At the Progress Annual Conference, Phil Collins of The Times, Peter Kellner of YouGov and Mary Riddell of The Daily Telegraph thought that a carbon tax to create jobs could become mainstream politics. The politician on the panel ducked the question.
They should read the article in the latest Fraser Economic Commentary (1), “The impact of the introduction of a carbon tax for Scotland”.
I like this bit:
Our simulations demonstrate that a carbon tax [ to support employment ] could simultaneously stimulate employment while reducing emissions: the double dividend.
Furthermore, in current circumstances, it may be thought desirable to focus the good news by recycling revenues to subsidise employment among the younger age groups who have been most adversely impacted by the recession and its aftermath.
The advantages of a carbon tax to create jobs are:
- It creates jobs
- It reduces domestic demand for energy so it
- closes the energy gap (2)
- reduces imports
- increases exports
- It redistributes from rich to poor
It may even help in international climate negotiations.
The economics has always been simple – tax “bads” subsidise “goods”. Now I think the politics will be possible as events show the public just how bad climate change is becoming.
I was surprised Mary, Peter and Phil thought it could be mainstream too.
Pity they aren’t politicians.
(2) Kim Swales, one of the authors, tells me they estimate the long run elasticity of demand for energy as 0.65, this means that price increases will dampen demand considerably. There should, of course, be measures to protect those in “fuel poverty”.
POSTSCRIPT: Carbon taxation best for Europe.
Vivid Economics, Carbon taxation and fiscal consolidation: the potential of carbon pricing to reduce Europe’s fiscal deficits, report prepared for the European Climate Foundation and Green Budget Europe,
TrackBack URL :