Ruth Lea exposes the folly of the ETS

Financial correspondents have been slow to realise what a colossal scam the EU Trading scheme for carbon is. Ruth Lea, is increasingly sceptical about climate change and the frenzy over the rate of change in the atmosphere's levels of carbon dioxide (Biog). She now appears to have finally discovered the fundamental flaw in the ETS system - it is not an objective system (although it claims to be) and it is operated by fallible and often venal human beings excited, by the propect of riches without having to do anything beyond and above shuffling pieces of paper and pressing keys on computer keybaords... and having lengthy lunches and visiting Wimbledon and Ascot and Glyndbourne in season.

Writing in the Daily Telegraph today she realises ..

" trendy international permit trading schemes .... require all Governments to act consistently, objectively and fairly if they are to work"

It is evident from Phase one, that the current scheme the ETS scheme is none of these. As a consequence of the combination of naivety (principally of Margaret Beckett) and the belief in their wonderful economic management of the mandarinate at the Treasury, British energy consuming industry - and that includes incidentally the whole of the National Health Service - has been well and truly shafted.

By the arbitrary application of carbon production limits The UK have effectively subsidised energy production in the rest of the EU by £500 by purchasing permits from them . The result has been say the DTI 25% of the rise in wholesale electricity costs between 2004/5 is due to the ETS and 75% by a rsie in raw materials - gas, coal. The ETS has cost any other EU nation a penny, not one red dime.

"To add insult to this injury" she writes," more permits were issued than under the ETS than were required to cut carbon emissions."

In Phase 2 she feels this will be corrected which will then force up EU costs who have increasingly got to fight China / India who are resolutelly chugging out Carbon Dioxide as they are not part of Kyoto - she reminds us that China is planning 560 new coal fired power stations between now and 2012.

Of the Clean Development Mechanism" she points out it's impact is negligible and that .." A comprehensive global trading system is most unlikely "

She argues that if there is to be a green mechanism taxes - argued for, for years will prove to be more effective and direct.

1. Taxes are direct , known, transparent and not volatile like trading schemes
2. There is no need to set arbitrary baselines and targets which can be poltically manipulated (and are)
3. The effect of such taxes can be offset elsewhere in the tax regime and are not simply another burden on industry
4. Such taxes can be co-ordinated with other energy taxes allowing greater harmonisation
5. Tax collection is straighforward using current proven mechanisms

She fails to mention that it would not enrich the army of lawyers, brokers, consultants, and other money jugglers nor provide them with a tithe.

Of climate change, she maintains that the arguments reeek of snake oil but that prudence must rule. Quite why the EU with 400 Mn people should be prudent and the remaining world population isn't, escapes mention.

Anyway the good news is that as Director of the Institute for Policy Studies people will listen to her. Maybe.