Thread by @DrSimEvans

Today's Times frontpage is reporting govt plans to (consult on & then maybe) include heat & transport fuel in the UK's emissions trading scheme

A few thoughts

1/

thetimes.co.uk/article/gas-an…

We currently only pay for CO2 emissions from electricity generation & industry

This is…bonkers

Domestic gas use gets an effective *subsidy* of ~£100/tCO2

(Air travel is even worse – and look at road vs rail!)

HT @EnergySysCat, scribbles are mine

2/

es.catapult.org.uk/comment/carbon…

So as a matter of principle, it would make sense to have a CO2 price on gas and (all!) transport fuels

(Economists often bang on about harmonised economy-wide carbon pricing for optimum "efficiency")

✅Polluter pays
✅Shift fiscal incentives towards electricity

But…

3/

As @EnergySysCat chief exec says "a carbon tax is not the silver bullet" and "imposing a pure carbon tax is fraught with compromises and political revolt…Gilet Jaunes a l’Angleterre, anyone?"

4/

es.catapult.org.uk/comment/carbon…

Check out @timbolord thread for more on what else would need to change if gas / transport are to face a carbon price, crucially including policy to support vulnerable households and ministers publicly making the case for change

5/

https://twitter.com/timbolord/status/1410880162485374978

I'll just end by saying that the Times story is obviously based on leaked info, which may be selective & may not reflect govt plans in the round

Not only that, but any big changes of this sort would be subject to public consultation

Let's see what is actually proposed

6/ends

One last thing to add!

@RichHallCA had a thoughtful blog yesterday on the question of whether and how to shift climate & social policy costs off electricity bills, paying for them via gas bills or taxes. Def worth a read.

7/6

wearecitizensadvice.org.uk/an-electrifyin…

OK OK, there's more

The EU is currently going through the same discussions about whether to expand CO2 pricing to heat + transport

8/

reuters.com/business/susta…

Leaked draft EUETS reform proposals would expand coverage to shipping fuel but heat + transport would be dealt with under a separate scheme, with revenues used to support vulnerable households

9/

reuters.com/business/susta…

Despite proposed efforts to manage impacts of CO2 pricing on heat + transport at EU level, the idea has still faced criticism for being "unfair and ineffective"

(NB part of this critique is nullified by the idea of a separate ETS for heat/transport)

10/

montelnews.com/en/news/119439…

New study from @CambridgeEcon (funded by ECF – full disclosure, ECF funds CB too) suggests including heat/transport in the EUETS would have limited impact on CO2, but high social cost

11/

europeanclimate.org/resources/impa…

Finally, Germany has already introduced carbon pricing for heat and transport under a national ETS

Handy primers here:

pinsentmasons.com/out-law/analys…

cleanenergywire.org/factsheets/ger…

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