Citizens' Climate Lobby UK

Tag: carbon pricing

  • What lessons should be learnt from the fuel crisis?

    What lessons should be learnt from the fuel 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 non-aligned mix. Finding a solution that keeps advocates of each policy and it’s raison d’etre supportive is challenging. Here we look at how Climate Income can be the sword that cuts the Gordian knot.

    First let’s examine some of the main policy elements at play …

    The political pressure is coming from the financial pain faced by families with rapidly rising fuel bills where energy use has already been reduced to a minimum with the bottom 50% of the population using energy consistent with a 1.5ºC pathway! Energy costs impact everyone, but low and middle income groups spend a higher proportion of their income on transport and household energy needs than the better paid.

    The main carbon pricing mechanism in the EU and UK is the Emissions Trading Scheme (ETS). The UK left the EU ETS and established an independent ETS which began in January 2021. ETS is considered to be a revenue raising mechanism (tax) as well as a carbon pricing tool. The revenue should be used for appropriate purposes but it is not used as a dividend to the householder to mitigate and thus enable a predictably rising carbon fee as with Climate Income. 

    The UK government has also historically put the burden of paying for the move to renewable electricity onto electricity bills, making this fuel, though increasingly greener than gas, considerably more expensive and adding about £200 to fuel bills. Environmental levies include the Renewable Obligation and the Contracts for Difference, which incentive and support renewable electricity generation, the Feed in Tariff to support solar panel installations, and the Energy Company Obligation, which has provided energy efficiency measures to more than two million households. EPC certificates have also compounded the injustice by rewarding the gas heating home owner over the electric heating owner!

    The government does need to mitigate the effect of rising fuel costs this winter. It refused to implement a post Brexit VAT cut on fuel, claimed to be too much of a ‘blunt instrument’ – although is it fair to just help the very poorest households and not the struggling middle classes? Even if implemented however, 5% of the projected £700 bill rise amounts to a mere £35 and the saving on the average dual fuel bill is estimated to be around £89. Removing the VAT may be a fair and wise move because of what it represents politically but it is not a solution to the underlying problems in our current carbon pricing policies.

    The suggested Warm Home Discount expansion will only target the very poorest and there are logistical problems in applying for the WHD –  meanwhile a targeted home upgrade grant for fuel-poor homes had been halved in the autumn budget! 

    A windfall tax as proposed by the opposition parties looks like an easy solution but it would be hard to implement and it would only cover the oil and gas we produce ourselves (only 40% of our gas is domestic and we imported 20 million tonnes of oil in 2020). It has also been argued that the perceived punitive nature of the tax could be used as a reason for reducing investment in carbon capture and more renewables. Like the other solutions it would be short term and not contribute much to the real solution – more renewables and the price of fossil fuels reliably reflecting their true price to society.

    The carbon price in the ETS (Emissions Trading Scheme) which is the main carbon pricing mechanism in the UK and EU is determined by the market, this led to it being too low to be effective during the recession and now so high that ‘Cost Containment Mechanisms’ has been and may be used to mitigate the immediate effects on industry. Cost Containment not only negates the claim that ETS is market driven rather than part of a command economy but also negates the effectiveness of ETS in encouraging decarbonisation. Under Climate Income Schemes the carbon price is designed to rise but in a predictable way which businesses can plan for.

    The Government had proposed last year that the ETS scheme would be extended to cover the other ⅔ of emissions including building and transport. This was similar to the proposed EU Building and Transport ETS which is meeting resistance in the countries historically dependent on coal (and colder!) such as Poland. The UK proposal was watered down (2nd item) through fear ‘it could trigger a political storm’ in November 2021 and it is no longer described as being about to be ‘radically’ expanded. (Marine and waste incineration emissions are still being considered with the possibility of agricultural emissions in the future).

    The Government had said it wouldn’t have a universal carbon fee back in February because it would raise the price of cheese and meat even though a universal carbon price would send a clear message on all products and eradicate most of the disincentives to electric heating and vehicles. In July the government seemed to be considering CI, which would of course offset the rising price of carbon dependent products while householders and manufacturers adjust, thus mitigating the problem of rising cheese and meat prices! In November at the debate prompted by the Zero C petition its briefing (current carbon charges 2nd para) referred not to the July proposals but back to the February statement on carbon pricing. That debate also took place when it had been decided to scale back the ETS extension but the briefing and government response doesn’t reflect that decision.  Please see Further information on the government response to the Zero C petition for a link to the government response to the petition.

    The government decided against a universal carbon price because of the costs to the householder. The preferred carbon pricing policies however are proving equally unpopular – especially the tariffs on electricity bills to pay for renewables and the VAT on fuel even though the low rate could be considered to be a hidden fossil fuel subsidy like frozen fuel duty. ETS is less visible at the moment – but would have been about to become extremely visible if the government hadn’t scrapped the extension to buildings and transport because of its likely unpopularity! As it is the government uses Cost Containment, whenever the carbon price seems to get too high for comfort – thus rendering ETS far less effective. 

    ETS  in its current form (without CI) can’t be effective without creating further problems for consumers, unpredictability for businesses and future short term cutting of the carbon price every time there is a fuel market crisis.

    Climate Income would mitigate the costs of rising fuel prices without the need to cut the carbon price (and thus reduce incentives to decarbonise) every time the market spikes. The predictably rising price would also allow businesses and households to plan ahead to decarbonise, especially if future carbon dividend payments could be offered as loans for retrofitting and industries could, among other tactics, have fees offset against carbon capture, usage and storage.

    It is unlikely that this current fuel price crisis is a one off – we need a carbon pricing policy which can weather this and future storms without having to be watered down each time. Climate Income is the answer!

    Catherine Dawson and James Collis

  • 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!

  • How did the debate on carbon emission charges go?

    How did the debate on carbon emission charges go?

    On November 1st the much anticipated debate on the Zero C petition was held in a extremely uncrowded Westminster Hall. Catherine Mckinnell (Newcastle upon Tyne Central, Lab) moved the petition, stating that its aim is  to impose a single carbon price across all sectors. ……

    In its simplest terms, the petition calls for the Government to work towards a single carbon price across almost all sectors. The campaign argues that a single carbon price would amalgamate the many existing price instruments, including the carbon price support and the UK emissions trading scheme—a different form of carbon charging—into a simple, transparent carbon charge. Zero Carbon points out that our current policies cover emissions across only about a third of the economy, giving the biggest polluters free allowances while the consumers are left to pay. I pay tribute to the petition’s creator, Isabella Goldstein, who is the senior campaign manager at the Zero Carbon campaign.

    The theory behind this form of carbon charging is straightforward. If we had, for example, a single carbon price of £75 per tonne of CO2, it would incentivise people and businesses to pursue any methods of emission reduction that cost less than £75. Hon. Members will be aware that we are far from having a single carbon price across sectors. Instead, we have a patchwork of policies that incentivise or disincentivise emissions in ways that are often unclear. While overall they have the effect of, for example, discouraging the burning of fossil fuels, the cost varies hugely depending on the source of the emissions. It is argued that the key benefit of working towards a uniform carbon price is that it avoids a situation where some sectors face higher carbon prices, and must therefore make more expensive carbon reductions, while others could more easily and cheaply reduce their emissions but do not.

    Mckinnell also pointed out that Zero C are asking for the policy to be fair and equitable…

     Alan Brown (Kilmarnock and Loudoun, SNP)……In a similar vein, I represent a former coalfield area. Carbon taxes had been applied to the extraction of coal over the years, but a few years ago, when the open-cast coal industry collapsed in my constituency, it left massive craters that needed reinstatement work at a cost of millions of pounds. Carbon taxes came from my constituency to the Treasury, but they just went into the black hole. When we asked for assistance for restoration work on those abandoned coalmines, the answer that came was, “No. Too bad. That money came in and it has been used. There is no money coming back to your constituency. It doesn’t work that way.” That shows the folly of not ring-fencing a tax for the purpose that it should be ring-fenced for. Again, transparency is utterly critical if we are to go forward.

    Jerome Mayhew (Broadland, Con) argued cogently for a Carbon Border Adjustment Mechanism policy, as he has been championing for a while. There was interest in CBAM earlier this year  but in July the Board of Trade published a report extolling free trade as the answer, the subject is still under review.

    Unfortunately although the speakers all argued that carbon pricing was necessary and should be fair there was no discussion on how to implement it, such as suggesting a solution like Climate Income. The argument for a single uniform carbon price wasn’t really debated, instead the arguments were vague, focussing on stating that the Net Zero Strategy isn’t doing this, that or the other, our party would spend more and be more equitable than the government and when will the ETS net zero consistent cap be announced. 

    This line of arguing therefore enabled the financial secretary to the treasury, Lucy Frazer, to argue that while “The petition specifically calls for a carbon charge to encourage industries and organisations to reduce their carbon emissions” the government is already doing this through the UK ETS scheme and Carbon Price Support, but she didn’t feel the need to address the petition’s main ask as no-one else had been discussing it.

    In summary the gist of the petition, arguing for a single, uniform carbon price seems to have been lost in the discussions about other aspects of the Net Zero Strategy and finance. 

    One has to wonder if the timing of the debate, falling as it did during COP26, inevitably led to the paucity of ideas and discussion, with no-one from the government, for instance, discussing the ideas leaked in July! 

  • 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.

  • Letter to Climate Assembly

    Letter to Climate Assembly

    We had a great response to our urgent action to contact the experts at the Climate Assembly -Many thanks to everyone who wrote. Here are a couple of examples.

    Dear Rebecca

    Thank you for your efforts on the Climate Assembly – it’s essential work and very exciting for our global future.

    I was lucky enough to be part of the Oxford Citizen’s Assembly on Climate Change. It was an amazing and enlightening experience. Often, how to change individual behaviour seemed to be the issue, especially as the majority of emissions were coming from buildings (space heating) and travel.

    How do we change behaviour? By making the desired behaviour the easiest option and/or the cheapest option, so making the right choices is a no-brainer.

    Pricing carbon can make this happen. But we know a rise in prices for fuel is unpopular – see President Macron’s struggle with the Gilets Jaunes. So it seems that carbon pricing is avoided as a strategy – a bit of an elephant in the room.

    But it is possible to price carbon in a way that is fair, empowering, simple and visible.

    Carbon Dioxide is a difficult subject to inspire passion. Unlike plastic, it is invisible. When we emit it, we can’t see it. We can see the plastic trail that we leave, but it’s impossible to grasp what size your own carbon dioxide emission are. But carbon dioxide is key, because the blanket of greenhouse gases is making Earth warm, melting the arctic and Antarctic and pushing temperatures worldwide out of the range of recorded history, towards a new climate that none of us or other life-forms on earth are adapted for.

    But the good thing is, we CAN change this by shutting down the flood of CO2 leaking from humankind into the atmosphere.

    HOW can we take action on CO2?

    We can take action by putting a meaningful price on carbon, aiming towards $80-$100/tonne.

    It is the nudge the world needs. A puny 5p plastic bag charge drastically reduced plastic bag use by 85%. Pricing really changes behaviour “Our modern economy reflects countless choices, made by billions of people all over the world. A broad-based carbon price influences them all. Nothing else can.”

    But what is the best way to price carbon?

    I’ve compared different carbon pricing options. What I’ve discovered is:

    A Carbon Fee and Dividend (Climate Income) stands out as the most fair, empowering, simple, and visible way to put a significant price on Carbon.

    What is Carbon Fee & Dividend?

    The government places a price on CO2 at source.

    The revenue is returned equally to all citizens via a monthly/annual lump sum or ‘dividend’

    I think it is the only way to make a carbon price that is high enough for effective change to be palatable.

    There are a few good things about a carbon fee and dividend plan. Here they are.

    It can appeal to people who call for social justice and want to battle inequality

    The lump sum system is progressive: it really benefits lower earners most. The richest (and largest users of CO2-intensive energy) benefit least. Anders Fremstad of Colorado State University and Mark Paul of Duke University calculate that taxing a tonne of CO2 at $49 would leave 59% of Americans worse off, including 75% of the bottom half, if the revenue were used to lower personal-income taxes. By contrast, recycling the receipts as lump-sum payments (Dividends) would leave 89% of the bottom half with an average net gain of $788.

    The 6 lowest income groups all break even or are better off, with the poorest getting the biggest benefits. The wealthiest, highest fuel users, are the worst off.

    Compared to tax rebates, it’s demonstrably fair as all get an equal dividend.

    It’s also possible to get dividends to the poorest and most marginalised sections of society, by, for example “investigating inventive ways of paying the dividend to ensure that the most vulnerable receive it. Linking the dividend to national insurance numbers would be one way to pay the dividend, but this may mean that the most vulnerable miss out. The Government should investigate whether new technology can be used to pay the dividend securely through a mobile app to ensure as many eligible people as possible receive it.” The Future of Carbon Pricing, policyexchange.org.uk

    It is motivating and empowering

    Through their dividend the public can support renewables in their choice of what energy to buy. The dividend is a visible sign of your purchasing power, and the public is trusted to choose how to spend it; wise choices bring a win-win virtuous spiral of energy-source-change away from fossil fuels. The dividend also gives voters an immediate interest in the fight against climate change – a lump sum arriving in your bank account is a very interesting event. All green energy sources benefit by becoming comparatively cheaper.

    It sends a signal to industry that the carbon price will be a permanent policy

    The Dividend, once people are used to it, is hard to withdraw by future governments (see what’s happened with UK Winter Fuel Payments) – and so acts as a pledge to industry that the carbon price will endure.

    These three aspects of carbon fee and dividend mean is can appeal to: Green and Social Groups who want action on climate change but also social justice; the general public who will find higher fuel prices unacceptable; businesses who want a clear steer to what the carbon future will be.

    Carbon is infused in all our lives and all our choices. We need to tackle climate change with a way that involves and empowers everybody, is fair and acceptable and progressive, and that also is able to set a high enough price for carbon to bring about change, in a way industry can see will not be overturned by a change of government.

    Carbon Fee & Dividend (Climate Income): fair, empowering, simple, visible.


    There’s more information, here: https://test.citizensclimatelobby.uk/carbon-fee-dividend/

    Please do include Climate Income/Carbon Fee & Dividend in your presentations and discussions on carbon pricing!

    I am convinced it is the one simple action that could change everything and alter the course this planet is currently on.

    Many thanks and best of luck with the rest of the Assembly,

    Mini

  • 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.
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  • Letter to Claire Perry MP re carbon pricing report

    Letter to Claire Perry MP re carbon pricing report

    Here’s an example of a letter which could be written regarding the carbon pricing report:

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