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The tech fix

Matt Sinclair, writing in Conservative Home's Thinker's Corner column, looks at responses to global warming. The insanity of current policy measures, hardly needs stating, of course, but he goes on to look at carbon taxes and concludes that these will not work either:

Some think that the answer is to replace all that with a nice, neat carbon tax. Pigovian taxation looks great on the economist’s blackboard but will never survive contact with reality. Politicians don’t have the information or the incentives to set the right taxes for negative externalities and subsidies for positive externalities. It quickly degenerates into just another excuse to feed the habits of countless subsidy junkies and impose higher taxes on the rest of us.

That carbon taxes are less foolish (in economic terms) than existing responses is perhaps the only thing that can be said in their favour. I think the idea of a highly politicised scientific establishment setting tax levels for the public also represents a democratic deficit that will make them highly unpopular in practice. In some ways, this is analogous to the UK's relationship with the EU. There is a pretence of democracy ("we can always repeal the European Communities Act") but in reality key decisions cease to be part of the democratic process. We have gone quite far enough down that road already, thank you very much.

Sinclair's focus is on tech solutions:

...instead of investing hundreds of billions to meet environmental targets with the technology available today, we should invest hundreds of millions in putting British scientists and engineers to work developing better alternatives. Prizes are the best way of deploying the money and have been used to steer technological development in useful directions since the Industrial Revolution.

Although he makes no comment on the recent evidence of low climate sensitivity, had he done so his point would only have become stronger.

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Reader Comments (23)

We already have the solution to what this country needs now in terms of copious amounts of cheap and reliable energy supplies. We don't need prizes, we just need politicians to get out of the way and let it happen. Of course, research into sensible future alternatives (eg thorium reactors, fusion reactors) would be welcome and prizes could encourage such research. However who would decide who gets the prizes? You wouldn't want any of the current politicians, their advisers and the troughers anywhere near the process.

Mar 31, 2013 at 9:29 AM | Registered CommenterPhillip Bratby

CO² Tax is not and never has been about saving the planet. where it has been implemented it has been so for money. Socialist regimes have always been the same animal but with different fur, tax and spend. Oblarny, Cameron, Hollande, Merkel I could go on for hours, are all socialists.

Mar 31, 2013 at 9:37 AM | Unregistered CommenterStephen Richards

Not sure about this claim...

Prizes are the best way of deploying the money and have been used to steer technological development in useful directions since the Industrial Revolution.

Does he give any examples?

Mar 31, 2013 at 9:44 AM | Unregistered CommenterJack Hughes

I hope he doesn't have CCS in mind when he talks about "steering development in useful directions". Think of all the natural gas that could be stored instead.

Mar 31, 2013 at 9:53 AM | Unregistered CommenterIan_UK

@Jack Hughes
The Schneider Trophy = Supermarine S6B -> Spitfire -> etc

Mar 31, 2013 at 9:54 AM | Unregistered CommenterSandyS

John Harrison, an instructive example.

Mar 31, 2013 at 10:16 AM | Unregistered Commenterkim

'look at carbon taxes and concludes that these will not work either:'

They will 'work' for those that look to them has massive money makers , the name of which should be familiar to us all .

Mar 31, 2013 at 10:19 AM | Unregistered CommenterKnR

Stephen Richards, you forgot Gillard. Easily forgettable I know and will be even more so after September when her carbon tax will very likely be scapped.

Mar 31, 2013 at 10:22 AM | Registered CommenterGrantB

Ah, Pigovian taxes. Every interest group since the phrase was coined (heh) has suggested them.

Just a tiny fleabite for the greater good, they tell us. Oh, boy.

It's like the "crumbs" that bond-traders got in "Bonfire of the Vanities."

I prefer carbon taxes to underhand schemes like renewable energy quotas and subsidies because they are transparent. But Pigovian taxes are just a honeypot for every financial trader and interest group around, as a means of parting us from our money with no accountability whatsoever.

Mar 31, 2013 at 10:22 AM | Unregistered Commenterjohanna

Bish you get a mention in the latest fro David Rose

Mar 31, 2013 at 10:30 AM | Unregistered CommenternTropywins

Carbon taxes.

We know the rate, from Stern, $80 a tonne CO2-e.

We know the emissions for the UK. 500 million tonnes (roughly you understand). Thus the total carbon tax should be $40 billion, or around and about £27 billion, roughly you understand.

So, what are current emissions taxes in the UK? Add them all up: fuel duty (yes, the escalator is indeed part of "the Rio process" as Ken Clarke told us when he brought it in) landfill tax (yes, this is about emissions, of methane from landfill), APD and so on and so on.

What's the number you come to? Well, actually, it's around and about £25-£30 billion.

We've already got a carbon tax of around and about the right magnitude. We rather over tax flying and petrol, undertax methane from farming, but the gross amount is indeed roughly correct.

We don't need to bring in some vast new carbon tax. We just need to tinker a little with where we apply the taxes we've already got.

Which is one of the great joys of a Pigouvian carbon tax. We're already doing it.

Mar 31, 2013 at 10:44 AM | Unregistered CommenterTim Worstall

Bjorn Lomborg has a big spread in "The Sunday Times" called "The Joy of Global Warming"

Basically he say carbon taxes are useless, screw the economy, drive out business, freeze the poor and don't reduce emissions.

Well there's a shocker!

He also gives the thumbs up to shale gas.

I project (to use climate psientists' jargon) a high probability (90%) of higher than average gnashing of teeth and wailing of "denier" by the usual suspects.

Mar 31, 2013 at 12:24 PM | Unregistered CommenterDon Keiller

It is said that industrial activity is increasing the level of CO2 concentration in the atmosphere. There is no doubt of that. Neither does anyone doubt that CO2 is good for plant life, which in turn favours food production and that benefits all organisms, not only man. Plants breathe CO2 directly and like it. CO2 is also claimed to increase the global average temperature, which is disputed by some, but which would also be good for plant life if it really were true.

Another purported consequence of any raised temperature is a more violent climate. This is not universally accepted at all because many believe that the temperature increase would be greater at the poles than at the equator. This would mean that temperature gradients would be smaller. It is not the absolute temperature that leads to higher wind speeds. It is the gradients. More benign gradients should mean fewer extreme weather events not more, which is opposite to what alarmists claim.

Nevertheless, the stated intention of taxing carbon dioxide is to prevent the global average temperature from increasing. Ross McKitrick has pointed out that the tax has many highly undesirable effects on society. He proposes that in order to minimise them, without needing to take a stance on the science, the tax should be related directly to the measured global temperature increase. That would logically relate the penalty to the imagined consequence.

In times of constant or falling global temperature there would be no carbon tax at all and no reason why fossil fuels should not be used to the full. The market alone should then decide what the fuel costs. Fossil fuels are also associated with pollution, in the more accepted sense of the word, but ‘traditional’ pollution has been falling rapidly for many years and the reduction correlates with prosperity. It becomes less as societies become richer. Reducing real pollution is apparently a perfectly solvable technical problem.

On the other hand, lack of energy correlates with poverty and hinders technical development. Maintaining energy supplies in the present era without using fossil fuels or burning them without producing CO2 is impossible.

Mar 31, 2013 at 3:35 PM | Unregistered CommenterMark Well

Also in the Sunday Times "Attack on ‘absurd’ energy plans" "Big business and consumers form pressure group to head off coalition policies that will bring ‘soaring bills’" by Danny Fortson

BIG business has forged a powerful new alliance with consumer groups to stop “absurd” coalition energy policies that they claim will send Britain “sleepwalking into blackouts”.

The cross-industry group, called the Powerline, will undermine the government’s beleaguered plan for a £200bn low-carbon overhaul of the nation’s energy supplies. The group, assembled behind the scenes in recent months, will break cover next week with the launch of a website and a national advertising and social media campaign.

An internal memo obtained by The Sunday Times said the Powerline would “start applying logic” to the power debate. Its immediate target is the energy bill, which had its second reading in parliament in December and is to be given royal assent this year.

The law represents the biggest overhaul of the energy industry since privatisation under Margaret Thatcher. A mix of pollution penalties and generous subsidies is designed to kill coal-fired power stations and replace them with more expensive low-carbon alternatives.

Critics say the plan will drive up bills and destroy Britain’s industrial competitiveness. The average annual household bill has doubled in the past five years to about £1,340 and is set to rise further, as a result not just of increasing fossil fuel prices but the welter of green subsidies that the bill will enshrine.

The Powerline, funded by large companies from a range of industries, plans to spark a “dispassionate debate” about whether the government should rethink the policy to reflect the huge changes that have occurred since it was first conceived.

These include the financial crisis, which has hit the big utilities, and America’s shale gas revolution, which has unlocked more than a century’s worth of new reserves and sent the fuel price plummeting.

The memo said: “The time has come to start applying logic and focus to a low-cost/low-carbon economy debate. The Powerline has been set up to create a new voice that seeks to illuminate [the Department of Energy and Climate Change’s] absurd and often contradictory positions and their impact on Britain, especially the risk of an energy crunch.”

It added: “Our ambition is to stop Britain sleepwalking into blackouts, soaring energy bills and a desert of lost jobs that have relocated out of Britain as a result.”

Tomorrow the carbon price floor, a new tax on industrial polluters, comes into effect, adding more costs for domestic manufacturers. Jeremy Nicholson, head of the Energy Intensive Users Group, the manufacturers’ lobby group, said: “These policies will put some of our members out of business.”

America, meanwhile, is enjoying a manufacturing renaissance as companies attracted by cheap, plentiful fuel open new factories.

Mark Powell, a partner at AT Kearney, the consultancy, said: “The world is awash in gas. [The Department of Energy] hasn’t woken up to the fact that the world has changed.”

The emergence of the deep-pocketed lobby group comes at a crucial time. The government is locked in negotiations with EDF Energy over subsidies for Britain’s first atomic reactor in two decades, to be built at Hinkley Point in Somerset. The French have threatened to walk away from the £14bn project unless Whitehall guarantees that it will be able sell power at roughly twice the current price for up to 40 years.

Talks over the figure have dragged on for more than a year and EDF set a deadline that expires today. Sources said the government and EDF are still far apart and that the entire project could collapse.

Nuclear power is one of two main planks of the government’s plan to replace Britain’s fossil-fuel-based system with a low-emission alternative. The other is wind. Onshore farms already receive twice the wholesale power price, while offshore generators receive three times the market price.

The Powerline will also question the government’s “ideological” allegiance to costly renewables.

Mar 31, 2013 at 3:38 PM | Registered CommenterPhillip Bratby

Which will be the first British political party to promise to abolish the Climate Change Act and to make that a major feature of its policies? Such a promise could transform its prospects in the next general election.

UKIP seem to be against the most damaging green policies according to the Guardian article below (which naturally criticises them for that reason) but they need to be much more forthright in their condemnation and shout it from the rooftops!

Ukip's energy and climate policies under the spotlight

The party's official energy policy is an incoherent mixture of anti-environmentalism and a disregard for scientific evidence.

Naturally there are a lot of comments from Guardianistas attacking UKIP's "barking mad" policies.

Mar 31, 2013 at 5:48 PM | Unregistered CommenterRoy

Philip Bratby, do you have a link for the Powerline group you mention?

[They should change their name. Too many other hits come up with simple searches on a famous search engine.]

Mar 31, 2013 at 7:42 PM | Unregistered Commentermichael hart

michael hart: Sorry, all I have is the article in The Times quoted above and a leader in The Times which says "A group of businesses and energy users has formed Powerline to campaign against government energy policies that it says are “absurd” and which will leave the country “sleepwalking into blackouts”."

I guess we'll hear more next week when they formally launch and start an advertising campaign.

Mar 31, 2013 at 8:17 PM | Unregistered CommenterPhillip Bratby

Sunday Times that should be.

Mar 31, 2013 at 8:20 PM | Registered CommenterPhillip Bratby

Roy, 5:48 pm - you're far too optimistic. Most of the populace are not Guardian or Telegraph readers and have never heard of the Climate Change Act. This is one of the things the politicians are depending on.

Mar 31, 2013 at 8:59 PM | Unregistered CommenterIan_UK

Phillip - thanks for the heads up on the Powerline. I hope they can do a decent public explanation of the Carbon Floor Price and how it relates to the EU Emissions Trading Scheme.

Mar 31, 2013 at 9:45 PM | Unregistered Commenternot banned yet

Pigou was a ... welfare economist.

Apr 1, 2013 at 11:52 AM | Registered Commentershub

Another consequence of "a highly politicised scientific establishment" setting taxes is that welfare economics is totally abandoned. A successful Pigovian tax, in ameliorating the impact of an externality, should make society (or the planet) better off than without the tax. There is a lot to unpick here, but with CAGW there are two distinct sides. The first are the adverse impacts of the warming. The second is the effectiveness of the policy in combatting the warming. The adverse impacts are most likely vastly exaggerated - through the compound effects overestimation of climate sensitivities & the disruptive consequences of a unit rise in temperatures. The theoretical effectiveness of policy is similarly exaggerated, whilst the theoretical policy costs (redistribution effects, slowing growth) are downplayed.
But when the theoretical bits have been evaluated, a policies needs to be enacted . We have the Climate Change Act setting reduction targets. There is no effort to optimize the tax policy to maximise the benefits (reduction in CO2 per £), whilst minimising the failures and unintended consequences. Pigovian tax policy is like many types of medication. It needs tweaking and adjusting in the light of effectiveness and changing circumstances. Politicians are not project managers, or detailed welfare-maximising planners.

Apr 1, 2013 at 2:24 PM | Unregistered CommenterManicBeancounter

CO2 is not an issue in the real world so scientists should be deployed to identify what poisons we are putting into the atmosphere and it's effect on the planet and our health.
Taxation is not the technology is.

Apr 2, 2013 at 10:35 AM | Unregistered Commenterjames griffin

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