The UK backtracks on carbon tax

I know the warmists want to believe it … that the world is ‘moving forward’ (hey, haven’t we heard this before?), but even the deep green Tory-Lib Dem government in the UK has decided that enough is enough.  The decision has been taken to freeze the carbon tax on electricity for a decade, meaning its real value will fall significantly over the period.

Needless to say, the renewable energy rent-seekers are squealing, along with some other energy providers (eg. nuclear).

But when you read the tosh from bodies such as our Climate Change Authority that countries are moving ahead of us with their emissions reduction strategies (note to Board: proposing/announcing and doing are not the same things), just bear in mind some actual facts.

Recall too:

  • Treasury assumed in its mangled carbon price modelling exercise that there would be world carbon price by 2016.  Hilarious, really.
  • Japan has recently junked its emissions reduction target and opted for an increase.
  • Lots of countries refused to sign on to Kyoto Mark II, including some big ones, including Canada and Russia.  (Please the Labor government, it could not sign up quickly enough.)

Here is the story about the UK decision:

U.K. Chancellor of the Exchequer George Osborne froze a tax on carbon emissions from electricity generation starting in April 2016 as part of a 7 billion-pound (A$12.8 billion) plan to cut consumer energy bills.

The package is aimed at boosting “British manufacturers, with benefits for families and other businesses too,” Osborne said in a speech in Parliament in London today as he delivered his annual budget. “We need to cut our energy costs.”

Prime Minister David Cameron’s administration has come under pressure to rein in rising energy costs. Ed Miliband, the leader of the opposition Labour Party, vowed in November to freeze energy prices if he wins the next election in mid-2015, prompting the government in December to announce measures cutting green levies by 50 pounds per household a year.

The chancellor’s announcement may boost the biggest carbon polluters, such as Drax Group Plc, which mainly burns coal in its power plant in northern England. It may weigh on utilities with a bigger proportion of renewables and nuclear power in their mix, such as Infinis Energy Plc, SSE Plc and Centrica Plc.

The government should bring in a stable policy to encourage investment in power generation, Energy UK, the industry’s main trade association, said in an e-mailed statement. The group, which has more than 80 members, including the “Big Six” utilities, said that while it supports the carbon tax freeze, the measure worsens the economics of generation from gas.

Stability call

“Clear and stable policy is required to get the investment flowing to start building our secure energy future now, bring new gas plant on stream to meet demand, provide the back-up needed for intermittent renewable generation and create jobs,” Energy UK said.

Osborne said the freeze at 18 pounds a ton of carbon will last the rest of the decade and will save a mid-sized manufacturer almost 50,000 pounds a year. Families would save an average of 15 pounds a year. In total, it could save British businesses as much as 4 billion pounds by April 2019, according to documents posted on the Treasury website.

The government is creating policy uncertainty by “fiddling” with its rules, said Nicholas Stern, a member of Parliament’s upper chamber, the House of Lords, and head of the Grantham Research Institute on Climate Change and the Environment at the London School of Economics.

Stern’s rebuke

“It is disappointing that the chancellor has chosen to fiddle with the carbon price floor within a year of having introduced it,” said Stern, a former government chief economist. “Today’s budget has created more confusion for investors about the government’s sense of direction and commitment to the transition to a low-carbon economy.”

Osborne also extended by four years to 2020 a program to compensate steelmakers, paper mills and other energy-intensive industries for carbon costs. He introduced a new plan to make up to them the rising costs of renewables incentives. The two compensation plans will save business 500 million pounds a year from 2016, according to the Treasury.

The industry group RenewableUK estimates the freeze may depress investment in low-carbon technologies by about 4 billion pounds, matching the sum the Treasury expects to save industry.

Nuclear reaction

In a joint March 11 letter with the Nuclear Industry Association to Osborne, it said the policy will “undermine confidence and will make it more difficult to secure the necessary investment.”

The Treasury also announced 60 million pounds of new funding for carbon capture and storage projects. Osborne said he’ll exempt electricity from combined heat and power plants from the carbon floor price.

The government introduced the carbon price floor in 2013 to set a minimum cost on emissions from power plants and compensate for lower-than expected prices of allowances in the European Union Emissions Trading System, or EU-ETS.

The U.K. floor targeted a price of carbon of 16 pounds a ton of carbon dioxide in 2013, rising in annual increments to 30 pounds in 2020 and 70 pounds in 2030. Ministers intend to achieve the floor price by adding a so-called Carbon Price Support to the cost of EU allowances at the time.

Carbon on the EU emissions trading system closed yesterday at 5.76 euros a ton. The carbon support level, set two years in advance, is set to rise on April 1 to 9.55 pounds from 4.94 pounds currently, and almost double to 18.08 pounds in 2015.

Annual increases were set to follow, with “indicative rates” of 21.20 pounds and 24.62 pounds outlined for the two following years. Instead, Osborne said he’ll freeze it at 18 pounds exactly.

The carbon price support freeze may damp wholesale power prices by as much as 6 pounds a megawatt-hour by 2020, according to Liberum Capital Ltd. Without the freeze, prices are forecast to rise to 70 pounds by 2020, according to the London-based broker. Month-ahead electricity was trading at 45.90 pounds at 1:28 p.m. London time, according to data compiled by Bloomberg.

Renewables harmed

Liberum said today in an e-mail that Alkane Energy Plc, which uses methane from abandoned coal mines to generate power, may be the worst-hit company.

A freeze may benefit Drax, Deutsche Bank analysts James Brand and Martin Brough wrote yesterday in a note to investors. Renewable energy company Infinis may be harmed, as would the generation arms of Centrica and SSE, which have wind, hydro power and nuclear assets, they wrote. At the same time, it may relieve pressure on the retail supply units of those two generators, they said.

U.K. household gas bills rose by about 41 per cent in 2013 from 2007, and electricity bills gained 20 per cent, after adjusting for inflation, according to government estimates last year. Ministers last March projected the average household bill for power and gas will rise to 1,331 pounds in 2020 from about 1,255 pounds last year. Bills for the biggest corporate customers were projected to rise by as much as 36 per cent.

 

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53 Responses to The UK backtracks on carbon tax

  1. nerblnob

    It’s always been a fallacy that Australia is somehow “behind” other countries when it comes to suicidal energy taxes.

    Instead Australia has been leading with its chin, failing to notice that the other countries are now over the hump, round the bend and heading back in the reverse direction.

  2. Joe Goodacre

    There are a lot of little signs that we’re over the top of the ‘global warming is a catastrophe’ mountain and are now coming down the other side.

    A significant one is the American Physical Society reviewing their statement of climate change. The questions that they are asking and the people whose opinions they are relying upon suggest they could be departing from the IPCC ‘consensus’.

    The green taxes and regulations are likely to fall away quickly when the politicians realise that the science is deserting it.

  3. Ant

    So who, among those who imposed this reckless, stupid and pointless tax in the first place, will be going to jail?

  4. Andrew of Randwick

    Who will hold the green discombobulators to account?
    .

    John Connor, the [Climate] institute’s chief executive, says the Government has a commitment not only to the Australian public, but to the international community. He says Australia has “ignored” the climate action being taken in China and the US and appears to be going in the opposite direction to the rest of the world. “While we’ve had this sort of bitter debate in the fishbowl of Australian politics, we’ve ignored the action that’s happening overseas,” he said….
    “We’re seeing China put in place seven [emission trading schemes] and there’s talk of another two or so. As they head towards this … South Korea’s doing the same.

    So what is South Korea actually doing?
    .

    The Korean ETS has specified the dates for three phases: Phase I (2015-2017), and Phase II (2018-2020), and Phase III (2021-2026). The ETS is scheduled to begin January 1, 2015. Approximately 490 of the country’s largest emitters
    During the first phase, 100% of allowances will be freely allocated. Later, up to 97% of allowances will be freely allocated in Phase II, and up to 90% of allowances will be freely allocated in Phase III.
    … This high percentage of free allocations is intended to ease international trade burdens on industries; companies in sectors that are considered energy-intensive and trade-exposed (EITE) will receive 100% of their allowances free of cost.

  5. Elizabeth (Lizzie) B.

    The world is full of slow learners. But they are slowly learning.

  6. Rod Clarke

    The Northern Hemisphere is STILL going through the longest and worst recession ever with career and life destroying rates of unemployment a staggering 35+% for young people trying to start their careers.

    This year marks 7 or 8? years since Bear Sterns and the start of the GFC.

    Against this backdrop Carbon taxes and ETS’s are nothing more than crippling Austerity measures with no environmental gain!

  7. Botswana O'Hooligan

    Energy production as in electricity is produced by the providers as cheaply as possible to ensure a viable profit to them, for no power station deliberately burns more coal than it has to and to achieve this end, the companies use the best technology available to extract the most BTU’s from any given quantity of coal just as aeroplane engine manufacturing people do with the kerosene for their turbine engines both large and small. Everyone knows that except governments who basically declare that every single entity, themselves excluded, is out to produce CO2 in huge quantities just for the hell of it and therefore must be taxed out of existence. As a sop to some companies governments give credits, Christ alone knows what for, but they do, and thus those companies can produce CO2 with gay abandon just as they always have, and not be taxed. Other companies of course are taxed no matter how efficient their fossil fuel usage is and their only option is to increase prices for their product. Just as trading in useless bits of paper euphemistically called “carbon credits” doesn’t do anything except enrichen merchant bankers, banks, and government coffers, whilst industry as efficient as it has to be these days continues to produce CO2, end of story. One wonders why the governments concerned, didn’t just tell all we taxpayers the outright truth in that they were embarking on an extra tax to raise more revenue and possibly redistribute some of that income to people who will waste the extra money just as they have wasted everything else handed to them over the years. The whole carbon tax is a gigantic con job and we must end this con job as quickly as possible to make way for the next con job the governments and their ratbag advisers come up with, don’t you worry about that! Just why they picked CO2 is also way beyond my ken for CO2 is beneficial to plants and thus puts paid to scares about food production crops that would just love more CO2. CO2 also puts the fizz into drinks including beer, but its best not to dwell too much on that else they will start producing flat beer.

  8. Rod Clarke

    The green taxes and regulations are likely to fall away quickly when the politicians realise that the science is deserting it.

    Yes but its “we the people” who have to keep the pressure up and drive the government out of our heating bills and light-bulb choices.

  9. Does this offer Abbott a way out of the Senate deadlock, eg. freeze or reduce the carbon tax rate/levy?

    If the ‘carbon tax’ could be reduced to 0%, then it wouldn’t matter if the legislation was repealed or not.

  10. Gab

    It is my understanding for that to happen, Philippa, such a proposal would still have to go through the Senate as an amendment.

  11. Squirrel

    “nerblnob

    #1233427, posted on March 21, 2014 at 11:29 am

    It’s always been a fallacy that Australia is somehow “behind” other countries when it comes to suicidal energy taxes.

    Instead Australia has been leading with its chin, failing to notice that the other countries are now over the hump, round the bend and heading back in the reverse direction.”

    Leading with the chin is one of our more regrettable national characteristics – a form of exceptionalism, but, more frankly vanity and naivety.

    It would be interesting to know whether the UK move will have bipartisan support (as suggested by Milliband’s promise to freeze energy prices), or whether UK Labour will still try to find a way of keeping the greenies happy.

  12. Bruce of Newcastle

    China also is backtracking:

    “…the all-out efforts to combat China’s disastrous pollution levels might get in the way of plans to tax carbon dioxide emissions in a bid to stunt the rapid growth of greenhouse gas emissions, Zhu Guangyao, the vice environment minister, said.

    “We have to reflect the requests of the majority through many consultation rounds,” he told the Beijing Morning Post from the sidelines of China’s annual parliamentary sessions.

    A carbon tax is increasingly controversial among lawmakers, said Zhu, adding that an environment tax would be easier to push through without carbon in the mix.

    Not looking good for the Gaia worshippers.

  13. It is my understanding for that to happen, Philippa, such a proposal would still have to go through the Senate as an amendment.

    That’s a shame. I’ve been looking at the Clean Energy Act, and it does mention ‘regulations may declare’, but either house of Parliament can then vote that these changes to regulations be disallowed.

    Damn damn damn.

  14. johanna

    Well, they’re not so much back tracking as stopping in their tracks. And this hodgepodge of measures is just a knee-jerk reaction to UK Labour’s irreponsible promise to freeze energy prices. They don’t address the fundamental problems which are leading the UK to the edge of blackouts, like the forced closure of coal fired power stations, the priority given to expensive “renewables” on the grid (making conventional plants less viable because they have to be unpredictably switched off and on again), the immense regulatory burdens on fracking – coupled with endless legal challenges from the usual suspects, and so on.

    Cameron, like Gillard, is in a coalition with extremist greenies (the Lib-Dems) and Labour is even worse. There’s a long way to go before the UK is out of the mess that energy policy is over there, and a lot of it is because of the EU.

  15. .

    Australia is a leader on this great moral challenge. Shorten can combat Abbott’s relentless negativity by campaigning hard on this issue in the mortgage belt.

  16. Dan

    OT- no forum? But Obama is on Ellen right now, dancing.

  17. Jazza

    Cripes, don’t the British nongs know it will save the Lot for the Lot, if they scrap the WHOLE bleeding useless carbon tax?

  18. .

    Bill Shorten represents working families who want climate justice and expensive, questionable quality cars as well as Liberal party members to be held to a higher standard than union bosses.

    Who does the newly elected Liberal Government represent?

  19. Paul

    15 pounds a year? Let the good times roll….

  20. .

    Treasury assumed in its mangled carbon price modelling exercise that there would be world carbon price by 2016.

    Shut. Them. Down.

    Fire. Them. All.

  21. incoherent rambler

    Botswana O’Hooligan
    #1233454, posted on March 21, 2014 at 12:00 pm

    Excellent summary.

  22. Andrew

    Dot, are you sure you want Senior Labor Figures talking about carbon taxing? Currently they’re on message by talking about how we don’t have illegal SIEV arrivals any more, and how awful it is that the Naval exercise that led to this was not on ABC24 live.

  23. .

    I want them to double down and demand an even higher carbon tax rate and I want them to campaign on it really hard, particularly in working class areas, marginal seats and seats that changed hands last election.

    I want them reduced to a mere rump of easily identifiable freaks and reprobates. Not a full caucus of them.

  24. I want them reduced to a mere rump of easily identifiable freaks and reprobates.

    We got there some time ago, I think.

  25. JohnA

    Philippa Martyr #1233472, posted on March 21, 2014 at 12:13 pm

    It is my understanding for that to happen, Philippa, such a proposal would still have to go through the Senate as an amendment.

    That’s a shame. I’ve been looking at the Clean Energy Act, and it does mention ‘regulations may declare’, but either house of Parliament can then vote that these changes to regulations be disallowed.

    Damn damn damn.

    Nil Desperandum though.

    I believe the Senate can no longer reject a money bill.

    So if a taxing act came through amending a rate only (as we desire, to set it at zero), I wonder if the Senate would be obliged to pass it?

  26. gabrianga

    Surely time for the Coalition’s “media experts” to flood the print and TV advertising to explain to Australian voters how they have been “had”?

    Half/full pages in local papers , Short sharp TV ads. Flood radio programs with quick ads (especially the anti-Coalition mobs like 2UE.

    Please Mr Abbott ,don’t just sit on this one.

  27. John Comnenus

    So once again Abbott is on the right side of history as the world comes around to his way if thinking. Like a surfer, he saw the wave of climate change idiocy ending while it was still forming. He paddled hard against the outgoing rip and got on the that wave early. Now as the world goes into climate change action retreat he can ride the wave right into the shore by getting rid of direct action as well.

    He is still hidden in a tube, but we all look forward to him coming out ready standing up and ready to do a big flashy cutback where he ends the whole climate action garbage once and for all.

  28. Bill

    I cant wait for that DD. Just imagine labour trying to defend the most hated tax in Australian history, and their immigration policies that drowned a thousand people.

    Just how stupid are they?

  29. wazsah

    Just remember that while GreenLabor delays the CTax repeal – a raft of opportunists are getting in on the act making hay while the sun shines.
    Local Cobar newspaper reports -
    Carbon farming is now paying off – 12 March 2014
    http://www.cobarweekly.com.au/public_html/public_html/120314/article4CarbonFarming120314.html

    I understand from -
    http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/Pages/default.aspx
    that upon repeal the ex GreenLabor Govt scheme will be replaced by the Abbott Govt Direct Action scheme -under which potential “carbon farmers” will have to bid for the privilege.
    A very different game.
    As that how Cats see it?

  30. Bill

    Carbon farming is a great lurk for the cockies – if the carbon price holds up for a while.

    You sequester about 20 tonnes per hectare, per year until the gum trees mature, which is about 30 years. At that point you stop getting paid, so then you wait for a dry spell in summer, and a day with a hot northerly blowing.

    Then just flick a match over the fence.

  31. Fisky

    Stopping illegal immigration, repealing carbon dioxide taxes, business deregulation, no to bailouts. These are all now mainstream, irrevocable positions, inseparable parts of the body-politic, that the Leftist establishment will be forced to adopt. The only thing to do is for the Left to collectively sign a formal surrender document renouncing most of the Leftist agenda.

  32. brc

    Remember how all this crap was brought in to provide ‘certainty’?

    The most certain thing ever was that the public would get fed up with paying ever more taxes for a vital cost of living. And that they would kick out politicians who wanted to endlessly raise taxes.

    Now a bunch of people have poured billions into tax-farmining initiatives and are screaming about ‘uncertainty’.

    Even I could work out that it was going to end up this way. You didn’t have to be a genius.

    Sometimes I hate being right all the time. But even having the simplest understanding of supply/demand economics and human nature will do that.

    It’s hard to remember the hoopla that surrounded the Copenhagen meetings. It’s hard to recall a time when people at barbecues were excited about paying more money for their electricity, because they were going to save the difference by switching to CFLs and turning their TV off at the wall.

    But that madness did all happen and it was tough at the time to keep the faith that it was an episode of crowd madness. We aren’t even close to out of the woods on this one. The UK will never recover.

    Curse them all, the idiotic activists masquerading as scientists. What a lot of lying, thieving false prophets they are.

  33. Maybe it’s always been about the taxes, not the carbon.

    How much solid carbon is wasted by allowing our coal plants to age and date, in the full knowledge we will continue to depend on them?

    How much carbon is emitted by incontrollable hot burns in the Australian bush?

    How much food, hence carbon, is wasted due to the ruinous tax on refrigerant gases?

    How much untaxed Australian carbon is burnt in Asia to manufacture solar panels and those whirlygig things?

    And really, if it was about “carbon” those nukes in uranium rich Australia were built yesterday.

    So maybe the New Class were going to do it all anyway. Just because they’re cleverer than us and have always had plans for us.

  34. Woolfe

    How abut allowing the cost of the Carbon Tax to be tax deductible, and those that wanted to pay would not claim. That wouldn’t have to go through the Senate,would it?

  35. johanna

    Yes it would, Woolfe.

  36. entropy

    The other reason you don’t want to just set a low rate rather than try and repeal it altogether is that if it is still in place the next time the filth get elected they will just up it to get their hands on all the loot. Better to make it too hard.

  37. Rabz

    It’s hard to remember the hoopla that surrounded the Copenhagen meetings.

    FFS, I’m finding it even harder to forget.

    Talk about most of the planet being gripped by this bizarre form of mass insanity:

    “OMG! We’ve got to do something about the weather! What can we do, smug, anti-scientific leftist frauds?*”

    “Pay more tax, peons, including a beaut new tax on air. That should do it.”

    *BIRM

  38. Senile Old Guy

    making conventional plants less viable because they have to be unpredictably switched off and on again

    As the recent “Code Black” (that was the term actually used) blackout across all Darwin demonstrated, you can’t just switch it on. As was helpfully explained (on the ABC, no less), if you do just “switch it on” everything would simply fail. Instead, power had to be carefully returned to suburbs in stages gradually. The first suburbs got power about 8:30 am; the latest, several hours later. The whole city was effectively shut down for the entire day.

  39. jupes

    ◾Treasury assumed in its mangled carbon price modelling exercise that there would be world carbon price by 2016.

    And Parkinson wonders why he was sacked.

  40. johanna

    SOG, I’m talking about supply management when the grid is working. When a bunch of wind energy hits the grid, the conventional stations have to power down at short notice until further notice (i.e. till the wind stops blowing). Needless to say, this is the opposite of what they are designed for. It adversely affects both their operating costs and their revenue.

  41. It’s hard to recall a time when people at barbecues were excited about paying more money for their electricity

    … as they pumped out carbon and wasted fuel by cooking meat out of doors …

  42. Would the Senate allow a rewording of the tax on air to make it a tax on soot instead?

  43. Craig Mc

    Remember how all this crap was brought in to provide ‘certainty’?

    That’s pronounced “cerdindy”.

  44. gabrianga

    Wonder how Goldman Sachs explains this to their punters in “renewables”? Perhaps Lord W and his predecessor Hewson could help with this one?

  45. nerblnob

    It would be interesting to know whether the UK move will have bipartisan support (as suggested by Milliband’s promise to freeze energy prices), or whether UK Labour will still try to find a way of keeping the greenies happy.

    UK Labour is not as deeply in with the Greens as the ALP. I have to disagree with Johanna there. It’s more of a Lib Dem constituency. There is widespread disquiet about energy costs, media is more diverse, the greenies were widely blamed for the recent flooding due to the way the environment agency had managed rivers and “wetlands” , coverage of anti wind farm protests is often sympathetic.

    The hysterical opposition to shale gas development still gets sympathetic coverage but the public mood is beginning to harden in favour of development, especially when they see what Putin can do to those countries dependent on Russian gas.

    Added to that, governments have five year terms so have more time to ride out unpopular decisions. What I’m saying is that the UK will back as far out of energy taxes as the EU let’s them. Labour are attacking hard on energy costs, so can’t really oppose lowering carbon taxes without losing more credibility.

  46. johanna

    Labour’s promise was to freeze retail prices, while the taxes would continue to rise.

    This economic vandalism (which meant cutting the prices that suppliers received) resulted in the UK conventional energy industry declaring a moratorium on further investment in the UK. If there is the faintest chance of Labour winning the election (which there is) the moratorium stays in place.

    Labour are at least as much contributors to the mess that the UK is in, and are infested with greenies.

  47. Notafan

    I see Cameron isn’t saying anything about an expected decrease in deaths caused by energy poverty. Is that 15 saving.per household going to make a difference to those statistics.?

  48. Senile Old Guy

    SOG, I’m talking about supply management when the grid is working. When a bunch of wind energy hits the grid, the conventional stations have to power down at short notice until further notice (i.e. till the wind stops blowing). Needless to say, this is the opposite of what they are designed for. It adversely affects both their operating costs and their revenue.

    Yes, spot on. Okay, misunderstood.

  49. Does this offer Abbott a way out of the Senate deadlock, eg. freeze or reduce the carbon tax rate/levy?

    If the ‘carbon tax’ could be reduced to 0%, then it wouldn’t matter if the legislation was repealed or not.

    Why not just cut the finding to the Departmental Branch responsible for collecting the tax?

    Isn’t that what the Greek Socialist party did to their tax department?

  50. wazsah

    Forester – I agree – in this period waiting for repeal of the CTax there must be many bureaucratic & administrative ways Depts like the Clean Energy mob could be neutralised.

  51. Fred Lenin

    A tax thatwill stop gullible warning? Everyone knows Taxes fix everthing,a tax on speeding stops motorists speeding ? How about a tax on Cancer and coronary disease ? That will fix them wont it? Maybe a tax on illegal migrants ? Now theres three Great ideas ,get the alp/green treasury on to that!

  52. Fred Lenin

    I still remeber that Dozy communist Puppet blanchet and the other third rate ” akters” standig in front of a picture of the old Battersea power station in London ,smoke poring from its fous stacks,neglecting to mention it had been closed for Forty years or so,long before gullible warning had been invented,all the socialist clowns and Dupes were at school when it was decommissioned,Lyimg Scum!

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