As we’ve been telling George Monbiot, prices work, yea even with climate
One of the things it’s always been impossible to get over to George Monbiot is this idea that yea, even when thinking and talking about the climate, prices work. He’s this idea that capitalism and markets are icky, climate change is a good problem to solve, we cannot use the icky to be good and therefore….
It’s rather like the Catholic Church’s fundamentalism in insisting that good cannot come from evil.
Which brings us to this:
The new prime minister will be looking for money? Well, here’s £21.7bn lying on the ground. The government could cancel its deranged, disastrous carbon capture and storage (CCS) programme at no cost to public welfare: in fact, it would greatly reduce the harm we will suffer.
Sorry, did I say £21.7bn? That’s the figure the government has been putting in its press releases for spending on this programme between now and 2050. But this covers only the first phase of the project. The climate experts Dr Andrew Boswell and Simon Oldridge worked through the data produced by the government’s Climate Change Committee, which was scattered across different spreadsheets, and discovered that the projected cost of the full CCS programme between now and 2050 is £264bn.
Well, OK. Perhaps CCS is a vast boondoggle. It’s not as if there’s a shortage of those around climate change. Maybe CCS isn’t a vast boondoggle, that’s also possible - maybe the things that need to be done just are expensive?
What we require is a means of working this out. Which is where prices come in. As Mssrs. Nordhaus and Stern have insisted - and so has every other non-somnolent economist - if we assume that climate change is a problem that must be dealt with then the method is the carbon tax at the social cost of carbon.
No, not because that’s an elegant solution that accords with our prejudices. But because it gives us a one stop shop to decide upon such things as CCS. Given that the carbon tax already includes the social cost of carbon into prices does CCS make sense at these price levels? If so then try it. If not then don’t. The point is not to extend neoliberalism to Gaia but to prevent ourselves being ruled by nerds gurning at us over their slide rules. With, obviously, all the political lobbying that George is so whingeing about.
The carbon tax gives us that ready reckoner of whether a specific idea is worth it. Which is why we should have the carbon tax and leave it at that - things that are worth doing will be done, things that are not will not be.
BTW, we’d note that the Stern Review’s carbon tax - that $80/tonne CO2-e - is already roughly implemented in Britain. It’s just badly implemented. Too much on things like car fuels, not enough on things like trains, cement and farming. Doing it properly would not cost us any more it would just cost us differently.
Tim Worstall