David Cameron Calls for Carbon Tax on Electricity Generated from Coal and Gas

david cameron carbon tax photo

Photo: Wikipedia, CC

David Cameron, the leader of the conservative party and possibly the next primer minister of the UK, said today that a Conservative government would put a tax on the carbon emitted by coal and natural gas power plants. "The levy would be put in place for 25 years and would be set at a gradually rising rate determined by the Treasury." This would create a floor price for carbon pricing which would lead to more predictability (which is needed when you're investing billions in power plants), but the level of that price (not too low) and whether it will be revenue-neutral will make a lot of difference.Since taxing something is a good way to get less of it (f.ex. taxing cigarettes), I've always thought it made a lot of sense for governments to raise revenue by taxing bad things like pollution rather than good things like work and capital investments.

A tax on carbon could really help clean up the grid, but it has to really hurt (just setting a low floor price isn't enough). If the cost per ton of CO2 is too small, it won't be enough to overcome inertia. But if it's high enough, it will acceleration innovation and adoption of low-carbon techs, which is exactly what we need. Time is of the essence, the pace has to pick up!

Via Times Online
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