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October 11, 2006

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Peter Nolan

I think that you presume too much of their intellectual abilities, never mind their honesty.

Ciaran

Peter,
A tad harsh methinks. Frank, hi. Sue Scott from ESRI gave various ways of addressing the effects of carbon tax on low income households in her paper at "The sky's the limit: Efficient and fair policies on global warming" back in 2002.

I don't think that it's right to allocate carbon allowances to the major polluters / emitters for free, and deny new entrants to the market (such as green cement manufacturers) any benefits.

I also feel that it’s a bit short-sighted of the Government to increase fuel allowances instead of increasing the funding to Energy Action or similar bodies that upgrade the energy performance of inefficient homes.

The problem with the EU / Irish approach to carbon taxes is that companies belching out CO2 like Aughinish aren’t been forced to pay their fair share, and taxpayers will have to pay for carbon credits that the Government needs to buy in order to meet our Kyoto obligations.

I’d say now is the right time to push the economy towards reducing emissions, particularly when the costs of measures such as tightening up the Building Regulations would fall equally on all players, and running costs would be reduced – a measure that would favour lower income households,
Ciarán

Frank McGahon

Hi Ciarán

Sue Scott from ESRI gave various ways of addressing the effects of carbon tax on low income households in her paper at "The sky's the limit: Efficient and fair policies on global warming" back in 2002

The point is that low income high emission households will have to be "punished" in some way (let's say when compared to a low income low emission household) by any effective carbon tax (to encourage them to make the switch) and I think it's better to be honest about this.

I haven't seen that ESRI paper but I'll try and dig it out but if there is a proposal to, say, award grants to improve insulation or replace boilers, there could be a perverse incentive for marginally low emitting housholds to emit more so as to qualify for a new boiler or spruce-up.

I also feel that it’s a bit short-sighted of the Government to increase fuel allowances instead of increasing the funding to Energy Action or similar bodies that upgrade the energy performance of inefficient homes.

I don't think that's the particular conflict- the conflict is in subsidising fuel on the one hand and aiming to get people to conserve fuel/reduce emissions on the other.

The problem with the EU / Irish approach to carbon taxes is that companies belching out CO2 like Aughinish aren’t been forced to pay their fair share, and taxpayers will have to pay for carbon credits that the Government needs to buy in order to meet our Kyoto obligations.

The problem is much deeper than that. The point of a Carbon tax is to "internalise" the externalities associated with emissions so that anyone who emits CO2 does so in the fulll knowledge and bearing the full costs associated with that volume of emissions, then they can decide whether it's worthwhile or not. That's a Pigovian Tax. For such a tax to work it has to be directly related to the volume of emissions and "blind" as to the source. Problem is that politicians will always want to adjust such a tax to take account of the source, either on the "pro-business" side, to favour established industries, or on your own "social justice" side to favour, say, low income households. Of course, the huge elephant-in-the-room problem underlying all of this is that Kyoto is effectively dead anyway.

I’d say now is the right time to push the economy towards reducing emissions, particularly when the costs of measures such as tightening up the Building Regulations would fall equally on all players, and running costs would be reduced – a measure that would favour lower income households,

Better energy conservation is a good thing anyway and should end up paying for itself, but that's not necessarily the same thing as reducing emissions - it's entirely possible for a focus on emissions to encourage the "wrong" alternatives, say expensive wasteful but not-directly-emitting energy sources.

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