To fix this utterly contorted market, politicians need to do less and to do it better. As with so many other areas of public policy, Brexit provides an opportunity but not a guarantee. We need to begin by decoupling two conflicting objectives – lowering carbon emissions on the one hand and alleviating fuel poverty on the other. We need only one straightforward policy instrument for each. Our exit from the EU will release us from the Emission Trading Scheme and an overly specific target for the proportion of energy delivered by re newables. We should seize the chance to adopt a tax on carbon, which can be dialled up or down depending on prevailing emissions and our best, latest understanding of climate-change science. We don’t need to lean towards any specific preferred type of energy – wind, nuclear or solar. Instead we just rely on capitalist innovation to find the best and cleanest delivery mechanisms. Schemes such as Hinkley Point should proceed only if they meet this test, not because today’s politicians deem it a worthy gamble. To ensure that low-income Brits don’t freeze to death while we save the planet from CO2, we could have a targeted support scheme aimed at poorer householders, paid for by ending universal benefits such as the preferential 5 per cent VAT rate and the winter fuel allowance.
Times 28th March 2017 read more »