6 5 mins 15 yrs

There will be dancing in the streets of the parallel universe for sure.

Ministers ordered to assess climate cost of all decisions

Coal-fired power stations, airport expansions and new road schemes could all be put on hold following a decision by Gordon Brown that ministers must in future take account of the true economic cost of climate change damage.

Ministers have been instructed to factor into their calculations a notional “carbon price” when making all policy and investment decisions covering transport, construction, housing, planning and energy.

That price – which will increase annually – is intended to frame all day-to-day policy and investment decisions for the next 30 years.

As a result carbon-free or clean technologies, including nuclear power, have been given a significant boost as they will now become relatively less expensive than polluting technologies.

The “shadow price for carbon“, representing the cost to society of the environmental damage, has already been agreed for every year up to 2050 by government economists. It will be set at £25.50 (£1=US$0.50 ed.) a carbon tonne for 2007, rising annually to £59.60 a tonne by 2050.

The climate change minister, Phil Woolas, said: “This will have huge implications for [the] government. If for instance a new power station is due to cost £1bn, but it will add £200m worth of carbon emissions, we will decide that the cost of the power station is £1.2bn, even though its cash price is £1bn. We are creating a new currency.”

In theory the carbon price will create a bias against roads and carbon-emitting coal stations and make new “zero carbon” building regulations appear more economic.

In other words, they won’t.

Decisions about investments in new nuclear power stations will be made exclusively by the private sector, but the social carbon price is likely to affect the role of regulators and make them more willing to back nuclear as opposed to other more carbon emitting energy technologies.

It has also been agreed that every major Whitehall policy and investment decision will be monitored over the next year to check that policymakers are actually incorporating the shadow price of carbon.

Woolas said: “This is far bigger than people realise. It is intellectually thought-through and very tough. Gordon Brown may not ride a bike, but by god he is showing a lead.”

My ass. Comrade Brown and his commissars have done nothing but create a cash cow for the government.

Tony Juniper, the head of Friends of the Earth, said the “carbon price” could change economic calculations around issues such as a third runway at Heathrow. He added: “At the moment there are gaping holes in government policy with them professing concern for climate change on one hand, and rushing to expand airports and widen roads on the other. If this helps to fill in that gap then it has to be a step in the right direction. Whether it works or not will depend on whether they have set the carbon price high enough.”

The price has been set at a level calculated to ensure the government can meet its major policy target of stabilising carbon emissions at between 450 and 550 parts per million carbon, the figure recommended by the review conducted for the Treasury by Sir Nicholas Stern.

The review found that the costs of addressing climate change now will be cheaper than the costs of doing so later.

The shadow price is partly drawn from new modelling on the scale of the threat posed by climate change and partly by economic work undertaken by McKinseys and the Stern review on behalf of the Treasury on the economic costs of failing to address climate change.

The price is intended to take into account the full global costs of the damage carbon causes over the whole of its time in the atmosphere.

Equivalent values will be used for other greenhouse gases.

Such as the vast amounts of carbon dioxide spewing from the mouths of politicians and bureaucrats?

A note setting out the government’s thinking prepared in part by the chief economist at the Department for Environment Food and Rural Affairs, Richard Price, says ministers must refer to the shadow price. It states: “It is important that the shadow price for carbon is applied consistently and universally across decisions in government with significant implications for emissions of carbon and other greenhouse gases.”

Via the The Guardian

Also at JWF

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6 thoughts on ““We are creating a new currency.”

  1. As a result carbon-free or clean technologies, including nuclear power, have been given a significant boost as they will now become relatively less expensive than polluting technologies.

    And this is bad news?

    Get a grip my friend. Your policy seems to be to let carbon emmissions rip with no attempt to switch to clean technology. Apart from the climate-change issue, that leaves the UK at the mercy of the Saudi towel-heads for oil and Russian gangsters for gas. Not very clever.

  2. An Athenian friend of mine lost her grandmother in August to air pollution. So many pensioners die needlessly in that city each year because of the emissions.

    Maybe some peeps on ATW ought to spend a summer there—or in Bombay—and see how they feel then about Brown’s proposals.

  3. I think nuclear plants and innovative oil-alternative technologies should be encouraged for a number of reasons, but I think the proposals here aren’t the best way to make it happen.

    Government could do more good by lessening burdensome regulations that nearly prohibit nuclear power plants from built (in the U.S.) and offering tax incentives/abatements to private industry that is actively investing in R & D to create cleaner, oil alternative, cars and machines.

    Less government – not more.

  4. Daphne

    The government isn’t going to own the new technologies. But it needs to set out a framework of carbon reductions over the next thirty years to give the private sector a firm signal. Then the private sector will deliver the necessary innovation and investment to get us out of this mess.

  5. Peter: "But it needs to set out a framework of carbon reductions over the next thirty years to give the private sector a firm signal."

    What faith in Government. If the government really wanted to give a firm signal to the private sector it could zero rate energy projects for VAT and Customs and excise.

    But Noooo, instead it will introduce "carbon credits", which being a bureaucrats wet dream is simply a disguised tax rise.

    Anyway, the whole carbon ‘saving’ or carbon ‘reductions’ is rubbish. Global temperature has practically nothing to do with the level of carbon dioxide in the atmosphere and much more to do with water vapour or the activity of the sun.

    In short the whole thing is dishonest, a scam and a fraud.

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