‘Carbon Caps are the Best Policy: Why taxing emissions is an inferior approach’

THE WALL STREET JOURNAL – 24/03/09

This comment piece in the Wall Street Journal questions Exxon Mobil CEO Rex Tillerson’s preference for a carbon tax over a cap-and-trade system, arguing that it is simply because he must recognise that a cap on fossil fuel pollution is ‘a far superior approach, environmentally and economically’. The article says that a cap is more effective as it represents a legal limit on pollution and that, whilst environmental taxes can work well to raise revenue, without a cap they will ‘inevitably become a license to pollute in unlimited amounts’. It suggests that the same cap could be adopted by other nations in a transparent, verifiable and enforceable way in order to cooperatively lower global pollution, but that a carbon tax does not make such a system of commitments possible. From an economic point of view, the cap is also argued to be more effective in pushing the economy towards clean, domestic energy in the most flexible way possible, with investors driven by the market’s demand for clean energy. Finally, the article says that a cap is self-adjusting based on economic conditions, whereas a carbon tax could only be modified through a ‘cumbersome legislative process’. Read the article…

‘‘Devastating blow’ for households in fuel poverty’

THE TIMES – 20/03/09

A new law which would make homes more energy efficient and introduce lower energy prices for vulnerable households – The Fuel Poverty Bill – required the votes of 100 MPs to progress. The Bill was, however, thrown out of parliament on Friday afternoon after receiving only 89 votes for and 2 against. Charities have attributed this shortfall to the timing of the vote, with MPs preferring to return home to their constituencies on Friday afternoons. Jonathan Stearn, energy expert for Consumer Focus, said ‘by not supporting the Bill, the government has dramatically failed the poorest consumers. We need urgent action to help the millions of at-risk households and this is a major lost opportunity.’ Gordon Lishman of Age Concern said ‘this is a huge let-down for the 2.75million older people living in fuel poverty and many will question why a Government which claims to be concerned about fuel poverty has acted in such a cynical way’. Read the article… and the Liberal Democrat response

‘Americans support action on global warming despite economic crisis’

SCIENCE DAILY – 18/03/09

The findings of a national US survey, conducted with 2164 American adults last autumn by researchers at Yale and George Mason Universities, indicate that, even in the midst of a growing economic crisis, over 90% of Americans believe the United States should act to reduce global warming, with 35% saying that the US should make a large-scale effort, even if it has large economic costs. Only 7% of respondents said that the US should act only if other industrialised and developing countries reduce their emissions as well. Respondents strongly supported a wide range of climate-change and energy-related policies, including funding for research on renewable energy (92%), tax rebates for people buying fuel-efficient vehicles or solar panels (85%), and regulation of carbon dioxide as a pollutant (80%). Only 53% of respondents, however, supported the creation of a national cap-and-trade system, and 23% strongly opposed this system. Peoples’ primary concerns about taking action to reduce global warming were that it would lead to more government regulation (44%), cause energy prices to rise (31%) or cost jobs and harm the economy (17%). However, among those who believed that both positive and negative outcomes will occur, 92% said that despite their concerns, the nation should act to reduce global warming. Read the article… 

‘Boris Johnson mulls ‘intelligent’ congestion charge system for London’

THE GUARDIAN – 16/03/09

Boris Johnson is considering plans to charge different congestion charge rates for London, depending on what time of day drivers enter the zone. One option would be to charge more for entering the zone during peak periods and less at other times, to encourage them to avoid rush hour in the capital. This variable charging is based on a scheme in Stockholm, which was implemented after London first introduced it in 2003. The mayor has also asked TfL to set up an accounts billing system to make it easier for drivers to pay, which may include direct debits or an electronic chip system that picks up a car’s entry into the zone. Critics of this plan have warned, however, that London’s ‘rush hour’ is ongoing throughout the day. London’s transport spokesperson on the London Assembly, Val Shawcross, said ‘Making it easier to pay is one thing, but a price cut would be a dangerous green light for more cars to come in and clog up central London. The mayor should be looking to make the best possible use of technology to cut congestion, make the system more efficient and improve London’s urban environment’. Read the article…

‘Efficiency plan to help fuel poor’

THE BBC – 16/03/09

The Welsh Assembly Government is introducing new rules for the home energy efficiency scheme (HEES), so that people receiving means-tested benefits whose homes are not energy efficient will be eligible for help. Those who qualify will receive funding for an improved package of support for the most cost-effective heat-saving measures, including solid wall insulation or micro-generation measures where appropriate. In addition to these changes to eligibility, the plan aims to offer: better advice for members of the public on where to find help; support for small businesses to become more energy efficient; help for credit unions to provide low-cost loans, and an end to public investment in high carbon home heating. Read the article…  and the Welsh Assembly Government announcement…

‘Pre-Budget Report 2008: Green fiscal policy in a recession’

ENVIRONMENTAL AUDIT COMMITTEE REPORT – 16/03/09

The Environmental Audit Committee has released a report summarising the findings of its twelfth inquiry into the Treasury’s annual Pre-Budget Reports. These inquiries review the Treasury’s approach to the environment. The terms of reference for this inquiry stated that the Committee would ‘focus on the implications of the economic downturn for environmental taxes and spending. This will include looking at the extent to which the Treasury is (or should be) using measures aimed at stimulating economic recovery simultaneously to advance environmental goals.’ The main questions explored in the report include: How effective is the announced green fiscal stimulus likely to be in meeting environmental challenges, while contributing to economic and social sustainability? How green is the overall package of fiscal stimulus measures? Should more be done in terms of green fiscal stimulus, and if so what? How coherent and effective are the Treasury’s policies on green taxes, and to what extent should these policies change in the light of the recession?

The report highlights that the Treasury is continuing to fail in its aim to shift the overall tax burden from ‘goods’ (on labour and capital) to ‘bads’ (resource use), and expresses disappointment at the Treasury’s decision to backtrack on the proposed ‘per-plane’ airline charge and to cut the increases in Vehicle Excise Duty for higher-emitting cars. It also states that, ‘while welcome, the extra funding announced for the Warm Front programme will not deliver the scale and speed of change that is needed. The Treasury should make programmes aimed at improving the energy efficiency of existing buildings the number one priority for green fiscal stimulus. Such programmes are labour intensive to carry out and do not require the development of any technological advances’. It also raises concerns that the wider fiscal stimulus package contains ‘hundreds of millions of pounds for road building and widening’.

Read the report… and an article about the report in the Telegraph…

‘Big energy groups failing to tackle fuel poverty’

THE TIMES – 14/03/09

The Construction Products Association (CPA) have criticised energy companies for choosing to meet their commitments under the Carbon Emissions Reduction Target (CERT) by using cheaper and less appropriate methods than those required. The CPA highlights Ofgem figures showing that energy companies have distributed more than 120 million low-energy light bulbs since April 2008, which equates to 10 million bulbs more than the Government had expected during the three-year timeframe of the CERT scheme. Simon Storer, a spokesman for the CPA, said that this rush to distribute low energy light bulbs has resulted from a flaw in the scheme, such that energy companies can accrue the same ‘score’ (a measure of their nominal contribution to cutting overall carbon emissions) by distributing 173 low energy light bulbs as they can by installing cavity wall insulation in a three bedroom home, but at a significantly lower cost. There is no evidence to show that these distributed bulbs are even being used. Read the article…

‘Six ways to save the world: scientists compile a list of climate change clinchers’

THE GUARDIAN – 12/03/09

Six key messages have been emphasised to policy-makers during the three-day congress held in Copenhagen this week, conceived as an update of the science of global warming ahead of the UN Summit in December, and as an attempt to make policy-makers appreciate that the emerging science calls for immediate action on climate change. The six key messages relate to: climatic trends – recent observations confirm that the worst-case IPPC scenario projections are being realised; social disruption – recent observations show that societies are highly vulnerable to even modest levels of climate change, with poorer nations and communities particularly at risk; long-term strategy –delay in initiating effective mitigation actions at both global and regional levels increases significantly the long-term social and economic costs of both adaptation and mitigation; equity dimensions – climate change is having, and will have, strongly differential effects on people within and between countries and regions, on this generation and future generations, and on human societies and the natural world; inaction is inexcusable – we already have many tools and approaches (economic, technological, behavioural management) to deal effectively with the climate change challenge, but they must be widely and vigorously implemented to achieve the social transformation required to decarbonise economies; meeting the challenge – to achieve the societal transformation required to meet the climate change challenge, we must overcome a number of significant constraints and seize critical opportunities. The full conclusions from this congress will be published in June 2009. Read the article…

and visit the Conference Website

‘Replace Kyoto protocol with a global carbon tax, says Yale economist’

THE GUARDIAN – 12/03/09

Leading economist, William Nordhaus, has argued that the world should replace the ‘inefficient and ineffective’ Kyoto protocol with a global carbon tax, saying that ‘to bet the world’s climate system on the Kyoto approach is a reckless gamble…taxation is a proven instrument. Taxes may be unpopular, but they work. The Kyoto model is largely untested and the experience we have tells us it will not meet our objective – to stabilise the world climate system’. He criticised the Clean Development Mechanism for producing ‘highly opaque’ instruments and suggests instead that a carbon tax would create a reliable carbon price which would create the necessary incentive to accelerate the shift to a low carbon economy. Whilst the tax would initially affect producers, the price signal would be passed through the economy and drive the transformation to low carbon technologies and more efficient energy use. He suggests that countries reluctant to sign up to the Kyoto Protocol for fear of not meeting their emissions reductions commitments could instead commit to imposing a carbon tax at a minimum level. Dan Kammen, professor of economics at Berkeley, said such a tax would have to be supplemented with additional policy, legislation, regulation and efficiency standards. Read the article…

‘EPA proposes GHG reporting as first step toward carbon tax’

ENERGY EXAMINER – 10/03/09

This article highlights that the new EPA under the Obama administration has effectively taken the first step in establishing some kind of carbon market in the US by proposing that different industry sectors start reporting their yearly carbon emissions. EPA administrator, Lisa Jackson, said that any carbon tax imposed upon industry – be it in the form of a carbon tax or cap-and-trade – ‘must be guided by the best possible information’. These new reporting requirements will not apply to all industry sectors, just those that are suppliers of fossil fuel and industrial chemicals, manufacturers of motor vehicles or engines, and large direct emitters with emissions equal to or greater than 25,000 metric tons per year. Direct emissions covered under the reporting requirement would include energy intensive sectors such as cement production, iron and steel production, and electricity generation. This reporting requirement will not entail any direct changes to business operations, but is providing time for these heavy-emitting industries to prepare for the likely implementation of future measures to regulate carbon emissions. Read the article…