Citizens' Climate Lobby UK

Category: Economics

  • Climate Income – How this powerful climate policy can address the cost of living crisis.

    Climate Income – How this powerful climate policy can address the cost of living crisis.

    The next UK government must address the cost of living crisis. It’s also clear from public data that the climate crisis is an ongoing concern for 75%. Now there is the opportunity to kill multiple birds with one stone. The latest developments in the EU Green Deal are contributing to international momentum on the subject of carbon pricing. If the UK wants a closer relationship with Europe, aligning on this key environmental policy offers a number of additional social and economic benefits.

    Carbon pricing, also known as carbon taxation, is overwhelmingly the fastest and most effective tool to cut greenhouse gas emissions. No one claims carbon pricing solves everything, other policies are needed, just that it’s the most important thing to do. Carbon pricing is a cornerstone of the EU Green Deal and improves the effectiveness of all other climate policies. The World Bank tracks international carbon pricing development both in terms of coverage and price level, i.e. how many emissions are covered and at what price.

    Currently the UK prices 40% of carbon via the Emissions Trading Scheme (ETS) which applies to large scale industry (and is almost invisible to consumers). The UK carbon price floor legislation adds strength and has been effective in dramatically reducing coal from UK electricity production. The EU is extending the ETS to Buildings and Road Transport (ETS2) with further expansion under discussion. The same approach in the UK would increase carbon pricing coverage to over 80% and have a direct impact on all households.

    Although most poor and middle income families use much less energy than the richest, it’s a higher proportion of their income. This form of taxation is inherently regressive, hurting the poor more than the rich. Climate Income, where the proceeds of the tax are given back equally to people, makes the vast majority of poor families and most middle income families better off. Making carbon tax popular and progressive in this way is well understood.

    The challenges for politicians in implementing Climate Income are that the public are wary that “tax” means they will likely be worse off, and industry is concerned about international trade competitiveness. The information on these first two issues has improved considerably, though there remains pressure from the fossil fuel lobby, which is still more powerful and better funded than the emerging green industry.

    The recent OECD report International Attitudes Toward Climate Policies surveyed 40,000 citizens from 20 countries. It found that people want to know that the policy works, is fair, and how it will affect them. The report showed that 5 minute videos can build public support, showing fairness by redistributing revenue equally protects poorer households. For the UK, confidence in public support for Climate Income is reinforced by the Scottish Climate Assembly with 77% support for this specific policy.

    Industry fears about “carbon leakage”, when trade and jobs are lost to companies in other countries with lower pollution costs, have often been highlighted as an economic risk. The EU has now taken on this issue directly with the Carbon Border Adjustment Mechanism (CBAM). It is prompting action in relation to carbon pricing from the US, China and India. Evidence from US industry implies that the UK not only has nothing to fear, but in fact has much to be gained. Energy intensive UK industry is highly competitive and is effectively leaving money on the table by not pricing international emissions.

    Whatever the UK’s desired trading relationship with Europe, there are proven examples of Climate Income. Canada and the UK today have similar trading structures with the EU. Canada introduced The Greenhouse Gas Pollution Pricing Act in 2019 rebating 90% to households. Expert consensus is growing that this is the best solution for Canada. Switzerland is in the European Free Trade Agreement and outside the EU. In addition to an aligned EU ETS, as the UK has, Switzerland prices domestic fuel at €120 with 67% returned to households. Austria is in the EU, in the Customs Union and the Euro Zone. Specifically in preparation for the ETS2 Austria introduced KlimaBonus (Climate Bonus) returning 100% to households.

    Being outside the EU may have advantages, EU member states have concerns about legislative complexity and price volatility. Especially when simpler alternatives like a national carbon price are encouraged by Sweden and considered in Germany, where civic society is demanding the government deliver the manifesto promise for KlimaGeld (Climate Money). The UK carbon price floor legislation has the potential to provide harmonised and less volatile pricing than either the ETS or ETS2. Predictability is very helpful to the longer term planning and certainty needs of industry highlighted in the FASTER principles for successful carbon pricing.

    Climate Income is a zero cost policy that addresses two of the top concerns of the public. With the prevailing international winds blowing in support, it does more to reduce emissions than anything else. It’s good for international trade, the economy and jobs. Most households are better off. And it’s endorsed through the biggest statement by economists ever, including every living Nobel Laureate Economist. Time to act on the advice of experts.

    N.B. This article argues for a similar policy advocated by the Young Liberal Democrats described as “A Progressive Carbon Tax” in their Policy Book from 2021. There is an updated European Young Liberal (LYMEC) policy “6.11 The Adoption of C02 Taxes and Tariffs by the EU” in their 2024 Policy Book that shows further support.

    Article published in the Green Liberal Democrat Website and Challenge magazine, May 2024.

    I am the Chair at Citizens’ Climate Europe and a Member of the EU Climate Change Expert Group for ETS2 Implementation. (Front left in photograph of Citizens’ Climate Europe members from CCL members from France, Germany, Belgium, Sweden, Finland, Poland, UK, Portugal and the Netherlands).

  • Fiddling while Rhodes burns, we can remind politicians there is a fair and just way to decarbonise….

    Fiddling while Rhodes burns, we can remind politicians there is a fair and just way to decarbonise….

    Both Labour and Conservative politicians have been spooked by the narrow by-election win in Uxbridge which has been squarely attributed to campaigning on the proposed extension of the Ulez scheme. Few commentators pointed out that Manchester, Bristol, Birmingham and Bradford received a combined £230m in Government funding for their scrappage schemes, but London and the South East have received none.

    Press coverage has rightly pointed out that people should not be made poorer by ill thought out schemes which could be said to put the cart before the horse. There are politicians in both parties who are calling for unpopular policies to be dropped or postponed but neither party is denying the need to reach net zero.

    Sam Hall, director of the Conservative Environment Network, told The Observer that …“Environmental policies are an electoral asset when they are fair, affordable, and deliver for people and their communities. I’d warn Conservatives against listening to calls to ditch environmental commitments following the Uxbridge result. Insulating people’s homes, building more renewables, and attracting investment into new clean industries are popular, bill-cutting and job-creating.” 

    A blog he wrote for CEN points out that…The Conservatives secured a victory against the odds by focusing the campaign on ULEZ expansion. They effectively pulled off a protest vote against an unpopular mayor instead of the usual dynamic of voters protesting the government. This strategy won’t work at a general election, when the party will be asking for a fifth term in government. Senior Conservatives must resist calls to ditch conservative environmental policies. (Over 150 MPs and Peers have signed up to the CEN).

    What the by-election shows is that policies which create financial hardship won’t work and in fact will be as counter productive as the tax imposed in France which led to the Gilet Jaunes revolt. Climate Income along with grants or loans based on future carbon dividend payments would go a long way to achieving the decarbonisation of the economy without penalising most people (as outlined in our report published last October). 

    Whilst not asking directly for Climate Income the Times editorial today puts the case for a Carbon Tax…..The message from policymakers must be that mitigating climate change can best be tackled through the continual innovations that are characteristic of market economies. And that doing so, using the price mechanism to encourage new technologies, is practical. It is widely understood that a carbon tax would be highly effective in persuading consumers and businesses to switch their energy consumption and behaviour. This would need to apply to carbon consumption and not only production, lest richer countries merely outsource their production to poorer economies. Revenues from a carbon tax could be used to subsidise renewable sources of energy and thereby encourage their wide adoption.

    Update 25/7/23

    Today Lord Deben (outgoing Chair of the CCC) has asked that parties build a cross party consensus on tackling climate change and getting to net zero, based on the recommendation of Chris Skidmore’s UK Net Zero Review. ….“If I were leader of the Labour party at this moment, I know exactly what I’d do,” said Deben. “I would say to the current government: ‘Here is Mr Skidmore’s report, he is a Conservative ex-minister, he was asked to do this report to show how best to deliver net zero by Liz Truss. Now we will accept, if you put it forward, we will do the following basic things [acting on the report’s recommendations]. We will do that. We won’t oppose it. You put them forward, we’ll back it.’” ………..There are those who don’t really take onboard the urgency of climate change, and they are in all political parties.”

    Let’s remind our politicians that there is not only no justification for dropping commitments to net zero while Rhodes burns and people die, but also no need!

     Tomorrow’s national meeting will be dedicated to this action

  • Woodhouse Colliery decision makes no sense – climate and economy will lose

    I have just sent a quick email to my MP about the decision to approve Woodhouse Colliery. He, thanks to the efforts of our local CCL group, understands and supports the case for Climate Income but I would have written even if I was not campaignong for Climate Income. The decision makes no sense even under ours and Europe’s current carbon pricing system (ETS).

    I am perturbed that the Woodhouse colliery has been approved, ostensibly to prevent the need to import coking coal, yet….There are only two potential customers for this coal in the UK: Tata Steel and British Steel. Yet Chris McDonald, chief executive of the Materials Processing Institute, said earlier this year: “British Steel have said they cannot use the coal from this mine because the sulphur levels are too high. Tata Steel have said if the coal were available, then they may or may not use a small amount. There isn’t anyone in the steel industry who’s calling for the mine.” 

    This retrograde step delays the industrial changes needed to move away from fossil fuels and will decrease our future competitiveness. We will also lose the credibility and leadership we gained at COP26 with the Powering Past Coal Alliance. As the future for steel is acknowledged to be smelting using green hydrogen and electrolysis for recycling steel we would do better to invest in green hydrogen. According to the LGA Cumbria could have 6,000 new jobs by 2030 with the right investments in green infrastructure, with 600 in Copeland.

    BEIS has had a 250 million Clean Steel fund since 2019 and an Industrial Energy Transformation Fund, lets use it to get ahead of the game and future proof our industry. Germany and Sweden are already piloting the technology, we will fast lose any competitive edge if we stick to this outdated technology the industry doesn’t want. With a sensible carbon pricing mechanism like Climate Income the price of coal coking of steel would also soon lose any competitive advantage, and it may even do so under ETS. The decision could be called Luddite, or at least extremely short sighted!

    I think we need to show our MPs that the decision was foolhardy to say the least. Send them an email or maybe a Christmas card to show that bad decisions on energy and industrial strategy will always come home to roost!

  • The IMF says that the world needs to mitigate climate change now using a form of Climate Income, the cost of procrastination will only get higher…

    The IMF says that the world needs to mitigate climate change now using a form of Climate Income, the cost of procrastination will only get higher…

    A Guardian report on the 5th October examines the predictions of a chapter in the current IMF half yearly World Economic Outlook report. It  has a chapter titled Near-Term Macroeconomic Impact of Decarbonization Policies. The chapter models the cost of delaying the tackling of climate change until ‘conditions are right’ and current global inflation has lowered; an IMF blog about it is titled.. ‘Further Delaying Climate Policies Will Hurt Economic Growth…The transition to a greener future has a price—but the longer countries wait to make the shift, the larger the costs’. 

    The blog argues that concerns about current cost have been perceived to be more real than the nebulous future threat of climate change, causing decades long procrastination …’despite overwhelming evidence that any short-term costs will be dwarfed by the long-term benefits (with respect to output, financial stability, health) of arresting climate change (October 2020 World Economic Outlook; IPCC 2022).  

    The current crisis has heightened the fear that climate mitigation would just raise inflation further and led to the claim that we need to double down on fossil fuels for energy security (as in the UK). Concurrently a Global Energy Monitor report states that…

    New oil and gas development in the North Sea could produce up to 984 megatonnes of CO2 equivalent and contribute to the United Kingdom exceeding its carbon budget for 2023-2037 by a factor of two.

    The IMF’s modelling uses the revenue from gradually rising greenhouse gas taxes returned in part to households to drive the transition….

    To assess the short-term impact of transitioning to renewables, we developed a model that splits countries into four regions—China, the euro area, the United States, and a block representing the rest of the world. We assume that each region introduces budget-neutral policies that include greenhouse gas taxes, which are increased gradually to achieve a 25 percent reduction in emissions by 2030, combined with transfers to households, subsidies to low-emitting technologies, and labor tax cuts.

    It argues that the policy, if started now would have a modest decline in GDP and rise in inflation, slowing global economic growth by 0.15 to 0.25% and rising inflation by 0.1 to 0.45; but if delayed until 2027 with the rationale of waiting until inflation is down the effect on the global economy would be worse….

    Is it reasonable to wait—as some have proposed—until inflation is down before implementing climate mitigation policies? We ran a scenario delaying implementation until 2027 that still achieves the same reduction in cumulative emissions in the long term. The delayed package is phased in more rapidly and requires a higher greenhouse gas tax, since a steeper decline in emissions is necessary to offset the accumulation of emissions from 2023 to 2026.

    The results are striking. Even in the most favorable circumstances when monetary policy is credible and the transition to decarbonized electricity is rapid, the output-inflation trade-off would rise significantly; GDP would have to drop by 1.5 percent below baseline over four years to drive inflation back to target. Delay beyond 2027 would require an even more rushed transition in which inflation can be contained only at significant cost to real GDP. The longer we wait, the worse the trade-off.

    The take home message? ….if the right measures are implemented immediately and phased in gradually over the next eight years, the costs will remain manageable and are dwarfed by the innumerable long-term costs of inaction.

    .

  • Oxford University report argues that switching to renewable energy would be as good for the pocket as the planet.

    Oxford University report argues that switching to renewable energy would be as good for the pocket as the planet.

    The report titled Empirically grounded technology forecasts and the energy transition derives from a collaboration between the Institute for New Economic Thinking at the Oxford Martin School, the Oxford Martin Programme on the Post-Carbon Transition, the Smith School of Enterprise & Environment at the University of Oxford, and SoDa Labs at Monash University.

    Professor Doyne Farmer told BBC News that.. “Even if you’re a climate denier, you should be on board with what we’re advocating…..Our central conclusion is that we should go full speed ahead with the green energy transition because it’s going to save us money,” ($12tn by 2050!). The report cites examples of cost predictions made by the IPPC and in the UK by Philip Hammond which it claims are erroneous and have been a deterrent to investment. 

    The report states that scaling up green technologies (solar and wind) will continue to drive down their costs. Why not also encourage the investment needed by putting a steadily rising price on the carbon content of fossil fuels to reflect their true cost to society and further encourage the uptake of renewables, returning the revenue to the populace to compensate for the rising prices of said fossil fuels during the transition period, aka Climate Income?

  • Three former UNFCCC Executive Secretaries speak out.

    Three former UNFCCC Executive Secretaries speak out.

    On the 1st June three former UN climate chiefs, Christian Figueres (2010-16), Yvo de Beor (2006-10) and Michael Zammit Cutajar (1991-2002) wrote a joint article in the Guardian. They state that in February the world’s governments endorsed the IPPC report on Impacts, Adaptation and Vulnerability and thus the statement that…

    “The cumulative scientific evidence is unequivocal: Climate change is a threat to human wellbeing and planetary health…. Any further delay in concerted anticipatory global action on adaptation and mitigation will miss a brief and rapidly closing window of opportunity to secure a liveable and sustainable future for all.” 

    Despite this the trajectory of current worldwide climate policies would lead to a temperature rise of between 2.7C and a catastrophic 3.6C above pre-industrial levels. Governments can’t act as if other crises such as health, poverty and security can be tackled whilst ignoring the climate crisis, they are interlinked. Perhaps, they argue… 

    If science has not persuaded most governments to act, perhaps economics will. The IPCC provides clear evidence that societies will be more prosperous in a world where climate change is constrained, than in one left to burn. In the energy sector, evidence of the zero-carbon transition is all around us. Wind and solar generation shows compound growth of about 20% a year and is cheaper almost everywhere than the alternatives. Electric car sales doubled between 2020 and 2021.

    Unless one is invested in fossil fuels, there is now no reason not to take the clean energy path. Many corporate actors understand the need for early action on this front. But governments still need to incentivise the transition. The evolving Just Energy Transition packages may yet offer an investment pathway that can accelerate deployment in emerging and developing countries. Corporate action towards other targets such as reduction of methane emissions, also needs to be encouraged.

    Carbon pricing, we might add, would reinforce the argument for decarbonisation if it applied in a way that enables forward planning and enhances the economic well being of the majority of people, as with Climate Income.

  • Growing interest in the merits of carbon pricing in general and Climate Income in particular as the old arguments against it are losing ground….

    Growing interest in the merits of carbon pricing in general and Climate Income in particular as the old arguments against it are losing ground….

    It seems appropriate to be writing about a blog by an Oxfam researcher on this Jubilee weekend as the biblical purpose of Jubilee years was to release the indebted and restore their land to them. Climate change is a symptom of global economic and social injustice. In the debate about solutions carbon pricing is often criticised as a regressive and ineffectual policy favoured by those who want to keep the economic status quo – of course supporters of Climate Income know better! 

    James Morrissey, Senior Researcher at  Oxfam US recently wrote a blog titled – The best answer to climate change – or a regressive policy set to fail? A guide to the arguments over carbon pricing.  Morrissey has highlighted the issues about current carbon pricing policies which are also acknowledged by proponents of Climate Income…….

     IT’S CLEAR THAT CURRENT CARBON PRICES ARE TOO LOW

    Before we get to the arguments about whether carbon pricing can work, it’s essential to point out that carbon prices are currently inadequate to address climate change. In the vast majority of cases, prices are too low, and not applied to enough of the economy to drive decarbonisation at the rate necessary. The graph below shows how prices are generally below $50 per tonne of CO2 (they need to be closer to $100/tCO2) and only cover 15% of the global economy (they need to be at 100%). Despite these problems, it’s notable that carbon pricing is seeing increasing uptake over time – with more and more countries adopting prices and more of the global economy under a price.

     CARBON PRICING DOES NOT AFFECT EMISSIONS

    First is the argument that placing a price on carbon does not affect emissions. The empirical literature doesn’t support this claim. Numerous empirical studies of carbon pricing, using a variety of methods, demonstrate that carbon pricing has reduced emissions. There is some question over whether the emissions reductions have been large enough, but this really comes down to what you consider “large” and what sort of reductions might be expected at what prices. In general reductions in emissions have been small, but significant, especially considering the low prices in place.

    IT WON’T BE ENOUGH BY ITSELF TO TACKLE CLIMATE CHANGE

    The second argument against carbon pricing’s effectiveness is that alone, it is inadequate to tackle climate change, because consumers don’t behave like economists assume: as rational cost minimisers. For example, people don’t just buy the cheapest car for their needs; they buy cars based on ideas of status and brand loyalty, among others. This is true and uncontroversial, we need more than price signals to move consumers. However, this argument is also something of a straw doll: most of the literature on carbon pricing acknowledges that carbon pricing will need to be complemented with other policies if it is to be effective in averting climate catastrophe. To this end, advocates of a carbon price who suggest it’s the only policy we need should be viewed with scepticism. 

    Note that CCI doesn’t call for Climate Income to be a stand alone policy and it has not been implemented as such in the countries like Canada which have adopted it thus far.

    IT WILL HURT THE POOREST PEOPLE WHEREVER IT’S IMPLEMENTED

    A big concern around carbon pricing is that increasing the cost of energy derived from fossil fuels will drive regressive impacts.

    Since energy is central to the functioning of the global economy, and we currently generate around 83% of primary energy from fossil fuels, a carbon price will make almost all goods in the economy more expensive. Because low-income groups tend to spend a greater portion of their income on energy-intensive goods, a carbon price will have a disproportionately large negative impact on their well-being compared to wealthy households – making the policy notably regressive.

    However, a huge advantage of carbon pricing is that the price also generates revenues. Importantly, wealthy groups tend to consume more energy-intensive goods than low-income groups (even though they spend a smaller proportion of their income on these goods). What this means is that, despite regressive cost-side impacts, you can use the revenues to make carbon pricing substantially progressive. There are a number of ways to do this, but the simplest is to just return all the revenues to everyone, equally (ie on a per capita basis). Doing so would result in low-income populations receiving more than they pay in increased prices, while the opposite would be true for wealthy populations. (My emphasis).

    Morrisey does point out that the policy has to overcome public antipathy to the concept of increasing taxation, which also makes the policy easier for opponents to criticise than less visible regulations and subsidies. He argues, however, that these alternative policies also encounter opposition and are no more capable of solving the problem of climate change on their own than is carbon pricing. He concludes that if there is some momentum for carbon pricing NGOs should support it with the caveats that ….

    The revenues produced by carbon pricing must be used to effectively address all regressive impacts created by the price. Prices must either be set high enough to drive ambitious emissions reductions or, if prices are to start low and increase over time to overcome political opposition, the process for increasing prices needs to be automatic and insulated from political push-back. (My emphasis).

    Carbon pricing can be effective but, by itself, it will not be enough to address climate change. Any carbon price will require complementary policies. The most important will relate to addressing other market failures (such as the need for public investment in research and development) and addressing network problems (such as supporting electric vehicle charging infrastructure), but will also include policies for numerous markets where price signals are insufficient to shift behaviour.  

    Along with the recent reports in Nature and by the Autonomy think tank, this blog and the related Oxfam primer on carbon pricing show growing support for the concept that a Climate Income policy will not only alleviate climate change but also the gross inequalities impeding sustainable development in the Global South. 

    Finally I must mention a very apposite blog by fellow Citizens’ Climate Europe member Brigitte Vangerven about the idea that protecting the climate requires sacrifice. …

    Pricing pollution will make polluting products more expensive than clean products. The price difference will make people and companies choose the clean alternatives. It will greatly accelerate decarbonisation and the widespread deployment of clean alternatives. The proceeds are used to support the people in the energy transition.

    Everybody receives a Climate Income. Most households, especially low and mid incomes are better off or break even through this policy.

    It is simple, transparent, just and effective, and I hope that for many people it will dispel their reservations.

    This makes it possible to implement an ambitious climate policy, that will receive broad support from the people. There is no longer a conflict.

  • Growing support for an international carbon price floor.

    Growing support for an international carbon price floor.

    Last year the IMF called for a globally applied carbon price floor corresponding to a country’s wealth, with a suggested tariff in 2021 of $75 for the wealthiest countries and $25 for less developed countries. Today in the Times (paywall) Mehreen Khan, the economics editor, makes the case for an effective international carbon pricing system rather than occasional windfall taxes…. 

    “One levy notably absent from the present debate is a global carbon tax to provide an incentive for the huge shifts required to hit the global net-zero target. Even in relatively benign times, politicians have taken fright at the idea of taxing carbon use, thinking that it will disadvantage their industry at the expense of foreign rivals…

    Arguments against national carbon taxes wither away if all countries agree to impose a price. The International Monetary Fund has devised an international carbon floor where the price paid corresponds to a country’s wealth. It would mean America, Britain and Europe would use a minimum floor of $75 a tonne, falling to $25 for the poorest. This collective jump into carbon taxation would not disadvantage industries in richer countries, the fund says, and would dramatically reduce emissions.” 

    Citizens Climate International supports a carbon price floor mechanism as a necessary step to the goal of Climate Income….

    We support establishment of a global “price floor”, supported by national policies to impose a steadily intensifying price signal disfavoring climate pollution. As the IEA has reported, “There is no need for investment in new fossil fuel supply…” Pricing systems should effectively and efficiently eliminate climate pollution while building incomes for people and enhancing international cooperation for a zero-emissions future.

    Recent studies such as the report in Nature and the Autonomy report have also suggested how Climate Income could be a game changer for the Global South….

    While countries in South America, Sub-Saharan Africa, South-Asia and many other parts of the Global South would profit immensely, most developed economies would only see proportionally relatively small losses.

    …..As a global policy, it could wipe out extreme poverty and easily dwarf the scope of any existing development aid and debt relief schemes, illustrating that, in this sense, it is the Global North that owes an immense debt to the populations in the Global South, not the other way round. It would also go a long way to alleviate the disastrous impacts the Covid pandemic has had on the world’s poorest and most vulnerable, with for instance an additional 100m children falling into poverty, and prevent global disparities from deepening as richer countries recover while poorer countries fall even further behind (UNICEF 2021b). Such a global carbon dividend scheme could end the bitter reality of mass hunger and destitution and be a key building stone of a fairer, more sustainable and more inclusive post-pandemic economy. (Toll gates and money pumps, Autonomy, p.51)

    It is good to see growing support for a carbon pricing system which would remove the uncertainty and short termism thwarting the rapid decarbonisation which the world needs!

  • A few thoughts on the British Energy Security Strategy…

    A few thoughts on the British Energy Security Strategy…

    The crisis caused by the war in Ukraine has prompted the Government to rejig its energy policy in order to increase energy security by reducing the need for imported fuel. This rethink could have been an opportunity to move away from the use of gas as our base load fuel and stick to our commitments to achieving NZ by 2050 by not licensing any more oil and gas fields or fracking. 

    The Government could have prioritised increasing onshore wind and solar farms which are the quickest and cheapest ways to increase our low carbon energy supply to the promised 95% by 2030, backed up by a campaign to insulate our poor housing stock to reduce the demand for gas. Although planning rules have been made less restrictive in the strategy, onshore wind and solar will still require unanimous consent, unlike roads and incinerators; it has also been reported that more ambitious plans were watered down the night before the strategy was released.

    The Government has instead decided to launch a new licensing round for oil and gas fields in the autumn. It will take years for these to come onstream and unless rules are changed the fuel will be sold on the international market as now. This  announcement came 3 days after the latest IPCC report had warned that we have reached the now or never moment and have to leave the oil and gas in the ground.

    The Climate Change Committee stated that….“Recognising the difficulties in implementing effective policy quickly, it is still disappointing not to see more on energy efficiency and on supporting households to make changes that can cut their energy bills now. Government has reiterated its commitment to do more and we look forward to seeing details in the coming months” – here’s hoping! 

    Micharl Lewis, CEO E.ON UK was even more forthright….. “Energy efficiency is the fabled ‘silver bullet’ for a future energy system: it cuts bills and carbon emissions today, it creates jobs and it reduces our reliance on foreign gas. By abandoning any extra commitment to helping people to improve their homes, today’s announcement condemns thousands more customers to living in cold and draughty homes, wasting energy and paying more than they need to for their heating”. 

    Now could have been the moment for the Government to look again at the case for Climate Income which it had acknowledged in The Future of UK Carbon Pricing (2020), ideally with the ability to borrow against future dividend payments for investments in energy efficiency and retrofitting.

     Advocates of the approach highlight that a well-designed scheme would have social and environmental benefits, equitably distributing the revenues and stimulating investment in low carbon technologies……..emissions to be reduced in a cost effective and technology-neutral way, while mobilising the private sector to invest in emissions reduction technologies and measures.

  • How Climate Income could transform the world….

    How Climate Income could transform the world….

    The progressive think tank Autonomy, which researches solutions for climate change, the future of work and economic planning published a (very readable) report titled ‘Toll Gates and Money Pumps: Why carbon taxation could be a simple, fair and transformative policy instrument’ on the 21st of March. The report outlines how a globally applied carbon fee and dividend policy would be extremely effective at lifting the poorest countries out of poverty and more than a billion people above the global poverty line, as well as combating climate change. There is an article on the report in the Independent.

    The researchers modelled the global, European and nation state application of the scheme using two carbon prices. The lower carbon price is the current highest carbon tax worldwide, that of Sweden, at $137 per tonne, a price which makes it into the range  indicated by IPCC to be needed by 2030 to stay below 1.5°C-warming. The higher carbon price modelled was $195, this is the rate for advanced economies proposed by the Federal Environment Agency of Germany. It states that the policy is not intended to preclude public spending on decarbonising industry, agriculture, homes and transport and commodities should be clearly labelled with the GHG emissions expended in manufacture. 

    The report states that the (lower) Swedish carbon price, applied globally, would be transformative, raising $2.69tn annually …… 

    While countries in South America, Sub-Saharan Africa, South-Asia and many other parts of the Global South would profit immensely, most developed economies would only see proportionally relatively small losses.

    …..As a global policy, it could wipe out extreme poverty and easily dwarf the scope of any existing development aid and debt relief schemes, illustrating that, in this sense, it is the Global North that owes an immense debt to the populations in the Global South, not the other way round. It would also go a long way to alleviate the disastrous impacts the Covid pandemic has had on the world’s poorest and most vulnerable, with for instance an additional 100m children falling into poverty, and prevent global disparities from deepening as richer countries recover while poorer countries fall even further behind (UNICEF 2021b). Such a global carbon dividend scheme could end the bitter reality of mass hunger and destitution and be a key building stone of a fairer, more sustainable and more inclusive post-pandemic economy. 

    The authors do not address the issue of diminishing returns as the world economy decarbonises but the assumption is that the proceeds of the tax will enable all countries to embrace sustainable and fair economic development. The authors even suggest that the visible benefits of the fair distribution of the dividend could lead to… 

     the introduction of a more comprehensive, far-reaching UBI – implementing a global infrastructure for roll-out and, more importantly, materially recognize and implement the right to equal use of our planet.

    Now that the results of our dependence on fossil fuels are so visible in the war on ‘our doorstep’ the world may be ready to welcome such ideas!