Trade and Climate Change – WTO/UNEP report

A new report has been published jointly by WTO and UNEP on Trade and Environment. This has sections summarising the science of climate change, an economic analysis of the links between trade and the environment and a review of climate change policies at the international and national level.

Interestingly the report is positive about the acceptability of border measures to level the playing field between firms subject to national carbon or energy taxes and importing firms subject to less stringent environmental regimes.

The  report provides clarification on the conditions under which border tax adjustments may be compatible with trade rules and therefore opens some interesting areas for further development which previously appeared to be stalled in policy terms. The Green Fiscal Commission will be publishing a briefing paper on Border Tax Adjustments later in the year as a contribution to this debate on the issue, which may perhaps now be reinvigorated following this WTO/UNEP contribution.

‘Energy price cuts have had little impact on fuel poverty’

ENERGY CHOICES – 15/06/09

New figures from u-switch suggest that recent energy price cuts had little impact on fuel poverty figures in Britain, and the current average annual energy bill has increased by more than a third compared to January 2008. Tom Lyon, energy expert at uSwitch.com, said the government has ‘no cohesive or well thought through plan’ for addressing the issue, and that ‘if this government is to stand any chance of tackling fuel poverty, it has got to get a grip on the issue, and it has got to do it now before further energy price rises push yet more households over the top’. Read the article…

‘Middle-classes ‘don’t need winter fuel payment’ says MPs’

THE DAILY MAIL – 10/06/09

This article picks up on the Environment, Food and Rural Affairs (EFRA) Committee’s recommendation that pensioners who pay 40% tax should not be given the winter fuel payment, and that the payment should be taxed at 20% for those whose income is over £9,490. It highlights that MPs say this will save £250 million a year which could be spent on helping five million households in fuel poverty. Consumer Focus, however, argue that ‘Winter Fuel Payments should remain universal to ensure that the much-needed cash reaches all pensioners who need it’ but that it was prepared for higher rate tax payers to be taxed on the payment in order to raise money to help fund energy efficiency schemes for the poor. Read the article…

A related article in the Times also highlights EFRA’s criticisms of the Government’s piecemeal approach to reducing fuel poverty as well as their recommendation for the current range of energy efficiency programmes to be consolidated into one comprehensive programme to upgrade all homes, delivered by local authorities …

Read the EFRA report…

Read further articles in the Daily Mail and the Telegraph

‘Israel declares ‘revolution’ against gas guzzlers’

REUTERS – 08/06/09

Israeli Finance Minister Yuval Steinitz has proposed a new customs levy on large vehicles and a rebate for disposing of older gas-guzzling models. He hopes this plan would persuade the public to switch to hybrid cars while earning the state up to $100 million a year. The plan would be implemented over the next decade but must first be approved by parliament’s finance committee. High levels of carbon emissions from a growing fleet of private and commercial vehicles is increasingly eating into the country’s gross domestic product through, for example, costs associated with illness, damage to buildings and other infrastructure. The government has already raised fuel taxes and increased the value added tax to 16.5% from 15.5%. Critics fear the proposed tax plan would actually result in an increase in the price of smaller cars, but Stenitz argued that purchase tax would be cut right back to just 30% for hybrid vehicles and that the bulk of the tax would be felt by purchasers of larger, luxury automobiles or SUVs. Read the article…

‘Bonn: Tax on rich nations’ ships and planes could fund climate aid’

THE GUARDIAN – 08/06/09

This article highlights suggestions emerging from the latest round of UN climate talks in Bonn for Britain and other wealthy nations to accept a levy on international flight tickets to raise billions of dollars to help the world’s poorest nations to adapt to climate change under an international global warming deal. The aviation levy, expected to increase the price of long-haul fares by less than 1%, would raise $10billion a year. This could be matched by a compulsory surcharge on all international shipping fuel. The article also refers to a separate Mexican proposal to raise billions of dollars through a ‘green fund’ plan. This would oblige all nations to pay amounts according to a formula reflecting the size of their economy, greenhouse gas emissions and population. Read the article…

An subsequent article in the Guardian highlights opposition to this proposal from the International Air Transport Association, arguing that they ‘have seen so many taxes that we are fed up. We are serious about what we pay in emissions [taxes] going towards the environment in a serious way’. Read the article… 

‘Older houses missing out on energy efficiency grants’

THE TELEGRAPH – 05/06/09

This article highlights a comment by the Energy Saving Trust that millions of people are not being given sufficient assistance to insulate their homes because they live in older buildings and need more extensive insulation. The Government’s Carbon Emissions Reduction Target (CERT) offers households on a low income free insulation and everyone else can get £300 off the cost. However, more than seven million homes are unable to take full advantage of the grants because they live in older houses requiring more complex work. Most houses built after 1930 have cavity walls, such that the cost of sufficient insulation provision is approximately £500. Yet older buildings often have solid walls that can cost up to £10 000 to insulate through putting on extra cladding. A spokesperson from DECC said ‘we plan to ramp up assistance to hard-to-treat homes, and are working on the Great British Refurb, offering comprehensive help to every household in the country – including up to seven million homes in the next 11 years’. Read the article…

‘How green are the Liberal Democrats?’

THE GUARDIAN – 02/06/09

This article, written by Jenny Jones of the Green Party suggests that a green tax switch, shifting taxes away from income and towards pollution, is something that ‘no serious greens would contemplate’. She said they rely on income tax to fund schools, hospitals and public services and that, if this funding is replaced with eco-tax revenue, then either they have to rely on maintaining high levels of pollution so as to keep the revenue coming in, or else they will have less money for schools, hospitals and other public services. Read the article…

‘Tesco turns itself into a green giant’

THE SUNDAY TIMES – 31/05/09

This article highlights Tesco’s plans to build the world’s first zero-carbon store in the town of Ramsey, which they hope will act as a template that can be rolled out internationally. The most significant difference in this wood-built store will be a combined heat and power plant that will create surplus energy to sell back to the grid. It is 25% more expensive than a conventional system but it is believed that the pay-back in energy savings will justify the additional cost. Sir Terry Leahy, Tesco’s Chief Executive, has stated firmly that ‘change can be achieved quicker through better information and greater consumer choice, than by tax and regulation’ and believes that government intervention could be the worst thing. He believes that businesses must be leading the way and underlines the need for society to understand that going green does not have to mean low growth. He argues that the consumer will drive demand and that this in turn will create competition between companies to come up with greener goods. Leahy refers to their successes with carrier bags; the Irish government imposed a tax of 15 cents on every carrier bag, but in Britain, Tesco offered an incentive of one Clubcard green point (equivalent to one penny) for every reused bag. Leahy said the success rate ‘proves’ that an incentive is ten times more effective than a tax. Read the article…

‘A green revolution’

THE ECONOMIST – 28/05/09

This article highlights that the best way to curb global warming would be a carbon tax, dividing up the resulting revenue among citizens or using it to repay the national debt. Such a tax would provide the necessary incentive for people to emit less carbon dioxide, and would be simple, direct and transparent. The article states that, for these reasons, it will never be introduced in America. It argues that politicians hate to admit that any of their proposals will cause pain to any voter and therefore prefer to back a cap-and-trade scheme, which does not have the word ‘tax’ in its name. Whilst putting forward the benefits of such a scheme, they do not mention that this will still raise energy prices, that subsidies for renewable energy will have to be paid for, or that such a policy may well destroy jobs as well as creating them. It continues by saying that, although the shift to a low carbon economy may reduce economic growth overall, there are many ideas that pay for themselves e.g. making buildings more energy efficient, reducing packaging etc. Read the article…

‘Rise in taxes on US petrol ‘not feasible’’

FINANCIAL TIMES – 28/05/09

This article highlights an announcement by the US secretary of energy, Steven Chu, arguing that it is not politically feasible for the US to reduce its reliance on oil by raising petrol prices to Europe’s levels through higher taxes or regulation. The announcement comes as global oil prices have reached their highest level this year, at $63.82 a barrel. Mr Chi did, however, stress that Americans will have to learn to live with higher petrol prices even without additional taxation, as the global prices of oil and natural gas are both likely to go up in the coming decades, simply because of fundamental supply and demand issues. Read the article…