Polly comes out in favour of personal carbon trading. A cap on each individuals\’ use. Clearly this is an idea we can reject out of hand then.
Odd that a government with computers thinks it can\’t introduce a simple credit system, when a Nectar or Oyster card shows how easily home and car fuel bills and airline tickets could be deducted.
NHS Spine, ID cards, national database, child support agency….well, do you want to extend that list of computer projects?
Historian Mark Roodhouse of York University draws comparisons with his work on wartime rationing. Back then the state provided ration books for all, covering not just fuel but coupons valuing virtually every individual item in the shops from clothes to food. Have we become more administratively incompetent since then?
Erm, not aware of how much more complicated the world has got since then? Leave aside the complexity of the issuing and trading of credits. You\’ve also got to calculate the carbon content of every good, service and activity. Composting produces NOx. How are we going to count that? Organic farming has higher emissions than conventional, what about the CO2 in beer (it\’s as much of an issue as bottled water is and people do indeed complain about that)?
But the real reason Polly\’s in favour is this:
It would be a powerful but voluntary agent for redistribution.
Ahh, redistribution. It\’s a tax rise of course. Polly loves tax rises. Ever heard of the Lafffer Curve? Want to see those who can stampeding for the exits when this system is imposed?
Directly contradicting myself (hey, my blog, I can do that) I\’m not sure that anyone\’s actually understood the numbers here. What\’s likely to be the cost of such tradeable permits? We can actually see that by looking at the EU ETS…..around €30 a tonne CO2 perhaps. Call it the £25 a tonne that Defra (is it still called that?) uses for the social cost of carbon. Average emissions are 10 tonnes a year or so per capita.
We\’re talking £15 billion for the country then, the total value of these carbon credits that we\’re going to trade. Anyone think that the government can set up such a system for less than this cost? Monitor everyone\’s carbon usage (plus all those CO2-e things) for less than that number per year?
Quite, so the deadweight costs of the system are going to be huge.
Especially if we compare it to the alternatives:
They were offered three possible government actions. First, a carbon tax could be added to all energy not generated from renewables. Second, a cap on the amount of carbon that companies could emit in selling their energy to consumers would force them to generate more from renewables: they would pass on the extra cost to consumers.
Me, in comparison with either of those alternatives, I think that the deadweight costs of the system entirely bury the personal allowance trading scheme.
To undo the contradiction there: either the scheme will have very tight carbon limits (which for any number of reasons aren\’t a good idea right now) and thus very high prices….in which case we see a stampede for the exits. Or the limits are set at rational levels (mild now, slowly reducing) and the costs are minimal….in which case the scheme is too expensive compared to the alternatives.
It simply doesn\’t make sense.