Category: Carbon fee and dividend

This article comes from a centre-right website CapX which…

was founded to make the case for popular capitalism: now more than ever, it is vital that the case is made for markets, innovation and competition, and for policies that deliver for the masses as well as the elites.

To that end, our team monitors thousands of news sources, blogs, academic papers and think tank publications to find the day’s most interesting ideas and most important facts and trends. We also commission opinion and analysis pieces by leading experts – though the views contained in any such article are entirely the author’s own.

The author, Eamonn Ives, is a member of the centre right think tank the Centre for Policy Studies, specialising in energy and environmental policy. He also sits on the advisory board of Climate Assembly UK, and previously worked as a Researcher for Bright Blue, where he authored five publications.

Eamonn adopts a techno-optimist approach to environmental issues, grounded in laissez faire economics twinned with proportionate government intervention to overcome challenges such as climate change, air pollution, and resource use. He is also interested in transport policy, urbanism, and innovation.

Eamonn writes that….

As temperatures outside begin to fall, the Prime Minister has detailed how Britain will help stop them heating up on a global scale. Yes, the long awaited ten-point climate plan is with us at long last – mapping out both policies and funding pots to limit the nation’s greenhouse gas emissions.

Much of what it said was nothing new – we already knew what the plan’s broad-brush strokes would be thanks to plenty of pre-briefing in the media and other channels.

To further decarbonise power, a big push is to be made on offshore wind, quadrupling how much electricity we produce via maritime turbines to 40GW by 2030. Support is coming for nuclear power, with a particular focus on developing advanced reactors and smaller, cheaper, modular units. Efficiency upgrades for public sector buildings and domestic properties, meanwhile, will limit the amount of energy we need to produce in the first place.

To clean up transport, the big news was that 2030 will indeed mark the end of the road for sales of new petrol and diesel cars and vans (with sales of the best hybrid models ending in 2035). Money has been made available to improve public transport, get more of us walking and cycling, and for research into cutting emissions in hard-to-reach transport modes, such as shipping and aviation.

To green our industrial processes, investments will be made in hydrogen – which will also be deployed in domestic heating and heavy transport. R&D funding for carbon capture and storage technologies should help address emissions in the thorniest industries, such as cement and chemicals production.

Plans to plant 30,000 hectares of tress every year will lock up more of the carbon already in the atmosphere while providing other benefits like habitat restoration and flood defences. Finally, the Government hopes that new rules will make the City of London the global centre for green finance and carbon offsetting markets.

One cannot knock the Government’s ambition – the plan looks across the board and leaves little out of its scope. The money, regulatory provisions, and redoubled Government energy behind tackling climate change should all combine to getting the UK closer to its net zero goal – which it legislated for last year.

But amid the flurry of spending promises and new targets, it was one seemingly unassuming line in the PM’s FT article – where the plan was first released – which piqued my attention. A cursory mention is given to the “carbon prices we will put on emissions”. If we assume this to mean further work is in the pipeline for carbon pricing across the economy, that could spell very good news indeed.

As Rachel Wolf – co-author of the Government’s 2019 election winning manifesto – has discussed elsewhere on this website, carbon pricing makes those who bring carbon into the economy financially responsible for the damage it does to our climate. Simply put, carbon pricing would mean fossil fuel companies face a per tonne charge on the carbon dioxide their products will eventually release.

We already have some carbon pricing – either explicitly, such as on electricity, or via rough proxies, such as fuel duty. But the current framework is confused – pockmarked by exemptions like different rates depending on where the carbon is emitted.

This is regrettable, because as countless eminent economists and climate campaigners will attest, carbon pricing is conceivably the single best way of cracking down on emissions. Importantly, it does so in a way which is economically efficient, steering people towards addressing the most solvable problems first for the lowest cost, and then working towards tackling more complicated matters. It takes power away from vested interests who lobby politicians and civil servants to favour their clients’ pet projects over genuine climate solutions. If the revenues of carbon pricing were recycled back to citizens, it could be made socially progressive, and ensure that climate action is not shouldered by those with the least ability to bear it.

Without a robust, simplified, and comprehensive price on carbon, the Government is depriving itself of a powerful tool to mitigate climate change – binding its hands and instead opting for more expensive, less effective policies.

An 11-point plan might not be as media friendly, but bringing carbon pricing into the fold could take the PM’s strategy up a notch. The Government should waste no time in doing just that.