Thursday, May 17, 2012

Owners of "Green" cars may still have to pay more in Britain

Motorists could face a 50 per cent rise in fuel duty in future years to cover a £13 billion hole in Treasury coffers caused by the increased use of environmentally friendly cars, according to a report.

The gap in public finances will come from increasing use of more fuel-efficient cars and a switch to electric vehicles, the RAC Foundation-commissioned report claims.

It added that while the fuel duty collected by the Exchequer stands at 1.7 per cent of gross domestic product (GDP), this rate will tumble to 1.1 per cent of GDP by 2029, leaving the Treasury with a big shortfall.

The report said vehicle excise duty (VED) would also drop over this period, from 0.4 per cent of GDP to 0.1 per cent, with the combined fall leading to the £13 billion shortfall.

RAC Foundation director Professor Stephen Glaister said: 'If the Chancellor was faced with a £13 billion shortfall in motoring tax revenue today, he would need to push the rate of fuel duty up from 58p per litre to 87p per litre to fill the financial black hole.

'Clearly there is no guarantee that future rises in duty rates will be limited to inflation, as is current policy.'

He added: 'As drivers endure record prices at the pumps they might be surprised to learn that future governments face a drought in motoring tax income.

'The irony is that while ministers encourage us to buy greener, leaner cars, they are being forced to look at ways of clawing back the money motorists think they will be saving. This isn't scaremongering.

'The Treasury has already announced a review of VED bands to ensure drivers make a fair contribution to the public finances even as cars become more fuel-efficient.'

The report was prepared for the RAC Foundation by the Institute for Fiscal Studies.

Institute director Paul Johnson said motoring taxation did not reflect the costs drivers impose on others and that revenue from petrol was set to fall.

He added: 'A national system of charging related to mileage and congestion, largely replacing the current system of fuel taxation, would help solve both those problems.'


Deep Tory Rift Over Green Agenda

William Hague, the foreign secretary, has warned the prime minister that Britain’s green technology companies and potential exports are being undermined by the failure of ministers to make the case vigorously for low carbon growth. Mr Hague pleaded with Mr Cameron to take the lead by making a speech on the subject; in the event the prime minister’s long-heralded “green speech” was downgraded.

In a private letter to David Cameron, Mr Hague urges him to promote “a stronger narrative on low carbon growth”, which he argues will help persuade potential customers such as China to embrace a new economic model.

Mr Hague has emerged as one of the government’s greenest ministers and he will today tell the CBI employers’ group that he sees low carbon technology as one of Britain’s most promising export sectors.

Although Mr Hague’s aides deny he is criticising colleagues, his letter – seen by the Financial Times – appears to be a warning that the Tory party’s hardening rhetoric on green issues is causing economic damage.

George Osborne, the chancellor, captured the new mood on the Tory right when he told last year’s Conservative party conference: “We’re not going to save the planet by putting our country out of business.”

Conservative MPs have also condemned what one called “wind turbine Toryism”, claiming that Mr Cameron’s promise to lead Britain’s greenest-ever government was forcing up energy prices and holding back the economy.

Mr Hague delivered his counterblast on March 19. In a letter marked “restricted”, the foreign secretary said a greater domestic focus on low carbon growth would “give our commercial diplomacy more purchase” in countries like China.

He added: “It is also essential for our climate diplomacy. We will not secure a binding climate agreement in 2015 unless the idea of low carbon growth becomes dominant across the major economies before then.

“We can leverage this. But our diplomacy will only succeed if it is rooted in our own domestic narrative.”

Mr Hague pleaded with Mr Cameron to take the lead by making a speech on the subject; in the event the prime minister’s long-heralded “green speech” was downgraded in April into some opening remarks at a conference.

The foreign secretary says the government has credibility in the field through the creation of the Green Investment Bank, electricity market reform and the “green deal” to improve energy efficiency, but he clearly believes the government is too timid in proclaiming these achievements.

Nick Clegg, deputy prime minister, was warned by manufacturers in Asia during a trip in March that the British government was sending out mixed signals on green energy.

Mr Hague’s green credentials have been lauded by the Liberal Democrats but will raise eyebrows on the Tory right, for whom green issues have sometimes been ranked alongside gay marriage and Lords reform as being distractions to the main task of reviving the economy.


Progressive climate science

Progressive ideology has solidly controlled environmental science at least since the publication of Rachel Carson's book "Silent Spring" in 1962. But, somehow, one of the environmental sciences -- climatology -- managed to escape ideological pollution for some years. This brief liberty for climatology likely occurred because the profession was populated with field scientists, who brought a real-world perspective that at least balanced out more theoretical and ideological views.

Today, though, progressivism has the upper hand here too, and it is dictating what is and is not acceptable, especially in the academic arena of atmospheric science. A good example of this can be found in "the Hockey Stick and the Climate Wars: Dispatches from the Front Lines" by Dr. Michael E. Mann, a Penn State University professor and director of the university's Earth System Science Center.

The book chronicles the emergence and fame of the "hockey-stick graph" that was so prominently displayed in the U.N.'s 2001 Intergovernmental Panel on Climate Change Third Assessment Report summary document for policymakers.

The hockey-stick graph usurped the traditional, apolitical climate graph of Earth's recent temperature changes. The traditional graph showed dramatic warming during a "medieval warm period" (about 950 to 1250 A.D.) and distinct cooling during a "little ice age" (about 1400 to 1850 A.D.). However, the hockey-stick shaped graph displayed temperatures over the past several hundred years fluctuating only a little from year to year (the relatively flat handle of the hockey stick) until the 1900s when the temperatures began to rise dramatically (the blade of the stick). This graph helped to convince many in government that human carbon emissions were behind an unprecedented increase in global temperatures and that drastic, immediate action was necessary to once again save the planet. The graph's construction was challenged by scientists and statisticians who had a very different and also valid view of climate data selection and analysis.

Mann uses the book's peer-reviewed science references to defend his data selection and graphing techniques, as well as many reasoned, passionate arguments. It will be frequently quoted to support the current status quo in the academic world of climate science. But the book still presents a limited perspective based on progressive groupthink.

Dr. Mann relies substantially on slanted sources such as Media Transparency (part of the Media Matters for America action network "dedicated to analyzing and correcting conservative misinformation"),,, the Union of Concerned Scientists (a very politically active group), the Government Accountability Project, the Center for American Progress, ThinkProgress, et cetera, ad nauseam.

Dr. Mann also seems to relish the pejorative phrase "climate change denier" to describe his challengers. As the professor himself observes in a recent letter to the editor of the Wall Street Journal, the denier label is an attempt to "politically pigeonhole" those who are not convinced of his position on the merits. This is an ideological mode of argument, not a scientific one. Such rhetoric also betrays an inability on the author's part to learn from his own unfortunate experience of others trying to silence his views.

The book's unintentionally arrogant tone is perhaps a hint as to what irritates the masses about ex cathedra climate science proclamations. Furthermore, the book promises that a new Climate Science Rapid Response Team will be summoned to trample any threat to the institutional ideology posed by the many skeptical atmospheric scientists practicing in the real world.

These real-world meteorologists and climatologists know that the climate system is too complex for global outlooks into the decades ahead. They strongly suspect that man-made carbon dioxide is far less determinative of climate change than the academics say it is. After all, what really regulates climate in nature is water in all its forms -- as solid in ice sheets, cloud crystals and snow; liquid in cloud droplets and oceans; and vapor in ambient air.

In the long run, vain progressive ideology is no match for natural forces.


German Chancellor Fires Green Energy Minister

German Chancellor Angela Merkel has sacked her environment minister, Norbert Roettgen, days after he led her party to a crushing defeat in a key regional election.

Mr Roettgen was the candidate of Ms Merkel's Christian Democrats for the post of state premier in North-Rhine Westphalia.

He was widely blamed for the party's heavy defeat to the Social Democrats.

The loss was seen as a serious blow to Ms Merkel's government.

She told a hastily arranged news conference on Wednesday that Mr Roettgen had been dismissed "to allow a change in personnel".

He was replaced by Peter Altmaier, the Christian Democrats' leader in the lower house of parliament, the Bundestag.

Mr Roettgen provoked controversy early in the North-Rhine Westphalia campaign by refusing to commit to giving up his job as national environment minister and becoming full-time opposition leader in the state if he lost.

In unusually strongly worded remarks, Horst Seehofer, the head of the Christian Democrats' powerful sister party in Bavaria, the Christian Social Union, accused Mr Roettgen of having made a "very serious mistake".

Pointing out that Mr Roettgen had started the campaign three percentage points ahead in the polls, Mr Seehofer said he was astonished that the lead had "melted away like a bowl of ice cream in the sun".

His remarks on Monday to broadcaster ZDF caused a sensation in the German media.

Support for the Christian Democrats dropped from 35% to 26% in Sunday's North-Rhine Westphalia election. It was the party's worst result in the state.

Official results give the Social Democrats (SPD) 39.1%, the Christian Democrats (CDU) 26.3%, the Greens 11.3%, the Free Democrats (FDP) 8.6%, the Pirates 7.8% and the Left, 2.5%, reported AP news agency.

The FDP, the CDU's national coalition partner, performed better than expected, increasing their vote by nearly two percentage points and thereby giving the lie to speculation that they might fail to win seats.


Green Energy Fiasco: German Electricity Prices To Double

A recent study estimates that the Germans will soon have to reckon with dramatic price rises in their electricity bills. According to the study, electricity cost for households will doubled in ten years. The rising costs are due to the expansion of renewable energy as well as the necessary grid expansion and the subsidisation of solar and wind power.

Electricity prices in Germany will rise by 70 percent by the year 2025 according to a study.

The costs are due to the green energy transition and the planned phase out of nuclear power, according to a new report by the Karlsruhe Institute of Technology (KIT). The study was commissioned by the Chamber of Commerce and Industry of Baden-Wuerttemberg.

The experts see this as a threat to Germany's economy: "If electricity prices are rising so dramatically, we have concerns about the competitiveness of German companies," said Chamber of Commerce and Industry President Bernd Bechtold.

The price increases were calculated for large customer contracts according to the study. "For households, prices are expected to increase even more because they cannot negotiate such high discounts," said engineer Karl-Friedrich Ziegahn, who coordinated the study.

German power prices highest in the EU

The rising costs are due to the expansion of renewable energy as well as the necessary grid expansion and the subsidization of solar and wind power. In early May, a study by energy experts at McKinsey suggested that electricity consumers would face 21.5 billion Euros in costs in 2020 caused by the transition to renewable energy.

"We already have the highest electricity prices in the EU today," said Bechtold. In France, the cost of electricity is about 40 percent lower.

The German industry could not afford such a price difference in the long run.


Brazil Cuts Energy Taxes To Revive Economy

Brazilian President Dilma Rousseff plans to cut and simplify taxes for electricity producers and distributors, two senior officials told Reuters, as part of a strategy to reduce Brazil's high business costs and stimulate its struggling economy.

Brazil has been on the brink of recession since mid-2011 as high taxes, an overvalued exchange rate and other structural problems squeeze what had previously been one of the world's most dynamic emerging economies.

Rousseff has in recent months announced targeted tax cuts for stagnant sectors such as the automotive industry, embracing an incremental approach to reform that has drawn criticism from investors who say more drastic changes are needed.

But the officials, who spoke on condition of anonymity, said the tax reductions for electricity companies, which Rousseff will announce in coming weeks, would likely be the most far-reaching to date.

Brazil has the world's third-highest power costs, and Rousseff is aiming to give relief to consumers as well as companies in energy-intensive areas such as steel and petrochemicals.

Internal government studies suggest that, depending on which taxes are cut, electricity costs could fall by between 3 and 10 percent starting as early as 2013, the officials said.

That would have a measurable impact on inflation and aid Rousseff's quest to push Brazilian interest rates lower.

Rousseff said in a speech on Tuesday that deep changes to Brazil's tax code were necessary, and cited electricity as an example of what is wrong with the current system.

"I don't know of many countries that tax electricity, but we tax it," she told a group of mayors. "We tax things that are fundamental for the development of the country. ... We need to push through the tax reform that we all want."

Rousseff probably will not pass the electricity tax cuts by decree, meaning she will have to negotiate with Congress and other groups. She plans to use her record-high popularity ratings to push through cuts to taxes at both the federal and state level, with a special focus on eliminating levies that overlap or are difficult to calculate, the officials said.

Brazil's tax code is so complex that an average company spends 2,600 hours a year calculating what it owes, according to the World Bank's annual Doing Business study, which compares business practices around the world. That is almost 14 times the time needed to do taxes in the United States, and by far the highest among the 183 countries in the World Bank's survey.

"The focus is as much on simplifying taxes as reducing them," one of the officials said.

Brazil's electricity industry includes state-run companies such as Eletrobras (LIPR3.SA) as well as multi-nationals like AES Corp (AES.N) and GDF Suez (GSZ.PA). Hydroelectric power supplies about three-quarters of Brazil's electricity needs, with nuclear, thermal and wind power accounting for the rest.

If the initiative is successful, Rousseff will use a similar blueprint to reduce taxes for other industries in coming months, possibly including telecoms, the officials said.

Specific details such as the size of the tax cuts, which taxes will be targeted, and the timing of the announcement are still being finalized by Rousseff's team, the officials said. One said the plan would likely be unveiled in late June, before politicians nationwide turn their attention to municipal elections in October.


Electricity prices are a big component of the so-called "Brazil cost" - the mix of taxes, high interest rates, labour costs, infrastructure bottlenecks, and other issues that have caused the economy to become less competitive.

After a decade of strong performance, Brazil grew below the Latin American average in 2011 and so far this year.

Brazil's average electricity cost of $180 per megawatt hour is exceeded only by Italy and Slovakia, the Getulio Vargas Foundation, a private think-tank, said in a 2011 study based on data from the International Energy Agency.

High electricity rates have contributed to stagnant investment and production in energy-intensive industries. Despite Brazil's bauxite and alumina resources, no new aluminium factories have been built in Brazil since 1985 and two have closed, keeping production levels stagnant, the Getulio Vargas study said. It said electricity accounts for 35 percent - "an insane proportion" - of the industry's production costs.

U.S.-based aluminium producer Alcoa (AA.N) said in April it was considering big production cuts at two of its Brazil factories in part because of high electricity costs.

One of the officials who spoke to Reuters said the situation at Alcoa had added urgency to Rousseff's plan to cut taxes.

All told, taxes account for about half of the cost of electricity in Brazil, studies show. The taxes themselves are roughly evenly split between the federal and state level.



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