Date published: 2008/11/19
The BBC says:
The UK Government is to auction carbon emissions permits to power firms in a sale projected to raise between 1.5 and 2bn euros over the next 5 years.
The Treasury is being warned that if it keeps the money, it risks fuelling public cynicism about green taxes.
A coalition of green groups and business leaders is demanding proceeds fund a green energy revolution.
In the first phase of the ETS, power firms were given most of the carbon permits they requested free of charge.
This was done in order to facilitate the carbon market.
If firms overshot their carbon allowance, they had to buy extra carbon permits from the market, in turn determining the EU price of carbon.
But many energy firms outsmarted politicians by acting as though they had been forced to buy all their permits, and then passing the cost on to electricity users.
This brought an increase in energy prices - and a huge windfall to the energy sector, which it said would be needed to invest in clean energy supplies. From this month, the windfall should be over in the UK, as the firms will have to buy 30% of their carbon permits - equivalent to the Treasury's estimate of the previous windfall.
The European Commission had hoped that proceeds from carbon auctioning would underwrite the vaunted transition to a low-carbon economy in Europe. The Netherlands, for instance, is using the revenue to shield low-volume energy consumers against the rise in electricity prices.
But the UK led a revolt against the Commission's plan and refuses to ring-fence the carbon dividend. A government spokesman said: "We are committed to reducing carbon emissions as our climate change legislation proves, but we do not hypothecate [specify the intended use of] revenues."
The Treasury is particularly nervous about the future of green taxation revenues because as cars become much more energy-efficient it will suffer a big drop in fuel taxes.
Surprise, "green" taxes are just a cynical ploy by government to raise yet more tax money, who would have thought it. To be fair to Labour, the Tories and Lib Dems are no different. And what is the BBC doing mentioning the Netherlands "using the revenue to shield low-volume energy consumers against the rise in electricity prices"? What in the world does that have to do with "the vaunted transition to a low-carbon economy"? (And if the BBC really means "low-volume" rather than "poor" then that is a doubly dumb statement, although of course there is a correlation between "low-volume" and "poor".)
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