Over-high green taxes and regulations destroy jobs without saving the planet.

Green campaigners make a fair point that rich countries like the UK actually emit more carbon than they let on. That is because a large part, maybe most, of their manufacture is done elsewhere. We busy ourselves selling insurance and making fashion videos that emit a lightbulb's worth or carbon, but we buy our cars, computers and clothes from other countries that are less squeamish about belching smoke into the atmosphere.

Their solution, of course, is that we need to cut back more – switch off that lightbulb! – to compensate, and that we should buy fewer cars, computers and clothes and live within our environmental means.

As always, the role of incentives is forgotten. Under the Kyoto protocols, the UK and other developed countries have significant targets for emissions reductions. And like everything else, that can be achieved in one of two ways: either by banning industrial processes that create them, or by taxing carbon so that nobody wants to emit it.

But there is a snag. If you ban too much or tax too highly, those processes will leak abroad to other countries which regard growth more important than global emissions. And already, we impose taxes well over the Stern Report's carbon cost estimate of £80/tonne. Sometimes, we can't escape them – ask any motorist or air traveller. Where we can, though, the above-reality fantasy tax just one more thing that pushes manufacturing out of the UK. The world is too full of such distortions already. Taxation should be based on reality, not self-righteous posturing.

Dr Butler's book The Rotten State of Britain is now in paperback.