The economic argument behind the market forces solving partly our Emissions goals is sound. In so far even Paul Krugman (Nobel laureate Economist) in our conversations, has taken the view that the expectation of the market place for higher prices of Fossil fuels and energy and the definitive expectation of a green tax on CO2 (Kyoto carbon remits, Cap & Trade etc) will stimulate growth in the economy.

A general growth and not just in the hotly debated green sector. I think we need some of that here now.

 By increasing the price of energy we can surely let the markets and public policy follow the easy and obvious way to reduce consumption of fossil fuels and their resultant CO2 emissions in the Atmosphere... A progressive tax on energy would do this nicely and qickly.

Three points:

1) It is essential an energy tax is a replacement for other taxes, not an additional tax. For example, if the tax was set at 10% of revenue (national and local), business rates, council tax, vehicle excise duty and insurance premium tax could all be abolished. The average person would overall gain as much as they would lose. Those who waste energy would be worse off, while those who use little energy would be better off -- which is the whole point.

2) The tax should be levied on the end user. Waste heat from fossil fuel and nuclear power stations should not be excluded from the tax. This has two benefits. If the power station operators are taxed on the waste heat -- of which they are the end users -- and have to recover that from their customers, it transforms the economics of renewables vs non-renewables, since renewables in general produce no waste heat. It makes renewables much more price competitive. The second benefit is that it encourages the use of waste heat in CHP systems, since then the power station operator would not be the end user of the waste heat, and the tax would be paid by the person whose property is being heated.

 3) The generated savings in CO2 will be the tip of the iceberg as this method actually grows the Economy without growing the Co2 emissions and thus creates a virtuous cycle. To reinvigorate the cycle we need to lend for new green developments of Environmentally friendly and sustainable energy production and alternative industries for all waste, energy and manufacturing. Construction and the weatherization of homes will play a big part in this economic growth with a rush of employment and new green job creation in the sector of home related building and construciton business

As for the figures, a 10%-of-revenue tax would mean roughly 2.5p per kWh on renewable electricity and domestic gas, 21p per litre on oil fuel products; and 8p per kWh on fossil and nuclear electricity where the waste heat is not reused.

There are also international measures the parliament could call for.

A) Climate Change, once it starts disrupting global food production, will kill a significant proportion of the human population of the planet. Depending on which books you read, forest clearance accounts for between 25% and 40% of human carbon emissions to the atmosphere. People who destroy mature native forest are therefore committing a crime against humanity on a far larger scale than anything seen in, say, Rwanda. They should be treated exactly as other war criminals.

B) That's the forest "stick". The "carrot" should be a fund administered by the UN and contributed to by each country in proportion to its fossil fuel emissions. This fund should be of sufficient size to rent mature native forest worldwide under threat of destruction, and to do so at such a price that the owner, be they government, corporation or individual, cannot make more money than they're paid in rent by converting the forest land to agricultural use.

C) A new take on an old chestnut! The world spends just over a trillion dollars a year on defence. That makes for a hugely powerful vested interest and a lot of jobs. Suppose Climate Change were declared to be a "threat to national security" (which it soon will be) and the defence industry were given the task of tackling it. Say for example a defence contractor was asked to build a geothermal power plant instead of an aircraft carrier. Would they really object? By defining Climate Change as a defence issue it would enable the defence budget to be tapped while permitting the military-industrial lobby to keep their budgets and their workforce. Suppose every country pledged to spend 50% of its defence budget incrementally on defence against Climate Change by 2020. That'd be over 2.5 trillion dollars worldwide over the next decade. It would buy a prodigious amount of green technology. Furthermore, since defence is an expenditure, not an investment requiring a pounds-and-pence payback, the cost of developing green energy sources through the defence budget would not need to be paid back, any more than the cost of a jet fighter or a battle-tank has to be. This would have a large positive effect on the economics of renewable energy. 

What do you think?

Please add to this blog and join us on June 25th at LSE to discuss further in a Town Hall debate. London School of Economics at 3pm on the 25th of June.