Personal Carbon Allowance

Are they completely mad?

Tim Yeo MP (Sussex South), who is a Conservative and thus ought to know better, was on the BBC today saying how such a system would be better than 'carbon taxes' because they 'hit the poor'. The general idea is basically, to inch us a little bit closer to the Surveillance State by giving people an electronic card that they have to swipe every time they pay a gas bill or fill up the car. Under their bureaucratic dream scenario, people who don't use up their personal carbon allowance would be able to sell the unused bit to someone who needs it.

Complete and utter bollocks, of course. If (and that's a big 'IF') it were agreed that it were desirable to reduce our CO₂ emissions, then, as I have said before...

I would seriously consider increasing taxes on fossil fuels (demand is quite price inelastic) and dishing this out to all UK residents as a part of the 'Citizen's Income/Citizen's Pension' system. Those who use less than average will gain, those who use more will lose, but the overall pressure will be that people use less (and spend a bit more on insulation, warm clothes etc); our oil, gas and coal will last that much longer and it will hopefully help our balance of payments a bit.

Of course all this Kyoto nonsense, "binding legal targets" and trading of "carbon credits" is a load of crap and will no longer be necessary.

1. The point about price elasticity is that even if domestic fuel bills and petrol prices were to double in short period (oh, they just did) then the amount that people will consume will not fall by half, it might fall by a couple of per cent. Their scheme will not affect total consumption either - people will use up to their 'personal allowance' and assume that it's cost free.

2. Do politicians expect people to vote for them, and in exchange be forced into this sort of bureaucratic surveillance nightmare? (What happens if you fill up you car and realise you've forgotten your card?) Well, clearly politicians do think that we'll still vote for them, and we probably will - that's the frightening bit.

3. The only acceptable form of rationing is price rationing - it's called free markets. Have they forgotten the disaster caused by government-imposed food rationing after 1945? And if there are external costs (like road maintenance) then sure, cover this with a tax on petrol. But it needs go no further than that.

4. Of course taxes on petrol and domestic fuel are far too high anyway, on top of underlying prices being an an all-time high. So my solution wouldn't work either, politically or economically, but it has the merit of simplicity - at least you can look at the idea and dismiss it fairly quickly.