Like Kermit I have a problem being green?

I’m getting closer to the green party, except that I believe in nuclear power. I’m definitely sympathetic to the green agenda, except I don’t like windmills. But I’m definitely a green, although I find many of them a bit.... well green.

I don’t like simple answers, magic bullets. I believe in the markets ability to drive change. Capitalism is a great mechanism to drive innovation. There are a number of reasons why this is not happening now. The main one is a total failure of the market to price what Galbraith called “neighbourhood costs”. To be more precise, a failure to fully price carbon. In effect that’s free market economics speak for you suffering from my pollution. I'm not charged for generating the pollution, your charged through environmental damage and the health issues that arise.

Politicians are not the right people to decide what solutions to back. Subsidies for wind power will only work if wind power is the right answer and all the other answers are wrong. Politicians are not the right people to decide which technology to support. Politicians do have a role to play. They have to kick start a new industrial revolution and ensure that the natural ability of our capitalist system to exploit new ideas is allowed to compete against the powerful interests of the fossil fuel lobby.

“Government policy can create viable new markets, boost private investment and innovation, and stimulate the economy without requiring large public expenditure” (Dimitri Zenghelis, 2011).

Retired climate scientist James Hansen has argued for a rather elegant solution:

It requires an honesty from our politicians that I’m not convinced they are capable of. Basically get rid of all energy subsidies and taxes. Then tax pollution and undesirable “neighbourhood costs” heavily, very heavily. Wind power has to compete once the playing field has been levelled. The price of fossil fuels will rise significantly and the world will be encouraged to wean itself off this previously underpriced energy source.

But here is the true beauty of this pollution tax. Every 3 months the government divides the tax take from the carbon tax by the full population and sends each of us a cheque. So the government does not get the benefit of the extra taxes but we are encouraged to be fuel efficient.

Two examples. A fuel inefficient person pays heavily, and gets a little back. A fuel efficient person pays less because they use less dirty energy and gets the same share of tax back as the first person.  And here is the surprise – it works, British Columbia have such a system running now and its so popular that opposition to it is political suicide. Latest news is the Boston asked private consultants to recommend an effective way of cutting carbon pollutants blamed for accelerating climate change. They proposed a multi million dollar carbon tax.

Read more about this in James Hansen’s book “Storms of my grandchildren”. In the UK I would include children in the cashback, but held in a trust which could be used to pay university fees. There may also be an issue with fuel duty making an existing contribution to the exchequar. However a lot of the fuel tax we currently pay is returned to the fossil fuel industry in the form of subsidies.

This elegant solution won’t work if the politicians keep the tax. In needs to be returned to us as a quarterly dividend.

A significant issue is the right wing free market hatred of any interference in markets. These right wingers think that everyone has a right to pollute and the government has no right to interfere. This is not a free market, it is rigged in favour of fossil fuel. Consider the tax breaks that Osborne is giving to the fracking industry. This is a UK taxpayer subsidy to oil. But according to the right wing pundits, the government has not got a right to try to control a dysfunctional market. In the future the failure to accurately price carbon pollution will be regarded as the greatest market folly of our time.