THE ANSWER?!


Decarbonising the energy supply of the world without risking creating the mother of all economic depressions is probably going to be waaay harder than most think. It isn't just a matter of widely deploying electric vehicles, insulation and solar panels. Most of the carbon footprint that people create, particularly in the richer nations of the world, is caused not by what you drive or how you power your life but by the fossil fuels used to extract, transport and make the materials, goods and services everybody uses. Most of this happens 'offshore' in countries far away and does not appear on the usual 'carbon emissions per country' figures you might have seen.

Weaning our personal energy use off fossil fuelled energy is relatively easy to do - it's the low hanging fruit, that most suggestions we see from the public would address that would happen first. It won' be enough - not nearly enough. To fundamentally solve the problem requires making the use of fossil fuelled energy increasingly financially unattractive. In market economies, most personal and business decisions are driven by prices, and wherever a fossil fuel is the cheapest source, and not forbidden, it will continue to be used - only draconian legislation could stop that and I think far too many people, in particular activists such as E.R., are far too optimistic in believing that if only 'the people knew the truth' they would vote for such far reaching legislation. Humans just aren't like that. That's why E.R et al use scaremongering tactics with their exaggeration of the science and their using over the top rhetoric in an attempt to scare the people into thinking as they do and jumping for the 'solutions' they want to see.

There is a relatively simple yet incredibly efficient solution which would work at all scales without needing heavy-handed legislation and/or severe punishments. It would also have the double whammy effect of stimulating the economy whilst simultaneously helping 'the poor'.

It's a form of carbon tax, but not the cap and trade type, or a simple VAT/GST like percentage added on. Those systems have their problems and would be very strongly resisted by many.

This magic system is known as 'carbon fee and dividend' and, apart from being hailed by many top economists as a very workable system, it also has several other benefits beyond just providing a powerful mechanism steering the world away from fossil fuels and towards low/neutral/negative carbon technologies. Introduce the system and, faster than one would believe possible, via the billions of consumer choices made every day, the economy would be propelled on to a sustainable footing globally.

It can be introduced unilaterally without disadvantaging the pioneers. Countries that did not introduce the system would be put at an economic disadvantage, as their exports would be made relatively more expensive compared with those countries who had adopted the system. James Hansen, the climate scientist who first alerted the US Congress to the threat of climate change, from human caused global warming, in 1988 regards it as the most workable solution. Here's a basic introduction, which is quite clearly written.

https://citizensclimatelobby.uk/climate-income/policy-makers/carbon-fee-dividend/

The biggest perceived barrier to a  conventional carbon tax is the (often justified) fear of people that any tax revenues raised would just disappear into the government's coffers and never be seen again and that it would also put up the cost of living for most. Americans in particular tend to reach for their guns to stop more taxation being introduced. No-one likes paying taxes, so how can this idea appeal to the vast majority of the voting public, as opposed to the green groups and their sympathisers?

The answer is actually simple and profound at the same time.

There are obviously different ways that the proceeds from a carbon tax could be managed so they don't simply disappear into the black hole of government. Here's the secret of the best way: all revenues collected are given right back, equally divided up, to all the people – every dollar or pound taken in tax is returned to people’s pockets.

This 'carbon fee and dividend' (CF&D) system imposes a carbon fee on energy, materials, products and services that have used greenhouse gas generating fossil fuel energy in their mining, extraction, refining, transport and manufacturing. If collected at the 'point of entry' into a nation/jurisdiction this would also send a strong 'market signal' for goods/energy from overseas by addressing 'Scope 3' emissions which, for an island such as Jersey (which has already largely decarbonised its electricity supplies) are a very significant, perhaps the most important, part of Jersey's overall excess greenhouse gas impact on the climate

https://www.gov.je/SiteCollectionDocuments/Environment%20and%20greener%20living/R-Channel%20Islands%20Scope%203%20GHG%20emissions%2020200401%20HL.pdf

The effect of such a fee would be to make 'good' environmental products and practices cheaper than climate unfriendly ones. People who chose to continue with a heavy carbon footprint lifestyle would pay out more than they got back. Those who changed their ways to avoid carbon heavy goods and services would actually receive net income - this is the economy stimulating aspect I mentioned before.

The forthcoming G7 summit just down the road from my new home in Cornwall https://www.bbc.co.uk/news/uk-england-cornwall-55678031 will undoubtedly be considering the merits of the CF&D to get the world out of the seemingly intractable mess it currently is in.   

It might even be the first highly popular tax!

https://en.wikipedia.org/wiki/Carbon_fee_and_dividend

https://ieefa.org/ieefa-europe-beyond-coronavirus-why-a-carbon-fee-and-dividend-make-sense/

https://www.theguardian.com/commentisfree/2021/jan/05/simple-way-green-economy-cash-prizes-carbon-dividend

Why the contribution is important

Too many do not understand the scale of the problems that need addressing, nor the immense difficulties in engineering suitably effective reductions in greenhouse gases in the timeframe delineated by the science. In particular, the immense political and economic risks involved in just  mandating that, for example, the world should ban the use of fossil fuels ASAP are virtually unrealised yet by the majority of the public. This posts shows a different way supported by economost of both the left and right not to mention top climate scientists. Sometimes, 'too good to be true' happens.

by NickPalmer on February 05, 2021 at 06:12PM

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Comments

  • Posted by brucecarnegie February 07, 2021 at 13:21

    'Carbon fee and dividend' should also be relatively easy for Jersey to implement and introduce. We have limited points of entry and can monitor products, just as we already do for GST. Paying out the dividend to the local population will help stimulate the economy which is something that the chamber of commerce and the government's economic development panel are keen to achieve.
  • Posted by SimonLanglois February 07, 2021 at 14:01

    This sounds like an excellent workable idea which I could definitely see working.

    Observations on ER (XR) are wide of the mark as that's a movement asking for binding Citizens' Assemblies to determine goverment policy - they don't have the answers and nor should they be expected to, as that's down to the experts. I don't agree that quoting official sources like the IPCC, NOAA, NASA, etc. counts as scaremongering. They're asking governments to tell the truth and do something about the Climate Emergency, rather than just declaring one and doing nothing.

    This Jersey Climate Conversation initiative is a step in the right direction. :-)
  • Posted by TKHathaway February 07, 2021 at 20:29

    An 'environmental impact fee collected from product or service point of sale, that is then redistributed back to all citizens in a jurisdiction', is an interesting form of economic policy.

    If we ignore the finer points of such a policy (such as when it pays back to people, how the fee is determined, and who exactly is a 'citizen in a jurisdiction') then at face value it is a reasonable way in which policy makers could 'nudge' commercial enterprise in 'more environmentally friendly directions' by making such products or services relatively more expensive compared to others.

    However I don't think it is helpful to tout such ideas as 'the answer' when in reality a number of public policy directives are needed, and all policies will have unintended consequences and socio-economic distortions.

    For example If the notion is for this wealth to simply be redistributed, there is a perverse outcome that the some people might feel they are better taking the less environmentally friendly options, because ultimately they will see a larger dividend from doing so, and thus arguing against environmental standards to keep the value of the dividend they are receiving.

    Also if the policy was widespread, this income would start to factor into peoples household incomes and become a 'structural income' that the state would be beholden to keep funding even if we got to the point of being very ecofriendly.

    And neither of these core issues addresses some of the more technical elements like how do you determine the fee to be collected, which is almost certain to be mired in legalese and vested interests and arguments as to what should be included and at what level?

    Even if a blanket approach is taken, you would create distorting effects, on some industries like cattle farming or concrete laying that, if we are talking greenhouse gasses, will see a greater impact than other industries, and so causing a short to medium term rebalancing of the market forces involved, with knock-ons to jobs, and lifestyle beyond the immediately obvious.

    While this may be, an argument against such a policy, that does not mean, in my opinion the notion is that it is a 'bad idea' – just one that needs to explained fully, properly and _seriously_ and not touted as a 'golden bullet', and we would need to tailor such an idea to the local economy.

    I too believe the best way to tackle some of environmental issues we face as a globe today is to select policies that seek to nudge collective behavior within the framework of the traditional economic paradigm, rather than us opt for regressive policies that would be detrimental to current or future standards of living, and thus shall be fundamentally unpalatable to the average islander. This being a policy idea firmly in the former school of thought rather than the latter.

    All of the above said – Jersey, like the UK has a clear advantage in being able to make such a form of environmental dividend work – and that is that as islands the point of import is relatively easier to monitor than the internal market, and that as a smaller and somewhat more closed economy it might be easier to observe the distorting affects of such a policy and make the right calls for how to address this.

    Personally I would say that rather than a dividend be paid directly back to the islander, I personally might prefer that such funds collected would be ringfenced to only be allowed to be spent as capital investment in environmentally friendly technologies and infrastructure and never for structural or maintenance spend (that would force such a revenue collection scheme to operate ad infinium to support past investments).

    However if one of the selling points about such a policy would be that it pays back to the Jersey Resident or Electorate (Voters Bonus to help address voter apathy anybody?), then why not look to elements of the recent £100 Spend Local scheme run by government that required the stimulus money to be spent locally, and in a time limited period, with the aim of supporting key target industry areas.

    A number of the other posts here talk about 'providing funding for x' what if such an environmental dividend is ringfenced in a similar way, forcing islanders to spend their dividend in the local economy in a time limited 'bonus' notion? Doing so might limit some of the effect of such an income becoming 'an entitlement' rather than 'a gift', and also at the same time giving the States Assembly a fund and a tool to help islanders have money available to make environmentally friendly property conversions, or address unintended distorting effects on the economy?

    I do not know if this an answer or not, but it is an idea that to my mind warrants serious thought by local policy makers in how such a policy could be applied to Jersey.
  • Posted by NickPalmer February 08, 2021 at 13:06

    TKHathaway

    With a fee and dividend system, anyone who chooses less climate friendly products, services and lifestyles will tend to pay more for those things than someone else choosing the 'greener ' alternatives. Thus, as everybody gets exactly the same dividend returned, the fossil fuel derived energy hungry lifestylers pay out more in carbon fees than they receive back in dividend. Those who choose renewable energy and products made with them, will receive back the same as or more than they paid out in fees.

    As I said, most top economists of all political stripes reckon this would do a major part of the job. The whole global warming thing is a 'market failure' caused because hitherto the market has not priced in the cost of the environmental damage that can be done to the environment. The 'fee' puts environmental consequences squarely onto the financial bottom lines. Corporate accountants would recommend that the big bosses change their ways or they will go bankrupt!

    There has already been a precedent in the very rapid solving of the 70s acid rain problem by the late 80s. A price was put on emitting acid gases from major industrial smoke stacks and almost overnight industry invested in pollution control measures. They mostly used the cap and trade model, which is now seen as less effective than the fee and dividend one. It also doesn't have the economic stimulus effect that F&D does.

    https://en.wikipedia.org/wiki/Acid_rain
  • Posted by NickPalmer February 08, 2021 at 13:59

    ER (and other well known darlings of many activists) DO grossly exaggerate the science using the same type of deceptive techniques that denialists do - cherry picking, misrepresentation of official sources, fake experts etc to achieve the opposite of denialism which is alarmism.

    ER demand that government's "tell the truth" - well they are, although they could probably say it a bit louder and more often. It's ER who aren't. ER's most notorious doomist nonsense was Roger Hallam's often repeated claims that six billion will die by 2100, not to mention claims by the similarly hyperbolic Jem Bendell and Guy McPherson that 'near term human extinction' is on the cards.

    These 'doomists', although sincere, are actually very counter-productive because they give denialist lobbyists and propagandists enormous amounts of ammunition to attack the actual science by proxy by implying that the shock horror headlines, that such as ER generate, represent what the real science says, thus it smears that science in the minds of the public and spreads doubt and uncertainty amongst them.

    Over many years, environmental extremists have repeatdly fallen into the same stupid trap of believing that if they just scare the public enough, then the public will be stampeded in to demanding action to fix the problems the extremists assert need fixing. The public will remember all the failed predictions of environmental doom of the past which never came to pass or that the reality proved to be much less of a problem than the predictions claimed.

    Now we have a real and hard problem to solve (anthropogenic climate change) all the same types who 'cried wolf' so often in the past are still employing the same fundamentally flawed strategy and screwing up the public's perceptions

    http:// climatefeedback.org/claimreview/prediction-extinction-rebellion-climate-change-will-kill-6-billion-people-unsupported-roger-hallam-bbc/

    http://www.realclimate.org/[…]/
  • Posted by johnpinel February 23, 2021 at 21:25

    Carbon labelling, similar to the 'traffic light system' (green = good / red = bad) used for salt and sugar in food products would be a great first step, enabling consumer choice in all purchases.
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