tag:blogger.com,1999:blog-32841798.post6725878902241488413..comments2024-03-28T22:45:51.014+00:00Comments on Capitalists@Work: ‘No Subsidy’ vs ‘Floor Price for Carbon’CityUnslickerhttp://www.blogger.com/profile/15929544047783163175noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-32841798.post-15837295465876090132010-05-23T09:59:00.975+01:002010-05-23T09:59:00.975+01:00we are all smarter than Huhne !
my thoughts are t...we are all smarter than Huhne !<br /><br />my thoughts are turning to how it might be possible to introduce unilaterally a UK floor-price for stuff that is traded internationally<br /><br />would never underestimate the cunning of the subsidy-wallahs (motto: <i>why do a hard day's work when you can lobby for a handout instead ?</i>)<br /><br />but the obvious method - an out-of-the-money put-option - or even a swap - suffers from several practical issues:<br /><br />could it be traded ? who is writing the put ? how would credit risk be handled ? (esp if a swap) would it not be an explicit subsidy ? illicit, even ?Nick Drewhttps://www.blogger.com/profile/13670594203660051701noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-35490983284818162372010-05-21T19:23:51.792+01:002010-05-21T19:23:51.792+01:00What Tim says.
Plus, I can see good arguments for...What Tim says.<br /><br />Plus, I can see good arguments for taxing fossil fuel (to help wean us off the stuff, as glorious as it is), provided other taxes are reduced. If electricity companies paid no corporation tax, could pay out wages tax free and if users did not have to pay VAT on electricity, then maybe £30/ton would work out at a lower tax burden (in which case make the tax £40 or £50).Mark Wadsworthhttps://www.blogger.com/profile/07733511175178098449noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-50935199002973881792010-05-21T18:06:13.877+01:002010-05-21T18:06:13.877+01:00And 50 euros is in fact too high a floor price any...And 50 euros is in fact too high a floor price anyway.<br /><br />whatever the subsidy/encouragement etc we give to non carbon should, clearly and obviously, be at whatever the costs to us of having carbon are. Stern puts this at $80 per tonne CO2 which for technical reasons comes out to about £30. A little below 50 euro. (technical reasons meaning boring stuff like discount rates and marginal as opposed to average costs)<br /><br />And Stern is way at the top end of estimates as well.<br /><br />What everyone is forgetting is that the price of carbon is not to be set at the rate where we stop using carbon. It should be set at the rate where carbon use which creates more damage than it saves should be stopped. So it should be set at the rate of the damage of carbon emissions, not at the rate which is required to make non carbon commercially attractive.<br /><br />If carbon costs us 30 euro and non carbon would cost us 50 euor then we should continue to use carbon.Tim Worstallhttps://www.blogger.com/profile/13161727860817121071noreply@blogger.comtag:blogger.com,1999:blog-32841798.post-65815925430422889552010-05-21T17:01:58.232+01:002010-05-21T17:01:58.232+01:00Permits issued for fixed periods. Auctioned off a...Permits issued for fixed periods. Auctioned off at the start of each period. Number of permits issued reduces at a steady and predictable rate.<br /><br />Simples.<br /><br />Money raised can mitigate other business taxes.Old BEhttps://www.blogger.com/profile/06974090439936326476noreply@blogger.com