Carbon border taxes should be based on, well, carbon taxes

We predict that this will go horribly wrong:

Cheap imported products made in polluting factories abroad may face new green import taxes

…..

The government will announce a consultation on a new system of “carbon border taxes” designed to protect UK manufacturers from being undercut by countries with lax environmental rules.

Carbon border taxes are indeed the new big thing. There’s good reason to have them too. If we are to burden domestic manufacturing with the costs of those externalities of climate change then - but no, that’s not the way the argument actually runs.

Instead, what we’re trying to do is change consumer behaviour so that consumption does not lead to those emissions which create the climate change. Therefore any form of production without the emissions works - and should be taxed the same and so on. Or, in the case of carbon taxes, non-emissive production methods should not be taxed.

Now imagine that Britain - yes, we know, ridiculous to even imagine that this could be true - adopts a very expensive manner of reducing said emissions in production processes. Bans fracking, forces up energy prices through ludicrous interventions, loads all of the grid costs onto consumers instead of charging them to renewables investors, and so on and on. Entirely nonsense that anyone would do it so badly but just imagine. Also imagine that other places do this less badly. Say, go nuclear, as France has done. Or hydro as Norway and so on.

Now, what should that carbon border tax be? From France and Norway, nothing, obviously. There’s no carbon embedded in their products. But which way would we all bet that the border adjustment will be made? Yes - it’ll be that British production costs are higher therefore the tax should be high for all non-Brits. That’s just inherent in the way this is being pitched. That the carbon border adjustment is to protect British producers. Instead of being to dissuade consumers from high emission consumption and nudge them, through prices, to low emission consumption.

The theory of carbon border adjustments is fine, logical, dandy even. Externalities exist, Pigou Tax them into prices. But when such logical theory meets politics we fear - nay predict - that it’ll end up as an orgy of simple trade protectionism. The thing being protected the inefficiency of the British domestic plans for reducing emissions.

A carbon border adjustment at the $80 per tonne CO2-e social cost of emissions? Fine and dandy. A carbon border tax to protect the vast expense of the British manner of trying to deal with climate change? No, not what should be happening at all. Sadly, we expect the second to be what does happen.

Achieving energy self-sufficiency at an acceptable cost

To achieve energy self-sufficiency without breaking the bank, the UK could adopt a number of practical measures. Firstly, by enhancing energy efficiency, it could reduce our energy consumption, for example, by insulating buildings, employing energy-efficient technologies and optimizing industrial processes. This would decrease its reliance on imported energy.

Secondly, investing in renewable energy sources such as wind, solar, and hydro power could provide a sustainable and cost-competitive energy supply for the UK. The cost of renewable energy has decreased substantially, so it can now effectively compete with traditional energy sources.

Thirdly, energy storage technologies, such as batteries and pumped hydro, can address the challenge of intermittency associated with renewable energy. Storing excess energy generated during peak periods and releasing it when needed would provide a reliable and consistent energy supply, and reduce the need for imported fossil fuels.

Fourthly, the UK could invest in carbon capture and storage (CCS) technology. CCS technology captures carbon dioxide emissions from power plants and stores them underground. This would help reduce greenhouse gas emissions while still utilizing fossil fuels such as gas derived from hydraulic fracturing until the transition can be made to renewable energy sources. The UK is in a favorable position for CCS owing to its North Sea oil and gas infrastructure.

Fifthly, the UK could play a significant role in facilitating the development and use of synthetic fuels. These can be made using carbon from the atmosphere with hydrogen produced by electrolysis to make methane and other hydrocarbons up to and including aviation fuel in ways that involve no fossil fuels, and which can be engineered to emit water vapour instead of pollutants as their exhaust.

By pursuing these practical measures, the UK could reduce its dependence on imported energy sources, and progress towards self-sufficiency in energy without excessive spending.

Having established that it could be done, the question moves on to one of whether it should be done. The answer to that bears upon whether the UK decides that it needs to be less dependent on fuel obtained from increasingly assertive and aggressive foreign autocracies.

Actual punishment here would concentrate minds wonderfully

We have been less than happy - and said so - over the years about the Post Office’s Horizon scandal. The original mistake was of such mindnumbing stupidity that it’s difficult to believe a system containing actual live, capable of breathing, human beings made it. The smokeblowing and backfilling over it were worse. So much so that one of us has, in another place, called for substantial punishment:

There’s plenty of blame to go around over the Horizon computer and accounting program and we might include parts of the Post Office management, Fujitsu the contractor and others. But Byng’s historic example shows that the right response is simple. In fact, why not go further back than Byng and go Viking on the guilty?

Matters are not getting any better:

Postmasters whose reputations were left in tatters by the Horizon IT scandal are being offered a maximum of just £10,000 for “severe” reputational damage, it has emerged.

Abject stupidity allied with bureaucratic cover up leads to a payment for reputational damage less than the costs of hiring a libel solicitor?

We’re normally very vocal in our insistence upon saving public money but this is one of those occasions when we argue entirely the other way. Here the State, the powers that be, screwed up big time and they need to compensate, swiftly and properly. We can have the discussion about whether to reopen Tyburn for the perpetrators a little later.

Action this day as the man said.

Let's go from 7 recycling bins to none, shall we?

As we’ve noted over the years, recycling that adds value is worth doing, recycling that requires subsidy possibly isn’t. But over and above that there’s the method of recycling to be used:

Households could need as many as seven bins to comply with new national waste-collection plans being drawn up by the Government.

The average new build in the UK currently has some 76 square metres of space. If each bin has a footprint of 1 m2 then we’re using 10% of the hovels we allow the proles merely to store the recycling until the council can be bothered to come around and collect it. If half that size then it’s still 5% - an excessive amount even then.

Or, we can think of this the other way. A useful estimate of the time it takes a household to sort and prepare materials for recycling is 30 minutes per week. With roughly 30 million households that’s 15 million hours a week of labour required. Or, the full time labour of 400,000 people at the usual 37.5 hour work week.

At which point why not muse on the benefits of economies of scale and mass production? If we were to change our system so that instead of praying to Gaia separately, each in our kitchens, we were to bundle everything off in the one bag to be sorted automatically in large factories? Such do exist, after all, it is merely a choice that is being made here about the method to be used in recycling.

Note what this would mean. If said factories required the labour of fewer than 400,000 people for the country as a whole then that would be the more efficient use of human labour. And isn’t it continually said that labour productivity flatlining is one of the major problems that afflicts us?

Or, as this also works out, why don’t we make ourselves richer by abandoning this idea of household recycling and moving to factory recycling? Just as we made ourselves richer by moving to industrial farming, industrial spinning and weaving, industrial production of pretty much everything else in fact.

Modernity, it has something of a ring to it.

If food banks solve the problem then Huzzah for food banks

The usual list of the international Great and Good - but possibly logic deficient - take to the letters page of The Observer to tell us that food banks really just aren’t the thing:

The extraordinary efforts of food bank teams, increasingly backed by corporate involvement, should not blind us to the fact that an emergency food parcel cannot do more than temporarily alleviate hunger.

And there we were, thinking that hunger was itself a temporary thing. Solve it once and a few hours later it reappears. It rather definitionally being a thing that doesn’t have a permanent solution.

The latest plea for an essentials guarantee from the Joseph Rowntree Foundation, the Trussell Trust and others is testament to the reality that growing reliance on food banks, backed by surplus food redistribution, is an ineffective substitute for poverty-reducing policies.

This simply isn’t true. Food poverty is reduced by supplying people with food. Food banks supply people with food. Food banks are, therefore, a highly effective means of solving food poverty. To the extent that reducing food poverty reduces poverty then food banks are an excellent substitute.

We’ve long maintained the view that food banks are a new technology - a technology is just a way of doing something. Originating in the US, arriving in the UK just post- 2000, food banks do indeed alleviate food poverty. By the simple mechanism of providing food to people. Sounds absolutely great to us. The task is that hungry people get fed, why knock a system that feeds hungry people?

But the real complaint here is that this problem is being solved the wrong way. Just people organising things by themselves, charity, corporate involvement, waste food being redistributed - the little platoons doing their stuff. This is wrong. For it should be the State in all its inability to handle the details which does this. That’s what the moral insistence is here among said logically deficient:

Guaranteeing the right to food and a living income through real living wages, together with adequate social security provision, is essential to ending the need for charitable food aid in all societies.

We’re pragmatists. Extreme pragmatists perhaps but pragmatists all the same. Food banks feed hungry folk better than governments do. All Hail Food Banks.

All 38 member countries of the OECD now rely on a privatised charitable food aid model, often dependent on volunteer labour. The ubiquity of corporate food charity in high-income countries should provide a stark warning. The European Federation of Food Banks and the Global Foodbanking Network collectively operate in 76 countries, including low- and middle-income states. Their mission is to expand “the presence and influence of food banks all over the world”, further anchoring corporate charitable food aid provision as a means to address hunger through surplus food redistribution.

That’s exactly why this new technology has spread from the US to all of the richer countries. Because it works. The insistence from these Great and Good is that we should stop doing something that works and attempt what clearly doesn’t on moral grounds. Get rid of that nasty charity, cleanse the corporates from the system and accept the hunger as the cost of moral purity.

Err, no, be off with you. If the hungry are getting fed then we’ve solved the problem already.

To change the world first change the language

As Mr. E. Blair pointed out, if you change the language with which people are informed and think thereby you change the information people gain and the way that they think. Which brings us to the recently resigned Food Czar for the nation:

Ultra-processed food — meaning a packaged product, generally high in calories and low in nutrients,

Leave the ultra-processed part out of it - despite the fact that that bans tofu to everyone’s great relief - and concentrate upon the definitional switch done there. Using Our Friend, Mr. Google, the first entry tells us that:

(NOO-tree-ent) A chemical compound (such as protein, fat, carbohydrate, vitamin, or mineral) contained in foods. These compounds are used by the body to function and grow.

Calories, from those carbohydrates, are nutrients. Not “calories and nutrients”, but “nutrients, such as calories and”.

It is possible to test this. Lacks of certain nutrients will indeed kill - no Vitamin C through scurvy, no niacin through pellagra, lack of protein through kwashiorkor and so on. A lack of calories will kill through simple starvation. Also, a lack of calories will kill rather faster than any of those others.

Calories are nutrients, an essential part of a human diet.

At which point we really do have to stop and think just for a little bit. We have here someone desirous of planning the diet of the entire nation. Someone who doesn’t, in fact, grasp the very basis of nutrition in the first place. This really might not be quite the place for us to be getting our national plan now, might it?

Not that we should be having a national plan and all that but this herd of nonsense needs to be stopped before it even gets out of the gate.

Calories are an essential part of all animal nutrition. Any discussion of food which tries to ignore this is doomed to logical and medical failure.

If we could just say very well done here, no, vry well done indeed

The standard and long lasting critique of the British economy is that we don’t, collectively, invest enough. Even that amount we do invest is at least partially financed by foreigners - that’s why we have a capital account surplus and also a trade account deficit in the balance of payments - meaning that domestic savings must be lower than even the anaemic investment demand.

We also know that we gain less of anything we tax. Yes, of course, at least some government is necessary, therefore there will be taxation. But it is still true that the act of taxation itself means less of whatever is being taxed.

So, given the paucity of both savings and investment, the effects of taxation upon both savings and investment, what is the proposal for the economy?

Labour’s deputy leader has suggested that the party should raise taxes on savings and investments.

Err, yes, that’ll sort matters out, won’t it? Tax so as to have less of both those savings and investings that the country is already short of.

Very well done that politician there, vry well done indeed.

Dunkelflaute, DESNZ, and Departmental Questions

The new Department for Energy Security and Net Zero (DESNZ) is due to publish an energy strategy by the end of this month, according to oral evidence given to the Public Accounts Committee on 23rd March.

This responds to a ruling by the Hon. Mr Justice Holgate on 18th July 2022 that the government had no 2050 energy plan and should produce one Pronto. He called, in effect, for a detailed roadmap showing how net zero will be achieved along with targets and outcomes published annually.

The reason for the delay, according to the DESNZ Permanent Secretary, is that they have so many mini-strategies and thousands of simulations. Q23: “We actually have a number of plans already to help us to achieve that.” Followed by Q24: “The Department runs thousands of simulations…” In other words, DESNZ is unable to see the wood for the trees.

The wood, as our written evidence to the PAC pointed out, is really quite simple. Due to weather variability i.e. “dunkelflaute” - a period of time in which little or no energy can be generated with wind and solar power - no amount of renewables will suffice. They will have to be backed up by nuclear, natural gas (plus carbon capture and storage – CCUS) and electricity imports from Norway and the continent, in turn offset by exports when the winds favour the UK. In other words, just four sources. DESNZ envisages three others: batteries, biomass and hydrogen. These, as our written evidence explains, are bunkum.

And how will total electricity demand be divided between the four sources? DESNZ expects that 2050 electricity demand would be less than double current levels: 580TWh compared with 300TWh now. A decarbonised 2050 power market implies that almost all UK energy will take the form of electricity. If 2050 total energy needs prove to be about the same as in 2020, electricity supply will have to increase by nearly seven times. The Chancellor’s budget forecast a 15% reduction due to energy efficiencies but that still means DESNZ is under forecasting by about three times…

DESNZ’s oral evidence did not disclose the split between the four sources but for renewables they talked about capacities, not delivery. Wind seldom exceeds 50% of its nominal capacity. Wind capacity in 2021 was 25.7 GW. Wind power only reached 50% of capacity for 2.3% of the time (205 hours). Equally importantly wind failed to meet 20% of demand for 58.8% of the year (5,154 hours).

For nuclear, the Permanent Secretary talked about “up to 24 GW” being added but only Sizewell C was specified (3.2GW). (Q41) The Nuclear Industry Association’s written evidence that 24 GW is an underestimate is surely correct. 56 GW seems more likely.

Nuclear will, in fact, need to move quickly to the SMRs the Chancellor highlighted in his budget but only had partial acknowledgement by the DESNZ team. We will need about 100 but we had no outline of how many suppliers would be considered, how many chosen or how many SMRs needed or timescale. Recognising the need and specifying how we will get there are very important as is also the case for CCUS but a government department preoccupied by “sophisticated modelling” appears to have has no time for simple commercial implementation.

The DESNZ team was reluctant to share with the MPs even the information that will be released next week. This is my final point. Delay and obfuscation are cloaks for incompetence. We need a SAGE-type team of top scientists and engineers openly to advise DESNZ and blow away the cobwebs. Such advice should be open to peer review. If DESNZ carries on fiddling while CO2 levels rise, we will not get to net zero this century.

Bibliography:

https://committees.parliament.uk/oralevidence/12875/pdf/

https://www.judiciary.uk/wp-content/uploads/2022/07/FoE-v-BEIS-judgment-180722.pdf

https://committees.parliament.uk/writtenevidence/119204/pdf/

https://www.bmreports.com/bmrs/?q=generation/fueltype

https://committeIbides.parliament.uk/writtenevidence/119201/pdf/

https://committees.parliament.uk/writtenevidence/119204/pdf/

Surprise! Incentives matter, even to upper middle class professionals

The most basic and fundamental thing you need to know about eonomics is that incentives matter. This is all that is required to understand this little snippet of news:

British patients face the shortest GP appointments and are least likely to see a doctor in person, an international study has found.

In most parts of the world doctors are paid when they see a patient. This may or may not mean that they then do something to solve said patient’s problem but that’s not what is being measured here. Rather, who gets to see a doctor is being taken as the measure of success because that is what is being measured - who does the doctor see?

All we require to understand this is that British GPs are not paid for seeing people. Instead they have their list and they receive an annual fee for everyone who is on that list - the capitation fee. In fact, the incentives in the British system of paying doctors are to maximise the number on the list and minimise the number of them who are actually seen. Which does, neatly, explain why the British find it so difficult to gain a doctor’s appointment, because British doctors are paid for not seeing patients.

Switch the payment system to that of other places and the performance of the system will be as that of other places. For, yes, incentives matter. Pay doctors for seeing patients and doctors will see patients. We can decry this as merely waving filthy lucre at them but given that we already stuff their mouths with gold we might as well get the incentives right as we do so.

The only useful argument against this idea is that we don’t in fact want doctors to see patients. We can imagine a bureaucracy dreaming of that as the perfect outcome but we think it more than a little odd as a goal of actual public policy.

The graphics that won a war

Forty years ago, on March 23rd 1983, President Ronald Reagan startled the world by unveiling the Strategic Defence Initiative (SDI). The plan was revolutionary in that it proposed a programme that would cultivate a defensive barrier, much of it in outer space, that would shield the US against enemy nuclear attack.

The previous doctrine had been Mutually Assured Destruction (MAD), to convince possible enemies that any attack would be met with a retaliation that would destroy them. The USA and the USSR trained nuclear missiles at each other from silos and submarines, and armed strategic bombers stood ready to launch if incoming enemy missiles were detected.

The new US policy was to use advanced technology to construct a nuclear shield to deflect and destroy enemy missiles before they could reach their targets. It was to include X-Ray lasers, neutral particle beam weapons, electromagnetic rail guns, kinetic kill vehicles and terminal phase defence to destroy warheads as they re-entered the atmosphere and before they could detonate. It was breath-taking in scope and alarmed the Left to the point of near hysteria. They described it as impossible science fiction, and dubbed it “Star Wars.”

The Soviets did not think so. When Gorbachev met Reagan at the Reykjavik summit in 1986, the top item on his agenda was that the US must abandon the SDI. He knew that the Soviets had neither the technology nor the resources to undertake, or to overcome, such a project.

Oleg Gordievsky, head of the KGB’s London station but secretly working for MI6, briefed Reagan not to concede on the SDI. He told the President that it would win the Cold War and that the USSR would fold if the US stood firm on it. The summit ended without agreement because the SDI was the one thing that Reagan would not budge on.

The US began initial work on key parts of the project, with graphics showing how it would develop and work. Larger than any technology gap was the graphics gap, with Soviet strategists appalled at depictions of what they would have to confront. In the event, the programme succeeded without needing to be implemented. As Gordievsky had predicted, the USSR folded three years after the failed Reykjavik summit. The iron curtain and the Berlin Wall came down, and the USA has won the Cold War.

A determined President, backed by conviction as well as technology and resources, had faced the enemy down and won. And graphics played no small part in that victory.