The art of taxing carbon without taxing carbon

Before I talk about how the coalition have screwed up, I’ll talk about how the energy industry seems to be moving in the right direction. Despite there being limited progress in pricing carbon or achieving a low carbon economy. People in the energy industry seem to be acting as though there has been. I put this down to expectations.

The more and more closely with people in the energy sector, the more and more I begin to see expectations determining people’s behaviour. Every UK energy company has a smart metering team (that is mandated by law), but they are also dedicated to working out how to get people to use less energy (which isn’t).

Likewise, BP has invested in renewable energy research (although of course it hasn’t abandoned its profitable fossil fuel business). Other energy companies have made a move to low carbon generation and to reducing their customers’ energy consumption. The language executives use has even shifted. Find a speech from an energy company exec that doesn’t mention reducing emissions, you might be surprised how hard it is.

These actions won’t show up in policy discussions because the policies haven’t been implemented yet. So pessimism is to be expected. But when you look at what people are moving towards, it begins to look as though the expectations of more expensive carbon and cheaper renewables is affecting people’s behaviour. In an industry with such a long planning horizon I suppose this is to be expected, but I was surprised.

I suppose this is another of my hobby horses. Economics isn’t about choice. It is about expectations and contracts. Expecting higher prices, even if today’s prices are low, will impact your decisions. I think we can see some of this in the energy sector. I don’t want to be Panglossian, we are still probably screwed by climate change, but probably less screwed than people assume.


Saving the Planet one meal at a time

I am not one who believes that if we all do out little bit – for example, walk to the local shops not drive or cycle to work every Friday – there will be an appreciable effect on mankind’s greenhouse gas emissions, and hence an affect on the climate. BBC’s Ethical Man did all he could for a year to cut his emissions:

We did all the big stuff. We stopped flying, got rid of the car and changed the way we heat and power our home.

But we only managed to cut our carbon emissions by 20%. That’s right, just 20%.

Remember, according to the scientists we need to cut our emissions by 80% by 2050 just to keep climate change within two degrees centigrade of current world temperatures.

Clearly even the best efforts of ethical men and women on their own will not be enough to prevent global warming.

There are a lot of confounding factors that make this going solo tactic very difficult. If the aim is to avoid major climate change that there are of course Free Riders to worry about. Those that will carry on polluting regardless of your good deeds, they will reap the benefits of the affect – if any – of your actions but bare none of the cost.

Moreover, as illustrate by Ethical Man, the Western world has a deeply carbon intense lifestyle. Your best efforts to change your lifestyle within the limits of acceptably behaviour will only just make a dent in your carbon emissions.

There are habits which need to be lost. Jim Jepps recently asked how we can reduce traffic with a view to reducing emissions and improving our roads. He favours the carrot over the stick but I feel without increasing the cost of driving – to accurately reflect the real cost of driving – habits will be slow to change.

However, putting these to the back of your mind there are positives to the small steps which we can all take.

For example someone on the Moral High Ground is usually fairly poor company at a party, but when campaigning or debating holding onto the little things can help defend you from attack and strengthen your own arguments.

Although the individual and cumulative effect of your actions will be comparably slight to non-existence, taking small steps will help keep you focussed, when dealing with something so vast and chaotic as the environment it can be difficult to see the link from an individual actions to their affect on the system as a whole.

So if I don’t think the real world effects of a more sustainable lifestyle are particularly important why write this post?

Well, I’ve just cooked a fantastic curry. And instead of using three chicken breasts I used one and added potatoes to bulk it out.

In one year a square meter of your garden can produce around 1600 calories of Potato, if you wanted to use that square meter to grow the food to raise a chicken, each year you could produce 190 calories of chicken, if you haven’t worked it out that wouldn’t fill a service station sandwich.

The same can be said of other vital inputs like water. To produce one kilo of Potatoes requires 50 Gallons of water. This sounds relatively thirsty until you compare it with Chicken for which you would need 1600 Gallons to produce one kilo of meat.

Growing food, to feed to something you intend to eat is an inefficient way to produce calories. So if solo action is your thing cutting down on meat will help reduce your carbon emissions, not to mention land and water usage.

From my point of view this is all largely irrelevant, because I want carbon taxed so that these stark differences are priced into the cost of the food. What is important is that by cutting out chicken and adding potato I made the curry better than one made with chicken alone. I’ve not saved the world one iota but I feel better for almost having done my bit. I’ve had a great meal into the bargain too.

The advice of this piece is simple, keep campaigning for Cap and Trade or a Carbon Tax or whatever compromise you think will work. Live the best you can and the next time you make a curry please cut down on the chicken and add some potato. You’ll feel good, you’ll feel full, you’ll feel like you’ve made a difference even if you haven’t.

But mostly you’ll have that curry on your mind for the rest of the evening and you won’t be able to blog about anything else. And I’ve left overs for work tomorrow!

Recipe available on request of course.