Posts Tagged ‘carbon trading’

Though not officially announced, the news on the grapevine is that after days of disagreements the coalition government will agree to implement the recommendations set out by the Committee on Climate Change to meet a target of a reduction of 80% of carbon emissions in 2050 compared with 1990 levels (590Mt), with an intermediary target of 60% by 2030 [1, 2].  The UK CO2 emissions for 2010 have been provisionally estimated at 492 Mt (a reduction of 17% from 1990 levels) [3].

Reaching these targets will involve substantial changes to the UK electricity source and coincides with the EU Renewable Energy Directive, which states that the UK must generate 15% of energy through renewable sources by 2020 [2, 3].

Other ways to reduce emissions will include reducing carbon intensity in the transport sector, which is also covered by the EU’s Transport Policy which aims to reduce conventionally (petrol and diesel) fuelled cars  by 50% by 2030 and eliminate them altogether by 2050 [4] and increasing energy efficiency in homes and work places.

This target is great news and, as it was first proposed by the Labour government [5] and will now be accepted by the Conservative/Liberal Democrat coalition, is unlikely to be overturned in the near future by a change in government.

Things to look out for:

1)      The incentives the government must put in place to ensure that the UK achieves its carbon targets. As the UK is not a command and control economy, government cannot simply dictate that emissions be dropped. Instead, incentives and disincentives must be put in place in order that industry will move themselves towards these targets. Examples include subsidies (including tax breaks) and taxes.

2)      Will carbon trading be part of the agreement? Will the government allow targets to be achieved through buying carbon offsets (paying for carbon reductions) in other countries? Whether this is allowed or not will affect how this deal changes the UK economy and infrastructure. Insisting that all carbon reductions be made within the UK will have a considerable impact on the UK economy and infrastructure and could pave the way for the UK to lead the way in green technology. Allowing for emissions to be offset in other countries will mean that only immediately cost-efficient changes to the UK economy and infrastructure will be carried out.

3)      Unaccounted exported emissions. A frequent argument against the claim that the UK has reduced carbon emissions since 1990 is that we have outsourced our emissions by importing products produced in developing countries such as China – production emits greenhouse gases and often times the production process is more carbon intensive than it would be in the UK.  It is unlikely that this will be included in the UK official carbon count, but we should all keep this in mind [6].

Read more:

[1] Coalition commits Britain to legally binding emission cuts – Toby Helm and Robin McKie, The Guardian

[2] Committee on Climate Change – Renewable Energy Review

[3] DECC – UK Emissions Statistics – 2010 UK Provisional Figures


[5] Heat and energy saving strategy consultation – DECC

[6] UK’s total emissions set to rise: new data obtained by PIRC – Guy Shrubsole, ClimateSafety

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Some time ago Betsy, Elsea, and Daisy went for a little walk between Grosvenor square and Parliament square.  Along this walk we saw many wonderful and amazing things,

It was good to see cousin Fred here, although we don’t necessarily agree with his views

however surely the most amazing of all to us economist cows was the following sign:

Taking a train from London to Aberdeen would take you 7 hours.  Taking a plane from London to Aberdeen would take you 1.75 hours.  I don’t know about you, but I would hate to see this clearly quicker option disappear completely.

I do not disagree that the amount of domestic aviation should be decreased, but calling for a complete ban on domestic flights seems like a boneheaded idea because it takes away the consumer’s choice of a faster mode of travel.  It would be like saying we should ban cars and trains and go back to the good old days of the slower, but emissionless, horse and carriage  – in fact even these are not emissionless (like cows, horses have emissions too!).

So how do we propose to lower the amount of domestic flights without enacting a command and control type ban on them?  It is quite simple really.  Let’s pretend that you had to travel from London to Aberdeen and you had, for simplicity’s sake, just two choices: the plane or the train.  How would you decide which mode of transport to take?

Obviously the first factor you would look at, apart from the time, is the monetary cost of each mode of transport.  Then you would go into the comfort, the accessibility of each mode of transport, oh, and if you care about the environment, the carbon footprint.

Obviously there are many people out there who value their time over their carbon footprint and the difference in costs of the two modes of transport.  However, what if we made that difference in the costs of the two modes of transport much more?  The more expensive a particular mode of transport is, the less the demand for it will be and vice versa… hence the shift from train to plane once cheaper domestic flights were introduced.

But how can we make flying more expensive than going with train and by how much?  An extra tax, say on aviation fuel, could be one option, where tax would be equal to the cost of the carbon footprint.  Environmental economists see such a tax as a way for the price of flying to reflect all of its cost and making the passengers pay for the environmental damage as well as other costs.  This is a way of ensuring that passengers factor in their carbon footprint into the decision on which mode of transport they wanted to take in case they had not already taken it into account.

There are of course other ways of reflecting the carbon cost of flying in airway bills. Including aviation in carbon trading is another – which incorporates the environmental costs through a different mechanism. For more information on including aviation in carbon trading, see the Committee on Climate Change’s advice to the UK government on reducing global aviation emissions.

Either way, the aim is to make flying a much more expensive choice, hence while it would still be available, only people who value their time a lot more would decide to take the plane.

Oh, and much further along the route we came across these people:

We like this option too!

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