What life will be like under climate lockdowns

March 1, 2025

They’re about to completely change our way of life – and most people don’t even realise.

Climate lockdowns are coming. This has already been decided outside democracy at a higher level.

And unless there’s a major change in current power structures, it’s happening whether the public like it or not.

While the term “climate lockdown” is useful shorthand, there are important differences from the lockdowns imposed during the Covid era.

Moving around won’t technically be banned; they’re just going to make it much more expensive, stressful and impractical.

Most importantly, the war on motorists will be ramped up massively – with new charges, red tape and restrictions. The kind of draconian measures seen in London will be rolled out to other cities, and then expanded to towns, perhaps even large villages.

There’s already a big campaign to condition the public to pay-per-mile road charging. This will most likely be added on top of road tax and fuel duty, plus ULEZ-style tolls for entering cities.

The system will be fiendishly complex by design. They want to make drivers fearful of huge fines if they stray into the wrong zone or make a minor mistake, to put them off travelling full stop.

Some councils are planning to force drivers to obtain permits to enter areas of cities or travel down certain routes. Personal carbon allowances are also being discussed (to be reduced in size over time).

There’ll be even more street closures, obstacles, traffic lights, and other reductions in road capacity – all intended to create artificial delays and “nudge” people out of their vehicles. The kind of measures imposed in so-called low traffic neighbourhoods will be scaled up.

Mass surveillance infrastructure is being installed to facilitate these controls. Alarmingly, this will allow the authorities to ban dissidents and non-compliers from travelling to certain locations.

During a future pandemic, they could use the system to stop unvaccinated individuals travelling outside their immediate locality.

As well as tracking and controlling the public, the main objective is a big reduction in car ownership, and for the remaining drivers to travel far less. The plan is for much of the population to be increasingly limited to 15-minute cities (more details here).

In practice this will mean less choice in employment, business, shopping and leisure activities. It will also breed social isolation by making it much harder to visit friends and relatives outside your own area. The impact on the elderly and infirm will be particularly serious. Denied the convenience of door-to-door car travel, more and more people will stay at home waiting for items to be delivered.

Holidays abroad will also become a thing of the past, at least for lower-to-middle income groups. Perhaps they’ll have to sell their carbon allowance to rich people as energy bills and other basic living costs continue to rise. In any case, new anti-tourist taxes and regulations will increasingly make overseas travel prohibitively expensive.

Anti-tourist protests are already being instigated and amplified in order to condition the public ready for the coming crackdown.

The aviation sector, while still a target, is likely to be treated with a relatively light touch however. This is because air travel is critical to many agendas of the transnational “elite”, such as deeper economic, social and political integration across borders.

Accordingly, the focus will be on anti-tourism measures imposed at local level, such as new taxes and restrictions on the supply of accommodation. Tourist-dependent regions will be sold these policies with promises of moving upmarket, as richer long-haul travellers are forced to holiday closer to home by inflated costs.

Finally, it’s worth discussing how governments are going to try to hoodwink the public that they’re not really undermining people’s mobility. They’ll claim it’s still easy to move around using “greener” alternatives, such as trains and buses. (The EU is even promoting the idea that time-consuming and expensive sleeper trains can replace flights).

In reality trains and buses are only practical and viable in areas and corridors with relatively high population densities. In many locations it’s impossible for them to replace a large percentage of car journeys.

Taking the train (or bus) involves at least three stages. You have to travel to the station to catch it, leaving enough time for unforeseen delays, then make the train journey itself. At the other end you have to get from the station to your final destination.

In rural and suburban areas it’s typically far quicker to drive directly to your endpoint. It often takes nearly as long to get to the nearest station as it does to complete the whole journey by car. Moreover, there are huge swathes of the country that can’t be reached by bus or train – at least not in a reasonable time.

So, forcing people to ditch their cars and rely on trains and buses instead is effectively the same as massively reducing their mobility.    

First published on the Transport Watch blog.

Filed under environment, transport

Why did the Conservatives become radical greens?

February 28, 2025

It’s deeply disturbing that a supposedly conservative government has been destroying property rights, undermining the middle classes and strangling the economy – all in the name of the environment. How on earth did this happen?

Looking at the incentives facing the party’s leaders might provide some clues.

The obvious explanation is they’re doing it to attract votes. To win the next election they need to go beyond their core support. So, they have to reach out to the centre, perhaps to voters who might consider backing the Lib Dems.

Such calculations also factor in the marginal seats needed to retain a majority and the particular voter groups they therefore need to attract. To give a specific example, a “green” policy of opposing Heathrow expansion might be cynically designed to gain marginal seats in south-west London.

However, if this strategy has been at play, then it is likely to have backfired spectacularly. The government’s green agenda is a major factor in a cost-of-living crisis that has caused its support to plummet.

Moreover, the Conservative majority relies on working-class voters in the North and Midlands – a group that has suffered particularly badly as energy bills have rocketed and real incomes declined.

Many voters don’t connect the cost-of-living crisis to green policies. Indeed, media propagandists deliberately hide the link by blaming other things.

The inconvenient truth is that the UK’s heavy dependence on imported gas is a direct result of the renewable energy agenda and in particular the forced closure of cheap and reliable coal-fired power stations. But whether voters understand this or not, they still tend to blame the government for the consequences and the marked decline in their living standards. 

So, the “going green to attract votes” hypothesis doesn’t stack up. If this was a factor, then it has been a huge miscalculation. In any case, more moderate measures combined with some environmentalist rhetoric could have ticked the “green box” without doing such immense damage to the economy.

A second possible explanation is that the government has to conform with the “metropolitan elite” in order to retain power. This group, so the theory goes, has different values and priorities to the rest of the country. It also has immense influence because it dominates the media, civil service and other pillars of the establishment.

London-centred, its members use public transport far more than people outside the capital. An often-vocal minority cycle to work. Many of them live in gentrified, densely populated inner-city areas, a very different environment to that experienced by the suburban and rural rich.

15-minute cities might seem normal and desirable to them. But in reality, the purchasing power of this group and the local services it supports are very far from the norm, and could not be replicated in more than a relatively small number of locations.

It seems likely that support for radical environmentalism is significantly stronger in the metropolitan elite than the general population. The Conservatives perhaps fear that reversing the radical green agenda would alienate this group, leading to negative media coverage, obstructive behaviour by the civil service and other problems.

Some Conservative politicians may also want to be part of this “elite” in order to enjoy the status, connections and financial rewards that come with it. If they reject the green agenda, they risk being ostracised.

It’s alarming to think that a small, privileged minority, concentrated in London, effectively has the whip hand over policies that affect the whole population, but this conclusion is certainly plausible when the incentives facing policymakers are considered.

A third hypothesis can almost certainly be rejected. Cynics often believe that politicians effectively get paid to implement various agendas.

A number of corporate interests are making vast profits from green measures. And it’s true they have a strong economic incentive to “capture” policy by investing in lobbying.

But this doesn’t seem to be taking the form of politicians benefiting financially. There are relatively few examples of former ministers getting well-paid jobs at renewable energy companies or other firms that benefit from green policies – and these may well be cases where the individuals concerned have genuine expertise in the industry. The phenomenon certainly isn’t widespread enough to explain government policy.

Moreover, there are also powerful vested interests that will lose out from the radical green agenda. They are attempting to sway politicians too – but, again, there is little evidence that this takes the form of substantial financial inducements. As previous scandals have shown, the reputational risks from exposure would be very high on both sides, which acts as a strong deterrent to any untoward activity.

Finally, there is the possibility that a significant number of ministers and MPs genuinely believe in radical environmentalism. It’s not about their careers, social status, or even the money, but ideological.

It’s striking that a significant proportion of Conservative MPs are not very conservative at all. They already support high taxes, heavy regulation, technocracy, political globalism, central planning, and rapid social change. This arguably makes them natural allies of the radical green agenda.

Their approach couldn’t be more different from genuinely conservative policies to protect the environment. These could focus on bolstering conservation and stewardship by restoring traditional property rights undermined by the state. For example, respecting private property by ending the practice of compulsory purchase would prevent a great deal of environmental damage.  

The key question is therefore how this not very conservative group came to dominate the Conservative Party and subsequently steer environmental policy in a non-conservative direction.

Whatever the real reason, the result is that the UK is effectively a one-party state when it comes to the radical green agenda. All the main parties support it and voters have little realistic choice.   

First published on the Transport Watch blog.

Filed under environment, political economy, transport

15-minute cities and the new feudal system

February 28, 2025

While the power elite will continue to enjoy their jet-set lifestyles, the general public will increasingly be restricted to 15-minute cities as “climate lockdowns” are imposed.

Serfs weren’t allowed to leave their village without their master’s permission. They spent their whole lives restricted to a small area, except perhaps for a rare pilgrimage. As councils start to require permits to drive down certain roads or into certain areas, the parallels with the feudal system are obvious.

15-minute cities are superficially attractive. The basic idea is that employment, retail outlets, health services, schools and various other amenities should be easily accessible to people’s homes – indeed within a short, 15-minute walk or cycle ride. This new urban geography is designed to reduce car dependency and foster “stronger communities.”

Encouraging walking and cycling is a key aspect of the policy, though in practical application this has meant using a big stick rather than a carrot.

The road space available to cars is reduced to make way for cycle lanes or wider pavements. Speed limits are lowered; traffic lights increased; parking restricted; obstacles placed in the road; streets closed.

These measures create delays and impose costs on motorists, reducing their mobility and deterring them from travelling outside their immediate area.     

Indeed, proponents of 15-minute cities admit that mobility is not their priority. Because, they hope, key amenities are accessible locally, they argue mobility is no longer needed to the same extent.

But here the movement hits a major hurdle: economies of scale.

Many services are inefficient or not viable at a micro level. In a relatively free economy, this means they would tend to be driven out of business by more efficient competitors that serve a larger catchment area and population.

An obvious illustration is to compare big edge-of-town supermarkets with the same brands’ “local” iterations, the latter having far less choice and significantly higher prices. Consumers often choose to drive further to a big supermarket in order to do a weekly shop in one go, which may be cheaper and more efficient than making frequent visits on foot or by bike to smaller local stores. (Of course, staying at home, shopping online and waiting for deliveries is another option under the 15-minute-city model – which may explain why the Big Tech elite are promoting it so enthusiastically.)

The 15-minute city concept therefore implies using planning controls and mobility restrictions to hinder the economies of scale associated with larger catchment areas – effectively forcing businesses and consumers to stay local. Accordingly, such policies are now commonplace across the UK, Western Europe and “progressive” US cities, representing a shift to command-and-control economics and a further erosion of private property rights.

There are similar issues with labour markets. If mobility is restricted – for example, by slower journeys or a forced reduction in car ownership – then it becomes harder for potential employees to find jobs that match their skills and talents. The size of the area in which they can access opportunities may shrink dramatically. The same problem applies to many small businesses. Productivity and wages suffer. Welfare dependency may increase.

The 15-minute-city movement seeks to overcome the economies of scale problem through high-density living. If large numbers of people are stacked on top of one another in blocks of small apartments, then a population of tens of thousands can be packed into a square mile. But given current rates of new home construction, it will typically take several decades to densify neighbourhoods in this way. Lost economies of scale will not be replaced in the foreseeable future.

Moreover, high-density districts have disturbing social and political implications. Residents of detached houses on large plots are relatively free to engage in various activities without affecting their neighbours. Their physical environment promotes self-reliance, independence and resilience. They have the space to accumulate possessions, resources and reserves; make repairs; start various businesses; even grow their own food.

By contrast, high-density apartment blocks are characterised by monitoring and surveillance; rules and regulations; permits; conflicts over communal space, repairs and maintenance. Eccentric, offensive or anti-social behaviour may affect a large number of neighbours, providing a rationale for meddling and intervention. This kind of neighbourhood promotes a culture of interfering in other people’s lives.

And residents of small apartments can’t own much. Their possessions and real resources are severely limited by lack of physical space. They have relatively little scope for self reliance and are more vulnerable to becoming dependent on the state in any crisis. They are therefore more controllable.

15-minute cities are an attempt to manipulate the built environment in order to undermine individual freedom. They’re a Trojan horse for big government and top-down control.

First published on the Transport Watch blog.

Filed under environment, transport

Political manipulation and the push for climate lockdowns

February 28, 2025

The plan is clear. The political elite want to create what amounts to a new feudal system, with the manipulation of the green agenda providing a convenient pretext. 

Ordinary people’s mobility will be severely restricted. They will be forced out of their cars and off the roads by a raft of new charges and controls. Their lives will largely be confined to “15-minute cities.”

But the perpetrators have a problem. These measures are deeply unpopular with a large percentage of the public. And they are being imposed in ostensible democracies. So, they need a strategy to overcome resistance.

One element is a relentless propaganda campaign to promote the idea of a “climate emergency.” With clear parallels to the manipulation strategies deployed during the pandemic, they’re trying to persuade the public that a form of lockdown is necessary to stop global warming.

This is why the BBC lectures viewers on climate change every time there’s a heat wave, flooding or forest fires. It’s also why the BBC has effectively banned proper debate on environmental issues, with sceptical voices not welcome on its outlets. The understandable anguish created by images of natural disasters is used to undermine free speech on the issue.

The second element is a focus on local government. There’s a reason why mayors and councils are taking a leading role in the “climate lockdowns” policy, while central government pretends to be more motorist friendly. The establishment is exploiting the different incentives facing members of the public.

The benefits of measures such as “low-traffic neighbourhoods” (LTNs) are highly concentrated and obvious to the relatively small number of beneficiaries. By contrast, the costs, which may be enormous by comparison, are typically dispersed and not always obvious to the losers.

If a through road is closed off by the council, many of its residents will support the new restriction (though some may be against – for example if it means much longer journeys). Their street may be quieter and perhaps safer. This constituency offers a bedrock of support for such measures.

It will be bolstered by locals ideologically wedded to the green agenda, perhaps the result of a lifetime of indoctrination by schools, universities and the media, with no exposure to the counter arguments.

They will be joined by state-funded “sock puppets” – campaign groups paid by government to lobby itself and create a fake impression of wider support for policies that the political elite have already decided to impose.

By focusing on the local level, the instigators can build a sufficient coalition of supporters to at least make the argument that they’re not imposing their agenda despite overwhelming public opposition.

Indeed, many of the losers from such policies will not even live or vote in the borough or city where the new controls are being installed. They may be commuters or businesses now facing prohibitive charges or massive delays to their journeys.

Residents in areas beyond the schemes may see a big increase in congestion as traffic is displaced. The emergency services might become less efficient as they can no longer take a direct route, or because cycle lanes mean motorists can no longer get out of their way to let them pass. Labour mobility, productivity and wages may decline because potential employees can’t reach jobs that match their skills, and economies of scale may be lost as the populations that can be profitably or efficiently served shrink (click here for a more detailed discussion).

It will not always be obvious to people that the “war on motorists” is to blame for these negative economic impacts, which in turn dilutes political resistance to the new restrictions. And these effects are spread over a much wider geographical area than the benefits (that accrue to a small, concentrated group), which means opposition is harder to coordinate.  

Note that the purported non-local environmental gains are quite tenuous. The costs and benefits of any future climate change are impossible to calculate accurately. And the impact of the new controls will be negligible in terms of global emissions. In any case, anti-car policies are often counterproductive. Artificially created congestion can actually increase pollution.

Rather than restricting ordinary people’s mobility – and effectively creating a new feudal system in the process – policymakers should focus on win-win policies that both cut emissions and benefit the economy. This means ending the vast subsidies pumped into various polluting activities.

It speaks volumes that governments are so reluctant to take this obvious step. The green agenda is really about giving even more power to the elite and their institutions rather than saving the planet.  

First published on the Transport Watch blog.

Filed under environment, transport

How to manufacture a climate crisis

October 31, 2021

The establishment is hinting that the kind of draconian restrictions imposed during the pandemic will be redeployed to enforce their climate change agenda. As with Covid-19, a key part of the plan is to generate fear across the population through psychological manipulation and media propaganda.

The desired result is a major reduction in personal mobility, with ordinary people taxed and regulated out of their cars and off flights. Heating costs will also be hiked dramatically as gas boilers are banned and replaced with expensive and less effective heat pumps. Food supplies are another target.

The aim of the ramped-up indoctrination campaign will be to convince the general public to accept this top-down assault on their living standards.

Key elements of the programme are already in place. The BBC long ago effectively banned any proper debate on its airwaves. Don’t expect to see scientists who point out flaws in climate modelling on the UK’s state broadcaster; or economists who question whether the benefits of reducing emissions are worth the costs.

Establishment journalists have also been encouraged to insert climate change into news stories. Almost every time there are floods, reporters tell viewers that such disasters are likely to get worse. The same policy is applied to heat waves, forest fires and hurricanes. Even cold snaps are blamed on global warming as part of the “extreme weather” trope.

Improved communications technology has been a great help to this campaign. Alarming footage of disasters in previously little noticed regions now spreads rapidly around the world, particularly if it fits the establishment’s narrative.

But propaganda by omission is another key element of the strategy. The public is kept in the dark about the debate over the frequency of climate-related natural disasters – and the possibility that even if their frequency were increasing there could be other causes.

The role of government policies is also conveniently neglected. Environmentalist-inspired changes to river management policies, such as reducing dredging, have made flooding more likely in some locations. The “green” agenda and its huge costs have also contributed to cuts in maintenance spending on drains and other vital infrastructure. Green land-use policies promote construction on brownfield sites, which for historical reasons are often on low-lying land near to rivers.

Another long-term factor is urbanisation, which promotes flooding as water runs off rapidly from concrete surfaces into drains rather than being delayed by vegetation and soil. (It also increases temperatures via the urban heat island effect.)  

Policy changes have also been implicated in forest fires. Management methods designed to mitigate the risks, such as thinning and clearing combustible material, have been phased out under pressure from greens. Moreover, arson is a leading cause of wild fires in some regions. This human element is another reason why assessment of long-term trends is problematic. There have been examples of environmentalists engaging in other forms of arson attack, and it is worth bearing in mind the possibility that various kinds of political actors could play a role in future incidents. 

Finally, water shortages have been made more likely by policies to obstruct the construction of new reservoirs, including in regions with growing populations. The subtext is that the resulting shortages would provide a useful rationale to reduce consumption by imposing new regulations and compulsory water meters.     

So, there is substantial evidence that many of the policies imposed by environmentalists actively contribute to the “natural” disasters that are then used by propaganda outlets to promote the idea of a climate crisis. The economic damage caused by green policies also makes societies less resilient. Yet discussion of these crucial factors is typically absent.

There are two main dangers from the one-sided propaganda and indoctrination programme currently being implemented by governments and their media assets. The first is that it will encourage the adoption of harmful policies that impose higher costs than any climate change they aim to prevent. In other words, there is a high risk that the cure will be worse than the disease, with negative effects on low-income groups and poor countries in particular. A sensible strategy would be to implement win-win policies that benefit both the economy and the environment – for example, ending the vast and inefficient state subsidies and privileges given to various polluting activities. However, governments and transnational bodies have been curiously reluctant to adopt this approach.

The second danger is that climate change will be used as a pretext to bring in a far more tyrannical economic and political system, for example by empowering unaccountable transnational institutions that lack the usual constraints. Indeed there are clear parallels with the Covid-19 pandemic, which is being used as a convenient excuse for elites to grab more power and to impose vaccine passports as a stepping stone towards a long-planned global system of digital IDs.   

A free and open debate about climate change is absolutely essential if these alarming outcomes are to be avoided. However, the wider agenda behind the climate change narrative could plausibly explain why elites are so obsessed with eliminating dissent.

First published on the Transport Watch blog.

Filed under environment Tagged with , , ,

Is there a free-market solution to overfishing?

July 12, 2017

Overfishing is often presented as a classic example of market failure. When individual fishing enterprises are competing, the benefits of winning the ‘race to fish’ accrue to the successful ones, while the costs of depletion are shared among all the fishermen in the fishery. There are therefore poor incentives for conservation – the so-called ‘tragedy of the commons’.

This is a simplistic interpretation, however. Market feedback mechanisms offer some protection to stocks. Declining yields will tend to force less efficient fishermen out of business, for example. Providing there is free trade in fish and substitutes are available in food markets, the combination of increasing costs and declining catches may not be offset by higher fish prices. The outcome will partly depend on the species in question. Its scarcity value, reproductive behaviour and migration patterns may affect the probability that overfishing leads to a collapse in stocks.

The history of the fishing industry shows overfishing has been hugely exacerbated by government intervention, in particular subsidies for uneconomic fishing businesses. These handouts have undermined the market mechanisms that would have helped to conserve stocks. The resulting overcapacity – too many vessels chasing too few fish – has strengthened the rationale for costly and bureaucratic regulation of the sector, as exemplified by the EU’s Common Fisheries Policy. As public choice theory would predict, such regulation has inevitably been subject to politicisation and lobbying by special interests, which has meant problems with overfishing have persisted. The creation of artificial property rights by governments, such as the Individual Transferable Quotas used in Iceland, has tended to deliver superior allocative efficiency compared with other forms of regulation, but has not been immune to special-interest influence or indeed discarding.

These problems raise the question of whether an unhampered market could solve the problem of overfishing. Clearly the removal of direct and indirect government subsidies would go a long way towards resolving the issue. However, it would not remove the tendency entirely and both yields and efficiency could still be suboptimal. While collapses would be less likely, they would not be impossible – and there are indeed examples that pre-date direct state subsidies to the industry.

There would therefore appear to be a trade-off between competition and efficiency. This is the case in many sectors, for example due to the ‘transaction costs’ resulting from competition, or because competition means economies of scale are lost (the rail industry is a classic example). Indeed it is a common misperception that unhampered markets inevitably produce a high level of competition. It depends on the characteristics of the sector concerned. One way markets can reduce transaction costs and capture economies of scale is through mergers and acquisitions.

In the fishing industry there are potentially major efficiency losses from competition in the form of the ‘race for fish’, both in terms of wasteful duplication of equipment, fishing effort and the depletion of stocks to suboptimal levels. There may therefore be strong incentives for fishing enterprises to merge or evolve into one large business (which could perhaps be some kind of cooperative) that held a near monopoly over fishing in a particular region. This dominant enterprise would then determine catch levels to maximise returns.

If fisheries remained ‘open access’, how could this structure be sustained? The market solution may be vertical integration. The dominant firm would merge with the harbours and/or the distribution operations in the region and perhaps even the fish processing industry, enabling it to exclude local competitors and to capture economies of scale that would act as a further market-based barrier to entry. Competitors from further afield would face much higher costs to reach the fishery. Nevertheless, initially the dominant firm might choose to deter them by deploying some of its vessels in a ‘race to fish’ in order to drive them elsewhere. Clearly there would be strong incentives to develop agreements between neighbouring firms not to stray into each other’s area of operation, to avoid the costs of such behaviour, and possibly also rules regarding migrating fish.

Subsidies from foreign governments to their own industries could upset this market outcome by artificially sustaining the ‘race for fish’, which raises issues regarding state protection of territorial boundaries within the current system of Exclusive Economic Areas. However, in principle there is no reason why these dominant firms or associations should not straddle existing national boundaries, with their geographical extent evolving according to market conditions.

This analysis also suggests that the state ownership/subsidy of fishing ports and associated distribution infrastructure (resulting again in substantial overcapacity) is likely to be a key factor in hindering a market solution to the problem of overfishing. In some countries there could also be problems with competition rules.

Finally it is important to consider the impact on consumers. The ‘market power’ of the vertically integrated firms would be severely limited. Under free trade they would be competing with fish suppliers from around the world, including produce from fish farms. Moreover, fish can be substituted for other foodstuffs and make up only a small percentage of the overall food supply. And the benefits would be substantial. A market solution to overfishing would deliver major benefits for consumers, with higher yields leading to lower prices and improved quality. At the same time, the inefficiencies, subsidies and special-interest influence associated with state-imposed fisheries policies would be avoided.

Filed under environment Tagged with , , ,

Energy Bill will impose immense costs on households and businesses

March 4, 2013

Today’s agreement on energy policy, ahead of the forthcoming introduction of the Energy Bill, shows the government remains committed to meeting ambitious targets on greenhouse gas emissions and renewable energy. The economic cost will be immense. The Department of Energy and Climate Change quotes a figure of £110 billion of investment in the electricity sector alone (by 2020), a high proportion of which will be used to expand offshore wind capacity and connect it to the national grid. This investment will be funded by higher bills.

A number of questionable claims are made to justify the policy. Firstly, it is claimed that new investment is required to ‘keep the lights on’ since a significant proportion of coal-fired power stations will close within the next few years.  In fact, environmental policies – in particular the EU Large Combustion Plant Directive (LCPD), which is supported by the UK government – are forcing the closure of coal-fired power stations which are not fitted with desulphurisation plants. In other words, the potential reduction in generating capacity is itself largely the result of environmental regulation.

Then there is the claim that meeting the targets on emissions and renewable will add only a small amount to bills. In reality, these policies are already inflating electricity prices by a very large degree. This is because government regulation effectively forces power companies to generate electricity from high cost sources and limits the extent to which they can deploy low-cost sources such as coal. The Renewables Obligation and feed-in-tariffs are two ways in the electricity market is rigged to achieve this result. And as long ago as the 1990s the ‘dash for gas’ was partly spurred by the imposition of EU regulations on coal-fired generation. It is telling that in US states that have refused to adopt European-style green policies, electricity prices are now over 50 per cent lower than in the UK. Indeed, DECC itself has estimated that by 2015, climate change policies will be adding 26 per cent to domestic electricity prices and 10 per cent to domestic gas prices. The impact on commercial users will be similar. This estimate implies an extra burden on energy consumers of approximately £12 billion per annum. Other environmental policies such as the LCPD will push up prices even further.  Moreover, there will be additional negative effects on the wider economy. For example, rising energy costs are likely to add to the political pressure to raise welfare benefits for those on low incomes, who spend a disproportionate share of their income on utility bills.

Despite the huge costs being imposed within the UK, these policies are unlikely to make a discernible difference to climate change. Firstly, Britain accounts for only a tiny fraction of global greenhouse gas emissions. Moreover, developing countries are rapidly increasing their carbon output. Secondly, higher energy costs in the UK are likely to displace economic activity, particularly energy intensive industries, to countries with lower costs such as China, a process known as ‘carbon leakage’. If production is less energy efficient in developing countries, as is often the case, this may actually lead to a rise in emissions. Given their questionable overall effectiveness, there is surely a strong case for the British government to moderate its green energy policies to take greater account of their impact on households and businesses. At the very least, the government should ensure that targets are met at the lowest possible cost by reforming fiscal and regulatory frameworks so that they treat different sources of emissions similarly.

23 November 2012, IEA Blog

Filed under energy, environment Tagged with , ,

Should the UK introduce a carbon tax?

February 17, 2013

Earlier this month, President Sarkozy announced plans to introduce a carbon tax in France. The UK could follow suit. A widely applied new tax, justified on environmental grounds, could prove popular with politicians seeking to address unprecedented levels of government borrowing.

Yet there are strong economic objections. In particular, given the economic and scientific uncertainty on the effects of climate change, together with the essentially individual and subjective character of environmental costs, the setting of a carbon tax rate would be almost entirely arbitrary.

Nevertheless, in the context of the government’s broad objectives on climate change (however misguided), a carbon tax could be a rather less harmful way of reducing emissions than the sector-specific tinkering that has characterised recent British policy. Examples of the latter include the renewables obligation in the energy sector, bus and train subsidies in transport, higher motoring taxes, forced recycling and tight regulation of the waste sector, as well as draconian planning controls. The current approach has imposed enormous costs on the affected sectors, subjecting them to a high degree of bureaucracy and central planning.

In theory, a carbon tax could avoid this kind of damaging micro-intervention and help ensure that cuts in emissions took place in a relatively cost-effective manner. But such benefits would require the tax to be applied evenly across all sectors responsible for greenhouse gas emissions and for the existing mish-mash of climate change policies to be phased out.

In practice, however, implementation is likely to be driven by interest-group politics and the tax-raising imperatives of the Treasury. Accordingly, a new tax would almost certainly be overlaid on existing taxes and subsidies.

Motorists would therefore continue paying high rates of fuel duty on top of any new carbon tax, as well as additional costs resulting from the forthcoming inclusion of road fuel in the EU Emissions Trading Scheme. In contrast, bus and train operators would probably require additional government support to help them pay the new tax burden – a case of taxpayers subsidising emissions.

The position of domestic energy consumers is a particular problem for policymakers. In another example of inconsistent policy, they currently enjoy a reduced rate of VAT on fuel. Indeed, If there is the political will to introduce a carbon tax, then it would be better to charge full VAT on domestic fuel consumption (and public transport) instead. However, in the context of concerns over “fuel poverty”, abolishing the concession could be politically difficult and imposing an additional tax almost impossible.

In conclusion, the politics of energy and transport mean that a carbon tax would probably not be applied consistently and that existing bureaucratic control would remain in place. Thus the new tax could end up aggravating existing distortions and would perhaps do little to ensure that emissions reductions were achieved at low cost.

24 September 2009, IEA Blog

Filed under environment Tagged with , ,

The dark side of climate change policy

February 17, 2013

The government recently announced a series of measures designed to make Britain a low-carbon economy, including a large expansion of renewable energy (primarily wind), grants for better home insulation and a so-called green transport strategy. Under the Climate Change Act, the UK is “legally bound” to reduce CO2 emissions by at least 26% by 2020 and 80% by 2050 (relative to 1990 levels).

Meeting such ambitious targets will require substantial investment and while ministers have emphasised alleged advantages, such as the creation of 400,000 “green jobs”, there has been little acknowledgement of the wider economic impact.

Higher energy bills and transport costs are likely to be devastating for many businesses. Some enterprises will be forced to close. Others will relocate to locations where energy and transport are cheaper and environmental regulations less burdensome. In some instances, potential entrepreneurs won’t even bother starting new ventures in the UK. Overall, jobs are likely to be lost rather than created.

Then there is the impact on the less well off. People on benefits, for example £64 per week Jobseeker’s Allowance, may already be using around one third of their (non-housing) incomes to pay utility bills inflated by existing environmental policies.

If this share increases further, there will be strong pressure to raise welfare benefits and winter fuel payments to compensate. Taxes will have to rise accordingly and the already weak incentives to enter low-paid work will be further undermined.

However, the most devastating impact of climate change policy is likely to be on the developing world. While some middle income countries may benefit initially from the flight of businesses from rich nations, it is unrealistic to think that a large upward shift in the level of political control and central planning can take place in the West without negatively affecting the Third World.

The resulting misallocation of resources will hamper entrepreneurship and innovation leading to reduced wealth creation. And restricted and constrained markets will inevitably limit the opportunities for trade, thereby hindering economic development.

The impact of climate change policy therefore goes far beyond landscapes ruined by wind turbines and higher electricity bills. Big cuts in CO2 emissions are likely to prolong the misery of hundreds of millions of the world’s poorest.

29 July 2009, IEA Blog

Filed under development, environment Tagged with , ,

Green “New Deal” will sink the UK further into the red

February 17, 2013

Will a green ‘New Deal’ help get Britain out of recession? The Liberal Democrats, for example, have proposed the reopening of disused railway lines as a means of boosting the economy.

Yet such policies will increase the level of public debt, making future tax rises more probable and putting upward pressure on interest rates, therefore deterring private sector investment in the UK. Indeed, any jobs ‘created’ are likely to be more than offset by those ‘destroyed’ through the wider economic effects arising from funding the developments.

Worse still, many green projects, such as reopened railway lines, will require continued long-term taxpayer subsidies, both to pay capital costs and absorb operating losses. The green ‘New Deal’ therefore threatens to increase the long-term role of the state in the economy with negative implications for economic growth.

At the same time, as with previous generations of big-government projects, it risks creating a new generation of white elephants which will gradually be abandoned as spending cuts become necessary to balance the books.

Green projects should be justified on their merits (if, indeed, they have any).

5 January 2009, IEA Blog

Filed under environment Tagged with ,

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