A carbon tax may not actually do a whole lot for emissions

There's a chicken/egg problem at work.

A carbon tax is most economists' favourite method of dealing with climate change. It is exactly the sort of simple, market-driven intervention that they tend to like: set a price per tonne of carbon emitted which is equal to the value of the damage that tonne does to the climate, and then sit back and what businesses and consumers react. Some may cut their usage; some may switch to low-carbon sources of energy, which suddenly become cheaper comparatively; and some may choose to just pay the extra cost (what happens in that last situation is debatable – some think the money should just count as general taxation, others that it should be put towards climate change prevention and mitigation).

The Washington Post's Brad Plumer suggests that it may not work as well as we would hope, however. He reports on a recent MIT study looking at the likely effect of a $20 a ton carbon tax in the real world – the value proposed by a pair of MIT researchers last month.

Plumer writes:

Sebastian Rausch and John M. Reilly of the MIT Global Change Institute recently put forward a proposal for a $20/ton carbon tax that would rise 4 percent each year, starting in 2013. (The funds would be used to offset taxes elsewhere.) Here’s what their economic model predicts would happen to U.S. greenhouse-gas emissions:

Blue line: MIT reference case with no carbon tax. Black line: EIA reference. Green line: Scenario with MIT carbon tax in place.

With a carbon tax in place, U.S. greenhouse gas emissions do start declining quite a bit (this is the green line). But by 2030, emission levels stall, even though the carbon tax keeps rising and rising each year. The United States wouldn’t get anywhere near the 80 percent cut by 2050 that the White House has envisioned.

One explanation here is that MIT’s proposed carbon tax just isn’t high enough. But Muro favors another possibility–that a carbon tax alone isn’t enough to drive deep reductions. The private sector tends to under-invest in energy R&D and key bits of infrastructure such as transmission lines. Without further policies, it’s unlikely that we’ll see a sweeping transformation of our energy system to give people alternatives to coal plants and gasoline-powered cars.

This echoes an argument I've heard several times from those on the more technical side of climate change prevention. For all that the economists and politicians like to talk about creating the conditions in which the private sector will be incentivised to help tackle climate change, those who are more keenly aware of the massive costs involved tend to be rather more pessimistic.

They point out that the carbon tax model provides a cash injection to providers of low-carbon energy – but only after the tax is already instituted. As a result, there's another weak link in the chain, which is the ability of those providers to secure loans to build the capacity required. That's possible for massive companies looking to get into a new area; and it's possible for smaller companies, provided they get enough certainty from the government to be able to convince bankers.

But the fear is that larger companies, already strongly embedded in the conventional energy infrastructure, have little incentive to devote money, which could be used to lower the cost of polluting fuels, to instead build new capacity; and smaller companies won't be left with enough time between when the government finally confirms a carbon tax, and when their new generation is actually needed.

At the same time, though, there is growing evidence that some companies really are going above and beyond the call of duty. Some of it may be greenwashing, and some may be token expenditure, but if there really is any sizeable investment in low-carbon infrastructure, then it makes a carbon tax that much more effective.

Carbon taxes can only lower emissions if they raise the price of polluting relative to an alternative. If that alternative isn't available, then they risk being simply another source of revenue for the state.

Wind turbines being prepared. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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It's not WhatsApp that was at fault in the Westminster attacks. It's our prisons

Britain's criminal justice system neither deterred nor rehabilitated Khalid Masood, and may even have facilitated his radicalisation. 

The dust has settled, the evidence has been collected and the government has decided who is to blame for the attack on Westminster. That’s right, its WhatsApp and their end-to-end encryption of messages. Amber Rudd, the Home Secretary, wants tech companies to install a backdoor into messages like these that the government can then access.

There are a couple of problems here, not least that Adrian Russell aka Khalid Masood was known to the security services but considered to be low-risk. Even if the government had had the ability to gain entry to his WhatsApp, they wouldn’t have used it. Then there’s the fact that end-to-end encryption doesn’t just protect criminals and terrorists – it protects users from criminals and terrorists. Any backdoor will be vulnerable to attack, not only from our own government and foreign powers, but by non-state actors including fraudsters, and other terrorists.

(I’m parking, also, the question of whether these are powers that should be handed to any government in perpetuity, particularly one in a country like Britain’s, where near-unchecked power is handed to the executive as long as it has a parliamentary majority.)

But the biggest problem is that there is an obvious area where government policy failed in the case of Masood: Britain’s prisons system.

Masood acted alone though it’s not yet clear if he was merely inspired by international jihadism – that is, he read news reports, watched their videos on social media and came up with the plan himself – or he was “enabled” – that is, he sought out and received help on how to plan his attack from the self-styled Islamic State.

But what we know for certain is that he was, as is a recurring feature of the “radicalisation journey”, in possession of a string of minor convictions from 1982 to 2002 and that he served jail time. As the point of having prisons is surely to deter both would-be offenders and rehabilitate its current occupants so they don’t offend again, Masood’s act of terror is an open-and-shut case of failure in the prison system. Not only he did prison fail to prevent him committing further crimes, he went on to commit one very major crime.  That he appears to have been radicalised in prison only compounds the failure.

The sad thing is that not so very long ago a Secretary of State at the Ministry of Justice was thinking seriously about prison and re-offending. While there was room to critique some of Michael Gove’s solutions to that problem, they were all a hell of a lot better than “let’s ban WhatsApp”. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.