Monday, October 06, 2008

Energy and climate change department's first tasks

The creation of a new Department for Energy and Climate Change is welcomed in all quarters: by environmental campaigners, CBI, oil and gas industry and the renewable energy industry.

Ed Miliband (38) - previously Cabinet Office Minister - is now the 10th minister in 11 years to hold the energy portfolio.

The energy team from BERR and the climate change and energy efficiency teams from Defra are now united.

The fact that the two areas of responsibility have been separated ever since Tony Blair split up John Prescott's humungous organisation the DETR, has resulted in a lack of joined-up thinking for many years, often lamented by commentators such as Andrew Warren of the Association for the Conservation of Energy.

Philip Wolfe of the Renewable Energy Association commented that "This will require Mr Miliband to extend the policy portfolio way beyond the narrow range considered by his predecessors."

This is absolutely right, and the Low Carbon Kid says that there is one relatively inexpensive and relatively easy to introduce a measure which it could champion that would have a highly cost-effective impact on fairly and equitably reducing year-on-year the carbon budget of the whole of the EU, not just the area of pollution covered by the ETS.

This is in addition to auctioning off ALL ETS permits to pollute, championing renewable energy end energy efficiency, stopping new coal burning power stations and nuclear new build.

This Tuesday afternoon, European parliamentarians gathering to finalise their proposals for a climate and energy plan for our continent should also adopt this policy.

We're talking Cap and Share.

Cap and Share is not a variant of personal carbon trading - it is an alternative to personal carbon trading because it is not based on individuals needing to surrender carbon credits upon the purchase of fuel or electricity.

The public is issued year on year with their own individual carbon allowance. They then sell it to the people who import carbon-based fuels into the country - the energy companies -- there must only be around 10 of these.

The public then gets money in their pockets. Year on year the allowances are reduced.

The suppliers of fossil-based energy can only sell the amount of fuel that they have permits to sell. The onus is on them to make the reductions, not on the public to make lots of complicated decisions about how they run their lives based on carbon accounting.

Instead they trust the government and the companies to do this for them and they receive in their pockets the financial benefit of the saving of this carbon. At the moment this benefit is given to the large energy users and accounts for some of the huge profit that oil companies have been making.

So, in Cap and Share it is the fossil fuel suppliers who would have to surrender carbon credits on their SALE (not purchase) of fossil fuels based on the emissions associated with the supplied fuel.

Indirect emissions can be covered by cap and share but not (in a simple way) in personal carbon trading.

Emissions have an indirect character when they are, so to speak, "embedded" in products - i.e. given off during the production of a good or a service that an individual or household purchases. Examples: flying or food. It would be hugely complicated and therefore expensive to calculate the embedded carbon for each purchase and make that part of a downstream system - however, with the Cap and Share upstream arrangement it is possible to design a scheme which covers these embedded carbon costs and compensates the public for them.

Another way of putting this is that Cap and Share could be designed to cover ALL non ETS emissions - not just the emissions associated directly with fuel sales to the public. This is about 50% of UK emissions. This should be compared with most presentations of personal carbon trading which cover 40% of UK emissions.

Cost? According to a report by AEA Energy and Environment the costs of administering an Irish scheme (The Irish government is seriously considering this policy) comes to the equivalent of about 40p a head for each time a permit is issued - probably once a year.

No comments: