Tag: ecological tax reform

Carbon trading has arrived

21st August 2006

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Image source: www.wri.org

I listened to an excellent podcast from ABC’s Background Briefing the other day. Entitled: ‘The rise of the carbon traders’, it gives an excellent overview of the current state of play in this rapidly emerging market, created to address the growing problem of global warming. The audio runs for 49 minutes, and the program also comes with a transcript. The essence of the story is that companies could find themselves financially exposed unless they start generating carbon credits (e.g. planting trees, building wind farms). As the pressure to reduce emissions becomes more intense, and as other countries join with the Europeans in introducing a carbon trading scheme, the market will vote with its feet and it is only a matter of time before a large pension fund announces that it has sold stock in a company because of the risk associated with its poor carbon performance.

The fact is that, some day soon, even the climate change recalcitrants like the US and Australia will have no choice but to regulate, and all of a sudden the atmosphere can’t be used for free any more. Some large companies are already operating in the carbon trading market without being compelled to as part of a risk management strategy. They see the writing on the wall, and they don’t want to see their share price fall as fund managers start offloading their stock. Interestingly, the state governments in Australia are not waiting for Fossil Fuel Howard to act, just as the Governator is not waiting for Dubya.

Why green energy is cheap

13th February 2005

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The BBC News web site reports this week that Green energy is to ‘cost consumers’. According to a report published by the UK’s National Audit Office (NAO), consumers face a 5% rise in electricity bills by the end of the decade to help meet government targets on renewable energy. The NAO concludes therefore that renewable energy is a relatively expensive way for Britain to cut emissions of greenhouse gases.

This powerful deduction makes me think the NAO needs to audit its auditors. What poppycock! Clearly the NAO is staffed by neoclassical economists who fail to see that the market regularly underprices products and services by failing to incorporate the environmental costs of providing them. If the taxation system were harnessed to penalise the polluters and subsidise the clean technologies, this would produce relative prices that would come close to telling the ecological truth. The following passage from Eco-Economy by Lester Brown highlights the flaw in their logic:

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The US power failure

18th August 2003

A piece in the Financial Times today sheds a little more light (pun intended) on the reasons for the big power failure in North America last week. These include low investment in an ageing grid, too much deregulation, coordination problems between states, and last, but by no means least, rising demand.

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