Left Foot Forward and cap and trade

The Left Foot Forward blog has a post which purports to rebut TPA Chief Executive Matthew Elliott's arguments on cap and trade.  Matthew is reported first as saying that British climate change policies, principally the emissions trading and renewables subsidy arrangements lumped together in the current US cap and trade proposals, has added substantially to electricity bills.


Left Foot Forward use two sources to try and rebut that.  One of them is a report from New Carbon Finance on whether bills will rise further when permits are auctioned instead of being freely allocated.  They describe the study as reporting that:


"The study’s authors argue that since generators are already passing through the value of carbon to the price of energy now (when they are receiving allowances for free)"


Which doesn't say anything about the extent to which emissions trading will increase prices or not, except to accept that it is pushing up prices, but just says that auctioning or freely allocating permits will make a minimal difference.  That seems to agree with Matthew's statement, about the effect of emissions trading schemes in Europe and the United States that allocate or auction emissions pemits which are then traded.


The second source is a report from the Sustainable Development Commission which says that climate change policies aren't the only factor that has been driving up electricity prices recently.  Indeed, but that doesn't mean they aren't having a significant effect.  The source for Matthew's statement was paragraph 10.5.3 of this document, from BERR - the department that was responsible for government energy policy till a recent carve up:


"Our current climate change policies (e.g. the Renewables Obligation, EU Emissions Trading Scheme, and the Carbon Emission Reduction Target) make up around 14% of average domestic electricity bills and 3% of average domestic gas bills. On the industrial side, for an average medium-sized consumer, the Renewables Obligation, EU ETS, and Climate Change Levy together contribute around 21% to industrial electricity bills and about 4% to gas bills. We expect that incoming climate change policies such as Better Billing will add further to retail prices, as suppliers pass on policy costs downstream; however, as some of these policies will reduce consumption of energy, the net effect on actual energy bills will be lower."


The effect on prices is steadily rising.  The effect of climate change policies on prices is a simple reality that can't be ignored.  A site like Left Foot Forward that claims to have the interests of the disadvantaged at heart should take that seriously as the poor spend the highest proportion of their income on electricity.


Matthew is also reported as saying that this policy is killing jobs.  A study by the Climate Group which consisted of simply asking many major firms - like Centrica - many of whom are making windfall profits from the Emissions Trading Scheme whether it is costing jobs is clearly not enough to refute this.  They have an interest in playing down the effect of the scheme.  And, that's all we've been given by Left Foot Forward.


Studies in Spain have found that for every green job created by renewable energy subsidies two are destroyed in the rest of the economy.  Government studies here have found that we are exporting huge amounts of emissions as activity relocates elsewhere, as you'd expect with the kind of unilateral policies we've put in place.  There is a host of other evidence that this policy is costing jobs.  Anyone who thinks you can add over 20 per cent to one of the biggest costs for many manufacturing businesses without any consequences is living in a dream world.


Left Foot Forward describe their product as "evidence-based political blogging", this post doesn't live up to that tagline.

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