Thursday, May 8, 2008

On this, the greens are right

I am rarely in agreement with the Greens, as I view them as a lobby group trying to play with the big kids.

However, their scepticism about the move to push transport's entry into the ETS back by a couple of years is quite justified.

The ETS is a tax. It is intended to affect the price signal by making it more expensive to undertake activities that in whatever way add to emissions. While Helen Clark is also right in saying that fuel usage has dropped as the price has risen, that is a red herring. The underlying rationale for an ETS must be that the market price does not reflect the externalities caused by using petroleum products. That does not change whatever the "fundamental" price is.

If this is an attempt to soften the cost of fuel increases for the lower income groups then it is pure electioneering. Regardless of how well-off one is, the cost should capture the externalities.

I am pretty ambivalent about the ETS or even carbon taxes. I use a car only during the weekends and am a very low mileage driver. Some people may complain that the car is the only way they can get to work. Well that's the trade-off you have to make to live in the Big Smoke. Nothing, not even housing, comes for free. *snort*

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