Green taxing and spending.

Red and blue reasons for a Green tax shift, November 2007.
Carbon taxes, May 2008.
Carbon quotas, September 2008.
Carbon price cooperation, December 2010.
Energy price reform, November 2013.
Carbon price floor, UK, March 2014.
IMF fuel tax toolkit, July 2014.
Price stability, September 2014.
Carbon emissions in the UK, March 2015.
Global carbon pricing, July 2015.
Weather-dependent energy production, 2015-6.
Decarbonisation, October 2020.
Carbon tax and dividends, November 2020.

Red and Blue reasons for a Green tax shift.
Alison Marshall, November 2007.

Major changes are needed to avoid an environmental crisis. . . much more could be done with eco-taxes on environmentally damaging activities.

. . . There would be less economic disturbance and public resistance to eco-taxes and quotas if the combined net government revenue from taxes and benefits . . . remained unchanged. But an effective Green tax switch or shift is being prevented by the widespread belief that progressive income taxes are essential for reducing inequality. (

Benefits are really negative taxes and taxes are really negative benefits, so it’s misleading to look at taxes and benefits separately. A flat tax system with a universal grant or Citizens Income gives more progressive average tax rates than a system with progressive marginal tax rates, a tax allowance, the same top tax rate and the same net revenue. ( Flat (on average) eco-taxes could be better than progressive income taxes, not only for the environment, but also for reducing inequality.

An alternative way of reducing public resistance to eco-taxation might be to spend the revenue from eco-taxes and quotas on developing sustainable technology and making it available to all. This is the sort of top-down, centralised picking of winners that was in favour fifty years ago, in combination with Keynesian public debt. Wikipedia says “In . . . Keynesian economics, there is tolerance for fairly high levels of public debt to pay for public investment in lean times, which can be paid back with tax revenues that rise in the boom times”. ( “However, with . . . the economic problems of the 1970s . . . many economies experienced high and rising unemployment, coupled with high and rising inflation. . . This stagflation meant that both expansionary (anti-recession) and contractionary (anti-inflation) policies had to be applied simultaneously, a clear impossibility. This dilemma . . . produced . . . the collapse of the Keynesian consensus”. (

The market should be allowed to pick some of the winners. Without Government investment or subsidies Green technology would be favoured by eco-taxes and quotas anyway, because they would add environmental costs to prices. But it would not necessarily be the same Green technology.

Technological development should also enable the choice of more leisure by people who want it. A lot of paid employment is unnecessary and a waste of resources, or subsidised in the name of full employment. We should all have the aristocratic right not to work, based on effective part-ownership of land and other sustainable resources, as recipients of Citizens Incomes funded by taxes on those resources. There would still be more than enough people who wanted to work to do all the things that really do need to be done, and people on low incomes would have a greater incentive to work if they had Citizens Incomes which wouldn’t be reduced as their earned incomes increased.

Carbon taxes.

. . . taxes on . . . fossil fuels . . . should be aimed at stabilising prices at a high level. Taxes on consumers might be reduced while prices are surging upwards but should be increased when prices start to fall. . . Additional taxation of fuels at source may remain appropriate at any price level, to collect some of the energy companies’ profits without affecting prices.
(Alison Marshall, May 2008).

“It is important that prices for carbon-based fuels should be kept high as well as stable. There is no point focusing energy efforts on new low carbon generation alone with too little effort to reduce demand . . .”
(Scottish Environment LINK, Time to act on climate change, 2008).

Carbon quotas.
Alison Marshall, September 2008.

. . . if emission quotas are set too high or allocated without auctions, they may, like the European Emissions Trading System, be ineffective. (

The administration of “upstream” quotas for suppliers could be less expensive and complex but just as fair as the “downstream” administration of personal carbon quotas.

Carbon price cooperation.
Alison Marshall, December 2010.

The best way of achieving maximum cooperation, according to mathematical game theory, is the Tit for Tat strategy. You start with cooperation, then continue to cooperate if the other party responds cooperatively, but not if it doesn’t.

In other words you don’t wait until there is an agreement, you go first and then see how the other party responds.

So perhaps there should be less emphasis on international agreements such as Cancun and Kyoto, and more of a campaign for a national policy of revenue-neutral Green taxes or carbon permit auctions, with strategies for counteracting any negative effects on trade with nations that don’t have similar policies.

A Green tax shift to carbon taxes, with cuts in other taxes, would make energy-intensive goods more expensive and labour-intensive goods more affordable.

Import bans or tariffs would be needed to prevent unfair competition from countries with lower carbon prices. Recent game theory research finds that if there is uncertainty about whether the other party is being cooperative, you should do cooperation in one interaction out of three if the other party isn’t a neighbour, and two times out of three if it is. (P. Grim, T. Kokalis, A. Tafti, and N. Kilb, “Imperfection and Cooperation”, in “Evolution of Communication in Perfect and Imperfect Worlds”, from World Futures: The Journal of General Evolution 56 (2000),

Energy price reform.
Alison Marshall, November 2013.

Environmentalists disagree about what combination of renewable energy, energy efficiency, fourth generation nuclear power, and carbon capture and storage should be used.

Funding problems are delaying the expansion of all these technologies. Green taxes on resources and pollution would put prices in the right perspective. They would discourage third generation nuclear energy including Hinkley C, and gas, coal and oil without carbon capture.

So environmentalists should unite in a campaign for a green tax switch from income taxes to green taxes, with universal citizens incomes to make the green taxes progressive.

Carbon price floor, UK.
18 March 2014 .

Energy companies already pay to pollute under the EU emissions trading scheme (ETS), buying permits to emit greenhouse gases when they generate electricity. But the price of the permits crashed to a record low last year, meaning there’s much less of a financial incentive for companies to cut their emissions.

The carbon price floor is meant to solve this by putting a minimum price on how much power generators in the UK pay to pollute. If the ETS price drops below this level, companies pay the difference to the UK Treasury. The carbon price floor was set to increase each year, from around £16 per tonne of carbon dioxide in 2013, to around £70 by 2030.

. . . the policy was generally derided when it was introduced. . . Now that it looks as though the carbon price floor will be frozen at 2014 levels – a bit under £20 per tonne – many are calling on Osborne to reconsider.

. . . Many economists maintain the most effective way to make companies cut emissions is by putting a price on carbon . . . Campaigners and chief executives alike say freezing one of the UK’s landmark climate policies just two years after it was introduced could make it hard to trust the government’s climate change promises again. Even if they weren’t all that keen on it to begin with.

. . . Coal’s cheapness has been more economically significant than the cost of emitting carbon dioxide in recent years, and it’s unclear whether keeping the carbon price floor would change that.

. . . The government had a chance to end the reign of old coal last year . . . As the energy bill entered its final legislative stages, an amendment was added which would have extended the emissions performance standard – which sets a strict limit on emissions from new power plants – to old coal plants. The amendment was voted down by coalition government MPs.

IMF fuel tax toolkit.
31 July 2014.

A new book, Getting Energy Prices Right: From Principle to Practice, is in effect the toolkit that the International Monetary Fund promised two years ago to help their members price energy responsibly.

It provides estimates of appropriate taxes on coal, natural gas, gasoline and diesel in 156 countries, to include environmental costs in the fuels’ overall prices. For example, meaningful taxes on coal, to reflect carbon damages alone, would amount on average to around two-thirds of the current world price.

At the book’s launch in Washington, Christine Lagarde, the IMF Managing Director, said that global cooperation is needed to overcome global challenges like climate change. But countries should not wait for global agreement on climate policies. Acting in their own national interests, they should make their energy tax systems properly reflect environmental side effects.

Higher energy prices would prompt people to shift to cleaner fuels or more fuel-efficient vehicles. They would be an efficient and simple way of dealing with environmental harm, better than relying on a patchwork of direct cash subsidies and other uncoordinated policies.

The revenue from energy taxes could be used to lower other taxes or to pay down public debt, so it is expected that these tax shifts would have limited adverse economic effcts.

The IMF estimates that these policies would reduce deaths from fossil fuels by 63 percent, cut carbon emissions by 23 percent, and raise revenues by 2.6 percent of GDP, for the world as a whole.


Price stability.
“Investors seek price on carbon in climate deal”, The Guardian, 19 September 2014.

A commitment to predictable future prices for renewable energy may be more important for investors than a mixture of unreliable short-term policies.

Carbon emissions in the UK.
Simon Evans, 4 March 2015.

UK carbon dioxide emissions fell by more than nine per cent in 2014 year-on-year, according to Carbon Brief analysis of newly released government energy data. . . record warm temperatures . . . contributed to the decline in emissions.

. . . A 9.2 per cent reduction would leave UK emissions 28 per cent below 1990 levels . . . The UK is aiming to halve its greenhouse gas emissions by 2025 and cut them by 80 per cent by 2050, both against 1990 levels.

. . . total UK coal use in 2014 was the lowest seen since the 1850s, when the UK was in the midst of the industrial revolution. The reduction was caused by several factors. . . the . . . most decisive factor is changes in the relative price of coal- versus gas-fired electricity.

. . . The top six years for annual UK carbon emissions reductions, in records going back to 1880:
. . . 1893 . . . Long depression.
. . . 1921 . . . Miners’ strike.
. . . 1926 . . . General strike.
. . . 1980 . . . Mass unemployment.
. . . 2009 . . . Global financial crisis.
. . . 2014

. . . Comments:

. . . If biofuels in the above article means the forests which the EU is chopping down in the U.S. for wood chips to burn in EU power plants, then the UK should be ashamed of itself. Instead of reducing world emissions, they are massively increasing them. . . Many . . . effects are not fully included in science models . . . melting permafrost and methane clathrate emissions . . . decreasing albedo . . . While I applaud Europe for doing more than the rest of the world, what it is doing and planning to do is grossly insufficient. We need to be net-zero in all global warming emissions as soon as humanly possible and definitely within 10 years.

. . . When the world can achieve a 10% reduction per year, each year, then there may be some chance at mitigation.

Global carbon pricing, 2015.
Michael Le Page, New Scientist, 18 July 2015.

A coalition of a few powerful nations or states, for example the European Union, China, Japan, the US, or California, could use taxes on imports from non-carbon-pricing nations to create a strong incentive for them to join a global carbon-pricing scheme.

Weather-dependent energy production.

Germany typically exports half of its renewable production to its neighbours, and nearly always meets less than half of its own demand from renewables. It is unlikely that it would be practical for all of its neighbours also to follow this strategy.

The operators of Ireland’s electricity system limit wind generation so that it never exceeds 50 percent of demand.

(Energy Research Partnership, August 2015. ).

Any electrical power grid must adapt energy production to energy consumption, both of which vary drastically over time. . . beyond about 20-40% of total generation, grid-connected intermittent energy sources such as photovoltaics and wind turbines tend to require investment in either grid energy storage or demand side management or both. . . As of March 2012, pumped-storage hydroelectricity (PSH) was the largest-capacity form of grid energy storage available.

( , accessed 20 June 2016.

Simone Abram, Alton Horsfall, Andrew Crossland, 28 October 2020.

A paper published in Nature Energy recently suggested that . . . countries pursuing nuclear power don’t tend to have significantly lower levels of carbon emissions, while those committed to renewable energy do.

. . . grid operators are learning to manage much higher proportions of wind and solar power . . . From a centralised system with constant, reliable, but relatively inflexible power stations, a shift is underway towards smart, reactive grids that can alter supply quickly to accommodate changes in generation or demand.

This flexibility can be met from stored energy in batteries, hydrogen fuel and biofuel generators that can be turned on and off quickly when needed.

Carbon tax and dividends.
Alison Marshall, November 2020,

Carbon tax could replace some income tax. Incomes may be affected more by whether a carbon dividend or Basic Income is means-tested than by whether it is carbon or income that is taxed, and whether the income tax is flat or progressive

For people with incomes below average, means-testing leaves little incentive for work or saving.

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