To carbon tax or not to carbon tax?

“All in all, though a carbon tax in the UK is likely to be ineffective at best and economically disastrous for marginalized communities at worst, there are options available to the government.”

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The idea of carbon taxes has been around for some time – and sometimes with more success than at other times:

Futures Forum: From the ‘fossil-fuel age’ to an international carbon tax (Mar 2015)

Futures Forum: Climate change: carbon tax >>> “the polluter pays” (Jul 2015)

Futures Forum: Climate change: and the budget >>> fossil fuel tax breaks and a clean energy tax hike (Mar 2016)

Futures Forum: Climate change: and taxing meat (May 2016)

Futures Forum: Why is Big Oil now in favour of a carbon tax? (Feb 2017)

Futures Forum: Climate change: and increasing the power of government: or, “crossing the welfare state with the carbon tax” (Feb 2017)

Futures Forum: Climate change: France introducing a carbon tax is “a masterclass in how not to sell climate policy” (Dec 2018)

Futures Forum: Climate change: the key to Australia’s general election (May 2019)

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According to Carbon Brief from earlier last month, the UK government isn’t too keen:

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Carbon tax plan gets binned by Boris Johnson amid fear it would spark a rise in food prices

The UK Government has “killed off” the idea of a carbon tax that “could have seen huge price rises for meat, cheese and gas”, reports the Daily Mail. Following reporting yesterday by the Times of a Whitehall memo on carbon pricing – which Channel 4 News “confirmed” – a government source tells the Mail that ministers would not be proceeding after prime minister Boris Johnson blocked the idea. The source adds: “We have absolutely no intention of putting a carbon tax on meat or other food products.” Yesterday morning, the prime minister’s official spokesman declined to rule out the policy – as reported by the Independent – but “at 6pm the plan was ditched”, the Mail says. The Sun has a similar story, reporting that a senior No 10 official told the paper last night: “This is categorically not going to happen…We will not be imposing a meat tax on the great British banger or anything else.” Elsewhere, the Daily Telegraph reports on criticism of the proposed tax by the National Farmers Union (NFU), which warned that it would put British farmers at a “competitive disadvantage” compared to other countries. The NFU deputy president told the paper: “A carbon tax will not have the desired effect if it is implemented in the UK alone. It is essential that any tax is internationally recognised, otherwise UK farmers will be put at a competitive disadvantage, outpriced by food imports with a higher carbon footprint.” …

Carbon tax plan gets binned by Boris Johnson amid fear it would spark a rise in food prices | Carbon Brief

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Sir Dieter Helm is Professor of Economic Policy at the University of Oxford and Fellow in Economics at New College, Oxford and was Independent Chair of the Natural Capital Committee, providing advice to the government on the sustainable use of natural capital.

Here he is writing recently on a more nuanced approach – with the introduction and conclusion reproduced from an excellent, longer piece:

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Bespoke carbon taxes on food

The government has been flying a signalling kite: that it might extend carbon taxes to a selected number of “sinning” activities. It let it be known that meat and dairy are in its sights (and gas heating). Signalling has two political merits: it lets the climate change campaigners know that the government is “on their side”; and it gives time to see how big the lobbyists’ backlash is going to be.

In the latest batch of “candidates”, there is some merit. The Committee on Climate Change (CCC) makes it clear that the net zero targets are hard to hit without a switch away from meat and dairy, for the very good reason that these both lead to high aggregate emissions. How else, it might be asked, are we going to get people to eat less meat and dairy, except by increasing the prices?

The lobbyists were fast out of the blocks. Step forward the NFU. This is Stuart Roberts, Deputy NFU President: “it is essential that any tax is internationally recognised, otherwise UK farmers will be put at a competitive disadvantage, outpriced by food imports with a higher carbon footprint.” He goes on: “First and foremost, we should not penalise businesses committed to net zero.” “A carbon tax will not be effective if implemented in the UK alone.” I suspect that the NFU wants its members to be paid to reduce their carbon footprint, an inversion of the usual polluter-pays principle to the altogether more convenient polluted pays. Its “Achieving Net Zero: Farming’s 2040 Goal” looks very much like this…

Conclusions

Bespoke carbon taxes on beef and dairy could work, if done properly. The government has floated the idea, putting the kite in the air to see what happens. The response of the main farming lobbyists has been highly predictable.

The question now is what is to be done about it. Carbon taxation makes a lot of sense, and it should be applied at the border, on the same basis to imports as to domestic production. It is a key part of achieving the immensely ambitious Net Zero 2040 target that the NFU has set itself. The result will be to lift the competitiveness of British farming, and to incentivise the shift from carbon-intensive to more sustainable farming practices.

Sustainable farming, where carbon is priced and polluters pay, is likely to be both more technologically advanced and also more local. To pretend that farming can go net zero in 19 years (or at least 29 years), and that food prices will not go up, is something the government should stop doing. Polluters – you and me – are living beyond our environment means. We are not paying all the costs. Paying those costs increases the economic efficiency of farming. An efficient economy incorporates all costs.

The real question is whether the government and the NFU, with its Net Zero 2040, is willing to wish the means as well as the end. Pretending it is all going to happen is not going to make it actually happen.

Bespoke carbon taxes on food – Dieter Helm

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The food industry is listening, however:

Carbon taxes could help the UK achieve its net zero aim – but there’s a catch | Comment & Opinion | The Grocer

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And there’s still plenty to debate, as this week’s press shows:

Meat prices WON’T rise as Boris Johnson rules out tax hikes for Sun readers under his green agenda | thesun.co.uk

Carbon tax would be popular with UK voters, poll suggests | Greenhouse gas emissions | The Guardian

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Finally, there might be clever alternatives, as the student newspaper of Durham University said last week:

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Why the carbon tax is a bullet well-dodged

Conclusion 

So, what could actually be done? Even a complete reduction in emissions the UK’s would be a drop in the environmental ocean. However, as the sixth-largest global economy, we still have hitting power when it comes to persuading the international community to change. As already mentioned, many of the goods we consume are produced elsewhere and imported, so we have one of the highest global rates of consumer emissions. Therefore, international trade tariffs are a viable option to encourage international companies to manufacture in a more environmentally friendly way or to encourage the public to buy British, which would reduce air miles and ensure production is up to our environmental and ethical standards.

Alternatively, the UK could take trading responsibility for the products we import, providing aid to countries we have damaged by outsourcing our emissions. This looks like investing in providing carbon sinks (like planting forests) or giving money to companies that reduced emissions methods in industry, therefore reducing both localized industrial areas, and reducing global emission.

All in all, though a carbon tax in the UK is likely to be ineffective at best and economically disastrous for marginalized communities at worst, there are options available to the government if they’re willing to take decisive action that harms their billionaire pals, rather than people on universal credit, single mums, and those trying to stay afloat. Hopefully, the UN will manage to beat some sense into Boris at the upcoming COP26 next November.

Why the carbon tax is a bullet well-dodged – Palatinate

   
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