There is at least the hint of a suggestion that we’ll gain the single obvious and logical climate change policy:
Rishi Sunak is examining proposals for a UK-wide carbon tax that could raise billions of pounds while encouraging the drive towards net-zero emissions.
The chancellor is seeking to replace existing EU carbon-reduction schemes with the new tax when the transition period finishes at the end of the year.
Treasury officials are also looking at longer-term proposals to extend the tax to other areas including domestic gas and agriculture, which could raise more than £25 billion by 2030, supporters say.
The idea - whether climate change is happening or not, whether something needs to be done about it or not - that nothing is going to be done about climate change is clearly beaten into a pulp. It’s simply not going to survive in the current politics. Thus the argument is over what is to be done rather than whether.
As William Nordhaus gained his Nobel for saying, as Nick Stern his peerage with the eponymous Review, as more than 90% of economist asked insist, the effective and efficient solution is a carbon tax at the social cost of emissions.
Around £25 billion is around right for the UK too. Take emissions levels, several hundred million tonnes CO2-e per year, multiply by $80 per tonne, convert to sterling and yes, around the £25 billion mark, that’s close enough for government work.
Each economic actor now bears, in the prices they face, those formerly external to markets emissions costs. We thus gain the optimal level of emissions. That is, this one tax and we’re done, finished, all we’ve got to do then is wait for the economy as a whole to chew through the changed incentives.
There are those who disagree:
However, the move has alarmed some environmental groups
Well, yes, clearly, for it will end the orgy of cronyism which is current climate policy. For the carbon tax is a one stop shop. Once instituted we get rid of everything else. Repeal the Climate Change Act, abolish the Climate Change Committee. If fracking makes sense when paying a carbon tax then we should have fracking - if green hydrogen then ditto. We also cease all subsidy, feed in tariff and planning partiality for solar, wind, hydro, tidal and the rest. The entire load of providing the correct incentives is now on market prices, as adjusted by that carbon tax. We even stop wibbling about insulating every house in the country - if more expensive fuel, incorporating all costs, doesn’t incentivise then it shouldn’t be done anyway.
Our view here is that given all that can be abolished by having that one correct policy of the carbon tax it’ll all end up being markedly cheaper this way. Especially as the literature recommendation is for a revenue neutral tax, meaning other taxes should fall by that same £25 billion.
That the associated parts, the abolitions and the reduced other taxes might not be quite what Mr. Sunak is actually proposing is all the more reason to hold feet to fire.