ended, the carbon tax revenue will dry up, but we will still be left with expensive renewable energy.
I have a suggestion. Let the government send out annual bills of £1000 to every household in the country, clearly labelled “CLIMATE CHANGE TAX”, and see what the reaction will be!
via NOT A LOT OF PEOPLE KNOW THAT
September 24, 2020 at 08:27AM