European oil and gas producers argue that a robust carbon price would boost gas demand and penalize dirtier coal. Latest UK data suggests they are correct: Gas demand leapt 55% year-on-year in the first half, aided by a unilateral carbon floor price, while coal shrank (p5). The top-up tax on British fossil fuel generators is set at ￡18 ($24) per ton until 2020. Along with the planned closure of all coal plants, it has sparked dire warnings about the security of UK power supply. Imagine then the backlash that a carbon price of $100/ton — what many climate scientists deem necessary to keep global warming in check — might elicit. However environmentally and economically desirable, it would be a non-starter politically.
展开▼
