TEQs Report launch today

[stumuzz]

2) Is there anything to stop Tesco (or anyone else) from charging you money and TEQ when you go shopping? It would probably be cheaper for them to do that than buy them off the market.

The TEQ'S will be built into the price. If your shopping bill was £50 a week before TEQ'S it will be £65 when Tesco has to purchase TEQ'S to supply the same goods. Tax on production. Simpols!

[clv101]

The TEQ'S will be built into the price. If your shopping bill was £50 a week before TEQ'S it will be £65 when Tesco has to purchase TEQ'S to supply the same goods. Tax on production. Simpols!

No, it doesn't work like that. Tesco will have been given the TEQs required, if they can operate their business with the TEQs limit (which is basically the same a the physical limit of energy supply / carbon budget) Tesco won't have to buy a single TEQ and the cost at the til won't change at all. If on the other hand Tesco fail to live within their allocation and have to buy more, they will be buying them directly from you and me! Putting money into our hands, hiking their prices and making Tesco less competitive against the retailer that does manage to operate within the limits.

Remember, without the TEQs limit, Tesco and the like will just have to bid up the price of energy until enough poor can't afford it for Tesco to get what they want. The till price will go up, but the extra money will be in the hands of Saudi Arabian princes, rather than you and me.

[woodpecker]

We had quite a bit of chat about TEQs last night at our first Green Drinks event.

People are feeling quite inspired by such a scheme, but of course there are questions.

One of my questions, and one that also cropped up last night, was: we understand that most people would want the price of TEQs to fall (so they would pay less for them) so there is a kind of virtuous circle of using less and wanting others to use less energy. But there seems to be one group that would always want TEQ prices to rise: those that will mostly or always be selling excess TEQs because they use less than their quota. Presumably this group would be small and so not affect the market? Or might we get some form of TEQ hoarding? (and if that's the case presumably the devisers of TEQs have already thought about/addressed that scenario?)

Another question is one of political will. Chris Huhne supports a carbon price floor. Do we know anything about the outcome of the meeting that took place between John Hemming and Chris Huhne? How much clout does the UK Industry Task Force have?

[woodpecker]

Right, now I think I understand. (Do correct me if I'm wrong.)

The government page on the consultation on carbon price support has the footer:

Martin Shaw
Environmental Taxes HM Revenue and Customs
3rd floor west, Ralli Quays, 3 Stanley Street
Salford,
M60 9LA

The taxman is clearly going to be promoting a scheme that looks like a tax. To a hammer, everything looks like a nail. And if you set up something called 'environmental taxes', staffed by tax people, everything they will take seriously will look like a tax.

And the environmental taxman is promoting this to Chris Huhne.

The closing date for this consultation is 11 Feb 2011 (week after next!)

So if you prefer a TEQs scheme, best to respond to the carbon price consultation asap:

Consultation responses should be emailed to http://hmt-cms01/CMS/ioEditor/Environme ... gsi.gov.uk

http://www.hm-treasury.gov.uk/consult_c ... upport.htm

(links to relevant documents, contact info)

[stumuzz]

The TEQ'S will be built into the price. If your shopping bill was £50 a week before TEQ'S it will be £65 when Tesco has to purchase TEQ'S to supply the same goods. Tax on production. Simpols!

No, it doesn't work like that. Tesco will have been given the TEQs required, if they can operate their business with the TEQs limit (which is basically the same a the physical limit of energy supply / carbon budget) Tesco won't have to buy a single TEQ and the cost at the til won't change at all. If on the other hand Tesco fail to live within their allocation and have to buy more, they will be buying them directly from you and me! Putting money into our hands, hiking their prices and making Tesco less competitive against the retailer that does manage to operate within the limits.

Remember, without the TEQs limit, Tesco and the like will just have to bid up the price of energy until enough poor can't afford it for Tesco to get what they want. The till price will go up, but the extra money will be in the hands of Saudi Arabian princes, rather than you and me.

Tesco is just a large shed with a till. All the stuff tesco sell is produced elsewhere. If these producers are given teq’s at the level they use now, then teqs will have no effect at all. If these producers have to buy teq’s then the price will go up. If the proceeds are given back to you and me the scheme is neutral.

However, in the report the proceeds are said to go to good schemes. Their idea of good and the publics will probably not be the same.

I am just about to get on a plane and will reread the rebate section again. I may well have missed something.

[cubes]

What I was thinking was, that surely it would be cheaper for tesco to demand some of your TEQ to sell you some shopping. They would get them extremely cheap/free that way. Of course, wouldn't work so well if the other stores didn't do it, but if the economics of it are right they would probably do it too.

Or alternatively offer a discount (less than the market value of TEQs) if you offer them up when buying shopping. I'm sure there are many stupid people who would do this too - "It's much easier this way" etc

Depending on the rules, there are many ways that companies can play this system - just like every other system out there!

[stumuzz]

The TEQ'S will be built into the price. If your shopping bill was £50 a week before TEQ'S it will be £65 when Tesco has to purchase TEQ'S to supply the same goods. Tax on production. Simpols!

No, it doesn't work like that. Tesco will have been given the TEQs required, if they can operate their business with the TEQs limit (which is basically the same a the physical limit of energy supply / carbon budget) Tesco won't have to buy a single TEQ and the cost at the til won't change at all. If on the other hand Tesco fail to live within their allocation and have to buy more, they will be buying them directly from you and me! Putting money into our hands, hiking their prices and making Tesco less competitive against the retailer that does manage to operate within the limits.

Remember, without the TEQs limit, Tesco and the like will just have to bid up the price of energy until enough poor can't afford it for Tesco to get what they want. The till price will go up, but the extra money will be in the hands of Saudi Arabian princes, rather than you and me.

Tesco is just a large shed with a till. All the stuff tesco sell is produced elsewhere. If these producers are given teq’s at the level they use now, then teqs will have no effect at all. If these producers have to buy teq’s then the price will go up. If the proceeds are given back to you and me the scheme is neutral.

However, in the report the proceeds are said to go to good schemes. Their idea of good and the publics will probably not be the same.

I am just about to get on a plane and will reread the rebate section again. I may well have missed something.

Had another quick read. My original thoughts still stand.

i could not find the bit which states that businesses are given an allowance of TEQ'S.
However, if businesses are given an allocation of TEQ'S. Then there be an advantage to set up multiple companies to get the allowances.

Also, tex will have to be paid on a diminishing carbon budget. So whatever is produced today will get proportionately smaller each year, which is the intention.

Therefore whichever angle you come at it, it is basically a tax on production to encourage industry to produce less,year on year.

Now, back to the original points.

TEQ'S are basically a tax on production/consumption.

People on benefits/pension credit have the increased cost of fuel included in the yearly increase in benefits.

People on benefits/pension credit will be massively hit by either having to repay the cash they receive from TEQS or will see their money reduced because they will receive TEQS. i.e. there is no need to pay the fuel element in their benefit because they will receive TEQS

Large landowners will greatly benefit from TEQ'S because of the increased value and value products from the land i.e. all energy comes from the sun via the land.

[cubes]

Wouldn't it be better (although more complex) to not assign or auction TEQ to companies?

We'd then all pay and also provide the necessary TEQ to purchase the item too. Surely that will help wean us off the consumer society too?

[Shaun Chamberlin]

One of my questions, and one that also cropped up last night, was: we understand that most people would want the price of TEQs to fall (so they would pay less for them) so there is a kind of virtuous circle of using less and wanting others to use less energy. But there seems to be one group that would always want TEQ prices to rise: those that will mostly or always be selling excess TEQs because they use less than their quota.

Interestingly your point about it not being in the interest of energy-thrifty TEQs sellers for the price to drop is exactly the point I raised to David Fleming when I first heard about the TEQs idea (I was very sceptical of anything that sounded like EU ETS-style carbon trading. Still am in fact… And the name 'Tradable Energy Quotas' got my hackles raised!).

What David Fleming pointed out to me then is that even the energy-thrifty TEQs sellers benefit from a lower TEQs price, since the TEQs price becomes a key constituent of the price of energy in the country. Since the price of everything we buy includes that energy price the temporary personal benefit of selling one’s TEQs units at a higher price would quickly be eaten up by the higher cost of, well, everything! So even TEQs sellers ultimately benefit from a lower TEQs price.

Of course it requires a certain level of understanding for them to recognise this, but then I would tend to believe that it is precisely the energy-thrifty who are more likely to grasp the importance of energy demand reductions for the benefit of all.

Edit: I'm sure we aren't the only ones who have pondered this, so I have added an FAQ to the TEQs website about it:
http://teqs.net/report/frequently-asked ... monPurpose

[woodpecker]

Thanks for your response, Shaun.

Perhaps we could do with some board game (or online game) to be able to play around with/get our heads around the possible scenarios....

I've much enjoyed all the videos that have been posted from the launch event, BTW. We're discussing running an event here and using your slide deck (though I think we need something a bit more interactive as well).

[Shaun Chamberlin]

Thanks for your response, Shaun.

Perhaps we could do with some board game (or online game) to be able to play around with/get our heads around the possible scenarios....

I've much enjoyed all the videos that have been posted from the launch event, BTW. We're discussing running an event here and using your slide deck (though I think we need something a bit more interactive as well).

Interesting idea, woodpecker. Do let me know if you come up with a good way of making a game of it. Or if you need any support in doing so.

Cheers,
Shaun

[Yves75]

I think a flat tax as proposed by James Hansen which revenues are 100% (or a high part of it) directly redistributed on an equal share basis per citizen is much better :
- it is much simpler (and cheaper) to implement
- it does not require tracking every citizens consumption and moves (major point here, orwell isn't far already)
- it can lead to exactly the same thing economically by not favouring the rich over the poors (poor ending up positive)
- it doesn't create all these trading jobs, markets, system tweaking, and associated WE ARE DODGY playing
- it is much closer to the product getting scarcer and more expensive

[Shaun Chamberlin]

I think a flat tax as proposed by James Hansen which revenues are 100% (or a high part of it) directly redistributed on an equal share basis per citizen is much better

Thanks Alain. I can see the arguments on both sides on this one, but at present I do firmly come down on the side of TEQs.

One reason - though not the most fundamental - is that the Cap and Dividend scheme that Hansen endorses (although he uses various names for it) doesn't address the issue of ensuring fair access to energy at times of shortage. It is purely targeted at climate change.

On a purely mathematical analysis, you are right that the end results look the same as TEQs in terms of equity and effectiveness on climate change. And if this is the reality, then clearly the upstream option is cheaper and simpler to implement, as you say.

Many of us argue that in the real world the end results would not be the same though, and that the engagement of citizens is essential to societies finding a way to thrive within tightening energy/carbon constraints. I did a post on this a few years ago that may well be of interest, but to summarise, the debate revolves around issues like whether a TEQs system would bring additional effects such as helping to shift perceived norms in acceptable behaviour, create a sense of common purpose or encourage greater cooperation.

This topic is explored in Chapter 3 of the TEQs report, and there is a deal of research exploring the question (see eg. Capstick and Lewis, Personal Carbon Trading: Perspectives from Psychology and Behavioural Economics, IPPR).

As yet, I come down with the House of Commons Environmental Audit Committee, who concluded that:
"A carbon allowance could be more effective at incentivising behavioural change and engaging individuals in reducing their emissions than price signals... We remain to be convinced that price signals alone, especially when offset by the (additional income from the dividend), would encourage significant behavioural change comparable with that resulting from a carbon allowance"

ps I think your 'Orwell' comparison is something of a red herring. As a long-standing member of Liberty, and someone who has campaigned against the likes of Government ID cards, I really can't see any issue here with TEQs. You would only need to surrender TEQs units when buying fuel and electricity (and this is often done by direct debit anyway). There are far greater privacy issues around the use of credit/debit cards than there are around TEQs.

[Yves75]

Shaun, saying Hansen redistributed tax is only targeted at climate change is a bit strange, current petrol tax in Europe were targeted at lowering oil deficit (or just targeted to state revenue when the UK was still a net exporter I guess), and pushing on better efficiency, here it's the same.

To me the objective of all these systems is simply to consume less fossile fuel, to push the infrastructure/products/way of life towards better efficiency (similar function for less or no fossile fuel), to shorten ROI time for fossile fuel efficiency or energy efficiency in general investments, and emitting less CO2 as a by product, that's it.

And about managing shortages, either we go in complete crisis mode, either the market price of oil is somehow "caped" by what the economy can "bear", as we have seen in 2008.

And about the "behavioural" aspect, as said on TOD (I'm yvesT on TOD) :

Yes, frankly I'm not convinced, and even on the behavioural aspect, in fact I think behavioural aspect with the redistributed tax system (maybe a new word should be used, "redib" or something ?), the fact that you would receive a check or money transfer directly on your account from the government every month would be something truly new, and this transfer really being directly based on the accounting of the tax, so variying every month, somehow giving you a direct feel of the fuel used by the nation for that month.

Moreover the crux of the issue to me with the behavioral thing (and again here my view is to be very careful not to surrender core values in this transition), is that the deficit in communication between CO2 aspect and peak oil aspect has been truly astounding, and I'm not an AGW denier at all.

But you really end up with the conclusion that let's imagine the CO2 aspect was not there, we would have handled the situation much better, even putting back the CO2 aspect afterwards ! For instance when you look back at Carter's TV discource on energy, these were more sane and rationnal with respect to the issue that what happened aferwards, even if they didn't lead to much action. Outsourcing PO alarmism entirely on the AGW side is/was truly a major mistake (especially when the term used to designate PO alarmism is "energy security"). But somehow if we do not go through a fast crash, I think the message is starting to get through (and fundamentally the PO thing is a much simpler concept to understand than AGW, no detailed physical/chemical/biological notions necessary, just basic maths so the "prise de conscience" (awareness period ?) could go fast, without all the skeptics debate and all that junk.

And then the measures, more than complex economics rules and everybody playing with their quotas online, should be targeted to the energy problem itself much more directly.
Like for instance cars, huge potential gains in efficiency are still there, even in Europe cars have been getting heavier and heavier for a given category generations after generations, with all the gadgets, weight added on security standards etc, so all the improvment in engine efficiency being sucked up by the cars being heavier or more powerfull.

For instance with my scooter although I'm allowed to, I never take the freeways or "périphérique", because I don't feel secure not having enough power to manage entry or exit lines or other tricky parts. If let's say 50 or 70 kms around cities the speed limit on freeways were down to 70 or 80km/h, this would lower consumption for existing cars a lot but also greatly favor a new class of vehicles much less powerfull and heavy. Because we shouldn't also forget that for instance the electric car, whatever way you look at it, it just cannot be the same concept as current cars, that is it cannot be a current car except that it is electric (starting with the basic fact that you need 30kg of the top current batteries to store the same energy as in one liter of gas). The optimal "place" for electric vehicles is most probably smaller lighter less powerful, and hybrids between 3 or 4 wheels scooter and cars in terms of shape/form.(also because of the price aspect). Favouring the use of the existing road infrastructure around cities for these kind of vehicles could most probably bring major consumption gains (and doesn't mean that public transit infrastructure shouldn't be improved to of course)

This is valid in other domains, insulation is less glamorous than PV cells on a roof, but people will soon understand it is a better investment, really don't see why these quota would bring any more "buy in" from people, except some guys getting pissed off because they forgot to buy some quotas or bought some, the next day the price crashed and they feel ripped off or things like that.

The motivation must be targeted directly at the energy consuming infrastructure and way of life, and really don't see why an "online market" thing for everybody would bring that more than the redistributed tax.

Was at a public meeting at "Assemblée nationale" yesterday about PO, Yves Cochet (green MP) had a good formula I thought, something like for transport it will be "less often, less far, less quickly", that's the kind of things that must get through.

Only problem I could see with the redistributed tax is, if it is quite high, people having to pay in advance before receiving their check end of the month, but think this isn't really an issue considering actual figures at the beginning.

Not having a CAP part I don't see it as a problem, cap aspect is kind of wishfull thinking somehow anyway, and the important thing is the actual results in terms of consumption being actually decreased, and on this I'm confident the tax would be efficient.