Yes but fracking requires a hundred times more drilling to get the same amount of energy that one saudi drill can generate. Fracking is a very short term solution. We might have four decades supply but the impact could be devastating to everyone in the area. There will be leakages and it will pollute the water table so destroying a resource there, when we will definitely have water shortages before long, because of climate change.

With a full carbon tax, gas would become comparatively cheaper against coal, but would still be more expensive than say wind or tidal. By having a higher base cost for energy there would be no need for subsidises for renewables which would be exempt from a carbon tax, but whose initial costs would be increased by the same carbon tax as a result of the energy required to make the windmills being accounted for. A matching levy for nuclear would mean that nuclear would not become the default choice because of the decommissioning costs, that would finally be fully accounted for. What happens now is that private nuclear companies are supposed to make provision for decommissioning but when the funds run out they are bailed out by the tax payer. What needs to happen is that the full costs are recovered and then if the decommissioning is cheaper then the private company gets the balance back as a one off profit.

In the interim higher energy costs will make people far more aware of the true costs of running devices and so encourage replacement of inefficient tech. The carbon tax could also be used to cap energy costs for average household bills. Those who use more energy would not be protected and so have even more incentive to invest for efficiency.

It's already massively quicker, cheaper and more economical to drill on land rigs in the middle east than it is to drill in the North Sea

How shallow do you thing the gas reserves are? Given the normal well bore geometries you'd need leaks into the A, B C & (possibly) D annuli. And even then you're talking about gas not oil. As long as there is strong regulation (as there currently is) then the chances of there being an issue are very slim. The formation surrounding parts of oil wells are deliberately fractured all the time, either during Leak Off Tests while drilling or during completions to start production. We're just talking a larger scale.
There was a massive over reaction to some fracking off Blackpool the other year. All that over something that had to be measured by machines as the effects were so small. Typical hald truthes and smokescreens by eco groups as they're only interested in propaganda rather than reasoned debate supported by evidence.

I fully appreciate that the costs of drilling on land are substantially lower than offshore, and yes the effects of the Blackpool earthquake were so small as to be unnoticeable by all except seismometers. The fact is that in the US there has been pollution of the water table by fracking. It is completely unregulated there because of the immunity given by Bush as he left the White House. In the UK it may be different but we need to be certain when it is done here.

Your claim for wind and tidal remaining competitive without subsidy requires a completely unrealistic tax level on fossil fuels. Furthermore, it fails to take into account the obvious problem that we cannot source reliable all day every day supplies from these resources. Therefore we still have to have the other stuff, it has to be on all the time. As a result, the investment in wind or tidal (which has much the same problem) comes with a massive opportunity cost that none of your wishful thinking is going to do the slightest thing to abate.

Forcing generators to issue bonds to cover decommissioning costs for nuclear power probably wouldn't make it economically less feasible than wind. And irrespective of that, it remains a better alternative to gas than wind is because it has the distinct advantage of providing lots of reliable electricity without requiring backup power stations running on idle, ready for firing up whenever there is a disappointing breeze. So it won't be crippled by the same ludicrous opportunity cost, and therefore wind can only underbid even nuclear with the aid of that subsidy that you are trying to wish away.

Capping household energy bills while trying to use a carbon tax to push people to reduce their household energy usage is clearly not going to work. Surely I don't need to explain why?

I would not suggest that the tax need be so high that it made all renewables cost effective. Some may never be cost effective or will only be cost effective when governments get serious about climate change and energy costs are substantially higher. The costs of nuclear decommissioning could be added to each unit or debited from the generators annually.


They are supposed to be providing for decommissioning already. Though the funds from past decommissioning were insufficient. My idea would be to make sure that the industry makes adequate provision and that the tax payer never has to bail out the industry ever again. If the decommissioning comes in under budget then they would get the balance back as a windfall. Nuclear may have to be part of the solution as may coal or oil. Though energy efficiency programs will mean that we might end up with surplus capacity anyway.


Capping low rates will encourage efficiency. The threshold does not have to be very high. Energy companies currently charge less the more you use, actually encouraging waste. Above the low threshold the energy companies will have to increase the costs further incentivising efficiency measures. The actual bill make be higher but could be offset via tax credits or an increase in tax allowances. The net effect can be minimised. The additional funds raised could be used initially for free home insulation interest free loans for boilers or solar water heating. The purpose is to be as tax neutral as possible. Some will face higher bills but they will also get easier access to insulation grants, which means the higher bill will be only short term. The long term objective is to reduce the emission of carbon which if left too long the costs will be too high to make any difference and then the only solution is adapt and that will be even more expensive.

I can't make sense of your capping plan. It's obviously some form of rationing, but confused with so many mixed messages, semantic vagaries and an unlikely claim about perverse incentives that I can't tell up front whether its weakness is to do with more of that wishful thinking, or the obvious conflict between a rationing plan that distorts markets and a taxation plan the virtue of which is supposed to be non distortion of markets.

There is no "may" about us needing old fashioned backup to support renewables. The backup is reliable and renewables aren't, so unless you are committing to unreliability of the electricity supply, you are going to have to commit to large scale gas or nuclear. Without that the lights go out often, and the economy shrivels, which is much more expensive to us all than the original tax (one simply raises revenue to be spent, the other smothers activity and cannot be spent).

If you have the backup you need in order to not destroy the economy, you have to pay twice for infrastructure, and you must emit large doses of carbon or create lots of radioactive waste. Power stations aren't like cars that can just be switched off when not in use, even gas fired ones use up a lot of fuel if you keep them online waiting to generate. Nuclear ones are on or off, creating the same amount of waste whether you use them to generate power or not.

The obvious way to pay for nuclear decommissioning is to have the generator post a bond when they build the plant, they pay off the interest over the life of the plant, you take out a CDS so you are covered if they go bankrupt, and the costs of servicing that bond go into the unit prices of electricity. That's the easy bit...
But in the event of a carbon tax that cripples even gas as a source of electricity, and in the absence of a subsidy that raises the competitiveness of renewables, and more so if we assume that you aren't hell bent on destroying the economy; the costs of servicing that bond do not suffice to make nuclear look expensive. It becomes the cheapest option and is reliable, so nuclear does not only survive in that scenario, it expands, wins, and bankrupts the renewables sector. The opportunity costs guarantee this.

A long term plan to reduce carbon does not need to begin with a short term one to do the same. It is clearly wrong to pursue an expensive short term carbon reduction plan if it is going to fail for obvious reasons. It makes far more sense to create a carbon tax at a reasonable level and then use the proceeds to develop realistic carbon reduction techniques. Then find a route to direct investment towards them once you have something viable.

Options might include a gradual increase in the CT, but not necessarily. A better solution would generate power without the emissions and also without costing more. For the sake of argument, I would suggest we assume that one or more out of the plethora of competitors is going to prove viable in the medium term, but there is no way of knowing which. Ideas exist for such solutions, but large amounts of R&D are required before they are ready to go. Every billion we spend on useless wind power is money that could have gone into R&D for something reliable and able to actually replace fossils rather than mildly reduce their use on a windy day.

Why should it fail? The tax could be low to start with but with an escalator built in. Initially the tax should be revenue neutral to stop it harming the economy in general, so that is why I proposed it funding energy efficiency, then grants and zero interest loans for long term development.

The initial carbon tax could be too low but since some renewables are already fairly close to being competitive without the subsidy then the addition of a small initial carbon tax would eliminate the need for any renewable subsidies. The revenue gained could initially be used to encourage efficiency upgrades as these are the most cost effective expenditure. If people can cut their consumption for relatively low outlay then it will cut emissions and long term power growth needs. The fact that there will be no subsidies will make it easier to assess any new technology. The problem is that people expect carbon capture and sequestration to be cheap achievable and safe, it has yet to be achieved anywhere commercially. So waiting for that solution to be developed is foolhardy. We need climate change solutions now, and who knows it could be the start of a whole new industry building zero carbon generators, which we could use to export.

The carbon tax could be used for green solutions like insulation and energy efficiency, to R&D, to fund alternative renewable sources, to reducing the deficit as a sin tax. The point I was trying to make was that wind power should not be the only solution, but it is a solution available now. Even so we will still need a back up, and the addition of a carbon tax would make many alternatives like tidal or wave more competitive sooner.

Opportunity costs

And mine is that that huge opportunity cost of wind power (which it shares which most renewables) makes it no solution. Just a greenwashing waste of money. You are supporting a fraud.
By all means use a carbon tax to promote energy efficiency - which still has an OC problem but at least not such a self defeating one. Better still, use the funds raised to research nuclear fusion or thorium reactors. But try to understand that a fuel burning process can create electricity whenever there is fuel available to burn. A wind powered process only creates energy when there is a breeze. People want to have electricity at their convenience, not nature's, so buying wind requires the purchase of equal capacity in fuel burning tech. And that means you buy both and then waste the capacity of one to cover fluctuations in the other. Anyone with the most basic understanding of economics can tell you what that means (hint, the first word is Crippling, the next begins with O and then there's a C word).

QED, wind can only survive WITH SUBSIDY because of OPPORTUNITY COSTS.

I'm not saying you can't find a way to use a wind subsidy to make it a viable investment, but I am telling you that you cannot skew the market in favour of that very awful power generation tech without a subsidy. A carbon tax alone will not make the economics of wind viable. It is doomed under that proposal to be eliminated either by gas if the CT is set relatively low, or by nuclear if the CT is set very high, because neither of those will have the same opportunity cost, no matter how you try to fake it.

It's a piss por solution.

I don't think it can be described as a solution at all. A solution is something which fixes a problem. I don't see how wind power fixes the problem if you have to break basic economics to make it viable.

The solution to punitively price 'dirty' generated electricity to stop people using it will eventually result in HC generated electricity being so ludicrously expensive that people simply won't be able to afford it. At which point a lot of people won't be able to afford any electricity at all (because unsubsidised wind power electricity is very expensive already) so you're left with no cheap alternative, so you just have to do without. Frankly, I don't see pushing us half way back to the dark ages is a great way to solve our energy generation problems somehow.

You don't solve the problem of us not having cheap, clean electricity by making all the dirty forms of electricity really, really expensive. You solve it by figuring out how to make cheap, green electricity.

Opportunity costs for the industry are the lost opportunities from not investing. If you do not invest you do not have opportunity costs and in economic terms it only applies to one firm, the cost of a decision. There will also be the counter opportunity costs for excluding firms from the market. I am very concerned that you are fixated on one solution nuclear being the answer. Raising the costs carbon pollution to closer to its true costs would make cars much more expensive along with many other technologies that we take for granted.

As for distorting markets every thing that the government does will distort it one way or another. The common car is subject to a multitude of taxes from import duty to VAT on purchase then differential rates for second hand car dealers. Then add Road Fund License for the car. and petrol duty and VAT and excise duty on the fuel.

The problem is that you are not even close to equating the true environmental cost of energy production in terms of carbon taxes, even if you include the fuel duty. So if you talk of opportunity costs you need to add trillions for the destruction of the environment that your children and grand children will have to pay because this generation loved its wasteful lifestyle and failed to cuts its carbon emissions.So you could raise carbon taxes to a level that could eliminated the need for any renewable subsidises. Renewables might still not be utilised because there are better cheaper solutions. Though as carbon taxes inevitably rise to eliminate emissions then solutions like "clean coal" and gas will also be uneconomic.

You do it slowly and use insulation grants to cut use, then recycle the carbon taxes so that everyone has extra income to offset some of the taxes. Though if you are unwilling to change then you pay more. If you adapt you pay the same or less. It does not have to be a return to the dark ages. Wind will also cap the energy costs as the energy source (wind) is free. Doing nothing will mean that energy prices are at the whim of the Russians and Chinese. They will also increase steadily over the next few years unless we have another global recession.

It's hugely admirable that we're keen to do our bit, but unless we can get the likes of China, India, Australia and the US to get on board, we're as effective as putting a house brick on your door step as a flood defence.