Citizens' Climate Lobby UK

Category: Climate Income

  • Tackling fuel poverty during the great transition – 7 principles for climate activists

    Tackling fuel poverty during the great transition – 7 principles for climate activists

    CCL member Rob Paton explains how Climate Income can be used as a solution to the fuel price crisis as well as the environmental one.

    1  The fuel poverty facing many households and the climate crisis facing us all must be tackled in synch. If they are not dealt with together, each problem worsens the other.  Fuel poverty, accentuated by a price spike, has led to calls questioning support for renewable energy and has clear potential for social and political instability. Yet the necessary action on fuel poverty must not be at the expense of the climate.  Households on benefits, or with low and insecure earnings, will be the least able to protect themselves from the consequences of weaker climate policies.  

    2  Fuel poverty should be addressed primarily by increased income, not reduced fuel prices.  What those in fuel poverty need is more money.  They know their priorities. And it must be money they can rely on – not complicated special payments, or means tested and arriving late to tackle a spike in prices..

    3  What businesses and our economy need for the transition to zero carbon is an underlying trend of rising carbon prices.  Economists and business federations agree on this. Most businesses can deal with price fluctuations, or are learning how to. Carbon subsidies and tax reliefs are a part of the problem not part of the solution. 

    4   The direction of travel for public finances should be away from the present high degree of carbon reliance and towards sustainable, post-carbon sources of revenue.  An overhaul of the UK’s current mish-mash of fossil fuel taxes and subsidies is long overdue.  A coherent approach would raise more funds, be fairer and simpler, support the drive to carbon neutrality.  This is bound to take time – so the sooner the taxation system starts down this road the better.

    5  Likewise, the direction of travel for income support during the great transition should be from indirect to direct payments. That is, from transfers hidden in a tax or benefits system to discrete, climate-related payments, labelled as such and paid directly. Citizens need to know that they are being supported in tackling the climate crisis, and enabled to play their part.

    6   Consistent policy on carbon pricing, fiscal reform and income support requires a cross-party political consensus.  Surveys have repeatedly shown that the public mood is to find and sustain the common ground, and to get on with the job.  Political contestation on other issues – including other climate and environmental policies – can and should continue, both locally and nationally. But a framework to tackle the great work of this decades-long transition is needed. These are three essential elements for such a framework. 

    7  Communicate, communicate, communicate. Public trust in politicians needs to be restored if sometimes unpopular policies are to be sustained. A cross-party consensus in Westminster needs the backing of public opinion, and its calls will be taken more seriously by the public than party-political pronouncements. Especially when promised action follows. Nothing is clearer and more convincing than a payment direct to your bank account.  

    Climate income offers a way forward with the clear potential to satisfy all these principles.  It may not be the only one. But it is the only one I am aware of.        

    Rob Paton 02/02/22 

    We are not the only ones with this message, today’s Carbon Brief Daily reports on two interesting reactions to the Levelling Up White Paper (Business Green is paywalled) ..

    Business Green’s James Murray, analysing the paper, writes that “a government that properly prioritised the net-zero transition, rather than treated them as a separate silo, would find it much easier to embed climate action in its response to the gas price crisis.”

    In another comment on levelling up in Business Green, Prof Henrietta Moore writes that “without tax reform, the cost of funding net-zero will fall disproportionately on the shoulders of those least able to afford but most likely to suffer the consequences of a rapidly degrading environment”. 

    Happily the fuel price crisis mitigation measures announced by Rishi Sunak today do not involve tinkering with carbon pricing and leave all to play for!

  • A simple, fair and effective solution to the UK cost of living crisis – Climate Income.

    A simple, fair and effective solution to the UK cost of living crisis – Climate Income.

    I posted this article on the Linked In Citizens’ Climate Europe page on the 22nd January and have been asked to reproduce it here. I hope you find it a helpful ‘take’ on the current crisis.

    The current fuel crisis is creating problems for governments in the UK and Europe. The conundrum is based on the combination of underlying energy costs, environmental taxation, poverty alleviation and climate policy, all overlapping in a complex mix. Finding a solution that keeps advocates of each policy and it’s raison d’etre supportive is challenging. Here we look at how leaving the EU offers the UK a simpler approach. Climate Income can be used to address the short term imperatives of the rising gas prices, “levelling up” the inequality in the UK, provide a clear pathway to NetZero and make the UK economy more competitive.

    Some of the main elements in the mix …

    Gas prices are rising, and will continue for up to 2 years. Average household energy costs are set to rise by around £600 p.a. in 2022. Energy costs impact everyone, but while low and middle income families use less energy it’s a higher proportion of their income, hence why governments implement policies to address this.

    To protect the vulnerable, old and poor, there have been various means tested financial supports introduced roughly every decade: in 1988 Cold Weather Payments; in 1997 Winter Fuel Payments; and in 2011 Warm Home Discounts. All essentially aiming to reduce the number of people suffering from cold or hunger in our first world economy.

    In 2013 the UK Gov introduced the “Environmental and social levies” to fund energy efficiency, encouraging low carbon generation and reducing fuel poverty. The levies are 10x higher for electricity bills than gas bills. At the time 35% of the UK’s electricity production was from coal, the most harmful fossil fuel for the climate and air quality.

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    Consequently in 2013 the UK Gov also introduced the Carbon Floor price, initially at £16 (above the EU-ETS at the time) and set to rise to £30 by 2020 (which would now be below the EU-ETS). This has seen Coal reduced to 2% or less (20x smaller) for electricity production. The UK established (EU approved) measures to protect industry and now the EU itself is driving international dialogue on Carbon Border Adjustments.

    Whilst prices fluctuate over time, these policies raise prices for things that pollute (or used to pollute), and at the same time try to alleviate the financial burden on the poorest. The apparently conflicting problems of poverty and climate change. Ironically most of the people living a lifestyle compatible with 1.5ºC are the poorest in society, with the richest 10% causing as much pollution as the other 90% combined.

    Climate Income – the solution?

    Climate Income is a revenue neutral, steadily increasing price on pollution fully rebated to all citizens. Revenue neutral means there is no cost to the government, and, significantly, no revenue for the government. The steadily increasing Carbon Price follows the polluter pays principle embedded in UK legislation for nearly 50 years. The key part is returning the money to all citizens equally in a fair monthly payment, much like how child benefits or pensions are paid. Despite the rising costs, the poorest 20% could be £500 better off, enough to match the one of the current UK government suggestions.

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    London School of Economics data from 2019.

    The rest of society would be proportionally affected depending on the pollution they cause. Once the gas price spike settles over half the population would be better off. The exact amount depends on the level of price introduced. LSE modelled a £40 /tCO2 charge, above the current £18 and the planned £30 level, though significantly below the current UK ETS price circa £75.

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    This type of approach is intrinsically fair, sharing the responsibility and rewards equally on everyone. In Canada a form of Climate Income has been operational since 2019 and the public increasingly understand and support it, re-electing in 2021 parties in favour.

    Above all, it must be clear to the public that this represents a rebalancing of the tax base, in order to incentivise greener technologies and activities, and not simply a backdoor way of the Treasury taking more cash from their pockets.

    What does this mean for the Net Zero goal?

    A clear path to NetZero is supported by aligning the steadily increasing price to the data from the IPCC 1.5ºC report and the latest International Energy Authority report which suggest most (70%+) of NetZero can be achieved with such pricing. What this illustrates is that the long term NetZero objective actually helps clarify how the UK Gov might proceed with other related policy options currently under discussion. 

    e.g.

    1. Subsuming the current Environmental and social levies – reducing the bias against cleaner electricity and shifting the costs more to polluting gas, whilst delivering on the environmental and social objectives.
    2. Removing VAT from household energy bills would be a cost to the treasury that would enable a higher Carbon price, reinforcing 1 above.
    3. Both above measures reduce pressure on the various means tested support programs over time. As the Carbon price rises each year the policy is increasingly progressive, enabling simplification and reduced bureaucratic burden on people and the state.
    4. Windfall taxes might also reduce the immediate financial burden on the treasury enabling more of the existing carbon price (via the UK ETS) to be returned to citizens.
    5. Rebating the money to citizens gives industry the confidence to pass costs on to consumers regardless of how the price rises domestically.
    6. The ETS (copied from the EU) could be replaced by a simpler and more predictable economy-wide carbon price that allows industry to plan and invest with more certainty.
    7. Such pricing strengthens the UK economy to exploit the international trade advantage that already exists in the eyes of this US assessment as the EU and others pursue Border Carbon Adjustments. It also helps create the investment case for industry in the inevitable green revolution the world needs over the next 30 years.

    It could be argued, however, that the current path, with various different ways to raise energy prices and tax revenue whilst only offering minimal and creeping support for the most vulnerable mirrors exactly what unfolded in France with the Yellow Vest movement. Indeed the parallel is further matched by a spike in prices being the trigger to public discontent to such policy creep. In France it was an oil price spike after 4 years of gradual price increases that drew public anger, today it’s gas.

    So to round up here’s a summary other expert opinions that endorse some or all of what is proposed in Climate Income:

    None of these experts are saying this is a magic bullet that fixes everything. They all broadly agree that it is the single most important tool to address climate change. It can also show us how to navigate the short term energy price spike and re-align our worthy intentions in other areas. As Our World in Data summarises: 

    “What’s frustrating about the challenge of climate change is not that we have no options, but that we do not take the options we have. “

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  • Another fantastic plug for Climate Income from one of our members!

    Another fantastic plug for Climate Income from one of our members!

    Last year Rob Paton and Citizens:MK succeeded in gaining unaminous support for Climate Income from Milton Keynes Council. Rob then went on to write about the campaign in the national Quaker magazine, The Friend.

    Rob has now succeeded in getting a full article published which he has given me permission to reproduce here. I attended a Zoom meeting organised by Rob for a local climate group and was able to see the issues people have with the concept of CI (which it is easy to lose sight of when you have been immersed in the campaign for three years!) which Rob describes – his approach has lessons for us all! Note that ‘testimony’ refers to the Quaker values of equality, peace, truth, justice and simplicity.

    A year of climate campaigning: What Rob Paton learned

    6 Jan 2022 | by Rob Paton

    ‘It’s often the testimony that does it.’

    ‘The alternative is to look for common ground.’ | Photo: by Li-An Lim on Unsplash

    I had been a ‘greenie’ for years, but not heard about Carbon Fee & Dividend (also known as Climate Income) until a Friend told me about it a couple of years ago. I visited the website of Citizens Climate Lobby UK – and wow! So simple. An arrangement that would turbo-charge all other carbon reduction policies, or render them superfluous. A way to make higher carbon prices not just acceptable, but popular. Like every good convert I set off with missionary zeal. At which point things became… interesting.

    Yes, sometimes people ‘got it’ quite quickly. What really struck me, though, was how often people didn’t (or couldn’t?) ‘get it’. For example, when another Friend passed on something I had written to her daughter, active in XR, the daughter was enthused. She shared it in her circle… to no avail whatsoever! Even professional campaigners who knew their economics seemed to ignore carbon pricing. It was the elephant in the room. As for Climate Income, well, on a good day it would be damned with faint praise. I asked several: ‘What should we be asking for at COP26? Wouldn’t it be great if we had one simple, specific “ask” that everyone could get behind, like “Drop the Debt”?’ Everyone liked the question, but their answers were either lengthy, or pithy but plaintive (‘just keep your promises’). No one expressed much interest in Climate Income. Gradually I came to realise – or re-learn – some important lessons.

    If people are not open, or ready, then I was probably wasting my time as well as theirs. It wasn’t just that trying to persuade people seldom helped. Things went better when people were stimulated to find out for themselves. For example, our local Citizens:mk climate campaign asked the leaders of the three main parties on Milton Keynes Council to consider supporting the idea. Initially, all were wary, but they agreed to check it out. When it came to the debate, genuinely enthusiastic speeches in support came from all sides, and the motion passed unanimously. Likewise, when we asked the local Anglican bishop to consider the idea and how he might use his position to promote it, he was sympathetically cautious: he would meet with us but the issues were complicated and he needed to find out more. But then before we knew it he was on board, asking a pointed question in the House of Lords!

    That illustrated another important point: it’s often the testimony that does it. A remarkable teenager in our campaign group had recounted being confronted with the harsh realities of what climate change would mean for her and her generation. She spoke simply, clearly and from the heart. It was moving and memorable in a way that bald facts and reasoning are not.

    I also noticed how widespread adversarial thinking is among green campaigners. The default stance is to campaign against things – and people. When I asked what was needed for a consensus in support of cutting out carbon, the answer was, essentially, for lots more people to care like we do. We have seen the light; we must convert others to our way of thinking. Worse still, I, too, slipped into adversarial thinking. At one point I was seeing the Treasury as a bogeyman. They didn’t like hypothecated taxes and would be bound to resist this idea. But one of the beauties of the arrangement is that it is revenue neutral – it is a transfer rather than a tax. It doesn’t add to government spending. Better still, by turbo-charging the switch to renewables, it reduces the need to subsidise green technologies which are a drain on the exchequer. It also gives a further basis for cutting out those subsidies still being paid to fossil fuel companies.

    The alternative is to look for common ground. Climate income provides such a common ground, securing support for long-term carbon reduction. In Canada, where this ‘fee & dividend’ approach has been adopted, governors of some provinces with high levels of fossil fuel activity thought they might roll back the legislation… until they found how popular it had become with voters.

    What really took me by surprise, though, was the way climate lobbying led into a deep consideration of truth, and our compromised capacity as humans to face it. I joined a Zoom course on how to engage with political leaders on climate issues. At one point the young course leader said words to this effect: ‘Look, we have enough information in this group to plunge half the country into a state of deep clinical depression. It’s just as well that many people are “in denial” – the health services would be overwhelmed if everyone suddenly woke up to what the disaster will mean for them. That wouldn’t do the planet any good.’

    Instead he introduced us to ways of meeting our leaders where they are, helping them recognise their own ambivalences and uncertainties, and helping them find their own safe next steps. This doesn’t mean that we should only engage with the political system in therapeutic mode – listening supportively, asking gentle questions, building trust. As we Quakers know, discernment requires threshing as part of the process. So explanations, facts, clarifications and analysis all have their place, collegially conducted, among those seeking further understanding. Here too I learned lessons.

    I had to treasure the disagreements and challenges I encountered. They were informative about what I had not explained. For example, if someone said, ‘Won’t people just use all their climate income paying for the higher price of fuels?’ I had to be ready to agree: yes, some would, to begin with. It would be their choice. Only then would it be worth my explaining how the steadily-increasing price of carbon (and climate income) would play out over the medium term: the higher the price the more incentive everyone has to switch to green alternatives. Instead of it being against our economic interests to ‘do the right thing’, we become (even) better off by ‘doing the right thing’.

    Another example: one councillor said we shouldn’t increase the price of fossil fuels until the cost of green alternatives had fallen to the level of current fuel prices, otherwise the poorest would be hard hit. This overlooks how climate income protects the least well off. But I sensed something else was confused in this observation, and it took me time to pin it down. In fact, the price of the alternatives will not fall until they are adopted on a large scale. So we need to make the green alternatives cheaper than fossil fuels in order to bring about large scale adoption. This is precisely what steadily increasing the price of carbon makes happen.

    I also came to appreciate the uncertainty in our predicament: no one knows what will be an achievable and sustainable mix of green fuels. The technologies are still a big cloud of unknowing. Some say heat pumps. Some believe hydrogen is the answer. According to others, the future is electric. Some think that Carbon Capture and Storage is crucial. Each of these has its advocates – and, happily, investors willing to back them.

    Finally I have had further lessons in patience and trust. Having been through panics about nuclear war, the scares about the millennium bug, and the fear that oil was running out, it is a little easier to hold my nerve. Yes, I do know about tipping points. The dangers are very, very real. But so are the emerging opportunities with many signs that the tide has turned. And so we choose life, doing what we can where we are.

  • Happy, if slightly belated New Year to all our members!

    Happy, if slightly belated New Year to all our members!

    As the fuel price crisis is on everyone’s minds this January member Darrin Charlesworth tops the Letters page in today’s Guardian Online………..

    John Vidal’s list (It’s the great green reset: 10 things Britain can do now to save the planet, 3 January) seems very achievable, but I would like to add one more to accelerate change: climate income.

    First, introduce a carbon tax across all industries to price emissions into the market, closing a huge economic loophole. By gradually increasing the tax, we not only incentivise lower emissions on the supply side, but we also drive demand for low-carbon alternatives.

    Second, redistribute the revenue equally to all citizens. This protects the most vulnerable consumers, who already have smaller carbon footprints, from fuel poverty. The wealthiest people with the biggest carbon footprints would see their costs rise, but for the majority, costs would be neutral.

    Third, introduce carbon border adjustments. This policy would prevent emissions being transferred offshore, but also protect many UK businesses, especially our vibrant small business community, from competitors in countries without a carbon tax. This policy would help drive many of the others at a time when we need real urgency.
    Darrin Charlesworth
    Citizens’ Climate Lobby UK

    Congratulations Darrin for succinctly and elegantly summarising how Climate Income would enable the true price of carbon to be reached – thus making decarbonisation a no brainer without impoverishing everyone!

  • Further information on the government response to the Zero C petition.

    Further information on the government response to the Zero C petition.

    I have to apologise for being pressed for time yesterday when writing about the parliamentary debate on the Zero C petition. In my haste I failed to take in the fact that the government had produced a briefing on the petition. The briefing states that…..

    The Government response to the petition refers to the UK Emissions Trading Scheme (ETS). The UK ETS sets a limit on emissions from energy generators and energy intensive industries, which incur a cost if limits are exceeded.  The Government response also points to the Government’s intention (set out in the Energy White Paper) to extend the scheme, and to explore expanding the UK ETS to cover two thirds of the UK’s remaining emissions.

    Carbon pricing can take a wide variety of forms. There were some reports that the Government was considering the options for broader carbon taxes or pricing earlier this year, but that it is no longer the case.

    This is very interesting (and disappointing) but it explains why we heard nothing further after the claims that Liz Truss was supporting a Carbon Border Adjustment Mechanism and the July ‘leak’ to the Times about introducing Climate Income based on the Canadian model.

    The government also states that support for poorer households will be targetted capital support from the tax payer, arguing that….

    Given the significant variation within income groups, it will be more effective to focus on individual technology transitions, with taxpayers providing targeted capital support for those low-income groups most acutely affected by a specific technology transition(and in advance of policies that penalise or phase-out use of high carbon technologies), than to consider the transition in aggregate and develop universal and untargeted policies to support households – such as, changes to tax and welfare. This would also mean that low-income groups could benefit sooner from the household savings that arise from a transition.

    It appears that the debate was used by participants to refute these claims rather than debate universal carbon pricing, although Alan Brown did make a strong case for the lost opportunities caused by the lack of tax hypothecation and a sovereign wealth fund.

    The complicated, costly and intrusive ‘targetting’ of support envisaged by the government in its net zero strategy will, it seems to me, not lead to fair and equitable transition. There is still all to play for!

  • CCL member decides to shake up Woman’s Hour!

    CCL member decides to shake up Woman’s Hour!

    Wiltshire CCL member Jane Renwick recently realised that a hallowed broadcasting institution which likes to think it is ‘cutting edge’ could do with shaking up when it comes to the most important issue of our time!

    But I know that CF&D makes sense and it frustrates me that so few people are talking about making it happen. 

    ” …..My grasp of CF&D is pretty akin to my knowledge of plumbing: I have a gist of an idea of the general principles (and the disasters that can occur if it’s not done properly) but not a lot of confidence when it comes to discussing anything beyond the tap that I’m turning or the chain that I’m flushing. Similarly, my knowledge of the workings of government and politics is weak, as is my understanding of economics, power production and the science of climate change. I do know a lot….. but nothing very relevant to this important issue it seems. 

    Our Parish Magazine carried an article by Rev Michael McHugh quoting James F Byrnes: “Curiosity will conquer fear even more than bravery will.” What an inspiring and liberating thought! So now, instead of thinking that I don’t know enough to join the debate I will think ‘I wonder what would happen if I sent a letter to Woman’s Hour’ or the Women’s Institute or another letter to my MP. What’s to lose? Surely the more people talking about it, the better.

    Dear Woman’s Hour

    Thank you for your recent item about women who are choosing not to have children because of fears about climate change – which illustrates just how much women are worrying about this. It is a HUGE issue for women and families. As a mother I am terrified. Sadly, I think women are struggling to visualise a positive route to addressing climate change that protects their family. 

    I would really like to hear Woman’s Hour address climate change, in a positive way, that presents politically effective family friendly strategies that women can campaign for, to make a real difference (in addition to recycling our clothes, reducing waste, eating less meat etc etc……) 

    For example – ‘Carbon Fee and Dividend’ is an approach that has been recognised by the Government as an effective method of carbon pricing that ‘has merits’ and is being considered as a way forward (The Times, 9 July 2021).

    The principles are simple:

    • Carbon fuels are still being used because they are relatively cheap.
    • If the Government introduced an incrementally rising charge on carbon fuels, industry would be motivated to explore other options quickly.
    • Money raised would be returned to every citizen (adult and child) which offsets rising household fuel bills and benefits those who live a less carbon hungry lifestyle. 
    • This is a fair, effective and free policy which supports families and those most vulnerable in the community.
    • 27 Nobel prize winning economists support CF&D   https://www.econstatement.org , as well as many prominent women in the UK e.g. the successful children’s author illustrator Mini Grey and another successful children’s author Judy Hindley who speaks very articulately on the subject.

    Talking about us all ‘doing our bit’ just isn’t working and women need to feel empowered to push for a change at a much higher level that supports families as well as industry through the tough choices and changes ahead. 

    Please would you consider raising this as a topic on Woman’s Hour – firstly by going on record in declaring a climate emergency and then by raising awareness of strategies such as Carbon Fee and Dividend as a way forward that puts families and the most vulnerable into the solution.

    Yours faithfully

    Jane Renwick

    p.s. A much better explanation than mine can be found at http://citizensclimatelobby.uk/

  • Members respond to the IPPC report – Part 2

    Members respond to the IPPC report – Part 2

    Please note that these essays are not the official view of CCL UK but of some of our members…..

    Carbon Fee and Dividend is structured to provide subsidy to ordinary householders as they begin to confront the costs of transitioning to a net zero carbon economy.  

    In addition, Carbon Fee and Dividend can be expected to accelerate the overdue reallocation of capital towards regenerative enterprise that fossil fuel divestment, by for example pension funds, has already provoked.  For the mainstream of society this is vital, since a transition to a low carbon circular economy based on regeneration and sustainable limits will provide the worthwhile and purposeful new jobs needed.  Hopefully, much of this innovation will be local or even community based and so lead to a multiplier effect as more of the money circulates locally and in turn leads to yet more enterprise and benefits. 

    A capsule of the actual problems lying behind Alok Sharma’s IPPC derived warnings might read: 

    The words assumption, belief, self-interest and delusion are all words that apply to the economic model (Neoliberalism) that has grown ever since money was finally liberated, in 1971, from the limits that being tied to the gold standard imposed.  There were no externality (environmental) costs built in, not least because of lobbying and deception strategies operated by large corporations.

    They appear to overlook that their concept is also the source of inequality; or put another way “too many in Maslow Deficit” (lower 3 tiers) and moreover, that their concept is the source of the debt which begets the growth dependency needed to pay it down.  With externalities largely ignored this all translates into the environmental destruction / climate breakdown that is bringing the world to its knees!   

    Andrew Stott

    On the 9th August 2021, the Intergovernmental Panel on Climate Change (IPCC) released the first part, ‘Working Group I’, of its Sixth Assessment Report. Compiling over 14,000 scientific papers, the work of 234 scientists from 66 different countries, the report outlined and emphasised the need for immediate and drastic action to avoid a rise of over 2°C in the global temperature. A system where fossil fuels are taxed and the money returned to the public is one way to approach this, tackling both the environmental concern and dealing with the required economic traction to get it started. This is known as a carbon fee & dividend (CF&D) scheme.

    The declining cost of renewables

    Renewable energy prices are at the lowest they’ve ever been (according to an analysis by Lazard Ltd.) and the UK government predicts that levelised cost of electricity (LCOE) prices for renewables will drop even further while prices for fossil fuels will largely remain the same. 

    Figure 1 – Table showing LCOE for the next 20 years in £/MWh as predicted by the UK government in their 2020 report on Electricity Generation Costs.

    The earlier a complete change to renewable energy happens, the more money that will be saved in the long run. A myriad of reasons have prevented the switchover to renewables, despite the apparent advantages they currently have over fossil fuels. The associated costs with starting a new energy plant, new fracking technology significantly lowering the cost of natural gas, existing contracts tied up with fossil fuel suppliers, increased electricity bills for the general public and seasonal inconsistencies with renewable electricity generation are just some of the reasons why, initially, a switch to renewables may not be as economically attractive as one first expects. This is why a carbon tax would ‘even the playing field’ so to speak and incentivise investment into renewables.

    The EU ETS and Britain’s departure

    Economic incentives for reducing carbon emissions are not a foreign idea to the UK. The country used to be part of a cap and trade scheme used throughout the EU. The European Union Emission Trading System (EU ETS) is the largest of its kind in the world and consists of a scheme designed to limit the CO2 released into the atmosphere by allocating emissions allowances to member nations. If a country needs to generate more emissions they can trade for these allowances from a country that has successfully reduced its own. Thus, creating an economic incentive for a country to reduce its emissions. 

    Unfortunately, on the 31st January 2020, Britain left the EU and with it the EU ETS. A similar system was designed and incorporated known as the UK ETS. Emissions trading would continue but between the 4 nations of the UK rather than the 27 member nations and 3 trading partners (Norway, Iceland and Liechtenstein) of the EU. However, the Grantham Research Institute on Climate Change and the Environment (GRICCE) indicated in their 2019 study that this would be “suboptimal” and a carbon tax would be more beneficial in reducing carbon emissions. Again, in 2019, the GRICCE theorised that “a tax of £40 per tonne of CO2 equivalent emissions turned into a £1000 annual return for UK households” would be one of the most ideal ways at reaching net zero emissions by 2050. It also recommends the £40 per tonne tax is just a starting point and the price should slowly be increased.

    How will the money be used?

    One of the main arguments against a carbon fee & dividend scheme is that the general public will bear the brunt of the tax and although environmentally beneficial, it will increase the cost of living. To low income families, an increase in the heating or electricity bill every month is very unappealing, especially as they would not experience the immediate benefits of reduced CO2 emissions. However, the scheme ensures that the money is equally distributed to everyone in a monthly dividend.

    Figure 2 – Courtesy of the Grantham Research Institute at LSE. Graph showing tax payments and dividend received by income decile.

    Looking at figure 2 we see that the lowest income decile households (1) would be better off with the flat £1000 dividend as it is a larger percentage of their total household expenditure. 

    Canada has a similar system and has been using it since as far back as 2008 (in British Columbia). Helen Mountford of the World Resources Institute states that citizens of Manitoba province, for example, would expect to see a rise of $174 CAD in cost due to the carbon tax. But receive a total rebate of $252 CAD resulting in a net gain of $78 CAD (~£45). Canada may only have a population of just over half of the UK but its CO2  emissions almost treble ours. If an industrial giant like Canada can implement a CF&D scheme and make it work, then so can we.

    The benefits of a CF&D scheme are clear. A switch to a more modern, cheaper and greener economy that will see benefits not only for our children and our children’s children but also us, we who are living currently. Alok Sharma’s warnings, ahead of COP26, are dire and desperately need to be listened to. Change is hard but if we don’t, our planet will.

    Luke Clews

  • The consensus is growing – what surveys, petitions and the media are saying and what we can do about it…

    The consensus is growing – what surveys, petitions and the media are saying and what we can do about it…

    Reading the daily email alert from Carbon Brief is fascinating and getting more and more time consuming! I have certainly noticed a real shift of media opinion towards the climate emergency over the past year, as the effects of climate change are becoming more and more immediate. There are very few denial editorials these days even if the solutions are still hotly debated.

    The media is reporting growing support for the government to go further and faster such as a Guardian report that ‘Over-50s want climate crisis addressed ‘even if it leads to high prices’. There were also reports in the Independent and Daily Telegraph. It is noteworthy that The Times and Daily Telegraph have written about the threat of famine in Madagascar without disputing the first ‘climate change famine’ description.

    What I found most encouraging in today’s email alert was a report on an editorial entitled ‘Don’t let climate goals be lost in culture wars – cutting emissions means decarbonising the way we live, not giving it up’ which appeared in yesterday’s Financial Times.

    The editorial suggests how politicians and, by implication, campaigners should be approaching the issue of gaining public support for the changes needed to fight climate change now we can no longer rely on the low hanging fruit of removing coal from the energy mix…..

    “…trying to convince everyone they must change their lifestyles radically” in order to tackle climate change is “unlikely to work: demands that essentially put the onus on individuals will alienate too many people in an environment of insufficient knowledge about what net zero means and distrust about the intentions of politicians”..

    Instead, the message politicians must communicate is twofold. First, emphasise the facts: climate change is an urgent threat, it requires all of us to act – but if we act together, the sacrifices are far from prohibitive. Second, acknowledge that people will need help to take the right choices – and ensure that it is forthcoming. A consensus around mass adoption of carbon-reducing technologies can be achieved if adoption is rewarded and costless for those at the bottom. The alternatives – insufficient action, or calls for asceticism — will lead to division and failure.”

    If that’s not an endorsement of Climate Income I don’t know what is! I also think it is a very useful hook for an email to a constituency MP, along with mentioning that over 100,000 people signed the ZeroC. petition  and even baby boomers are willing to put their money where their mouth is. (I am afraid I fit in that category but I am sure I am not alone in wanting more support and reassurance before I replace the fairly new gas boiler!)

    The UK has the chance to set an example to the world to make sure there will be no more climate change famines.

    If you email your MP please don’t forget to bcc us/forward to at [email protected].

  • What is the IPPR report suggesting?

    What is the IPPR report suggesting?

    In April there was a news report on citizen’s juries which were set up in areas which would be most affected by decarbonisation. Their deliberations fed into a cross party environmental justice commission along with business leaders, union leaders and the Institute for Public Policy Research which produced its report on the 14th July.

    The authors state that the gilets jaunes (yellow vest) protests in France show that fuel tax increases will bring a backlash if they are perceived as unfair. Instead, they cite Canada as an example of redistributing carbon tax revenues among citizens. 

    The report is arguing for grants and support for better ‘well being’ rather than the fair dividend paid to the populace regardless of personal merit or circumstance which Canada has implemented and Citizens Climate Lobby, including Citizens Climate Lobby UK support. 

    The report suggests using the proceeds of a price on carbon and borrowing at current low interest rates to ensure fundamental change in the ‘country’s economic model’.

    The main suggestions are:

    Adding £30bn of public investment each year in a low carbon economy until at least 2030.

    A new £7.5bn-a-year “GreenGO scheme”, which would serve as a financial one-stop shop, akin to the government’s Help to Buy scheme, to help households switch to green alternatives on heating, home insulation and transport.

    Upgrade local public transport and making it free to all users throughout the UK by 2030, with free bus travel by 2025 as a first step.

    Introducing a “3 x 30 x 300” rule for local planning that would ensure at least three natural features are visible from every new home, every neighbourhood has at least 30% tree canopy cover, and no new home is further than 300 metres from an accessible green space.

    Establish a permanent, UK-wide climate and nature assembly, alongside a “wellbeing of future generations” act in England, Scotland and Northern Ireland (Wales already has this) to ensure that all business and policy decisions must take account of their long-term effects.

    Involve communities so policies reflect local priorities. This would include granting local authorities new powers over economic strategy and giving the public a direct say over how local budgets are spent.

    Yes, the proceeds of a price on carbon should go to society rather than into government revenue. This plan however would not directly compensate every household for rising fuel prices evenhandedly. Most of the dividend and borrowed money is intended to benefit people living in certain areas, particularly new developments in urban areas.

     It will not directly combat fuel poverty or support rural communities who may not be considered low income but would be hard hit by rising fuel prices in transport and heating. No free bus service would be able to replace the car for every farm and small village. There is a danger in prioritising certain areas which historically has left more rural counties struggling with less money for education, health, social care etc. Note that under the Canadian plan the Federal Government report states that…

    In recognition of the fact that people who live in small and rural communities have reduced access to cleaner transportation options, a supplementary amount in addition to the baseline Climate Action Incentive payment is provided for eligible individuals and families who live outside a census metropolitan area, as defined by Statistics Canada. This supplement increases the baseline amount by 10%.(p.26). 

    Under the Canadian plan the majority of households are better off, this is a fairer and more politically neutral way to hand out the proceeds of the carbon price.

    Illustration by Mini Grey.

  • The reality of climate change can no longer be ignored in North America but what is the best policy to combat it?

    The reality of climate change can no longer be ignored in North America but what is the best policy to combat it?

    The reality of climate change has hit hard over the past week with the deadly heatwave in the Pacific NW. The issue of how to combat rising emissions can no longer be kept off the front pages. On Friday 2nd Carbon Brief Daily reported that a frontpage story in the Times stated that “ministers have drawn up radical plans to reduce carbon emissions that would increase gas bills and the cost of running a car by hundreds of pounds a year”. They are proposing a carbon reduction scheme, copying the EU ETS plan to cover emissions caused by heating buildings and transport. The paper states that it “has been told that the prime minister does not want to include petrol in the scheme amid concerns that it would penalise motorists”, while the government “said last night that no decisions had been made”. This is the trouble with designing a regressive policy which will adversely affect most households. To be cynical is this a ‘leak’ in the hope that a backlash will mean it can be scrapped? 

    On Sunday there was an editorial in the Washington Daily Post arguing why a carbon fee and dividend plan would be a far more effective means of mitigating climate change in the US than Biden’s current strategy. One of the authors, Republican nonogenarian James A Baker co-authored the 2018 Baker Shultz Carbon Dividends Plan (this is not the plan supported by CCL US but shares similar principles). 

    The editorial points out the elephant in the room in discussions about climate change mitigation. Republicans in the US are worried that Biden’s plans, based on limiting US fossil fuel production without any plan to affect the price of imports, will reduce its competitiveness with China….Most nations won’t risk their own economic well-being in the hope of reversing what is clearly a global problem……  A plan co-authored by Secretary Baker and the late George P. Shultz holds the key to placing market pressure on China and other nations to start doing their part. It would place a fee on all carbon emissions in the United States, an approach that most economists believe is the most efficient and effective way to reduce such emissions.

    But rather than giving that money to the federal government, all of the revenue from the fee would be returned to Americans in the form of a quarterly dividend. A household of four would receive $2,000 annually, enough to provide the vast majority of households with more money than they would pay in higher energy costs. As a result, this fee would not expand the federal government, and therefore should not be considered a tax.

    But it would incentivize the private sector to find new and better ways to reduce emissions. This is a far better route than forcing the United States to wean itself from fossil fuels (while other nations fail to do so) because it harnesses a set of critically important strategic assets of our country: our abundance of affordable and cleaner energy, and our unmatched powers of innovation. 

    It discusses the European Carbon Border Adjustment Mechanism (CBAM) plans  to place a tariff equivalent to the carbon price  on imports which have not had a price imposed in the country of origin – probably easier than trying to talk them into equally restricting their output!  It points out that…..The economic upside here is unmistakable. U.S. steelmakers, for example, are far more efficient in low-carbon production than their major global competitor, according to a recent study commissioned by the Climate Leadership Council. By applying a carbon fee to domestic and imported steel, U.S. industry would win across the board. Overall, the study found, the U.S. economy is 40 percent more carbon efficient than the world average, and nearly every U.S. industrial sector enjoys a carbon advantage over most of our key trading partners.