Tax Break

Who said tax is boring?

Raising the energy bar

Ancient artefact circa 1968

In my salad days, apart from holding down a regular job as an elementary school student, I had some house jobs. Returning home in the freezing dark each winter’s eve, my chafed thighs burning from the cold, I would make straight for the soot encrusted scuttle standing guard outside the kitchen door. Carrying it across the yard to the squat  bunker opposite I would scoop coal into the scuttle and then return it to its post ready for an older pair of hands to commit the contents to the boiler that spread warmth around the house.

…and another

In the mornings, after breakfast, when the teapot was empty, it was my task to take it into the garden and spread the tea leaves around the roots of the rose bushes to help them grow.

Every day, before the empty milk bottles were washed and returned to the doorstep for collection by the milkman, I used to gather the silver and gold metal tops. When I had a sufficient quantity, I would post them to the BBC Television Centre and await the following Monday’s Blue Peter programme when they, along with millions of others,  were transformed by the wonders of alchemy into a Guide Dog for the Blind. The dustmen (oldspeak for “city cleansing department”) only had to come once a week.

All innocent stuff you might think. But judged by modern standards it is not clear to me whether, on balance, I was an ecological saint or a child soldier pressed into service  by the Lord’s Resistance Army as an Earth Murderer. Fossil fuels do not get a good press these days.

I would love to meet the joker who invented the word

In the last few months alone we have had Australian legislation against carbon emissions, EU legislation over airline polluters, Canadian protests against shale gas fracking and British centralization of future power policy.

Dealing with the greenhouse gases that lead to global warming is, of course, not a new concept. The main “incentives” to reduce the release of carbon dioxide (the main culprit) into the atmosphere have been carbon taxes and cap-and-trade schemes.

Crime against humanity?

Carbon taxes are quite simple in that the social cost of a specific measure of carbon emissions is estimated and emitters are taxed accordingly. There are two main problems with this system . Firstly, while university professors may have had a field day devising the concept, nobody has the foggiest idea how to objectively calculate the social cost – so prices vary madly. Secondly, it is impossible to predict how much effect the tax will have on reducing emissions. In addition, there is the philosophical (and, if you happen to be poor, highly practical) problem that the tax is regressive. That means that if affects the poor more than the rich because, on the assumption that the cost is passed on to consumers, they  are hit comparatively higher. On the other hand, as long as a government applying the tax (as Australia this year) undertakes to ensure that the tax is dished out to lower income households as subsidy or tax break as well as supporting industry’s efforts to reduce emissions, this last problem is mitigated.

Cap and trade schemes, in contrast, control the reduction of carbon emissions by setting limits and the government issuing permits for those emissions. That is where the fun starts. Schemes have tended to start with “grandfathering” the permits free of charge to emitters on the basis of past emissions. They are then free to trade these permits. The concept is that a market price will be reached where those emitters who can most cheaply reduce emissions will do so.  This has produced windfall profits for some of the biggest culprits while there is little government revenue to aid the lower income sufferers of price hikes.  A more morally acceptable  (but less politically practical ) scheme is to auction the permits and use the revenue in a similar manner to the carbon taxes.

And now to the real world. Both types of scheme do not appear to be working too well. Carbon taxes have been set too low and permits have been distributed too freely.

While both systems, especially the cap and trade, appear quite clever on paper, both lack bite. When you take into account the countries that do not play ball, the potential leakage as companies move operations elsewhere is positively frightening.

Perhaps it is time to take a look back at the world before the Industrial Revolution when  the only greenhouse gases emitted came from the extremities of grazing cattle.

Hanging maybe. But drawn and quartered?

In those days there was a lot of lawlessness. As today, many only respected the law to the extent it was enforced but then society was not sufficiently organized to ensure its enforcement. So, what did the authorities do? They terrified the population. If you stole a sheep you were hanged. If you deflowered the wife of the heir to the throne you were hanged until you were half dead, dragged through the streets and then forced to watch yourself being disemboweled, castrated and quartered before being sent off to meet your Maker at a number of addresses around the country.

Where greenhouse gases are concerned, we are back in the good old days. Nobody (hmm..) would suggest executing factory owners for spewing out a bit too much smoke but, instead of making all those nice academic calculations to establish the fair cost of these heinous crimes, carbon taxes should be set at punitive rates (lets call it what it should be – a fine) and cap-and-trade permits made more scarce with a minimum price in the primary market. The revenue raised should principally be returned to the pockets of those in lower income brackets as well as being employed to assist companies to reduce carbon emissions.

Do you think he separates his wet and dry rubbish?

Coming downstairs one morning about a month ago without my glasses I noticed, stationed outside every house in my street, an absolutely motionless heavily tanned sentry. After turning on the radio with the expectation of being greeted by martial music but instead having my ears harassed by yet another castrato Bee Gees song in tribute to the late Robin Gibb, I found my specs and realized that the sentries were in fact brand new standard issue chocolate coloured slop buckets. The green revolution had finally come to my home town and we were to split the dry rubbish (green coloured bin) and the wet, rotting, stinking  rubbish (poo coloured bin).

After drinking my early morning mug of tea I decided to christen our new acquisition and went out to deposit my teabag. We might not have any rose bushes but we do now have a bloody ugly brown bin littering our doorstep.

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One thought on “Raising the energy bar

  1. Ettie on said:

    John, a very interesting theme. However, as far as I understand, since the largest emitters of GHG in the world like US and China are quite reluctant to address this issue plus current instability in Europe, I am afraid there will be little done in the near future…However, there are some interesting initiatives/ small projects that aim to clean the GHG before they are emitted from the coal power stations (most damaging in GHG terms) and use the cleaned Carbon Dioxide for agricultural or algae cultivation…Ettie

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