The wrong type of subsidy

We've pointed out a number of times here that the basic policy about climate change is simply wrong. Given that everyone has got so excited about the subject that something is going to be done we have been pointing out that what should be done is the least damaging and most effective thing. A simple carbon tax, revenue neutral by preference. Instead, as a result of Ed Miliband's misunderstandings of how the universe works, we've ended up with a ludicrous subsidy system. Which continues to get worse:

In October 2013 the Government agreed a deal with the French state-owned energy giant to guarantee it a price of £92.50, index-linked to inflation, for every megawatt-hour of electricity the £18bn nuclear plant would produce over a 35 year period.

The difference between the wholesale price of power and the guaranteed price would be "topped up" through subsidies, paid for through a levy on UK energy bills. 

At the time the deal was signed, power price projections had implied a lifetime cost to consumers of £6.1bn for the subsidies, the NAO said.

As of March this year, that had more than quadrupled to £29.7bn due to significant cuts to official power price forecasts.

We should tax the bad thing, not subsidise a possibly good thing. But if we are to have subsidies then it should be just the one subsidy rate.

Instead of different subsidy rates for nuclear, solar, tidal, offshore and onshore wind and so on and on we want to have just the one single rate. Any and every technology which meets that rate without emissions gets it, any that doesn't thus doesn't get built. It's only in that manner that we end up getting the most efficient method of dealing with the problem built.

Instead Ministers have, over the years, fallen prey to the idea that they can plan this instead of admitting that the actual solution is to harness market forces and technological advance to deal with it.