In 2010, George Osborne announced his intention to impose, from April 2013, a “carbon floor price” of £16 on every tonne of CO2 emitted by British industry, rising to £30 a tonne by 2020 and £70 a tonne by 2030.
They’ve managed to get confused between a cap and trade system and a carbon tax.
Under a carbon tax it is the tax itself that provides the incentive to reduce emissions. Thus a higher price does indeed tend to reduce emissions and can arguably be a good thing.
Under cap and trade it is the limit on the number of emissions permits that provides the quantity limitation. The price of such permits is not the incentive: it is rather telling us how expensive it is to meet that target.
You really do have to be morons of the highest grade to get confused between the two. A low permit price is just absolutely wonderful. For it shows that the cost of meeting the emissions targets is very low. Hurrah!
Then the idiots decide that solving a problem at low cost is a bad idea. We must raise that cost because, well, because what, other than that they are fools?
1 response so far ↓
1 Andrew M // Sep 30, 2012 at 11:10 am
I don’t know the details, but presumably the difference between the open market CO2 price and the “floor price” goes to the exchequer? That would easily explain why he’s so keen on it.
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