What the TaxPayers’ Alliance and Daily Mail don’t tell about their ‘green tax con’

  • 15 Aug 2011, 18:00
  • Guy Shrubsole

The Daily Mail has an article today headlined

'The 'green tax con' that is costing families £500 as finances are under strain'.

The £500 figure comes from a book from the TaxPayers' Alliance, Let Them Eat Carbon, due to be released on Thursday. So far the TPA have put out only a press release and the book's introduction. The book - and the Mail - argues that families are paying £500 more than they should be annually in green taxes.

As Carbon Brief has detailed before, this is not the first time that the Daily Mail has attacked the costs of green taxes.  In June, the Mail claimed in a series of articles that 'green measures' were adding £200 to an average household energy bill. The £200 figure was based on unreferenced claims by climate skeptic lobbyists the Global Warming Policy Foundation. In July, the Mail said that by 2020, green measures would add "up to £1,000 a year" to household energy bills. This figure came from a report by Unicredit bank which is not publicly available, which the authors would not discuss, and which contained no further detail about how the figure was calculated.

So what lies behind the statement that the 'green tax con' is costing families £500?  This is how the TPA justify it in their press release:

  • "The Office for National Statistics has reported that environmental taxes raised £41.4 billion in 2010
  • After accounting for total road spending (£9.2 billion in 2010-11) and Air Passenger Duty (£2.1 billion), total domestic green taxes net of road spending were £30.1 billion in 2010
  • Greenhouse gas emissions were 582.4 Mt CO2-equivalent in 2010 according to the Department of Energy and Climate Change. The social cost of those emissions, based on earlier Government estimates of the social cost per tonne adjusted for inflation, was £16.9 billion
  • That implies that excess green taxes were levied of £13.2 billion, or over £500 for every family."

In other words, according to the TPA, total domestic green taxes amount to £30.1 billion annually. The 'social cost of carbon' is a price which the Government puts on carbon emissions in order to account for the economic impacts of climate change. The TPA says that 'based on earlier Government estimates' the social cost of carbon was £16.9 billion. £30.1 minus £16.9 is £13.2 billion, which is equivalent to £500 per family.

Note however the crucial line "based on earlier Government estimates". This is where the TPA have used an old government accounting methodology - in geek-speak, a method called the Social Cost of Carbon. It was replaced in 2009 following criticism from a wide range of economists as being an inaccurate way of properly capturing the price of carbon. The new method of carbon valuation ( available here on the DECC website) looks at the cost of mitigating emissions rather than estimated damage costs. As the DECC website states:

"Carbon valuation for policy appraisal no longer uses the Social Cost of Carbon."

Even using the old methodology, the TPA may have seriously underestimated the range of estimated social costs of climate change. The Stern Review, for example, calculated that under business-as-usual emissions scenarios, the social cost of carbon is $85 per tonne of CO2 equivalent (or £73.60 in 2007 prices). Applying this social cost to the UK's total current emissions, as the TPA does, gives a figure of £42.9bn - more than they say was collected in environmental taxes last year.

As the TPA's report has not yet been released, it is impossible to comment further on it at this time. It looks as though it may make some valid arguments - it's certainly true for example that very little of what the Treasury collects in 'green taxes' every year is spent on green energy projects or infrastructure: when we pay fuel duty, for example, only a proportion of it goes to funding electric cars or public transport. But its figures for so-called the "green tax con" are questionable.

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