A report calls for doubling the Climate Change Levy in the UK. In theory sensible enough. Taxation can and should be used to tackle the problems of externalities….or, if you wish, internalise the cost of them. I’m a little less confident of the level they calculate as being necessary. Currently around $60 a tonne of carbon emissions (I’m working from a news report here and it doesn’t tell me whether that is CO2 or carbon, sorry) they want it raised to about $120. That seems slightly out of whack with what Nordhaus calculated as being the most economically efficient, which from memory was around the $10 per tonne mark. Obviously people are using different estimates of the costs of GW, perhaps also playing with discount rates.
Now I am slightly out of touch on this issue as I haven’t been following it closely but one of the little facts that came out of the bankruptcy of British Nuclear. The Climate Change Levy is applied to nuclear power (or certainly was until recently. That’s the bit I’m out of touch with.) and that is simply absurd. If the system is going to be changed then it should at least be made rational in that respect. Energy production that does not produce carbon emissions should not, don’t you think, be paying a levy based on carbon emissions? Until that is done it is difficult to take the whole thing seriously.