Reuters reports: “The British government unveiled draft tax breaks on Friday to drive investment in shale gas production, in what it termed the most generous shale incentives in the world.”
Oh dear. Another “right wing” government subsidising fossil fuels. What is the worth of convictions about limited government intervention when a free-market government dollops grants and subsidies like so much soft ice-cream on the energy sector?
Another day, another instance of the Bustard’s First Law coming into play.
Reuters reports that “European Union regulators on Wednesday approved a German scheme to compensate heavy industries for higher electricity costs resulting from the bloc’s emissions trading scheme (ETS).”
This is not surprising.
Carbon pricing should cause a shift of wealth from carbon intensive industry to carbon light industry. So the Bustard’s First Law makes assumptions about the relative political power of those two camps. It assumes that old industry has more political power than new industry. And, possibly, that individuals in senior positions in old industry care more about their jobs than their descendants.
Political power is a function of (among other things) loyalty, wealth and number of employees. Of these, the number of employees is surely the most important in serious countries; wealth and loyalty are the most important in countries further east.
New industries are likely to have less political power because they have accumulated less wealth and loyalty. There is also a strong impression that low-carbon industries create fewer jobs than will be lost from carbon intensive industries. If this is not true, then low-carbon industries need to do way better at persuading politicians and voters that they stand for more jobs than old industry.
This might well mean going beyond the simple numbers of people employed at this factor and that, and rather, having a model of the economy which can predict labour levels assuming different mixes of energy sources and materials used.
A deep, residual belief among people that traditional industry is the largest source of meaningful work is perhaps the most powerful card held by those who lobby against cutting emissions. It is essential for low carbon industry to be very convincing about jobs.
Oh dear. Yet another instance of the Bustard’s First Law of carbon pricing alive and kicking.
Reuters reports that “California is considering handing out more allowances to energy intensive industry for free under the state’s emissions trading scheme to ease the costs that steel, cement and energy companies face in trying to cut emissions of heat-trapping gases, officials said Monday.”
If only they had read this from March 2011: https://www.thebustard.com/?p=353
This is why carbon pricing will never be enough. We have to change people’s beliefs as well.
There has been a flurry of comment today (28th June 2013) because the National Grid is considering paying consumers not to consume electricity in order to avoid blackouts. Last night the Energy Minister Mr Fallon dismissed this idea, hence the cartoon below. However, since the BBC first wrote about this this morning, Mr Fallon has softened his line significantly (http://www.bbc.co.uk/news/business-23093581) , so actually the market might prevail after all. Still, now I have done the pictures, I might as well post them.
