Citizens' Climate Lobby UK

Category: Economics

  • Writing to your MP about the Climate Coalition 10 Point plan – a great opportunity to remind them of the benefits of CF&D which they have already acknowledged!

    Writing to your MP about the Climate Coalition 10 Point plan – a great opportunity to remind them of the benefits of CF&D which they have already acknowledged!

    Many members may have received an email from the Climate Coalition requesting that they email their MP about the Coalition’s 10 point plan, (or could go to the website and find out about how to get involved).

    There seems to be no place for easily mentioning the benefits of CF&D in the email template. I decided to add a piece after my name, so it is right at the start of the email. I have also used the government’s own words from the carbon pricing policy report to mention the benefits of CF&D! This is an easy way to remind MPs that the government itself is aware of the advantages of using CF&D to finance the move to net zero and beyond!

    My name is Catherine Dawson.  I am also a member of Citizens Climate Lobby UK  and have written to you about the benefits of Carbon Fee and Dividend and was involved in the Time is Now Zoom meeting in June. As you are aware the Government in  its report on carbon pricing policy acknowledged that …..Placing a price on carbon creates the incentive for 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…..  It would make it possible to achieve many aspects of the suggested ten point plan without crippling the economy or deterring the market led economic model.

  • The Zero-Carbon Commission

    The Zero-Carbon Commission

    The Zero Carbon Campaign (ZCC) is about as different from CCL as two organisations, with similar aims and acronyms, can get. Both organisations campaign for carbon pricing and both organisations have concluded that a carbon-dividend is vital to ensure fairness and effectiveness. But CCL is a grass-roots band of citizens whilst ZCC was set up by the founder of OVO Energy and is a commission of experts (including a former chair of the Climate Change Committee and the current executive director of Greenpeace UK). This is not a criticism of ZCC; there’s strength in diversity.

    In September 2020, ZCC published its “White Paper”—a report on How Carbon Pricing Can Help Britain Achieve Net Zero By 2050. There’s much in there for CCL to cheer including a call for the UK government to announce “a clear carbon-price trajectory”, to use the proceeds to “cushion rises in household bills” and to “investigate options for a multilateral border carbon adjustment”.

    ZCC is not advocating 100% revenue recycling into a dividend, as CCL does, but this should not stop us making common cause with an organisation whose aims have far more similarities than differences with our own. The publication of the White Paper is also an opportunity for us to publicise “climate income” and CCL-UK as an advocate for that policy.

    So what happens next? ZCC are asking the public (and organisations) to sign their declaration and to lobby MPs (sounds familiar!) They’re also planning a media campaign to pressure the government to adopt carbon pricing ahead of COP-26 in Glasgow. This will be centred around a “mock COP” to run in the second week of November this year, i.e. a year ahead of the real COP. These are all things we, in CCL, would support or are already doing.

    I’ve been asked, by CCL’s steering group, to keep an eye on developments and to involve CCL where appropriate. I’ll try to keep you all up to date and please feel free to contact me, through the comments below, if you want to be involved too.

  • A good argument for Carbon Fee and Dividend by a Free Marketeer

    A good argument for Carbon Fee and Dividend by a Free Marketeer

    Ambrose Pritchard, writing in The Telegraph criticises the proposed Democrat Green Deal as being a dirigiste policy with an ulterior motive of ‘fuelling’ the trade war with China. He gives a very cogent explanation of the mechanics of carbon fee and dividend and why he prefers this market led method of carbon pricing. He also argues why the dividend should go directly to consumers…

    Mr Biden’s new age Gosplan is not to my taste. Should the Democrats be pledging to install 500 million solar panels and 60,000 wind turbines over the next four years? Is such dirigiste planning the American way?

    The laissez faire way is to set a carbon price that ratchets up predictably, letting business respond to the price signal, and letting Schumpeterian competition find its own answers. All former chairmen of the Federal Reserve and a cast of economists of all ideological stripes have backed HR 763, a bipartisan House bill for a carbon tax and dividend.  

    It starts at $15 a tonne and ratchets up $10 every year until CO2 emissions are almost eliminated. The money raised is rotated back into people’s pockets. The higher the carbon price, the bigger the cheque, and the poor do best. 

    Needless to say, Ursula von der Leyen’s variant in Europe aims to siphon off its carbon tax to fund the Commission’s apparatus. The EU seems to have learned little from the gilets jaunes and the sociology of revolt. 

  • The response to the Covid 19 Emergency is influencing the response to the Climate Emergency (and mostly in a good way).

    The response to the Covid 19 Emergency is influencing the response to the Climate Emergency (and mostly in a good way).

    Christina Figureres wrote in the Guardian of June 1st about how many international institutions and corporate leaders are learning the lesson of governmental responses to Covid 19 to call for ambitious green economic stimulus packages.

  • Avoiding a shock to the system

    Avoiding a shock to the system

    No system is perfect. Corvid-19 has shown us that. As Britain grinds to a halt, what would have happened if we had tried to carry on as normal as the work dried up, employees laid off with no pay, companies went bust, and no benefits or sick pay for days? Our High Streets could close for good during a terrible recession, led by the biggest fall on the stock markets since 1987. 

    And, thank goodness, despite that we have a government traditionally of low taxation and a small welfare state, there was a quick realisation that our free market economy – which has given us a safe, stable country – could not cope. It was time to throw in a lifebelt and shore up the weaknesses of the system: relaxing benefit rules, paying salaries.

    From a fiscally-Conservative point of view it works because people still have jobs and money to spend which protects growth.

    From a socialist or populist-Conservative point-of-view it works because it looks after people.

    Now, think about something else that’s killed millions of people, not only those with underlying health conditions but, in fact, has given people underlying health conditions.

    Of course I’m talking climate change and air pollution. These are caused by another failure of the system: encouraging that which creates monetary wealth irrespective of the poverty it causes to the environment and climate.

    To abate this problem, we could simply stop burning fossil fuels (and meat farming).

    But the Coronavirus crisis has shown that putting the brakes on the usual run of things shocks the market and throws it under a bus. You save the climate but chuck the world into chaos. People lose their livelihoods. Anxiety and poverty is rife. And the effect would quickly be temporary.

    So we can’t ban burning fossil fuels overnight, even though that may feel the obvious solution to desperate times. We need to make them redundant, make them a bad investment by easing them out of our economy and giving the market fair warning. Prices will go up so people need a financial cushion before more cheap clean energy comes online. And the fix would stick.

    It works because it protects the economy, it protects jobs and the people the economy is there to serve.

    This is the beauty of a Climate Income.

  • Car Park Fee and Dividend

    Car Park Fee and Dividend

    CCL’s policy of carbon fee and dividend1 is designed to operate at a national level. Fees are levied when fossil fuels are extracted or imported into a nation and the revenue is distributed as an equal income to all citizens of the same country. But there’s a need for climate action at other levels too. CCL should be just as relevant in the personal, workplace, local government and international arenas. We should be offering solutions in these areas that are as beautiful and effective as fee-and-dividend at the national level.

    But, at first sight, fee-and-dividend doesn’t translate easily to other levels. Or does it? I think we can even apply it to running a local car park.

    I’ve been thinking about the University where I work and what we are doing about the Climate Crisis. Sadly, the answer is “almost nothing” but that’s starting to change. In fact, I’ve been asked to give a talk there about CCL and that got me thinking. Could we introduce a fee-and-dividend scheme for car parking to encourage staff and students to use public transport? The idea is simple, a fee for car-parking is introduced but, instead of the University keeping the money, it redistributes the income as a flat-fee to staff and students. The beauty of this is that you can set a high parking fee, to ensure a strong incentive to walk/cycle/catch the bus, without actually penalizing people very much (because the dividend would offset the full cost).

    There are a few details to work on. The scheme would probably need to be split into three separate parts, one for staff, one for students who live off campus and one for students who live on campus. This would recognize that the car-parking needs of these three groups are quite different. There are also tax-implications for staff who get a net-payment (students could just get a discount on their fees). But these are minor issues that I believe could be overcome.

    The same idea might also work for councils but it’s a bit trickier in that context. Parking price-hikes in return for council-tax rebates would penalize those not living in town centres and it would also drive even more of us away from the high streets. Perhaps this could only work if done in conjunction with introduction of greatly improved public transport. Still, it’s worth thinking about.

    At the international level, too, there is scope for fee-and-dividend approaches. The recent COP meeting in Madrid largely failed because of arguments over which countries should pay into a mitigation-fund and which should benefit from it. The answer could be that everyone should pay in and everyone should get payments out. For example, if we set a carbon price of $10 per tonne of CO2(eq), that would produce a dividend of about $65 per person. The UK, for example, would then pay in about $5 billion but get back a refund of $4.35 billion.

    The beauty of this is that, as with my car-parking example, incentives are magnified by the imposition of a relatively high fee whilst keeping the true cost relatively small because of the refund. Perhaps the fee-and-dividend approach to carbon pricing can be used across a wider range of applications than we’ve generally considered. It’s certainly worth thinking about.

    1. Sorry, I’m not calling it “Climate Income” here but only because my title wouldn’t work if I did.

  • COP 25 and a future for an international carbon market

    COP 25 and a future for an international carbon market

    Under the 1992 United Nations Framework Convention on Climate Change (UNFCCC), most countries are treaty-bound to avoid “dangerous climate change”. Countries who signed and ratified the 2015 Paris Accord then had to produce nationally defined contributions (NDCs) to meet the decarbonisation targets.

    As the twenty-fifth annual UN Conference of the Parties (COP) begins in Madrid, attention has been focused on Article 6 of the Paris Accord and how this may shape global carbon markets.

    Article 6 of the Paris Accord lays out an opportunity to implement the NDCs through cooperation mechanisms. These mechanisms seek to assist the existing targets and raise the ambition of future targets and forms the legal framework to allow market-based solutions, with an option for a common, cross-border carbon market potentially also linked to existing schemes such as the EU emissions trading system (ETS). This could be de-centralised through bi-lateral cooperation or centralised through an international body designated by COP. And another sub-section in Article 6 leaves the door open for non-market-based approaches although this has yet to be defined. The best way to proceed and enact this Article is to be decided at this year’s COP.

    This is in response to the virtual collapse of the previous regime- the clean development mechanism (CDM). This was the world’s only global system for trading carbon which was designed to allow developed countries to achieve compliance through purchasing offsets from CDM projects in developing countries. This collapse was brought about by a myriad of factors coming together, such as the US’ refusal to ratify Kyoto; emerging economies classified as developing, such as China and India, meaning they have no emission reduction targets; and the recession and Eurozone crisis throughout Europe.

    Eighty-eight of the countries that have continued to commit to the Paris Accord, representing more than half of global emissions, have stated that they plan to use or are using carbon pricing as a tool.

    Now, the question is whether the tool will be fit-for-purpose and be all-encompassing. There is potential to create a sensible international carbon trading market that is fair for all countries- whether their economies are developing or developed. The simplest, transparent and most complete solution is the Climate Income from the Citizens’ Climate Lobby.

    The UK is a successful case-study in implementing a carbon price that has the desired effect. The carbon price floor (CPF) policy was initiated to support the ETS in 2013 and since then electricity generation using coal has decreased to almost zero. However, the CPF only covers electricity generation, which is not the largest sector of emissions, and the pound per tonne of carbon dioxide (£/tCO2) was frozen at £18/tCO2 in 2016. Although the CPF worked as designed it could be more ambitious by targeting all sectors equally; using  pound per tonne of carbon dioxide equivalent (£/tCO2e) to also capture methane emissions and other greenhouse gases; and not allowing a freeze on the price, instead investing more into the alternatives that mature or returning the revenue collected to the public, such as the Climate Income.

    Climate Income works by, through new legislation, charging the businesses that extract or import fossil fuels, according to the amount they burn (£/CO2e). Import fees are levied on products imported from countries without a price on carbon along with rebates to UK industries exporting to those countries, discouraging businesses from relocating where they can emit more greenhouse gases.

    So, a global carbon market that encourages participation across all countries, taxes the emitters at source, gives the revenue back to the citizens of the country from which the tax was collected, and accounts for importing or exporting sources of emissions sounds like the way forward and hopefully this will be discussed and realised at COP 25 with a commitment to implement this essential global carbon market.

  • Carbon Pricing: Be Careful What You Ask For

    Carbon Pricing: Be Careful What You Ask For

    Why All Ways of Pricing Carbon Are Not The Same…

    Why do fossil fuels continue to provide most of our energy? The reason is simple. Fossil fuels are the cheapest energy.

    James Hansen, leading climate scientist and former director of NASA Goddard Institute for Space Studies.
    (more…)

  • Getting Paid to Save the Planet

    Photo: Alexander Mills.

    This week’s title is not a description of my dream-job.  It’s actually a way forward for all of us.  Too good to be true?   Stick with me and I’ll try to persuade you that I haven’t lost my marbles.

    I’ll start where I left-off in my previous column–carbon-taxes are an effective way to encourage millions of people to find cunning ways to cut back on greenhouse gas emissions but new taxation is generally about as popular as Boris Johnson at a Remain rally. 

    New taxes are particularly resented when they are perceived as unfair.  This is a problem for climate-related taxes as they can have a disproportionate impact on those least able to pay.  If we make gas more expensive, struggling pensioners turn their heating off whilst the rest of us complain bitterly but carry on with our long, hot showers.  The least significant producers of emissions cut-back and the worst polluters don’t change their behaviour at all!  That doesn’t sound promising.

    So, should we forget taxes on carbon emissions?  That’s what our political parties have tended to do until now.  Economists may like the taxation approach but politicians run a mile because it’s a great way to reduce the number of people who vote for you.  To be fair they tried—when the “fuel-price escalator” was introduced in the 1990s—but a few blockades by haulage companies were enough to push the emergency red-button on that particular moving staircase.

    Somehow we need to retain the benefits of carbon taxation—economy-wide, economically-efficient emission reductions driven by the shared brainwaves of millions of people—without imposing new burdens on those least able to bear them. 

    The solution to this conundrum turns out to be remarkably simple.  The revenue from the tax should be redistributed back to the population as an equal dividend.  So for example, if we taxed emissions at the rate of £25 for each tonne of carbon dioxide, this would bring in enough money to give every adult in the country an annual cheque of about £250.

    But how does that help?  The consequence of the tax is that prices go up but, for the least well-off third of society, their costs go up by less than £250 and they are better off.  The most affluent third of society, on the other hand, spend more money and the total increase in prices they see is more than £250.  They are a bit worse off.  At a stroke the burden is on the rich rather than the poor. Economic modelling suggests that the remaining third of the population see their costs going up by about the same as the dividend and they are unaffected. 

    This approach is called “carbon-fee and dividend” and it is already being used in Canada. There’s also a Bill before the US Senate which, remarkably, has support from both Republicans and Democrats.  The Left like it because it redistributes wealth.  The Right like it because it’s a market solution to global warming that allows massive deregulation (e.g. you don’t need to ban petrol cars if taxation has made them substantially more expensive to run than electric cars).

    So why aren’t we looking at this in the UK?  Quite simply, because no-one here has ever heard of it.  Had you before you read this column?  To find out more, check out https://test.citizensclimatelobby.uk/.  Spread the word, please.

    First published in Marlborough.news

  • The Changing Climate of Climate Change

    The Gillet Jaune protests in France started as protests against climate-related taxes on petrol. Photo: Koshu Kunii

    It’s been a dramatic few weeks.  Climate Emergencies were declared by the Scottish, Welsh and UK parliaments last week (and the Irish Parliament this week) whilst, last Thursday, the government’s own Committee on Climate Change (CCC) published a report recommending the UK have a target of net-zero greenhouse gas emissions by 2050.

    The last few weeks have also seen climate protests on the streets of London, whilst the visit from Greta Thunberg—the Swedish girl who sparked off global school-strikes—stimulated, at the very least, some warm words and commitments from our politicians.  I also loved David Attenborough’s programme which really described well what we are facing.

    All this activity is raising my spirits.  The CCC report, for example, is surprisingly upbeat and positive.  You get a strong impression of a well-thought through plan that really can deliver.  And net-zero by 2050 is just about good enough to avoid the worst consequences of climate change (as long as everyone else does the same).  I’ve not been this optimistic about global warming in years. 

    Hopefully our government will accept the CCC recommendations before the end of this year.  If they do, the UK really will be an international leader in tackling climate change.  Perhaps my fellow columnist at Marlborough News—MP Claire Perry, the Minister for Clean Energy!–could say a few cautious words about this in her June column although I appreciate that even the pages of Marlborough News are not the right place to announce government policy.

    Last week also saw publication of a less widely publicised Government document—a consultation on how the UK will replace the European Union’s Emission Trading System (ETS) when (if?) we leave the EU.  You’re probably unaware of the ETS but it’s been operating since 2005 and it places a cap on the greenhouse gas emissions of our biggest polluters (e.g. electricity generating companies, steel makers and so on).  Importantly, this cap is reduced over time so that these large organisations are forced to reduce their emissions.

    It’s not a bad way to do things but it does have one major flaw.  It only controls about 30% of the greenhouse gasses we put out.  The remaining emissions come from lots of small things (e.g. heating your home) and these cannot easily be controlled by an approach like ETS.  The government’s current answer to this problem is to introduce lots of regulations (e.g. a ban on petrol cars from 2040) but that has flaws too.  Apart from the fact that it generates lots of red-tape, it also relies upon a few (admittedly very clever) people in Whitehall to come up with all the necessary regulations, and they can’t think of everything.

    There is another way.  We can tax all emissions.  It’s simple and it applies to the entire economy.  But taxes are not generally popular even for good causes like combating climate change.  We can see that just by looking at the continuing Gillet Jaune protests in France (which started as a protest against climate-related taxes on petrol) or the problems the UK government had with the “fuel price escalator” in the 1990’s and early 2000’s.  Any such taxes have to be applied intelligently and I’ll talk about one possible solution in my next column.

    First published in Marlborough.news