Archive for March, 2011

Excuse me for being just a slightly bit amused by this article from the Telegraph headlined “EU to ban cars from cities by 2050” and the ensuing comments.  Although the article plainly quotes Siim Kallas (Vice-President of the European Commission and responsible for transport, but who is amusingly referred to in the Telegraph article as the EU transport commission – we hope the commission consists of more than Kallas!) as saying “That means no more conventionally fuelled cars in our city centres” (emphasis added by Betsy) – the rest of the article and its commentators continue on the same vein of the EU will ban all cars completely from European city centres.  I don’t recommend you read the comments because after initial amusement, it might make you lose faith in humanity; sadly, together with the usual spoutings about socialism, elites, etc., the commentators have reacted as you’d expect them to – wondering how people would move around without their cars. And UPS without their trucks. And emergency services without ambulances.

All hilarity aside, while we haven’t actually looked in-depth into the EU Transport 2050 Strategy we have read a quick summary.

The objectives seem fine, although the goalposts are set perhaps a bit too far away in time for our liking. But perhaps our old friend the hand of the market will sort that out for us.  The Transport Strategy aims to have a 50% shift away from conventionally fuelled cars by 2030, phasing them completely out of cities by 2050. The way fuel prices are rising perhaps these targets won’t be so hard to achieve. It’s basic economics that – as the price of a type of fuel increase, demand shifts to cheaper alternatives – perhaps into public transport, or cars that are less reliant or even aren’t reliant at all on these fuels. It all depends how much the price increase is and how available (convenient and cheap) the alternatives are.  As the demand shifts, alternatives will become more available – vehicle manufacturers will be more encouraged to innovate, producing more fuel (of any type) efficient cars.

What will raise fuel prices? Increasing cost of exploration and processing could be one reason but so is political instability and, as we are seeing today, conflict in regions that produce oil. Policy intervention can also increase fuel prices. The Transport Strategy talks about moving towards a full application of “user or polluter pays” principle.

This principle takes the idea that the price for the fuel – no matter how high – pays only to cover the cost of exploration, processing, distribution and so on, but not the cost of environmental damage during the finding and preparation of oil or its use. But users of fuel (the polluters) should pay for these costs too and this can be through taxes on carbon for example and other policy intervention. Taxes, in turn, increase the fuel price encouraging demand to shift to alternatives, reducing the fuel use and emission of carbon and other environmental impacts.

Why should we do that? We know Telegraph readers probably believe that climate change is all a big plot by some world socialist government, but whether they believe the science or not, they will be affected, just as all of us will. Without cuts to greenhouse gas emissions the science tells us that it is possible that rather than worrying about the government stealing their cars by 2050, in 2100 Londoners on their daily row to work may be cursing the government for allowing this climate change business to happen…

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So we had the 2011 UK budget announced yesterday (click here to download). The key objectives of the budget are a strong and stable economy, growth and fairness.

‘Environment’  has a section of its own that is 4 paragraphs long in almost 100 pages of the budget, some other sections that are obviously linked to environmental impacts like the paragraphs on ‘motorists’. The thing about the environment – human society interaction is that when thought through carefully almost everything in this (or any) budget will have some impact on people’s behaviour which in turn will affect their use of the environment and hence the environment (or vice versa). It’s not enough to summarise a few points as I will do here or use the colour green for headings and important statements as the designers did for the Budget 2011 document.

So, what do we have? A bit of a see-saw effect…while the budget has commitments that will reduce our impact on the environment, there are others that will increase it. And we could be missing at least one great opportunity. For example,

  • The proportion of tax revenue accounted for by environmental taxes will be increased – this is both good and bad…environmental taxes are most efficient when they are higher than, say, abatement costs so that ‘polluters’ prefer to abate (reduce their pollution) rather than pay the tax. If this is successful, then environmental taxes will not raise much revenue. In contrast, when environmental taxes are used to generate revenue, they tend to be low enough for polluters to pay but too low (i.e. lower than the cost of abatement) to change behaviour. One should prefer the first option.
  • On the one hand, a carbon price floor for electricity generation will be introduced from 1 April 2013 which will provide a future guarantee for investments into low carbon technologies. The ‘floor pricing’ is an old trick many countries used in the past to protect domestic industry and agriculture – whereby government promises to buy certain produce at floor prices or higher – and some countries still do. On the other hand, the climate change levy discount on electricity for CCA participants  will be increased from 65 to 80 percent from April 2013 to continue to support energy intensive businesses exposed to international competition – well the impact of this could only be one way: continued / increased use of energy and hence carbon emissions. Whether the balance of the two policies will be positive remains to be seen.
  • The initial capitalisations of the Green Investment Bank (GIB) will be £3 billion and it will begin operating in 2012-13. We’ve written about this before: see here. And this new funding, anticipated private finance leverage and the Bank being given borrowing powers from 2015-16 (that is if public debt is falling as targeted) are welcome (not ecstatically, mind you).  On the other hand, permission to borrow is uncertain and too late: at the moment UK banks have more surplus cash than ever, setting us at the start of a new investment cycle which could have been channelled towards more sustainable and green options had the GIB been permitted to borrow sooner.
  • It is always better to make a process more efficient and the planning process is no exception. But the budget’s statement that the planning reform will have “a new presumption in favour of sustainable development so that default answer to development is ‘yes’” (paragraph 1.82) is confusing (at least to me). There cannot be a default answer (whether yes or no), there can only be default processes that are sustainable, i.e. that take all impacts (economic, environmental, social etc.) into account. Working on such default answers could be very wrong indeed.
  • Quite a few measures of the budget will “ease the burden on motorists”:  fuel duty is cut by 1 penny per litre, the fuel duty escalator is abolished and replaced with a fair fuel stabiliser, Approved Mileage Allowance Payments for those who use their own vehicle for work is increased, there may be a further reduction in petrol and diesel duties across Inner and Outer Hebrides, the Northern Isles, the islands in the Cylde and the Isles of Scilly if the European Commission allows. All these will indeed ease the burden on motorists but also increase the burden on the environment. The only ‘environmentally friendly’ motoring related policy (that I could find) is that the Government will freeze Company Car Tax for cars emitting less than 95g/km from April 2013…so the message is “you can use your car more, all the better if it is more efficient”. There is an argument that this is key to economic growth but is there enough evidence? And regardless of whether we target growth , shouldn’t the message be “use your car less even if it is more efficient?” Oh yes, and since Air Passenger Duty will be frozen, so you can also fly….kind of puts a damper on all the discussions of whether aviation should be included in EU ETS if there are other incentives to keep air travel on the increase.

Well, I am more depressed about this budget now that I’ve read through it than when I was listening to George Osbourne yesterday…General commentary on the environmental implications of the budget is more pessimistic than mine. For example, The Guardian scores it 2 out of 5 in terms of its greenery.

I wish I could end on a positive note…oh, yes, at least Defra’s budget is not cut too much!

*: George Osbourne, Chancellor, in his budget speech at the Parliament, 23 March 2011

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We had a trip to out of the pasture last week to see the play GREENLAND at the National Theatre. The play is still on…check it out here:

The programme has a summary of the Stern Review, a foreword from Professor Robert Watson, (Chief Scientific Officer of Defra) among many others, facts and a time line of greenhouse gas emissions and climate change research.

A few of us have been thinking for a long while as to how theatre can be used to communicate environmental messages. It’s interesting that while environmental conditions shape our lives so much, theatre in particular has been relatively silent on the topic. It’s a difficult one – what could the plot of such a play be? An apocalyptic future in which life as we know it is no more? We’ve seen it countless of times in the movies – both big Hollywood blockbusters and small independent films, but really that just provides empty entertainment, or worse, shuts people off rather than engage them in productive debate. Nobody wants to hear bad news.

GREENLAND playwrights chose a different strategy. They show the debate as it is happening today and as it affects people’s lives and psychology….all sorts of different people from deniers to activists and from scientists to civil servants. It was like our pasture on stage – a weird experience. But one that is as informative as it is engaging. Go and see it, it will make you think about what you can do as an individual and whether or how you can make a difference!

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My daughter is 4 soon and her grandparents were proposing a bike, with stabilisers, as a present. I’m reluctant. I’d rather she had a 2-wheel scooter as the 3 wheel version has helped her develop her balance noticeably – and in the end, the quicker she learns to balance on two wheels the better. I can see the case for stabilisers: to help her with the transition to proper balance – she is growing up.

The government has been thinking about the idea of a fuel duty stabiliser for some time http://www.bbc.co.uk/news/uk-12144966 , and with petrol prices spiking due to global political events, the expectations have intensified: http://www.dailymail.co.uk/news/article-1363571/Petrol-tax-cut-drivers-forced-pay-1-41-litre-time.html . This is classic head in the sand stuff, trying to tackle the short-term problem, without any thought for the context of energy use and its consequences. The quicker we adapt to high oil prices the better for our economy – cheap hydrocarbons have allowed our economy to bump along inefficiently (like a toddler with stabilisers) for too long – using two wheels would be a more efficient ride. High oil prices are the future – if not for political reasons, simply because the current economic model is so thirsty (remember that before the bank crisis there was a credit crisis, and the credit crisis was triggered by rising oil and food prices as demand outstripped supply).

And in the medium to long term there is climate change, Stern, and all that stuff…

The UK economy is ‘mature’ – it has to adapt, but like a toddler, if it needs help with stablisers, this needs to be for a transition – to a world with high energy prices and non-hydrocarbon power. While high oil prices might hurt the economy in the short term, the real danger is not adapting our economy to the future quickly enough. So the only justifiable use of a fuel duty stabiliser is to smooth the increase in fuel prices – meaning a minimum increase as well as a ‘stabilised’ maximum increase – sending the signal that while the Government may protect the economy from short-term price rises, it can’t alleviate the inevitable need to change our energy use.

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