This week has been hugely exciting in the fight to combat climate change.
A CCL UK contingent sat down with civil servants, journalists and energy companies on Wednesday (10 Oct 2018) to hear the hotly anticipated launch of Policy Exchange’s ‘The Future of Carbon Pricing’ report. In the same week, the UN’s Intergovernmental Panel on Climate Change (IPCC) said we had 12 years to drastically reduce greenhouse gas emissions if we are to restrict global warming to 1.5 degrees, and an advocate of carbon pricing – William Nordhaus – won the Nobel Prize for Economics.
Both Nobel Prize winners work in sustainable economics. “I think… many people think that protecting the environment will be so costly and so hard that they just want to ignore [this]. [But] we can absolutely make substantial progress protecting the environment and do it without giving up the chance to sustain growth,” said joint winner Prof Paul Romer.
So why was this report on Carbon Pricing so exciting?
Well here was a government think tank darling pushing for a carbon tax and dividend.
Report co-author Matt Rooney opened the launch to the backdrop of Brexit. Right now we’re part of the EU emissions trading system (EU ETS), “cornerstone of the EU’s policy to combat climate change and its key tool for reducing greenhouse gas emissions cost-effectively.”
Come Brexit – whatever Brexit we end up with (whatever your politics) – we have an opportunity to replace the EU ETS with something much more fast and effective. Policy Exchange recommends that we leave the EU ETS by 2021 and replace it with a carbon tax and dividend.
Guest speaker Alyssa Gilbert, Head of Policy and Translation at the Imperial College London Grantham Institute for Climate Change and the Environment, said, to remain within the 1.5 degree global temperature rise, “We have to use every emissions reduction mechanism we have, in every sector, across the world now.”
An efficient and fast policy
Ted Halstead, founder of the US Climate Leadership Council, explained that a carbon tax and dividend would create the speed required: in the US they have calculated this policy could give a 30 per cent reduction in greenhouse gas emissions by 2025 (if implemented by 2021). Compare this with a 14 percent reduction under Trump’s energy efficiency schemes and 18 percent if Obama’s initiatives were still in place.
Very important was the presence of political celebrities Lord Alistair Darling and Lord Michael Howard. The former was the last Labour chancellor of the exchequer and the latter, former leader of the Conservatives and John Major-appointed secretary of state for the environment. Bi-partisan and cross-party support is an important value for CCL as we all need to work together on this problem – it cannot be blocked by left, right or centre. As Michael Grubb, professor of energy and climate change at the UCL Institute for Sustainable Resources said, “We’ve been stymied by politics time and time again.”
Lord Howard said, ‘sometimes regulation is necessary but if you can harness market forces it’s far more likely to succeed’. Lord Darling described the current regulation as ‘overlapping’ and ‘opaque’ and don’t cover 80 percent of emissions, and that the energy market is ‘no normal market’. Ted Halstead agreed saying a carbon tax and dividend is responding to a ‘market failure’ and was a ‘corrective tax’.
Dividend is a crucial part of the tax
The dividend wins many ways: it doesn’t penalise the poor and not-so-poor and so makes it popular politically, it prevents the political arguing about how the money should be spent and allows citizens without capital to have the money to invest in clean energy technology. “One of the hardest nuts to crack is home heating,” said Alyssa. The Policy Exchange report tackles another issue, potential lag between price rises and dividends – allow loans against an annual payout.
Warwick Lightfoot, another report author, after the main talks gave me an insight in the golden rule of taxation, certainly from a conservative point of view: it should make minimal disruption and not add to the tax burden. This makes carbon fee/tax and dividend such a winner with left and right – it tackles a very serious problem, whilst giving money back. It expects technological change but actually little difference in lifestyle.
As Lord Howard said, “I commend the Policy Exchange report and hope it is given very serious consideration by government.”
Top picture: Top r-l: Tim Prior, Clive Elsworth, Ed Atkinson. Bottom r-l: Gina Cooke, Judy Hindley, Warwick Lightfoot, Matt Rooney