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Re: Don’t axe this tax, the carbon floor price is the best of a very variable bunch

Robert McIlveen is absolutely right that "those who are concerned about climate change have a responsibility to take the costs of tackling it seriously too."  Not just to ease the burden on families here but because that is the only way we make a helpful contribution to cutting global emissions.  Our share of emissions is tiny and unilateral policy can just drive industry abroad, doing nothing for the climate.  If you really want to reduce global emissions then what Britain needs to do is demonstrate that can be done affordably.  All we're doing at the moment is offering a graphic illustration of how measures like installing massive amounts of offshore wind capacity means piling pressure on families and rendering manfacturing businesses uncompetitive.

Unfortunately he then goes on to describe a carbon tax, like the floor under the carbon price that the Government is introducing, as a relatively efficient climate change policy.  And chastises us for attacking it instead of other measures such as feed-in tariffs and the Carbon Reduction Commitment:

Attacking one of the best carbon policies we have rather than seizing the opportunity to get rid of the worst is an opportunity we shouldn’t miss – but the Taxpayers’ Alliance has.

That's more than a little unfair. I'm pretty confident that we attacked the feed-in tariff before he did at Policy Exchange, or just about anyone else.  When George Monbiot - hardly a great supporter of the TPA - first called it a Great Green Rip-Off he said the "only body to have called this right is the loathsome TaxPayers’ Alliance".  We have kept it up since, just the other week I was on radio and television attacking plans for a council to invest in solar panels and take advantage of the subsidies.  In my new book Let them eat carbon there is plenty more on why picking losers by subsidising the most expensive sources of energy is a very bad idea, and a discussion of our brush with double cap and trade in the form of the Carbon Reduction Commitment.

But we can't just criticise the worst schemes as they aren't the biggest.  If we did that on waste we would spend all our time writing about police cars painted to look like pumpkins or the EU's £250,000 for a luxury toilet for Nicolas Sarkozy that was torn out unused.  Those stories are important examples of how bad things can get, and you can read our April Fools' Day quiz for more.  But we do also need to look at the big items and write reports about welfare reform and major cuts in spending.  Otherwise we won't be tackling the major causes of the rising burden on taxpayers.

In just the same way feed-in tariffs are an awful waste of money but the total bill could be small compared to the major regulations like the EU Emissions Trading System (ETS) and the Renewables Obligation.  Attempting to shore up the EU ETS with the a floor under the carbon price could also be very expensive.  It could double the cost of the scheme as the Government's target price is around double the current market rate.  The Government claim that the cost will then come down over time as a more stable price encourages investment to lower emissions, particularly in nuclear power.  Unfortunately it isn't likely to work out that way.

Nuclear operators say it isn't enough to get new capacity.  What they really need is protection against financial risks in constructing reactors.  And any emissions cut will make no difference overall anyway, thanks to the way the EU ETS works.  As the IPPR have set out, every tonne of carbon we cut out here in Britain will be emitted elsewhere in Europe.  We will be left paying billions more for no good reason. The only people who benefit will be energy companies, who will make a £7 billion profit according to Credit Suisse, particularly EDF Energy who lobbied for this furiously.

The carbon floor price is a bad policy.  It isn't quite as awful as the feed-in tariff but then we weren't offered a choice between the two.  We have both and I'm arguing for neither.  In the book I talk about an alternative based around technology, adaptation and resilience that wouldn't put the same pressure on families and manufacturers.  But the first step is to stop making the fossil fuels a modern economy runs on more expensive.


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