Some might recall the Stern Review, that report to the British government that said we’ve really got to do something about climate change you know. That something being to impose a carbon tax. Longer memories might remember Willam Nordaus who has been saying much the same for three decades now. And the general consensus among economists is that, assuming the cause and problem are correctly identified then yes, changing the price of emissions by the addition of a Pigou Tax is the correct method.
The question becomes, of course, what should the rate be? James Hansen as argued for up to $1,000 a tonne CO2-e. The Stern Review said $80 per such tonne. Today we’re told something different:
Charge €30 a tonne for CO2 to avoid catastrophic 4C warming
This is, apparently, all we need to do:
The climate summit in Katowice, Poland, in December will conclude that the voluntary contributions of the governments are currently insufficient to put the world on a 2C, let alone 1.5C, trajectory. Policies to intensify efforts are necessary. All nations need to revise their mitigation targets to accommodate the more rapid emission reductions required to truly stay well below 2C.
New global policies are needed. One such policy would be a carbon price starting around €30 per tonne of CO2, which would very likely render investments in coal-fired plants unprofitable.
Isn’t that good news? Our required price change is less than half what Stern thought it was. Climate change is easier and cheaper to fix than we thought. Oh, and that also means that we’re already paying too much tax in the UK to fix it. That Stern $80 a tonne is about 11 p on a litre of petrol, a sum the fuel duty escalator has already more than added. And yes, the 23 p or so added by that escalator was to “meet our Rio commitments.”
To meet the climate change challenge means lowering UK taxation - can we all at least get behind that idea?