Ministers ordered to assess climate cost of all decisions.
Coal-fired power stations, airport expansions and new road schemes could all be put on hold following a decision by Gordon Brown that ministers must in future take account of the true economic cost of climate change damage.Ministers have been instructed to factor into their calculations a notional “carbon price” when making all policy and investment decisions covering transport, construction, housing, planning and energy.That price – which will increase annually – is intended to frame all day-to-day policy and investment decisions for the next 30 years….The “shadow price for carbon”, representing the cost to society of the environmental damage, has already been agreed for every year up to 2050 by government economists. It will be set at £25.50 a carbon tonne for 2007, rising annually to £59.60 a tonne by 2050.The climate change minister, Phil Woolas, said: “This will have huge implications for [the] government. If for instance a new power station is due to cost £1bn, but it will add £200m worth of carbon emissions, we will decide that the cost of the power station is £1.2bn, even though its cash price is £1bn. We are creating a new currency.”In theory the carbon price will create a bias against roads and carbon-emitting coal stations and make new “zero carbon” building regulations appear more economic.
December 22, 2007