Green Growth

My proposals would focus on electricity market reform (focusing on very large amounts of investment in zero-carbon power) and a very large consumer-basis carbon incentive, (a tax refunded according to historical consumption for consumers; but not falling on producers until equivalent taxes could be placed on carbon-intensive inputs). This could be allied to financial reform (bank money-government money/governmetn debt/bank debt swap; and/or negative interest rates; and/or standardised green bonds).

A touch more complicated than saying just 'a carbon tax' but then the principles are basically the same, it would, I claim, stimulate the economy, not put people's bills up and avoid costly subsidies.


Adrian Wrigley said...

Presumably these refunds are associated with existing electricity consumer accounts? And at least in the case of a corporate person, are assignable to others - like following a company takeover. And perhaps they are heritable - when a husband dies, the refund stream can be passed to the wife, and then the kids?

Maybe I misunderstand something, but I don't think this is a particularly smart way to proceed. Perhaps you could implement it as a transferable note with a coupon. Basically a government bond?

Stephen Stretton said...

I should have said that the refunds are transitional measures: they reduce over time, to be replaced by more general refunds. They are based on the domestic property not the person (I would propose).

Adrian Wrigley said...

OK. So it's like a temporary reduction in local property taxes, varying according to the property's recent consumption. So it could be administered as part of Council Tax and Business Rates in the UK.

Normally a change in property taxes causes a change in property prices and rents. You then want electricity producers to invest loads into zero carbon power. And then you add a tax on electricity delivered, raising its price. This may approximately cancel out the property price rise expected from lower property taxes. Consumer windfall gains/losses are thus moderated.

It sounds somewhat plausible in terms of economics. But the politics is lousy because most people affected won't understand it very well. You also need to make rather detailed interventions in the electricity market. Interesting idea, but I'm afraid I don't buy it.

Stephen Stretton said...

OK; so getting something simple and understandable is crucial, I agree. This scheme could be called 'double the difference'. - and the concept is simply to given people a strong incentive to use less energy.