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Tag Archives: carbon tax

The Helm energy cost review

By Dave Elliott

In his wide-ranging review of energy costs for the UK government, Dieter Helm says ‘the cost of energy is too high, and higher than necessary to meet the Climate Change Act (CCA) target and the carbon budgets. Households and businesses have not fully benefited from the falling costs of gas and coal, the rapidly falling costs of renewables, or from the efficiency gains to network and supply costs which come from smart technologies. Prices should be falling, and they should go on falling into the medium and longer terms’.  And he sets out his ideas for enabling that to happen.                   (more…)

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The Hartwell initiative

“We advocate inverting and fragmenting the conventional approach: accepting that taming climate change will only be achieved successfully as a benefit contingent upon other goals that are politically attractive and relentlessly pragmatic. Without a fundamental re-framing of the issue, new mandates will not be granted for any fresh courses of action, even good ones”.

That’s the line adopted in the Hartwell report, by an international group of academics co-ordinated by the London School of Economics. They claim that ‘it is now plain that it is not possible to have a climate policy that has emissions reductions as the all encompassing goal’. They note that ‘in particular the ambitions for regional- let alone global – “Cap & Trade” regimes to regulate carbon by price, can be now seen to have been barren in their stated aims although profitable for some in unexpected and unwelcome ways.’

They say that in any case we shouldn’t just be focussing on climate change: ‘there are many other reasons why the decarbonisation of the global economy is highly desirable’. In the approach they would like to see ‘decarbonisation is achieved as a by-product of pursuing more pragmatic and popular primary goals, including expanding energy access, energy security and, ultimately, making energy less expensive and more abundant.’

They also claim that we have focussed too much on carbon. So for example they want vigorous and early action on non-CO2 climate forcing agents like black carbon and tropospheric ozone. But their main overall concern is to rebuild public trust via successful improvements in energy efficiency and new energy innovation which clearly cut costs. So they want to develop ‘non-carbon energy supplies at unsubsidised costs less than those using fossil fuels’ and advocate funding this work by ‘low’ hypothecated (dedicated) carbon taxes.

However they say that there is a way to go: renewables are still mostly expensive, ‘except under the best of circumstances, i.e. when located at optimal sites; close to existing transmission lines; displacing peak generation rather than base load, and serving a constituency willing to pay higher prices’. In passing, they manage a dig at ‘the chilling history of European and particularly British wind-power, recently’, which has ‘led to poorly-chosen wind facilities that have performed much less well than promised, with serious financial and social consequences because they also distort overall portfolio investment decisions in significant ways’

Clearly they see carbon taxes, as being better than government subsidies, which is evidently what they see as being the basis of the EU approach. In fact, at present, RD&D apart, there are not many EU government subsidies – the UK’s RO, the Feed In Tariffs in the EU, and even the EU Emission Trading System, are all in the end supported by extra charges levied by supply companies on consumers – not by taxpayers.

While the authors clearly don’t like subsidies, really though their fundamental objection to current climate policy is much wider. They say ‘energy policy and climate policy are not the same thing. Although they are intimately related, neither can satisfactorily be reduced to the other. Energy policy should focus on securing reliable and sustainable low-cost supply, and, as a matter of human dignity, attend directly to the development demands from the world’s poorest people, especially their present lack of clean, reliable and affordable energy. One important reason that more than 1.5 billion people presently lack access to electricity is that energy simply costs too much’.

This sounds a little disingenous- there will be precious little dignity if climate impacts turn out to be as bad as expected. Carbon and other emission have to be dealt with- and fast. What the Hartwell report is claiming is that it is no good focussing on emission targets, in part since, as was stated in an earlier comment from the team quoted in the report “It is a characteristic of open systems of high complexity and with many ill-understood feed-back effects, such as the global climate classically is, that there are no self- declaring indicators which tell the policy maker when enough knowledge has been accumulated to make it sensible to move into action. Nor, it might be argued, can a policy-maker ever possess the type of knowledge – distributed, fragmented, private; and certainly not in sufficient coherence or quantity – to make accurate ‘top down’ directions.”

So do we just leave it to the market? The authors seem to think so, in terms of choosing which way to go: ‘Driving cost reductions must be the explicit purpose and primary design of deployment policies. Achieving consistent reductions in the unsubsidised cost of clean energy technologies must be the measure that determines which technologies will fly and which will stall in the long term’. But it can’t, they say, just be left to the free market: ‘since much of the energy technology revolution will require…basic RDD&D investment, public funding on a long-term basis is essential; and that is why an hypothecated tax is so important’.

A bit confusing since later they say ‘innovation activities will of necessity be sponsored initially by the public sector’ i.e. a short-term input. But what they are adamant about is that the carbon tax must not try ‘to alter short-term consumption behaviour’. They were clearly chastened by the spectacular failure and withdrawl of the ambitious Carbon Tax proposed for France by President Sarkozy. Theirs would be lower and just for technology push. But then it sounds like they hate government dictats of any sort, and only accept government intervention and support grudgingly, since the private sector won’t fund much R&D.

Overall, the carbon tax aside, their approach seems to have much in common with that adopted by the US and China at COP 15 – a free market technology-led approach, with no binding emissions targets, or government edicts. That may not be too surprising when you look at some of the sponsored of the report- who include the Japan Iron and Steel Federation, and the Japan Automobile Manufacturers Association.

Leaving conflicting ideological views on markets aside, of course more needs to be done across the board – the Kyoto approach was marginal at best. However, it’s not clear the Hartwell approach is any better. A carbon tax would increase consumer energy bills, and most studies suggests that, although, in time, the transition to renewables will reduce prices, initially it may not.

Some have also seen the reports emphasis on non-CO2 emissions as odd. Dr Bill Hare, from the Potsdam Institute for Climate Impact Research, commented that ‘The paper’s focus away from CO2 is misguided, short-sighted and probably wrong’.

And underlying it all is a belief that technical fixes are the answer, while social and behavioural change is likely to be hard. The latter is clearly true, but that doesn’t mean we shouldn’t try to do both. Technical fixes may well work in the short to medium term , but is it really realistic to expect continually reducing costs, and perhaps more importantly, continually expanding energy use, long term? Energy efficiency and renewables can allow us to expand energy use up to a point, but there are limits. We also need to start thinking about sustainable consumption.

The Hartwell Paper: A new direction for climate policy after the crash of 2009

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AGU Meeting: Jim Hansen on pacts with the devil

By Liz Kalaugher

“We have a much sharper knowledge of global climate sensitivity than is usually stated and the Faustian bargain we have cut for ourselves is nastier than we have recognized,” said Jim Hansen of NASA to a packed lecture theatre on day three of the AGU Fall Meeting.

Hansen believes that governments don’t yet recognize the urgency of climate change. “There are a lot of governments who say they understand the problems, but a lot of it is greenwash,” he said. “The Venus Syndrome [in which Earth undergoes runaway warming and the oceans boil off] is the greatest threat to humanity’s existence. Earth is Goldilock’s choice of the planets – not too hot, not too cold, it’s just right.”

(more…)

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