Personal Carbon Allowances or carbon taxation?

Parliament’s Environmental Audit Committee think that personal carbon allowances would be a useful way of reducing emissions. The system that they have in mind is complicated and like most of the systems that really clever people invent it seeks to change people’s behaviour by a system of incentives and penalties and shies away from introducing any real measures, rather expecting that carbon emission reduction behaviour will follow as a result of the scheme.

Personal carbon allowances are supposed to work like this. Everyone would have a personal carbon cap and be given an allowance to emit. If they exceed their personal emissions they can buy allowances from people who have some spare and thus it would reward people who made positive efforts to reduce their emissions, just like your supermarket reward card.

The Environment Audit Committee is convinced that a system of personal carbon allowances would “guarantee a reduction in emissions because it places a ceiling on the carbon available for consumption rather than solely seeking to reduce demand”. They want a sensitive and moderate scheme.

I think that the Committee are being naive. I think, as with all cap and trade schemes, there is so much scope for fraud, so much reliance on theoretical calculations and so much difficulty in setting the initial allowances and policing them that we will find many bad outcomes as unintended consequences – unjust enrichment, illness, audit errors for example – but very few carbon emissions reduced as a result.

The first problem is to set an allowance; people in rural areas need a higher allowance for many reasons – they have to travel long distances in order to work and get their children to school and they are likely to be among the nation’s 16% of people off the lower carbon natural gas grid network and on the very high carbon heating oil and electricity network. What is the right thing to do about these people?

What should we do about the biomass burners? They emit tremendous volumes of carbon, but because it is biomass shall we pretend that it is all soaked up again by plants and trees that will remain for the one hundred years that the biomass carbon lives in the atmosphere?

What do we do about people who are ill and because of their illness need to live in a warmer home and have all kinds of electrical equipment, such as oxygen making equipment, humidifiers, dehumidifiers and the like? Do we create a terribly complicated system of reliefs, exceptions and regulations to cater for all this in order to create justice so that some people have larger carbon allowances than others? Do politicians, by virtue of their unique value to society have larger carbon allowances?  

The idea is about changing people’s behaviour; many old people use their winter fuel allowance not to heat their homes better but to provide extra Christmas presents for their grandchildren. I have no doubt that many older people will sacrifice their personal carbon allowances because they will regard their grandchildren’s comfort and more important than their own health.

The Environment Minister, Hilary Benn, says that the idea for personal carbon allowances is ahead of its time and there are lots of practical problems to overcome. I agree with Mr Benn (for once) but would go further. I think that trying to devise a system of personal carbon allowances would be terribly wasteful of resources. The money spent would be far better spent on measures.

We already have a system that has been devised for hundreds of years, that tries to create fairness and justice for the common good and we should use that system for combating climate change; I am talking about the system of taxation.

Unfortunately, as the Environmental Audit Committee pointed out in their report about personal capital allowances, green taxes are simply not being imposed; they quoted themselves in 2006:

 

As the latest figures show, the proportion of all taxation made up by green taxes is markedly less than in 1997, and is indeed at a lower proportion than as far back as 1994. This Pre-Budget does contain some limited announcements of rises in green taxes, but these are still very modest when set in the context of several Budgets and Pre-Budgets in recent years in which many environmental taxes have not even been raised in line with inflation

 

 

 

 

 

 

 

In contrast, they believe “personal carbon trading has the potential to drive greater emissions reductions than green taxation. A carbon allowance could be more effective at incentivising behavioural change and engaging individuals in reducing their emissions than the price signals resulting from green taxation.”

Their belief is founded on incentivising behavioural changes works and taxes do not.

I am sure that they are wrong although I welcome their concern to do something effective. Ultimately reducing carbon emissions only happens if we introduce measures; behaviourally people do not want to be cold, unwashed, or without their computers and televisions and holidays. There are always a few that will deprive themselves of pleasure in order to see their bank balances swell, but most people want to live well.

For this reason I am sure that the idea that personal carbon allowances can change people’s behaviour is wrong. It is part of the pretence that carbon reduction measures will not hurt. They will.

The government needs to be courageous and devising a complicated scheme to join all the other complicated cap and trade schemes that don’t work will simply be treading water which a short term measure. There is no courage in treading water.

“Green” taxes can be introduced that affect people’s behaviour. It can be done slowly and gently and the additional revenues can be hypothecated to saving carbon emissions in the UK. I have not done any costings but if the government can raise a few hundred millions to invest in solar panels and wind turbines it will do more good than all the cap and trade schemes.

I think also with green taxes you have to start gently aiming at easy targets and then build up; people will soon see that their behavioural changes will save them real money.

Where do we start our green taxes? I suggest that we look at the following:-

  • Higher rate of tax on purchase of high performance cars and power boats
  • Tax on first class air travel
  • Tax on business class air travel
  • Tax on private jets landing at UK airports
  • Higher rate tax on a households gas and electricity consumption above a certain figure
  • Higher rate stamp duty land tax on homes above say £5 million.
  • Higher rate tax on appliances that consume more electricity than they should consume.
  • Higher rate tax on metal and plastic furniture
  • Higher rate tax on less efficient boilers and cylinders
  • Tax on cement production
  • Special tax on non return plastic bottles
  • Tax on plastic food packaging
  • Progressive tax on cars according to their engine size.

I am, of course, suggesting new additional taxes but instead of the money going into the general pool of government funding the money should be administered by a non governmental body charged with providing incentives and grants and subsidies for specific carbon reducing technologies, like solar panels and carbon sequestration measures, like forestry.

We have to de-politicise carbon reduction measures. The government spend so little of taxpayers’ money incentivising things such as solar panels in any event, so they can close all their nonsensical “programmes” if my idea is taken up. In that way we would de-incentivise behaviour that creates high emissions and at the same time have measures within these shores to incentivise behaviour that creates very low emissions.

 

5 Responses

  1. That is certainly a lot of new taxes. I don’t think we would ever see the day a government would be prepared to introduce such taxes but it would certainly have an immediate effect (unlike the many “green taxes” which supposedly exist at present).

  2. i agree that personal carbon allowances would be extremely difficult to monitor and your taxes provide a realistic solution. Pity the government would not take notice.

  3. I believe taxation is ok. That way it kind of “forces” companies to go and produce less harmful products. Eco-friendly companies should be given tax breaks. Everyone else should just use B5 oil (if currently using oil). It produces NO greenhouse gases, reduces emissions, helps conserve 400 MILLION gallons of oil. That should be enough to stimulate a tex break. Working for NORA, I fully back the idea. Plus if proof is needed, you can always refer back to http://oilheatamerica.com/index.mv?screen=bioheat

  4. I believe taxation is ok. That way it kind of “forces” companies to go and produce less harmful products. Eco-friendly companies should be given tax breaks. Everyone else should just use B5 oil (if currently using oil). It produces NO greenhouse gases, reduces emissions, helps conserve 400 MILLION gallons of oil. That should be enough to stimulate a tex break. Working for NORA, I fully back the idea. Plus if proof is needed, you can always refer back to http://oilheatamerica . com/index.mv?screen=bioheat

  5. Sharon

    bio oil for heat is excellent stuff, under certain conditions, otherwise you rsik throwing the baby out with the bath water.

    440 million gallons of oil is quite a lot, but the US consumes 388 million gallons of gasoline EACH DAY!

    Robert

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