Stay with markets, protect the environment, save lives

Nuclear energy, carbon taxes and clean free trade key to achieving UK’s environmental goals

• Markets not socialist economies must be embraced to solve climate change

• A renewable-only energy grid would cost £2.9 trillion in backup battery capacity, 135% of the UK’s annual economy — nuclear energy is key to clean, affordable power

• Carbon taxes, not subsidies, regulations and bans, can solve climate change

• Post-Brexit Britain risks becoming rule taker in environmental trade and falling behind in  technology unless it reduces costs and barriers 

In the run-up to the UK hosting the COP26 climate change conference, a new report from the Adam Smith Institute (ASI) and British Conservation Alliance (BCA) argues that free markets must play a central role in addressing environmental challenges.

The ASI and BCA propose three key market-based policies to help achieve the UK’s environmental goals: embracing nuclear energy, implementing a border-adjusted carbon tax and practicing clean free trade.

Nuclear

Nuclear power represents a safe, cost-effective, efficient, and emission-free means of energy production that can address key issues with the UK’s energy grid. Existing renewable options— solar and wind power—remain hampered by lack of storage capacity and grid inertia generation. 

With reforms to the way we finance new nuclear plants, the UK could more effectively harness nuclear power to meet its Net Zero by 2050 goal.

Border adjusted carbon tax

Carbon taxes enjoy strong support from economists across the political spectrum as an effective means of tackling pollution. They force polluters to shoulder the cost of environmentally damaging production and provide a strong incentive to innovate towards low-carbon alternatives.

Rather than the government picking winners and losers through subsidies, the UK should use border-adjusted carbon taxes to ensure a level playing field. At the same time, it must lower more damaging taxes such as corporation or income tax and explore carbon dividend payments to ensure Brits are not left worse off.

Clean free trade

As the Government strikes new post-Brexit trade deals, they also have the opportunity to become a global leader in clean free trade by abolishing tariffs and quotas on all goods that the OECD designates as having environmental significance and seeking membership of pacts such as the Agreement on Climate Change, Trade and Sustainability (ACCTS).

The report also examines the poor environmental record of state-led, socialist economic models, finding that greater government control of the economy leads to overexploitation of resources and more environmentally damaging forms of production.

By contrast, market environmentalism is a proven alternative to radical ‘degrowth’ proposals that would impoverish Brits and millions of the world’s poorest.

Free markets reward the innovations that help us produce more with less, protect valuable land through strong property rights, and most importantly create the prosperity that gives us the means and motive to improve our environment.

Connor Tomlinson, report author and Policy Director for the British Conservation Alliance said:

“As the government’s policy purview turns to post-pandemic life, this paper demonstrates the benefits of taking a market-led approach to solve environmental issues. It is my hope that this paper contributes to policies which meet the government’s net zero emissions target of 2050 without unduly burdening British taxpayers. Market environmentalist initiatives deliver practical solutions to limiting our carbon footprint while simultaneously further improving the living standards across the globe.

“This practical policy framework should provide incentives for government and the private sector to make changes which ensure a cleaner, freer future.”

Matthew Lesh, head of research at the Adam Smith Institute said:

“Nitpicky regulations and banning the likes of gas boilers and petrol cars are the policy tools of the top-down socialist. Climate change is a real problem but will not be solved by politicians picking winners. We need a market-centric approach that emphasises innovation and properly costing externalities. 

“This paper is calling for a reset in the way the governments of the United Kingdom, both central and devolved, think about the environment. It’s not about throwing away free market principles, it’s about using the power of markets to achieve environmental goals.

-ENDS- 

Notes to editors:  

For further comments or to arrange an interview, contact John Macdonald, Head of Government Affairs, john@adamsmith.org | 07584 667326.

The report ‘It’s Easy Being Green: Embracing Nuclear Energy, a Border-Adjusted Carbon Tax, and Clean Free Trade’ will be live on the Adam Smith Institute website from TUESDAY, 31 AUGUST AT 10.00PM and is available here in advance.

The Adam Smith Institute is a free market, neoliberal think tank based in London. It advocates classically liberal public policies to create a richer, freer world.