Carbon rationing by price, through the tax system

Introduce carbon rationing by price, through the tax system.

That is, increase the proportion of tax take on fuel, including fossil fuel-based electricity, but with personal allowances for amounts of home energy and transport fuel used much on which less, or no tax, would be paid.

This approach simultaneously tackles the needs to incentivise real deep cuts in unsustainable energy use, so as to address the 'energy gap' and stop Kingsnorth! and also address fuel poverty concerns, and is mentioned in Early Day Motion 1479, http://edmi.parliament.uk/EDMi/EDMDetails.aspx?EDMID=38650&SESSION=899.  Has your MP signed it?

NOTE: Specifically this would be a tax on embodied GHG emissions, so it would still encourage a shift to renewables and the burial of CO2 from existing coal-fired plant, for which the above EDM supports demonstration projects.

Special arrangements need to be worked out for:

- Energy-intensive industries that compete internationally

- Fuel use by hauliers and farmers who also have competition concerns

- Tourists and foreign students: don't want to deter their business

- Aircraft: how and whether to allow for other climate change effects.

- Bioenergy, for which the non-GHG externalities are often particularly significant.  A simple provisional approach would be to allow solid biomass for heat and/or electricity to qualify for ROCs or the tax exemption, but not both, and biogas from waste to qualify for both.

The personal allowances could progressively be made deferrable and tradeable, but the main thing is to get this up and running.  It can be brought in much faster than formal Personal Carbon Allowances, even be started by 2010!

The rollout of smart meters, including the option of having mpg readers wired into cars as part of MOTs, would greatly help people anticipate the changes they will need to make, and not get nasty surprises.

It doesn't have to be symmetrical.  We don't want to reduce tax take on motoring but on the other hand it would be unrealistic to bring tax on home energy up to par on carbon terms with motoring taxes in the near term.  Also we need to consider the impact of the ETS on home energy prices.