How to be a carbon vigilante

Chris Adams writes on carbon trading schemes and buying one's way back into heaven.

Most of us are aware of carbon offsets now - to some they’re a godsend, to others they’re little more than a the 21st century equivalent to indulgences from the Catholic Church of the middle ages - if you had enough money, you could make up for your sins by giving money to the church, effectively buying your way back into heaven.

Less of us are aware of their big brothers, the industrial scale carbon trading schemes. Carbon trading schemes work by setting an absolute level of Carbon Dioxide that can be released in a time period, and issuing tradable permits to companies that allow them to legally emit green house gases. Companies that go over their legal limit must buy permits from cleaner companies to keep their plants running within the framework of the law. This creates an incentive for companies to invest in clean, low carbon technology, by putting a monetary value on carbon emissions - if you can sell your unneeded permits to the laggards in their field, then you’re basically being paid to clean up your act.

How much should carbon cost?

It’s an ingenious idea, but you really have to set the ceiling for emissions to be low enough for emitters to notice and feel some financial pressure, otherwise there’s just no real incentive for them to change. This is the main criticism levelled at the EU carbon trading scheme - the price of carbon permits at launch was just too low to make a difference, so it's largely been ignored. So what you do to fix this sorry state of affairs? You hack the price of carbon, that’s what.

Sandbag.org.uk is a site set that lets ordinary people gleefully distort the carbon markets by grouping together to buy up carbon trading permits, and then take them out of the trading scheme. This increases the scarcity of the remaining permits, and by extension makes them more valuable. When carbon trading permits are more valuable, investing in clean technology becomes more attractive than the increasingly expensive option doing nothing and of pumping out CO2 into the atmosphere.

Right now Sandbag.org are putting the price of taking a tonne of carbon emissions out of the system at around the £24 mark. With most powerplants allocated an allowance of between 500,000 and 2,500,000 tonnes a year, hoovering up permits like this isn’t a cheap process; in fact it’s almost ludicrously expensive to wipe out the emissions allowance for even a single power station.

The idea of using industry loopholes as levers to force companies to take action has a charming air of righteous anger about it, but for this to work, you really need mass participation to make a visible impact. If ever there was a site that’s crying out for a pledgebank pledge to kick off a funding drive, this would be it.

Anyone care to join me?

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Forget gaining £350m a week, Brexit would cost the UK £300m a week

Figures from the government's own Office for Budget Responsibility reveal the negative economic impact Brexit would have. 

Even now, there are some who persist in claiming that Boris Johnson's use of the £350m a week figure was accurate. The UK's gross, as opposed to net EU contribution, is precisely this large, they say. Yet this ignores that Britain's annual rebate (which reduced its overall 2016 contribution to £252m a week) is not "returned" by Brussels but, rather, never leaves Britain to begin with. 

Then there is the £4.1bn that the government received from the EU in public funding, and the £1.5bn allocated directly to British organisations. Fine, the Leavers say, the latter could be better managed by the UK after Brexit (with more for the NHS and less for agriculture).

But this entire discussion ignores that EU withdrawal is set to leave the UK with less, rather than more, to spend. As Carl Emmerson, the deputy director of the Institute for Fiscal Studies, notes in a letter in today's Times: "The bigger picture is that the forecast health of the public finances was downgraded by £15bn per year - or almost £300m per week - as a direct result of the Brexit vote. Not only will we not regain control of £350m weekly as a result of Brexit, we are likely to make a net fiscal loss from it. Those are the numbers and forecasts which the government has adopted. It is perhaps surprising that members of the government are suggesting rather different figures."

The Office for Budget Responsibility forecasts, to which Emmerson refers, are shown below (the £15bn figure appearing in the 2020/21 column).

Some on the right contend that a blitz of tax cuts and deregulation following Brexit would unleash  higher growth. But aside from the deleterious economic and social consequences that could result, there is, as I noted yesterday, no majority in parliament or in the country for this course. 

George Eaton is political editor of the New Statesman.