My word this is a surprise. Willy Hutton\’s wrong again

This new political geography has been obvious ever since the Copenhagen talks collapsed in 2009, but last week the speed with which ground is being lost became sickeningly obvious. The European parliament refused to back a stop-gap measure to save the European carbon emissions trading scheme. This allows EU companies economising on carbon to sell an allowance to those who are less efficient.

The theory is that the higher the price, the greater the incentive to economise on carbon use and the greater the value in being carbon efficient. But overloaded with sellers and too few buyers, because policing the use of carbon is completely ineffective, the European carbon price has collapsed. The European Commission proposed to clear away the backlog of sellers with a one-off buyout of the overhang of carbon permits and so support the price, but parliament was not prepared to back the cost. The scheme is as good as dead.

No, that\’s not the way a cap and trade system works. The emissions are limited by the cap. The price is telling us how difficult it is to stay under the cap. Thus, of course, low prices for permits are a good idea. It shows that it is easier than we thought to reduce emissions. Hurrah!

Hutton\’s claim is that the carbon reduction scheme is doomed because it is easier to reduce emissions than we thought it would be. Which is a slightly strange position to take, no?

15 thoughts on “My word this is a surprise. Willy Hutton\’s wrong again”

  1. Might he for once (and I really do believe it will be for once) have stumbled onto something? A feature of European Law is that it is pushed by one or two countries – let’s call one of them, er, France, – with the UK objecting to certain aspects. Having got their shiny new lawn that country proceeds to ignore it, allowing their traders to undercut idiot Rosbifs who are suffering as UK authorities impose the measure to the letter. Willy suggests the policing has been “ineffective”. I would be surprised if it was that rigorous.
    No policing; no need to bother; no demand; collapse of price.
    By the way, could can and trade be a fairer rationing mechanism than tax here? I ask because of being disgusted once by the sight of Emma Thompson campaigning against a 3rd runway at Heathrow, but leaving the protest early to catch her flight to LA. She was arguing for a supply restriction, which would push up the future cost of air travel and thereby stop people flying – by which we mean it will stop POOR PEOPLE flying. Cap and trade means those that want to do naughty thing pay money to those who decide not to do naughty thing. Any thoughts anyone?

  2. I’d always assumed this low price was at least in part due to the incredibly generous way in which permits were issued by various EU countries to ensure that their energy intensive industries would be unaffected.

    After that, the market price was only maintained because people thought that the ETS would be too important to be allowed to fail. Post 2008 its become increasingly obvious that the ETS was a mirage and that’s been reflected in the price of carbon.

    So the parliament decision is an appropriate step. After all, we’re prepared to bring Cypress and Greece to their knees for their economic misdeeds.

    I’d have been more impressed if there had been agreement about toughening up the monitoring and issuing of permits.

    I’m assuming that “one-off buyout” is “Bale Out” in Hutton speak 🙂

  3. Another reason for the low price is due to the depressed economic situation. Firms going out of business or reducing output need no (or fewer) permits hence the price falls.

    Cap & Trade can be a workable system but it needs to be introduced carefully especially with respect to grandfathered rights for big players. My own company made a packet in the first couple of years by flogging of spare permits that we were allocated but did not in fact need or deserve.

  4. If stuff is “grandfathered in”, then it’s just another big government plus big business scam to protect incumbent interests. No doubt with hefty kickbacks in return for more free permits.

    Personally I think all the settled science behind global worming is several shed loads of bollocks, but if it’s true and there is a requirement to reduce CO2 (and assuming we have any idea by how much) then only an actual market, as Tim keeps going on, is the best way to reduce that for the best value. Giving it away to the large companies that make the right donations to the correct parties is stinking corruption, whichever way you look at it.

  5. @Ironman ‘She was arguing for a supply restriction, which would push up the future cost of air travel and thereby stop people flying by which we mean it will stop POOR PEOPLE flying.’

    We must never stop poor people flying. How will I get that warm glow on turning left?

  6. William M. Connolley

    I think you’ve misunderstood what he is saying. He said:

    “too few buyers, because policing the use of carbon is completely ineffective”

    which I think says that he thinks that there aren’t enough people buying, because its too easy to get away emitting without having to buy credits. I’m dubious that he’s right about that either, but your attack is off-base.

  7. Oh look, Billy Connolley’s back to give us another round of his comedy missing-the-point act.

    Billy, dear, why not ask mummy and daddy if they can read you the quote above instead of your bedtime story. Ask them to explain to you why this bit is, just as Tim Worstall explained to you, completely wrong, and in fact the exact opposite of the truth: ”The theory is that the higher the price, the greater the incentive to economise on carbon use and the greater the value in being carbon efficient.” Maybe they can explain it terms even a child can understand while you have your hot milky drink.

  8. Tim’s attacks are based on:
    1) name of writer
    2) wine
    3) religious and devout adherence to a system of words he once learned and trying to fit his intellect into something far too big for his smug satisfaction. Hence his continual and boring repetitions.

  9. [email protected]

    Would sitting next to Emma Thompson spouting environmentalist shit cool that warm glow for you?

    P.S. I think it’s cruel to engage Arnald in debate. Kinder to ignore him.

  10. @Ironman I would have my headphones on.

    Re Arnald, I’m just interested in what makes him thick. Sorry, tick.

    Also, I wonder if his musical career ever got off the ground.

  11. Don’t be too hard on Arnald, he’s given us a perfect example of the unintentionally self referential comment.

  12. Dave:

    Hutton wrote:

    But overloaded with sellers and too few buyers, because policing the use of carbon is completely ineffective, the European carbon price has collapsed.

    Tim wrote:

    Hutton

  13. Dave:

    Hutton wrote:

    But overloaded with sellers and too few buyers, because policing the use of carbon is completely ineffective, the European carbon price has collapsed.

    Tim wrote:

    Hutton[apostrophe]s claim is that the carbon reduction scheme is doomed because it is easier to reduce emissions than we thought it would be.

    If Hutton means that ETS prices have fallen because emissions policing doesn’t work not because of a genuine reduction in emissions – and there’s every reason to think that is what he means, because the thrust of his article is that “The world is going to fry” – then Tim is wrong about what Hutton is claiming.

    I suggest you lay off the childish abuse until your reading comprehension improves.

  14. Paul>

    That doesn’t prevent the theory as stated being plainly and simply wrong. Which is what Tim commented on.

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