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TEQs : Carbon Rations : not Auctions or Giveaways
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Keepz



Joined: 05 Jan 2007
Posts: 478

PostPosted: Wed Dec 12, 2007 6:42 pm    Post subject: Reply with quote

Nobody else seems interested and it's clear that we're not going to agree, but perhaps just a few points where I do not appear to have made myself clear.

Quote:
The issue here is that you use a myth, a non-argument, an urban legend, when you use the idea that Carbon Reductions will mean Loss of Employment.


No, I do not hold that idea. I think that some companies and economic activities would find it difficult or impossible to reduce carbon without very great economic loss, perhaps going out of business. Others would not; others can actually create wealth and employment by means of carbon reduction. Since most people seem to like wealth and employment - you are clearly an exception, but I think you'll accept that many do, and that that liking has a very great influence on the choices they make - a system that directs wealth and employment away from carbon emission and towards carbon emissions reduction should also encourage them to like carbon emissions reduction as well.

In other words, there's no contradiction between cost and value. Attach a cost to emitting carbon and you logically attach a value to not emitting carbon.

Quote:
your assumption that those at the top end of the Carbon chain will be compelled to decarbonise by having to pay for Carbon Rights by Auction.


Not compelled, but they have the following choices.

They can either pay for the carbon rights and try to preserve profits by passing the costs on to the consumers, thus losing competitive advantage to products which don't include a carbon price - adversely affecting their sales volume as consumer preferences change to low-carbon products.

Or they can pay for the carbon rights and try to preserve sales volumes by not passing the cost on to the consumers, so as to try to stay competitive with products that don't include a carbon price - adversely affecting their profits.

Either way, it is not a pain-free easy option just to buy some carbon rights.

Or they can avoid the need to pay for allowances by not emitting the carbon. If it's cheaper to do so than to buy the allowances, a rational economic actor should do that.

Whether it is cheaper to do so, depends on each company's individual circumstance - as noted, some can do it more easily than others - and on the price of carbon. That's a function of demand and supply, and supply is up to Governments. If they restrict the supply, that will push the price up so that more and more economic actors find it more worthwhile to reduce emissions than to buy allowances.

See, this is a system which actually harnesses one of the most potent, consistent and reliable forces on earth, which is human greed. It's like gravity - whether you like it or not, it's there, and you will get more results by working with it than by trying to regulate it out of existence.
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jo



Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Thu Dec 13, 2007 2:05 am    Post subject: Self-interest is not necessarily the same as greed Reply with quote

@Keeper of the Flame

You say :-
"See, this is a system which actually harnesses one of the most potent, consistent and reliable forces on earth, which is human greed."

I say : I think it is poorly simplistic and reductionist and ultimately dishonest to say that everyone is motivated by greed. Most people on the planet, and most animals and plants are properly said to be motivated by instincts of survival, of garnering resources for their own use, to satisfy quite justifiable life needs. If there is a cult of belief in scarcity of any resource, people will hunt and stockpile, hence "limited editions". If it were possible to suddenly extract half of the remaining crude oil from all the wells, people would do it and stockpile it. What is being sold to us as "Carbon Capture and Storage" is effectively an attempt to pilfer diminishing wells...but I digress...

When you say :-
"I think that some companies and economic activities would find it difficult or impossible to reduce carbon without very great economic loss, perhaps going out of business."

I say : but isn't that the whole idea ? We don't need and we don't want to continue to prop up the fortunes and legal rights of Big Carbon to continue to pump and mine and refine. We do need to see growth frozen in high-Carbon industries and Carbon fuel producers. That may seem anathema to say it, and I might get a lot of flame mail for saying so, but that's what Carbon cuts implies - Carbon-intensive business must be capped.

You said :-
"a system that directs wealth and employment away from carbon emission and towards carbon emissions reduction should also encourage them to like carbon emissions reduction as well. // In other words, there's no contradiction between cost and value. Attach a cost to emitting carbon and you logically attach a value to not emitting carbon. "

I say : You are still making the mistake of writing as if money has an absolute value. It does not. The money supply increases, and if it is not backed up by added value in the economy, money de-values. Banks create money - they are under orders not to create too much of it or that would be destabilising - but create it they do - in the form of debt mostly.

Putting a price on Carbon may not necessarily create serious changes in its use.

Let me give you an example : we all need water. Say there we live in a small village and our currency of exchange is groats. We are obliged to pay for water, as the well is deep and someone must draw it and we need to pay them. Say this person decides to up the prices. Since we all need water, we will all pay more for the water, and probably, after a period of readjustment in the local trade of goods for groats, when the prices of everything increases, we will all still buy the same quantity of water. The currency will de-value, but the amount of water purchased will remain the same. That is all.

It is only in the short-term that Carbon demand can be dented by a Carbon price. Companies don't invest in the long-term on the whole, so the only Carbon savings will be in terms of efficiencies. Say a company makes short-term levels of investment in changes to its Carbon use, to compensate for an increase in the price of Carbon. However, as the company becomes more profitable again, it will expand its business, and use more Carbon again. The goalposts keep changing.

Why is it that the price of my telecommunications bill is the same or more than the price of my energy bills ? Until energy is valued, comparatively more than services that do not use much energy, then the full value of the energy has not been realised.

A Carbon tax would impinge on both the price of my energy bill, and the price of my telecommunications bill, as the energy bills of the telecoms company will also rise and they will pass the costs on to me. However, I will be awarded a cost of living increase to my salary and I will be able to afford more of everything, and make up for any loss in use in the meantime.

You said :-
"They can either pay for the carbon rights and try to preserve profits by passing the costs on to the consumers, thus losing competitive advantage to products which don't include a carbon price - adversely affecting their sales volume as consumer preferences change to low-carbon products. //
Or they can pay for the carbon rights and try to preserve sales volumes by not passing the cost on to the consumers, so as to try to stay competitive with products that don't include a carbon price - adversely affecting their profits...they can avoid the need to pay for allowances by not emitting the carbon. "

All products of a similar nature will have a similar carbon price - there is no real competition. There is evidence that many companies see investing in Carbon cuts as expensive and on a long-term scale, right out of their field of vision.

You say :-
"the price of carbon. That's a function of demand and supply, and supply is up to Governments. If they restrict the supply, that will push the price up so that more and more economic actors find it more worthwhile to reduce emissions than to buy allowances."

I say : "economic actors" will not reduce emissions unless their gross business is restricted - supply-side quotas. And to stop leakage there needs to be demand-side rationing - which will also control the price of Carbon and all goods dependent on Carbon Energy.

Only Carbon Quotas for Carbon Energy producers and resellers, and the concommitant Carbon Rationing for consumers can stabilise both the Climate and the Economy.
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Andy Hunt



Joined: 24 Nov 2005
Posts: 6760
Location: Bury, Lancashire, UK

PostPosted: Thu Dec 13, 2007 4:14 pm    Post subject: Reply with quote

All very interesting stuff! Smile
_________________
Andy Hunt
http://greencottage.burysolarclub.net
Eternal Sunshine wrote:

I wouldn't want to worry you with the truth. Rolling Eyes
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Keepz



Joined: 05 Jan 2007
Posts: 478

PostPosted: Fri Dec 14, 2007 8:46 pm    Post subject: Re: Self-interest is not necessarily the same as greed Reply with quote

Andy - glad you like it! I was beginning to think this was becoming a bit of an insomniac's corner.

jo wrote:
@Keeper of the Flame

When you say :-
"I think that some companies and economic activities would find it difficult or impossible to reduce carbon without very great economic loss, perhaps going out of business."

I say : but isn't that the whole idea ? We don't need and we don't want to continue to prop up the fortunes and legal rights of Big Carbon to continue to pump and mine and refine.


But the requirement to acquire and then give up carbon allowances for the amount of carbon they emit doesn't prop them up (not unless the allowances are issued free of charge, which I said right at the beginning was wrong). It imposes costs on them - the bigger the carbon, the higher the cost - which are not imposed on carbon-efficient businesses. It forces carbon-intensive activities to transfer money to carbon-efficient activities. And if money transferred from company A enables company B to deliver more carbon reduction than company A could have done, then that's a better use for the money and a better result for the environment.

Quote:

You said :-
"a system that directs wealth and employment away from carbon emission and towards carbon emissions reduction should also encourage them to like carbon emissions reduction as well. // In other words, there's no contradiction between cost and value. Attach a cost to emitting carbon and you logically attach a value to not emitting carbon. "

I say : You are still making the mistake of writing as if money has an absolute value. It does not.


No, I am saying that people like making money and a system that equates reducing carbon with making money will cause them to like reducing carbon.

Quote:

It is only in the short-term that Carbon demand can be dented by a Carbon price. Companies don't invest in the long-term on the whole, so the only Carbon savings will be in terms of efficiencies. Say a company makes short-term levels of investment in changes to its Carbon use, to compensate for an increase in the price of Carbon. However, as the company becomes more profitable again, it will expand its business, and use more Carbon again. The goalposts keep changing.


And so they should; the amount of carbon allowances available should steadily decrease with time as Government restricts supply.

Of course the low-hanging fruit - the cheapest means of saving carbon - will be undertaken first. Do you think the resource would be better spent on trying to save carbon in the most expensive way? But as time goes on, the supply of carbon allowances keeps being reduced, the price keeps going up, and the pressure continues to keep on looking for ever more ways to save carbon. Far from regaining profitability and expanding, companies will have to keep cutting back on their carbon use just to stand still.

Quote:

You said :-
"They can either pay for the carbon rights and try to preserve profits by passing the costs on to the consumers, thus losing competitive advantage to products which don't include a carbon price - adversely affecting their sales volume as consumer preferences change to low-carbon products. //
Or they can pay for the carbon rights and try to preserve sales volumes by not passing the cost on to the consumers, so as to try to stay competitive with products that don't include a carbon price - adversely affecting their profits...they can avoid the need to pay for allowances by not emitting the carbon. "

All products of a similar nature will have a similar carbon price - there is no real competition.



All products of a similar nature will most certainly not have a similar carbon cost - consider a megawatt hour of electricity produced by a nuclear power station and one produced by a coal fired power station (I'm leaving renewables out because their economics are less directly comparable, given the Renewables Obligation). They'll both get the same price, if the MWh is produced at the same time, but the nuke will make a lot more profit because it does not have to incur the cost of buying and then giving up carbon allowances. Production will therefore be encouraged towards the lower-carbon production method. Consumption on the other hand is generally encouraged downwards, because the overall price of electricity goes up to include the carbon cost.

This doesn't necessarily mean inflationary pressure. All costs do not rise. Only the cost of carbon-intensive products and processing. It's an economic rebalancing as well as an overall economic slowdown.

Quote:

There is evidence that many companies see investing in Carbon cuts as expensive and on a long-term scale, right out of their field of vision.



Whether investing in carbon cuts is too expensive depends on the price of carbon. As the carbon price goes up, more and more companies will find that the necessity to make carbon cuts and avoid the cost of buying carbon allowances forces itself into their field of vision.

Quote:

You say :-
"the price of carbon. That's a function of demand and supply, and supply is up to Governments. If they restrict the supply, that will push the price up so that more and more economic actors find it more worthwhile to reduce emissions than to buy allowances."

I say : "economic actors" will not reduce emissions unless their gross business is restricted - supply-side quotas.


And I repeat: If they are given a choice between buying a carbon allowance and reducing their carbon emissions so as not to have to buy a carbon allowance, they will choose the cheaper option, and the more expensive carbon allowances are, the more companies there will be for whom it's cheaper to reduce carbon emissions than to buy carbon allowances.

Quote:


Only Carbon Quotas for Carbon Energy producers and resellers, and the concommitant Carbon Rationing for consumers can stabilise both the Climate and the Economy.


Still don't quite understand - sorry - why a carbon quota for carbon energy producers is different from giving them access to a limited - and reducing - overall pot of carbon allowances. Is it the tradability you're objecting to? because it's the tradability that ensures that money finds its way to those who can deliver most carbon reduction for it. If a carbon quota is set to ensure that everybody makes the same amount of reduction, then that will not be the most efficient use of money. A has to spend ?500 to reduce by 100 tonnes, B can deliver 100 tonnes reduction for ?100; but if A gave the money to B instead, B could deliver 500 tonnes for it. How is that not better? Meanwhile, the cost of A's product has gone up and that reduces either A's profit or his sales, while B does better. Gradually more and more economic activity and resource shifts into low-carbon activity.

As for carbon rationing for consumers, any Government introducing that will have to have either enormous political courage (to face down protests that since everybody has different needs, giving everybody the same allowances is not fair) or enormous competence (to ensure that everybody's allowance is proportionate to their needs, thus sharing the responsibility/burden equally).

For example, I live in a well insulated flat in London near to good public transport, so I don't use my heating much and don't own a car. If I got the same allowance as an elderly person living in a draughty old house in Scotland who depended on her rickety old banger to get to the Post Office, I'd be much better off than she. I might even have some carbon ration left over at the end of the year, which I may as well blow on a patio heater or something, whereas she might have to switch her heating off altogether when her ration runs out. If the level of carbon ration is set so as to start to bite on me - Hm, perhaps I should get some energy efficient light bulbs - she is in desperate trouble and might die of hypothermia. Can any Government realistically face that? Or realistically undertake an assessment of the individual circumstances of every single one of us?
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jo



Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Fri Dec 14, 2007 11:30 pm    Post subject: That old "Fuel Poverty" chestnut, again Reply with quote

@Keeper of the Flame

Please don't flame me when I say "Ah ha ! That old 'fuel poverty' chestnut again, dug out of an old jacket pocket and burned to a veritable crisp !"

Yes, of course, older, iller and more vulnerable people living in poorly insulated accommodation should be helped negotiate their Carbon needs - hence Warm Front - hence virtually free energy efficiency works to households on benefits - hence I can imagine and predict a system of Carbon Credits to the socially underprivileged that looks a little like Tax Credits do now to the underpaid.

People in northern Norway should not necessarily expect a higher Carbon Ration than those in Southern Spain, but any adjustments that get negotiated are red herrings or cul-de-sacs to the main thrust of the Carbon Rationing rationale.

When you say :-
"But the requirement to acquire and then give up carbon allowances for the amount of carbon they emit doesn't prop them up (not unless the allowances are issued free of charge, which I said right at the beginning was wrong)."

I say : giving - or even selling - Carbon Allowances to companies without giving citizens Carbon Rations is a rights issue : it gives Carbon Rights to the companies, and cements their position, their Licence to Pollute.

If, in addition to the Carbon Allowances they have been given or bought, they are also permitted to acquire further Carbon Credits by purchasing them, then it cannot and will not enforce a Carbon Cap.

By giving or selling Carbon Allowances to Big Emitters, we are effectively condoning/supporting their business. They have the wealth to acquire the Carbon Allowances to carry on burning, and they have the liberty to pass their costs onto their consumers.

When you say :-
"It imposes costs on them - the bigger the carbon, the higher the cost - which are not imposed on carbon-efficient businesses. It forces carbon-intensive activities to transfer money to carbon-efficient activities."

I say : I'm sorry, but I think you are naive about how far energy efficiency can carry a company. I agree that enterprise that uses no computing, no transport, no heated offices, no material resources, no equipment and no petrochemicals could probably become quite efficient.

Most businesses, like most of society, are dependent on petroleum-derived products, in transport, space heating, agriculture, consumer goods, and so on and so on.

There is a reverse exponential gain that can be had over time with drives towards energy efficiency. The big gains (losses) come at the start, but then it starts to peter off. Some companies think big (small) about Carbon, but most continue to have a significant footprint.

Most energy efficiencies in companies are invisible to consumers, they only provide gain to the companies themselves, in the form of smaller utility bills.

If you imagine that energy efficiency building can keep on keeping on within a large business organisation to carbon-neutralise it, you are mistaken. There comes a point at which no further gains can be made. For many companies, this point of maximum energy efficiency is reached soon after they start applying it. So where else can they go ? Offsetting ?
Does that work ?

I think it is clear that some businesses cannot ever be made to be Carbon-neutral. Hence, some of them should fall by the wayside.

You say :-
"No, I am saying that people like making money and a system that equates reducing carbon with making money will cause them to like reducing carbon."

I say : let's take the work of the Carbon Trust, a UK quango thingy that has been working with corporates to help them analyse where their Carbon savings can be made. How many of these companies actually do what the Trust advises ?

Is it even possible for some of these companies to be able to make Carbon cuts ?

It's all very well recommending Carbon cuts, but if companies cannot actually budget for them, or make a business case out them in the medium to long term, then they won't be happening.

It can be very expensive to decarbonise, and if companies are going to be forced to pay a premium for Carbon Energy this will be a double cost whammy.

Basically, your analysis is too simplistic.

Most companies will hit the "Carbon Crunch" - it's too expensive to decarbonise and it's increasingly costly to be Carbon-intensive. Companies will be going to the wall.

This is why I don't like pricing Carbon - it destabilises the whole Economy, since everything is reliant on Carbon Energy.

When you say this :-
"And there's evidence - quite a lot, actually - that raising the price of a product reduces demand for it. The consumer doesn't have to buy the product at all; you can reduce your electricity use, for example, or use less petrol by getting a more efficient car, or taking the bus more. "

I say : you are implying the contraction of the Economy. Those people who are growth-economists will not like this. It's going to happen anyway, but for a variety of reasons, including Peak Oil.

Let's look at the London Congestion Charge - successfully reducing demand by putting a price in place - for a while. You can delay growth in Carbon Emissions by setting a price, but after a while, people will just pay the premium and get on with burning the fuel.

You say :-
"This doesn't necessarily mean inflationary pressure. All prices do not rise. Only the price of carbon-intensive products."

I say : I really urge you to consider the fact that our economies are highly dependent on petroleum-derived products. If you place a price on Carbon, this means that everything will get more expensive. Even coal, which needs to be mined and transported using liquid Fossil Fuels, and even tar sands that take oil to refine.

A Carbon price means that all prices will rise, because there is very little Zero Carbon capacity at present.

And because the prices of everthing will rise, the price of investment in Zero Carbon technologies will rise.

The Carbon Crunch - we will not be able to afford the Renewable Energy technologies we need to replace the Carbon Energy we can no longer afford to use (in economic or ecological terms).

You say :-
"Still don't quite understand - sorry - why a carbon quota for carbon energy producers is different from giving them access to a limited - and reducing - overall pot of carbon allowances."

I say : The system of Carbon Control has to take into account both ends of the Carbon pipe - upstream as well as downstream - producers as well as consumers - in order to stabilise the economies.

The Quotas should only be awarded on the basis of the Rations administered - this will fully regulate the Carbon supply.

If Allowances are made to upstream actors, they will continue to hold onto their rights to these Allowances - because they will see that they can continue to sell more than their Allowances in goods terms.

If they recognise that there is a limited market for Carbon-intensive goods and services, because there is a limited pool of Carbon Rations with which to buy the goods and services, then there will be no Allowance-busting, or "Offsetting" possible.

You say :-
"Is it the tradability you're objecting to? because it's the tradability that ensures that money finds its way to those who can deliver most carbon reduction for it. "

I say : there should be no trade between the upstream holders of Carbon Quotas and the downstream holders of Carbon Rations. But there should be trade within the pool of Carbon Quota holders. And there should be a separate trade within the pool of Carbon Ration holders.

I'm not against tradeability - you and I will benefit as we are careful with our Carbon Energy use. And so will a lot of other people - the Cap & Share people (spawned by feasta) have even calculated that more than half of citizens will benefit from having a Carbon Ration they can trade up.

I bet you're an economist. Are you ?

Economists always assume that efficiencies can continue to increase.

I'm an engineer (of various sorts). I know there are limits to Energy efficiency.

I also think in system-wide terms : cost cannot cap Carbon, but that's where we need to be heading.

A flat price for Carbon in the form of a Tax or a Tonne traded cannot set in place a Carbon Budget, but that's what we need.
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Ballard



Joined: 24 Nov 2005
Posts: 826
Location: Surrey

PostPosted: Sat Dec 15, 2007 12:28 am    Post subject: Reply with quote

Sorry,

I'm too lazy to read all of this thread... However I am dubious about the 'human factor' with TEQ's, seems as if it's too easy to abuse and to complicated for my old gran, here's an idea I posted earlier (if you are less lazy than me you can read it) Wink

Quote:
Hi all,

We seem to face multiple energy depletion issues in the UK, peak Oil being just one aspect of our declining ex-status as an ?energy island?. The more pressing issues may well be the cost and availability of gas and electricity, especially for the domestic customer who is already experiencing the price effect of our declining North Sea output.

So how do we deal with the power-down? The idea of TEQ?s seems sensible enough however the implementation is fraught with the risk of corruption and exploitation, the problem is likely to be human nature not the TEQ concept.

So how about a simple pricing mechanism?

Currently gas and electricity prices are generally charged on a basis of two price bands, usually the first percentage of your gas/electricity bill is charged at a high rate, and the subsequent portion is charged at a lower rate. This is a historic mechanism based on the idea of encouraging the consumer to use more E/G and thus create greater profit for the Energy Company, this is a mechanism designed for a supply outstripping demand situation.

Now that we face a new reality of declining supplies and increasing costs I propose that a new pricing mechanism is adopted by the supply companies (by government mandate if necessary).

This system (for domestic customers) would create four new price bands: -

1. BAND A

The lower band would be free, basic minimum electricity and gas required to cook one warm meal a day and heat and light two rooms would be supplied without charge. This would ensure that the most venerable in our society (pensioners etc) would be effectively removed from ?fuel poverty? (a government pledge) and be able to survive despite future price rises.

2. BAND B

The second price band would run from the lower band up to the apparent UK average consumption, this would be charged at a variable rate. But lower than the current average price.

3. BAND C

The third band would be the standard high rate, this would be considerably higher than the current electricity / gas costs. This is where the discouragement of profligate consumption kicks in and this would be the band where we start to see demand destruction.

4. BAND D

The Final Band would be the high rate, this would be prohibitively expensive, this band would be used to fund band A, and it would discourage profligate energy consumption and ensure that those with the means to pay, fund those without.

These bands and the associate pricing can be adjusted to meet the depletion rates and help the UK to meet its Carbon reduction commitments. They will remove the threat of fuel poverty and promote energy conscious behaviour.

Comments ?


From this thread:-

http://www.powerswitch.org.uk/forum/viewtopic.php?t=2753&highlight=
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Keepz



Joined: 05 Jan 2007
Posts: 478

PostPosted: Thu Dec 20, 2007 6:51 pm    Post subject: Re: That old "Fuel Poverty" chestnut, again Reply with quote

Can I state in general that I think you are being unfair in comparing how a carbon quota/carbon ration system ought to work in theory, with how the EU ETS is working in practice. There are huge practical difficulties in implementation even with a limited number of large, well resourced participants and these would be multiplied exponentially once you start bringing individuals into it.

jo wrote:
@Keeper of the Flame

I say : let's take the work of the Carbon Trust, a UK quango thingy that has been working with corporates to help them analyse where their Carbon savings can be made. How many of these companies actually do what the Trust advises ?

Is it even possible for some of these companies to be able to make Carbon cuts ?

It's all very well recommending Carbon cuts, but if companies cannot actually budget for them, or make a business case out them in the medium to long term, then they won't be happening.


But that't the whole point of a carbon price - it strengthens, or even creates out of nothing, the business case for making carbon cuts. If you make carbon cuts, you don't have to buy allowances.

Quote:
It can be very expensive to decarbonise, and if companies are going to be forced to pay a premium for Carbon Energy this will be a double cost whammy.

Most companies will hit the "Carbon Crunch" - it's too expensive to decarbonise and it's increasingly costly to be Carbon-intensive. Companies will be going to the wall.


Quite agree that decarbonising will cost the economy as a whole and it is indeed entirely possible that some companies will not be able to afford either the cost of allowances or the cost of decarbonising to avoid the cost of allowances. Don't really see how your alternative would help, either. But I remain convinced that a system which encourages those who can, to do as much as they can, at the expense of those who can't, is the best way to ensure that it costs as little as possible while at the same time encouraging both production and demand away from carbon-intensive towards carbon-efficient.

Quote:
If Allowances are made to upstream actors, they will continue to hold onto their rights to these Allowances - because they will see that they can continue to sell more than their Allowances in goods terms.


I've said consistently that allowances should not be given but sold. Once that's done, participants can't "hold onto their rights". Once they emit a tonne of carbon, they have to give up an allowance. If they want to emit another tonne of carbon, they have to buy another allowance.

If they can avoid emitting the carbon for less than the price of buying the allowance, then that is what they will do. Energy efficiency is by no means the only way of achieving this. Companies might simply produce less. Or they might switch to a different fuel source.

If they can't do any of the above and they buy an allowance instead, that is an allowance which has been made available because a tonne of carbon has been saved somewhere else. The total amount of carbon emitted stays within the limit set by how many allowances are made available.

Quote:
If they recognise that there is a limited market for Carbon-intensive goods and services, because there is a limited pool of Carbon Rations with which to buy the goods and services, then there will be no Allowance-busting, or "Offsetting" possible.


Don't agree that offsetting/allowance-busting is a bad thing. It simply means that carbon reduction is done here, where it's cost efficient, rather than there, where it isn't.

In any case carbon will be rationed at the final consumer end, but by price rather than by the decision of some civil servant with an abacus and no real understanding of the needs, priorities and preferences of the individuals to whom they are handing out the rations.
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jo



Joined: 20 Oct 2007
Posts: 184
Location: London

PostPosted: Thu Dec 20, 2007 10:37 pm    Post subject: Wealth as Usual Reply with quote

You typed :-
"I've said consistently that allowances should not be given but sold."

I rejoinder with : for me there is no difference to the economic system if a profit-making capital-based large-private organisation is given Carbon Emissions Allowances for free, or is forced to pay for them.

After the Carbon Flow is complete, the cost burden, if there is any incurred, will always have fallen to the end consumer, the citizen.

If Carbon Allowances are auctioned, and competition is legally assured, those that have the most leverage/capital will win the most allowances.

Those businesses that have been financially successful in the past will continue to be profit centres.

This is what I can "Wealth as Usual".

The wealthly carbon-intensive companies continue to be wealthy and carbon-intensive. No change, there, then : the most wasteful are the most wealthy, and they will survive, and there will be no great efficiencies won, or Renewables installed.

It is highly unlikely that any system that tries to use cost to control Carbon can be efficient in setting a Cap on Carbon Emissions.

The reasons is that nobody will set the Carbon price high enough to change behaviour significantly.

Let's look again at the relative cost of utility bills at home : why is my gas bill on a par with my telecommunications bill, when the amount of energy and resources needed for telecoms is so much less than for the Natural Gas infrastructure ?

Why has the UK Government subsidised the Nuclear electricity generation sector, even off-sheeting waste disposal costs into the public purse ?

What is the UK Government doing any number of deals to assure liquid natural gas LNG supplies to the new infrastructure of terminals and pipelines ?

The UK Government takes the responsibility of energy provision so seriously, they are unwilling to cost it properly.

That will not change, even though a percentage of the new phase of EU ETS allowances will be auctioned.
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