Well, one bit anyway.
But as if to show that they haven\’t really thought this through, they\’ve decided to supplement the ETS belt with braces and suspenders: as well as creating a functioning emissions trading system, they intend to maintain feed-in tariffs and the renewables obligation system. This could be an insurance policy, in case a sensible ETS doesn\’t materialise. But if it does, they will end up with three separate and incompatible systems.
Sorry, make that four. Like the renewables obligation, the proposed emissions performance standard – forcing power stations to produce no more than a certain amount of carbon – is a good idea in its own right, but it would become redundant if the ETS really kicks in. Which policy do they intend to prioritise?
If you have a functional cap and trade system (and yes, that does mean auctioning all permits rather than giving them away) then you don\’t either need or want any of the other systems.
Similarly, if you had a proper carbon tax (say, James Hansen\’s idea of a tax at the wellhead or mine) then you don\’t need a cap and trade system: or any of the rest of the things either.
You want to either limit or tax carbon once and once only, then leave the rest of the economy alone to work out how to deal with that limit or tax. That\’s actually the point of doing it this way, of making sure that we use the flexibility and local knowledge of the market rather than the people being stupid in offices which is regulation and bureaucracy.
There are a couple of things he\’s still got wrong though:
Possibly the most important measure it contains is the commitment to create \”a floor price for carbon,
No, we don\’t want a floor price for carbon. Absolutely not. As long as we\’ve got the cap limit that everyone must adhere to then we\’re over joyed, delighted, if the permit price is low. 1 cent a tonne would do nicely. For the cap limits the emissions and the permit price is the cost of that limit. A low permit price means that it\’s costing us less than we thought it would to reduce emissions: what a nice surprise!
To argue for a high permit price is to completely misunderstand cap and trade. A high carbon tax, perhaps, because it\’s the tax which causes the behaviour change. But here it\’s the cap that does that and we\’d be surprised but delighted if the price of conforming to the cap were low.
The cancellation of the third runway at Heathrow and the refusal of additional runways at Gatwick and Stansted is a definite improvement.
It would have been even more cheering if the agreement had said no new airport space in the UK.
Again no: Aviation isn\’t (yet, although it probably will be) subject to the cap. But we do have the correct carbon tax on it (APD is at the right levels). So, as with his first point, we\’re done, finished. We only have to either cap or price in carbon once, we don\’t have to do that and then have further bureaucratic regulation.
Strange that George can see this in one area but not in all really.