Vox Polis

It seems that it’s worst than I thought. I reported yesterday that the EU were going to introduce warning labels on alcohol. Well it seems that Finland, who currently hold the Presidency of the EU, plan to harmonise tax on alcohol upwards, i.e. towards the member state that has the largest tax. Currently Sweden is the highest but the UK can’t be far behind.

The end of booze cruises is nigh!

What will become of the low duty beer port of Calais when there are no longer any British alcoholics wanting to visit?! There’s nothing else there of interest!

To think that Customs will have to start catching real criminals instead of confiscating day tripper’s cars (luckily they’re not allowed to do that anymore anyway). And ferry companies will probably go broke!

Looks like we’ll all be supporting the proposal for free wine (reported yesterday). It’ll be the only way we can afford it.

Looks like Spellar’s idea to drain the wine lakes by giving it all to pensioners is getting some support in Westminster. We reported on the Parliamentary Question Spellar asked a while back and explained how ridiculous the whole idea was. Well according to this Early Day Motion, several MPs have joined his crusade.

Seems the EU are looking for a new slogan so they’re launching a competition to get “young European designers” to do the work for them help out.  We can’t resist competitions (or big cash prizes) here at Vox Polis so here are a few suggestions -

• Now with 10% extra Eurocrats!!!
• Forward into complexity
• Just say yes (new logo being some kind of swooshy design)
• United in homogeneity
• Better than Kilroy
• States, United (new logo - some arrangement of 6 stars and 25 stripes)

As for a serious suggestions I’m not feeling particularly inspired right now.  ‘United in diversity’ is actually pretty good and is the kind of not stupidly over confident thing that I’d come up with myself.  The best thing I can think of right now is ‘Freedom together’.  Suggestions (especially of the prize winning kind) from our loyal cadre of readers are welcome.

I’ve previously covered the difficulties that new windfarm construction schemes can have when faced with (amusingly ill-informed) local objections. In light of that, these alternative designs from the Netherlands seem like a pretty good idea. Personally I like them but then I’ve never had a problem with the standard turbine design. Unfortunately I fear that disguising turbines with a thin veneer of modern art won’t fly so well with the “but it’s not art” Daily Mail crowd.

Via We Make Money Not Art.

Looks like Alistair Darling is going to introduce some new measures to reduce climate change by paradoxically getting energy companies to encourage people to save energy. Energy companies would have targets to reduce their customers’ energy consumption - clearly not going to be popular with energy companies. They could even force people to put wind turbines on their house according to the interview in the Sunday Independent.

It’s a bold move. I can’t think of an example where any company has in the past been forced by law to get its customers to actually stop buying their products, although there are examples of businesses voluntarily forming organisations to deal with the externalities of their products (Drinkaware trust is funded by the drinks industry).   We’ll  have to wait and see if it actually happens.

Yet again the US has outperformed the EU, according to this week’s The Business. But for once it’s not an article criticising the EU for its poor economic growth or its excessively high unemployment. This time the US has beaten the EU at its own raison d’etre: Climate Change.

According to the Business, the US has kept CO2 emissions constant, whilst they have continued to rise in the EU. It puts this down to the high proportional increase in fuel prices in the US which have encouraged innovation and the move towards lower emission technology. Whether this trend will continue remains to be seen.

The situation in the EU is worrying. The EU prides itself on its environmental credentials and often takes the international lead on new regulatory mechanisms to reduce mankinds environmental impact (see the RoHS and WEEE directives). Even though the EU has introduced a market based mechanism to tackle CO2, the Emissions Trading Scheme (ETS), emissions have continued to rise.

ETS gives businesses carbon permits to cover their CO2 emissions. If businesses reduce their CO2 they can then trade permits with other businesses that emit too much. This is much in line with the polluter pays principle. The scheme is a great initiative on paper: in economist terms it is efficent, and has the advantage of the double dividend: improve the environment and help economic growth. However in pratice the EU has created an overregulated and burdensome mechanism that has so far had little impact on emissions.

The EU’s biggest mistake was giving the permits away for free to each business instead of auctioning them off. Giving them away for free basically transfers permits to a business that are worth millions of euros, and could be seen as a form of state aid. According to the Sunday Telegraph, this allocation has meant that businesses, including Esso and other oil companies, have made millions out of the scheme.

Instead of auctioning the permits, the EU member states formed burdensome National Allocation Plans to distribute the permits to the different sectors in the scheme. However each member state chose to distribute them in a different way. Some basing it on their historic emissions, others on their future emissions. This resulted in some plans giving some businesses more permits than they required. They then sold these to make money.

It looks like the EU will continue to make the same mistakes in the second phase of the scheme which operate from 2008. Last week Germany and France indicated that they will actually increase emissions in the second phase.

So what’s the solution?

Clearly doing nothing is not the answer- although it seems to be working in the case of the US. But the current ETS is not performing as it should and could. Last week the IPPR called for the EU to decide the allocation of permits. This is something that member states are unlikely to agree with: allowing the EU to dictate how much aid each industry gets is certainly something they wont like.

The situation is certainly critical. In 2008 the Kyoto mechanism is supposed to come on line, and we’ll start to see project based credits too, which will certainly complicate matters.

The solution is simply to allow all the allocations to be auctioned off. This is the most efficient method, and will result in the CO2 reductions the EU needs to achieve if it is ever to meet the kyoto agreement.