5 Jan 2008

UK Virtual Carbon Pricing


As reported by The Guardian:
Government says new 'carbon price' will favour eco-friendly policy choices
Saturday December 22 2007

'Ministers have been instructed to factor into their calculations a notional "carbon price" when making all policy and investment decisions covering transport, construction, housing, planning and energy.'

I think this was a piece of good news for a change. The act of applying a carbon cost to all decisions makes low-carbon cost-competitive, even if the carbon cost is never really paid. If all decisions by government are done in this way, it makes it easier, from the politicians' point of view to create a real carbon price applicable to people and industries.

Governments (or, more precisely, the civil service) can get away with a virtual price, because their decision-making procedures are closely monitored and hard to circumvent. If policy dictates that the price will be included in all cost calculations, then any decision made on purely cost grounds will probably be low-carbon.

Individuals and corporations, on the other hand, make un-monitored decisions, and can ignore a virtual price, knowing full well that it is imaginary with only their conscience (or that of their customers) to hold them to their low carbon ideals.

So if the government were to declare, in a year or two, that they were creating a carbon tax to be applied to all electricity, cement and fuel, priced at the same value they are already applying to their decisions (and probably reducing fuel duty by a similar amount to appease the motoring lobby), they would get a kinder reaction than if they had not demonstrated their own willingness to bear the costs involved.

Take this together with a recent accusation by Jeremy Leggett:
Civil servants have played a damaging role in skewing UK policy away from renewables
Thursday January 3, 2008

'Department of Trade and Industry officials fought a rearguard action. Nuclear was granted a place on the back burner, to be reviewed after five years.'

and you can see why the politicians are driven to forcing civil servants to act in the Earth's favour rather than the economy's.