Another reason we really do want a carbon tax now

Have a look at this nonsense that is going on over Drax at the moment:

Drax is to legally challenge the Government's decision to exclude the power plant operator's plans to convert a coal-fired unit into one burning biomass from its latest round of funding. The decision to challenge the Government could set a precedent for other generators and overshadowed the approval of several new renewable energy projects on Wednesday. Drax had expected to receive the subsidy after the project to convert Unit 3 at its Drax station in North Yorkshire was shortlisted in December under the Government's new contracts-for-difference (CFD) scheme. However, the Government said on Wednesday that the scheme does not meet all its criteria for the enhanced CFD mechanism and urged Drax to continue with the project under the existing direct subsidy, sending shares in the company tumbling 11.7pc to 667p at midday.

The first point we should make is that it's actually fairly stupid to try to ship wood pellets 3,000 miles in order to avoid the burning of coal. There are reports out there insisting that this will lead to an increase in emissions, not a reduction. But leave that aside for a moment.

Assuming that we do sign on to the idea that climate change is a problem, one we need to do something about, it is exactly this sort of bureaucratic jockeying which makes the case for the carbon tax. Who is getting, or not getting, saubsidies, contracts for difference and all the rest is being determined by who is in favour politically. Whcih isn't what we want at all: we want simple and sustained economic pressure on people to reduce emissions. Which is exactly what a carbon tax does. It might put Drax out of business. It might encourage a move to biomass, or to continued coal burning with more efficient methods. But it becomes purely an efficiency argument as to which happens rather than a political one driven by whatever it is that is between Ed Davey's ears.

And what's actually worse is that we do now have a carbon tax. It's disguised as a minimum price for a carbon emissions permit but it has much the same effect as a carbon tax. Meaning that all of this bureaucratic nonsense has already been superceeded. Either burning coal at Drax, including that minimum price for a permit, makes sense or it doesn't: therefore it will happen or not.

All of which is intensely irritating of course. We now actually have that correct (if rather Heath Robinson) system to reduce emissions. Yet the politicians are still playing games as if they don't realise that they've already solved the problem.