Carbon Floors: This is the draft story I filed the day I got fired in May 2020

By Mathew Carr

April 7, 2022 — Im at the tail end (hopefully) of a brutal unfair-dismissal dispute, which I’ve lost. This is what I filed on the day I was let go, May 13, 2020. Technically it was the next morning when I was finally sacked at a supplementary meeting to the disciplinary hearing held the day before — I was fired by video link during the pandemic.

It seems appropriate to publish this 2020 story today [I think the people named will forgive me for the delay – contempt laws for example].

Today is the day the U.K is to reveal its post-pandemic, mid-war climate strategy. See this also, which I published late yesterday — when the British revelations began.

WARNING: some things have changed, some haven’t. Comments from 2022 in [square brackets]

2020

Minimum Carbon Price Seen Easing Stretched Government Finances

By Mathew Carr
([then not now] Bloomberg) —

Alternative headlines:


Minimum Carbon Price Seen Easing Climate Fight


Here’s How the Pandemic is Easing at Least Some Climate Politics


*******draft****not immediately for wire***subject to quote/fact checks***

[I will leave this here for authenticity]


Governments strapped for cash after the Covid-19 pandemic will probably consider this: installing carbon prices with minimum levels will boost their coffers, as well as protect the climate.

Selling the right to pollute rather than giving it away for free is a practice that’s now seen more marketable to the electorate. Certainly more appealing than financially painful new taxes following a punishing coronavirus crisis.

Forcing polluters to pay would help nations to balance their books as they deal with the wake of the pandemic, without hurting employment, former Australian Prime Minister Malcolm Turnbull said in a webcast hosted by thinktank Policy Exchange.

“The problem with imposing new taxes, higher income taxes or corporate taxes, is of course the dead weight that they impose on the economy,” Turnbull said. “There’s a respectable argument that a carbon tax would be less of a dead weight, less of a brake on economic activity.”

Less than a fifth of the world’s emissions are covered by carbon pricing, yet its use is on a gradual rise in regions including the European Union, in nations like China and in states led by California.

The opportunity for the governments of the rest of the world of installing a carbon price floor is huge, with $1 trillion in yearly revenue available at $30 a ton of CO2.

Greenhouse gas markets allow power utilities or factories to buy and trade carbon permits, often under a cap. Those cutting emissions can sell spare allowances, while those needing more can buy. Taxes impose a cost measured the same way — in tons of carbon dioxide.

Yet the politically controversial measures will now be less costly than they were a decade ago because the cost of clean energy has dropped substantially, easing the switch from fossil fuels.

Countries are seen continuing to favor a suite of policies to spur the energy transition and recover from coronavirus measures.

Lower crude and natural gas prices are freeing up space in strained consumer budgets to impose some new carbon pricing that’ll adjust economies to a cleaner base, said Mark Carney, former Bank of England governor and United Nations adviser on climate finance, speaking at the same event.

[2022 note: OK this is clearly out of date. Yet, as oil and gas prices fall over the next few years as demand wanes, that will ease the shock of higher carbon prices for customers / voters.]

Taking the Wedge

“There’s certainly an opportunity to take some of the wedge from the fall in the price of oil, particularly, but you need a suite of policies in order to have these adjustments,” he [Carney] said [back in 2020]. A key to make carbon pricing work is to ensure prices rise fairly consistently, he said.

In Europe, pricing has been up and down, a history that’s favored market traders rather than governments relying on the revenue or clean investors needing the signal to protect their profit.

A gradually rising carbon price floor, a mixing of a tax and market, is seen as bolstering the climate fight because free-market incentives to curb emissions are not lost completely.

With consistently rising levels, economies will pull forward the transition, Carney said. “The reason why I emphasized other factors is not to overburden the price on carbon.”

The U.K. already has a floor price on carbon and France is among nations considering minimum levels to ensure taxpayers always get their fair share of the right to pollute. Canada’s carbon floor is to rise to C$50 by 2022 from C$30 now.

“Above all, what you need is not policies that have a stop-start element to them that undermines the price,” Carney said.

Britain’s floor has allowed it to decarbonize at a faster pace than Germany, which is also considering the measure for transport.

The U.K. government adviser on the energy transition, the Climate Change Committee, recommended post-Covid-19 measures should stick with the practice.

‘Even in times of external shocks’

The post-Brexit system “should be designed to ensure that an appropriate price for carbon is maintained even in times of external shocks, for example through a well- designed floor price.”

Boris Johnson’s conservative government is “committed to carbon pricing as a decarbonization tool and we will establish a U.K. system that supports our world-leading climate ambition, including net zero greenhouse gas emissions by 2050,” the government said in an emailed reply to questions.

It didn’t immediately comment on the need for a floor [in the future].

[The UK’s existing floor is known as a floor support. That’s enabled it to lead on decarbonization.]

One problem with the U.K. price floor was that in forcing Britain to cut emissions quickly, it reduced the carbon price across Europe, said Andrei Marcu, executive director of the Roundtable on Climate Change and Sustainable Transition thinktank based in Brussels.

Any floor needs to be structured carefully. “If it’s a price floor then for it to be effective it really should be applied to everybody,” he [Marcu] said by phone. “The price floor in the U.K. essentially freed allowances for others in Europe,” depressing the EU carbon price for five years and reducing revenue for other nations in the program.

Carbon pricing floors are set to become important as the world sets international rules for the Paris climate deal, said Marcu, a carbon market expert, climate envoy and industry lobbyist [who has worked these roles].

[Note from 2022: The world set rules for carbon markets in November at UN climate talks in Glasgow, sort of.]

Groupings of nations

Nations grouping together to apply carbon markets may set floors at the same level to ensure fairness in trade of energy-intensive goods, Marcu said.

[The pandemic and climate crisis has made many companies favor shorter, more energy efficient supply chains]

The floor could apply, except for a certain portion of compliance, boosting the chance for emerging nations to supply emission-reduction credits to richer nations if they want to do that credibly at a lower price, he said.

“You can make a special provision so that a sliver of a country’s compliance needs can fulfilled using international credits” and those credits may have a lower floor or no floor at all.

[In 2022, it seems a floor may be needed in all carbon markets, as long as strict criteria are met. Otherwise emerging countries creating the carbon credits may feel exploited. Right now, climate injustice is worsening — that is, those who have not created the crisis are suffering most and their suffering is rising the fastest.]

Suffering — Photo by Alex Green on Pexels.com

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s