I was asked by a person with a political persuasion to prepare some slides for them so that they might present my ideas on what I call Sustainable Cost Accounting. These are what I sent them. They were meant to explain what was being said, and not illustrate them so they should, in themselves provide the narrative flow:
The essential idea
- To make business a partner in the transition we all have to go through;
- To require this by changing accounting rules ideally via an amendment to the Companies Act 2006;
- The essential logic is that ‘what counts matters';
- The aim is to make sure that the transition to net-zero carbon matters by counting its cost in the accounts of companies.
The requirement
- That all large and maybe medium-sized companies prepare a plan to become net-zero carbon by 2030;
- That they cost this plan - literally saying how much they think it will cost to become net-zero carbon emitters;
- They must have this cost audited;
- And then they must:
- Publish the plan;
- Include all the estimated costs in their accounts by 2022 as a provision, with the actual spend to be recorded against this provision over the years that follow.
Why do it this way?
- Because it makes clear the scale of the practical issues that these companies face;
- It makes clear the scale of the costs that they will have to meet;
- It highlights whether or not they will need new capital to finance the transition and makes them plan for that e.g. by
- Cancelling dividends;
- Raising new funding;
- It lets markets, shareholders, pension funds, employees, government and regulators know the scale of the risk that we face, company by company.
The options for companies
- If they can show they can afford the transition then they simply have to get on and do it;
- If the plan shows the company has to restrict dividends to pay for the transition then it will have to do so;
- If instead the business needs to raise new capital to pay for being net zero carbon it has to say how, and when, and who it expects to get that money from, and get its auditors to agree that's plausible;
- And if it can't either:
- Make the transition, or;
- Convince its auditors that it can do so on the basis of currently known technology (and a precautionary principle must apply to the assumptions made), or;
- Work out how to raise the funding to make the transition;
Then its declared carbon insolvent and it has to have its affairs wound up in an orderly fashion.
The benefits
- Every large company has to address the climate crisis: it will have no choice by do so;
- Markets can reallocate capital from companies who cannot survive to those who can, which is precisely what is required by society and is the proper function that accounting should assist;
- The scale of the capital required to fund the transformation can be assessed and planned for;
- Employees with uncertain futures can begin to make plans for change;
- If the government is going to need to assist some business then that too can be planned;
- And the scale of the new green jobs required to replace those that will be lost can be estimated.
The risks
- It will become apparent that some companies are overvalued, and might even be carbon insolvent and have no future. This will create a cost for pension funds. But we need to know that now;
- Dividends may go down, and that will also impact pension funds - but unless the planet survives pension funds have no role anyway;
- It's too late;
- The forecasts might not be right:
- Things could cost more than expected (they usually do);
- Technology might not not solve the problems not the ways forecast;
- More capital is needed than planned;
- More alternative jobs are required;
- But if we don't try we get nowhere.
The alternative is extinction
- There will be objections to this suggestion, of course;
- The alternative is extinction;
- The question is whether we face economic reality now or extinction later;
- I know the option I prefer.
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I think you should expand on why there is no mention of tax in the outline presentation.
Also worth going back to fundamentals, because anyone presenting this kind of thing is going to be asked what the best evidence there is that there is a Climate Crisis when the mainstream scientific view is that there are gradual increasing risks associated with temperature rises.
Finally the conclusion that net-zero is desirable needs justification. Anyone making such a presentation will be asked why net-zero when the mainstream view is ‘net-optimal’, which might be a positive or negative number, you don’t say. It’s a bit weak to assert that the number should land on zero and say ‘we’re done’.
With respect, there is a climate crisis
The scientific evidence is that unless we hit net zero by 2025 we may be past the point of no return
Your claim is completely unfounded – nonsense in fact
And this is not the standard – it’s a suggestion for where it might go
You are missing the point
Mandon Wibble (?) says:
“…. the mainstream scientific view is that there are gradual increasing risks associated with temperature rises.”
I don’t think so. Global climate is a complex system so disrupting it gradually doesn’t produce gradual change. Complex systems can spiral into chaos with very small changes of inputs.
An additional factor is that there are positive feedback loops that lead to exponential changes rather than the gradual changes you attribute (wrongly I think) to ‘mainstream scientific’ thinking. For example; marginal average temperature increase in Tundra (permafrost) regions releases carbon rich gases such as methane into the atmosphere increasing the ‘greenhouse’ warming effect leading to further temperature increase leading to more gas release and so on….. the only thing ‘gradual’ about that it is that it is gradually accelerating.
Looked at positively, if you are prepared to take a (very) longterm view it means that the planet is healing itself. The extraction and release of all the fossil carbon from burning coal and oil is naturally creating the conditions of higher temperatures and CO2 which will encourage the sort of climate in which we can expect to lay down more fossil fuel deposits.
……..but we will have been extinct as a species for aeons before ‘we’ see the benefits. If you see what I mean.
The claim made conflicts with the science
I wonder who pays these trolls?
Mandon Wibble (?) raises one interesting point…
“why net-zero when the mainstream view is ‘net-optimal’, which might be a positive or negative number,”
It doesn’t really change the proposition though. It merely changes the operating target, I think that is only a matter of detail isn’t it. ? In this case the devil is not in the detail; that is something to be tweaked.
We wouldn’t scrap an entire tax system (which was sound in principle) just because we had the rate wrong by a percentage point or two. We’d adjust the rate to meet its intended purposes.
The same applies here. It may may indeed be that we need to apply a negative number. But first the system has to be established in principle or there is nothing to work with.
Agreed
This would be an amazing change.
Have you drawn up any rough draft examples of figures for a couple of different companies to see how it might look?
I could not do that – only they could
Sorry
Perhaps the biggest hurdles this would help us clear are the base psychological ones – fear and denial.
Often the bogeyman isn’t so scary when you stop running and turn around to face him.
I have my doubts about “net zero” (as opposed to “real zero”).
According to climate scientist Kevin Anderson:
‘”net” zero masks a dark secret. It’s shorthand for passing the buck to our children to invent & deploy planetary-scale CO2 sucking machines (at 100sGtCO2 scale)’.
https://twitter.com/KevinClimate/status/1138393996894621696
Isn’t this really a call for govt to mandate carbon neutral rather than a change to accounting. If it’s mandated then they will have to include costs, provisions etc. and if they can’t achieve it then going concern will kick in as they could be legislated to close (even though fiscally solvent).
The question is what do we mean by carbon neutral and how far is this supposed to go?
Should a company offset the impact of their employees travelling to work?
If delivering to large regional distribution centres who counts the onward movement to individual stores, does a company have a cutoff handover point to its commitment?
Similar if you post something?
If you book travel through a company that is carbon neutral complainant company then can you assume you are compliant for that activity?
Are you proposing that govt maybe creates schemes for certain costs/resources and all relevant companies buy carbon credits then govt is responsible for administering the environmental impact, say local flood defences
The company can only control its own activity
And whilst you raise some good questions why not comment on what the post was about?
P says:
“Isn’t this really a call for govt to mandate carbon neutral rather than a change to accounting.”
The government could mandate ‘carbon neutral’ but without a system of accounting that measures the carbon cost, how would it be possible to regulate the mandate ?
The underlying point of the Murphy proposal is that accounting needs to account for more than just the cash flow and money profit…. it needs also to account for real societal costs – pollution, environmental degradation, exploitation of natural resources and the rest. We don’t under existing systems of accounting consider the benefits of industry (in its broadest sense) against the true costs.
This is not really a new idea …… and we should have been doing this for a long time.
This iteration is new
I agree with all the rest
Just to be clear are we talking about direct emissions or do you want to include indirect emissions?
If you are including indirect emissions how do we avoid double counting, e.g. my indirect emission maybe your direct emission. For example an employee catches a bus to work then the bus company has a direct emission (fuel in bus) while the employees company has an indirect emission from employee travelling. Who should be accounting/planning?
What if one employee drives and one catches bus and one walks do I need to consider them separately for emissions?
Sounds an intriguing concept subject to defining some parameters and considering the holistic view not just individual companies
I am discussing direct emissions
But reselling bought in emissions makes them direct emissions, of course
Wouldn’t it be a fair assumption that the carbon costs are all ready accounted for in items resold as they are in the price, only the direct cost of the reseller would be included (onward transport, lighting/heating etc)
So a retail premise would only show its carbon cost not the carbon cost of every items it’s purchased, similar with services if I shipped using a freight service to customers the freight service price would include the carbon cost and I wouldn’t need to account for it, as opposed to running a fleet of vans.
Or are we talking about something like WEEE where providing a recycling scheme is required, but applying this to a much wider group?
But the reseller then becomes responsible for its carbon content
The impact on the supply chain operates in reverse
The pressure for change is created in that way
Have you thought through the many problems with your “Sustainable Cost Accounting” idea? Specifically you have left out a lot of detail in the “Risks” section.
I can see a variety of them, with no easy fixes.
Firstly, how are you going to actually value the cost of becoming net carbon zero? There is no definitive methodology to do this. It’s hard enough to work out how much carbon a company is producing, let alone work out how much it would cost to stop doing so.
Secondly, how are you going to account for all the inputs and outputs? Who is actually using the carbon? How do you account for all the carbon footprints in a manufacturing chain? Is it the business or the end user that should be paying for the carbon use?
Third, how many businesses in general are likely to be net carbon neutral at all? I can think of almost no business that would meet this criteria. If this is the case, how are those companies going to offset their carbon emissions? What is the mechanism for them to do this?
Fourth, if the costs are too high and companies start becoming carbon insolvent as you call it, what are you going to do when the economy starts to suffer because of all the businesses that are closing or moving abroad, to where these pernicious rules can’t touch them? The UK only produces around 1.5% of the world’s CO2. Do you think China are going to apply the same rules if it damages their economy in even the slightest manner?
What you are suggesting doesn’t seem practical or realistic in any sense. If anything, they could make the problem worse as companies move their most polluting businesses to places where the regulation is not touched by SCA type things – which means places like China – and the pollution will likely get worse not better.
There is no definitive methodology to most accounting
The company has to account for its own emissions: but it is responsible for all it sells
If no companies are net carbon neutral we are extinct
Do you understand the issues this addressing?
And all businesses will close if we are extinct
Well, there are definitive methods for most accounting, but there is certainly no method for carbon accounting. If you are saying we should account for it – and then shut businesses down on that basis, you should probably have an idea how it should be done.
I mean, are you going to account for all the carbon a business produces directly, or indirectly as well? So does that mean just the carbon produced through use of electricity and in the means of production or does that include all the carbon their workers use as well, for example?
But ultimately I just don’t think you are being very realistic. You are saying we should go back to pre-industrial revolution levels of carbon output by essentially shutting down huge swathes of industry – but forgetting the global population (and humans aren’t carbon neutral themselves) is many times larger.
Do you think most people will go along with this if it is going to cost them their jobs and livelihoods, or are you suggesting we should just cull billions of people through starvation, because farming and especially the transport needed to get food to the cities is not carbon neutral.
Where do you draw the line? Can you even give an example of a carbon neutral business? I doubt even your own company is. But then the health service and education aren’t carbon neutral, and I would guess nearly every household in the UK isn’t carbon neutral either. What are you going to do about them?
And even if such a law is passed in the UK, what difference would it make? China isn’t going to suddenly accept this kind of rule, so all that will happen is the worst carbon polluters will move there.
Which is why a lot of these very extreme schemes simply have no hope of ever happening. You can’t persuade billions of people in developing countries to stay poor and forgo the industry that is driving their economic advancement. You won’t be able to persuade those in the western world to forgo their lifestyles either.
Why not try doing a carbon audit on your own business and lifestyle? Once you are carbon neutral yourself maybe you will have a better idea of the costs and sacrifices it would entail everybody else making – rather than just ordering everybody else to go along with your rather authoritarian idea.
It would be better to come up with realistic, workable solutions to the problem, rather than a solution which essentially means throwing the economy back to the middle ages, which nobody is going to accept.
I have not said we need to account for carbon
I have said businesses have to provide for the cost of being net zero carbon
IAS 36 and IAS 1 could cover that
I am putting them together
And that is what we will have to do
The rest of what you say is just pure nonsense, unless of course extinction is your plan
Isn’t the point that you refer to IAS a contradiction to the statement that there are no accounting methodologies
No
Those that exist are within an inappropriate framework of responsibility
Hi Michael
That read a little bit like “this is going to be hard, best not bother”. Maybe that wasn’t your intention – I don’t want to put words in your mouth.
Anyway
Point 1 – if no methodology exists; consider the problem, identify relevant metrics, create methodology.
Point 2 – see response to point 1. You’re correct of course, it will be difficult and no doubt a coarse grain model will have to be developed and refined as time continues. But that it will be difficult isn’t really an excuse. Could be an interesting PhD project if the funding were secured…
Point 3 – probably none right now, or only super-eco projects. But again, this smacks of “it’s difficult, let’s give up”. nothing will change if we don’t try. And we must try.
Point 4 – yeah reasonable point actually. Apart from the irresponsible attitude of we’ll make no/barely any difference. Be the change you wish to see (as much as I hate resorting to cliched phrases)
Thanks
And agreed
@Michael G
I don’t suppose your contribution actually counts as trolling, but …..
“Have you thought through the many problems with your “Sustainable Cost Accounting” idea? [….]…Specifically…..Risks…. I can see a variety of them, with no easy fixes.”
Oh, dear. There are some risks with no easy fixes so the idea’s a non-starter ? We are facing a problem of massive complexity and you want an easy fix? I don’t think you’re going to be a happy bunny then.
In fact I think from the tenor of your comments that you will be unhappy with anything other than a continuance of the staus quo because essentially you don’t believe there is a problem to address.
” How do you account for all the carbon footprints in a manufacturing chain? Is it the business or the end user that should be paying for the carbon use?”
We share the cost as we do with all business costs….duh ! They are included in the price to the end user.
You give yourself away rather with “these pernicious rules”. In your book there’s nothing pernicious about wrecking the planet, then?
“The UK only produces around 1.5% of the world’s CO2. Do you think China are going to apply the same rules if it damages their economy in even the slightest manner?”
We may only produce 1.5% of CO2, but we have that relatively low figure by outsourcing a vast proportion of our manufacturing (to ‘China’….) and agricultural production to other countries. How can that be considered ‘fair’.
Carbon Accounting at each stage of the production chain allocates the costs where they are generated and passes on the costs. In practice it might be difficult, but the principle isn’t complicated is it ?
Where I do agree with you is that for this sort of sharing of real costs (across and within national borders) to work properly we do have to have an understanding of what we mean when we talk of ‘Carbon Neutral’, ‘Zero Carbon’, and associated terms. And we will need reliable and agreed international measuring standards. (God ! Won’t the Americans hate that. 🙂 )
(Just for clarity, I am Mich/Michael G – I just typed my name in the box quickly when posting earlier and forgot if I used my full name or nickname).
@ Richard Murphy
Isn’t accounting for carbon and providing for the cost of being net zero carbon essentially the same thing? You need to work out how much carbon you are producing then account for it’s cost….
IAS 36 deals with impairment of assets. Carbon is an externality so doesn’t easily fit within that. IAS 1 just sets out overall requirements for presentation of financial statements. So I’m not sure what you are getting at here, other than saying companies should be charged for all the carbon they produce up front.
Which is very difficult to do in practice. Not only is it hard enough to account for the carbon produced and it’s cost, but it would make any new investment almost impossible (as the carbon would be produced but no revenues to support it for some time afterwards). It would also immediately make most businesses fail – as you point out – which would cost the economy and huge numbers of jobs.
I don’t think anything else I have said is pure nonsense, unless you are viewing it from an absolutist point of view, not a realistic one. You proposals might be the “solution” to carbon production, but you aren’t taking into account any of the potential downsides. When you take into account the damage it would do to business, economies and jobs, the chances of people for voting for such a policy is near enough zero. Let alone the fact that most countries around the world won’t implement such a law, or that the net result is likely to just shuffle the problem to somewhere else in the world.
@ Johan G
Well it is going to be hard, but I wasn’t suggesting we don’t bother. I am saying that we have to be realistic though. I don’t think Richard Murphy’s suggestion is.
To your points:
1/2. Methodology and measurement are only part of the problem. A big one mind. But how do you pass the costs on? Do you apply the costs to the producer or the end user? How do you account for all numerous inputs and outputs accurately? How then do you make sure that at the end of the day it is all fair, as the likelihood is that carbon costs will get passed on to the consumer, which will affect the poor and larger families more, let alone people who live outside major cities and have less access to public transport etc.
3. I don’t agree here. The UK has managed to dramatically cut it’s CO2 (to 1890 levels) output without radically changing the nature of life and the economy. More can be done, but it’s most likely to be successful if the population as a whole buys into the idea – which is going to be hard if you are trying to get hem to vote for what is tantamount to throwing back the economy to pre-industrial times overnight.
4. I think this point is important. The more radical the idea and the more damage to the economy, the more likely externalities will arise. If you make it impossible to manufacture things profitably in the UK, the chances are that production will shift to somewhere without the same carbon laws – or even more lax ones. Which means the problem hasn’t gone away, it’s just out of sight. I don’t think Richard Murphy accounts for this kind of thing at all. It might sound nice to say the UK is carbon neutral, but if all we’ve done is move the problem on, we haven’t achieved anything.
@ Andy Crow
I think you are mis-stating what I have wrote.
There are no easy solutions to this problem – that is not what I said. But there will be better and worse ones, and some which are manageable and realistic and some which will never get off the ground because they unrealistic in scale and design. I think Richard Murphy’s idea is in the latter catagory.
Nor did I say there is no problem to address. But you aren’t going to fix anything with totally unworkable, authoritarian ideas which you can’t sell to the public because it means eradicating large swathes of industry and how live our modern lives – with no real guarantee it will fix anything, and could easily make things worse.
“They are included in the price to the end user.”
See my response to Johan G. It’s not as easy as that, in pure accounting terms, and how do you make it fair to the myriad of different end users. A larger family will be default end up paying more of these carbon costs. You might well argue that is fair, but then you are intrinsically putting a cost on human lives, and a cost which will be highly regressive in nature. It will affect the poorest the most. Why not just go the whole hog and just charge people a carbon poll tax?
“In your book there’s nothing pernicious about wrecking the planet, then?”
Again, I didn’t say that. But these rules fail some basic tests. Not least the basic fact that human life – especially modern human life – is not carbon neutral. What would you do with the thousands, if not millions of people thrown out of work because their businesses fail thanks to carbon taxes? Or are you saying there should just be a lot less people? Would you be happy to limit what people can eat, do, drive, or how much power they can use to heat their homes etc? That is the end game for this kind of thing.
“We may only produce 1.5% of CO2, but we have that relatively low figure by outsourcing a vast proportion of our manufacturing (to ‘China’….) and agricultural production to other countries. How can that be considered ‘fair’.”
Actually, UK manufacturing and food production has grown significantly whilst our carbon emissions have dropped. But you make my point for me, by ignoring the externality Richard Murphy also did. If you stop manufacturing in the UK, you are just going to shift the problem elsewhere – and potentially make it worse. And the problem is the amount of CO2 produced, not where.
“Carbon Accounting at each stage of the production chain allocates the costs where they are generated and passes on the costs. In practice it might be difficult, but the principle isn’t complicated is it ?”
The principle isn’t complicated, no. But principles don’t mean a great deal unless they can be suitably and equitably applied. That isn’t easy.
“And we will need reliable and agreed international measuring standards.”
Good luck with that. I actually think the US won’t be the biggest issue in this sort of process. Their emissions are already dropping fast, and set to drop another 20% over the next 10 years, and such global regulations will help their manufacturing industry against their major competitors – specifically China, and to an extent India. Who will never agree to such accounting standards. Their emissions have skyrocketed over the last 20 year and are still climbing. Why don’t you (or anyone else who puts this kind of idea forward) ever deal with the elephant in the room, which is China?
I think the takeaway here is that just because Richard Murphy proposed something that you like, doesn’t make the idea a good one or workable in any sense.
Michael
You say
“Isn’t accounting for carbon and providing for the cost of being net zero carbon essentially the same thing? You need to work out how much carbon you are producing then account for it’s cost….”
And my answer is no, not at all
Nothing in this asks that you account for the cost of carbon
I simply do not agree with your logic, at all
Richard
“Nothing in this asks that you account for the cost of carbon”
Hmmmm…….because it’s not a carbon tax scheme…with the option of carbon trading; the object is to reduce levels of carbon we produce/emit ?
So…the accounting is financial accounting of the cost of changing the business to being carbon-zero /carbon neutral …..whatever. And if the company cannot operate viably at that carbon level we’re saying it will not be allowed to operate at all ?
Am I getting this right ?
I realise I’m going to have to look into what it means to be carbon neutral/zero. Is it even theoretically possible for an airline, for example, to be carbon neutral I’m wondering…
The challenge is to say to a business they must be carbon neutral
It is fof a government to decide if they can be excepted, and how
I tend to agree it’s an interesting concept and definitely worth using as an initial thought exercise, but needs to be much more fully fleshed than is being presented here. Though in fairness this is a blog and the author may well have much more detailed papers or academic studies from which this simplistic blog summary was generated. Calling it Sustainable Cost Accounting does imply that there is more of a framework than presented though.
I think the discussion on the comments reflect that to some degree just some of us are more interested in how this would play out as a working model while others are more concerned about the concept.
There is more
It needs to be developed further
I hope to do so
@Miicael G
I appreciate that you took time to make a thorough interrogation/rebuttal of some of my comments. I’m thinking about what you say. I’m certainly not dismissive of the difficulties you highlight. This is still an entirely new idea to me and I’m trying to get my head round it, too.
If my tone to you was aggressive, I apologise. I think you rather miss the point that it is not ‘you’ (Richard Murphy) as dictator of the nation who will impose this, rather it is ‘we’ collectively who will impose it on ourselves – assuming it’s an idea with legs. I’m probably as guilty as you are of personalising arguments. I know it’s not helpful and I try not to, but don’t always succeed.
You say however:
“Not least the basic fact that human life — especially modern human life — is not carbon neutral. ”
Isn’t that the very problem we are addressing here ? That modern life as we have come to expect it is very far indeed from being carbon neutral, but that it needs to become so. (?)
The implications of ‘Sustainable Cost Accounting’ are that we have to change a lot of other fundamental ways we run our society. Climate scientists are telling us we need to be coming up with some of these alternative ways of life PDQ. It has been said that we need to approach the problems as if we were on a war footing.
We aren’t doing so. (I hate to mention the ‘B’ word, but we’ve wasted three years haggling pointlessly about EU membership to the exclusion of what is a significantly more important issue. If that’s a proxy war and indicative of the way we will approach the real crisis, we are going to fry.
So one of the fundamental ways we need to change our way of life is to start doing ‘politics’ on a more mature and inclusive basis. A significant proportion of the population won’t even undertake the very simple task to separate their domestic rubbish into ‘recyclable’ and ‘other stuff’. We’ve got a hell of a lot to do and a hell of a lot of people to get on board.
Some of the initiatives we adopt will not work well, and some may even prove to be counter productive, but we do (IMO) have to get on with implementing and monitoring them. This sort of forum is one place we do that and your input is as valid as mine, but we need to travelling in the same direction.
Andy
Thanks
Excellent comment
Richard
@ Micheal G
>>Well it is going to be hard, but I wasn’t suggesting we don’t bother. I am saying that we have to be realistic though. I don’t think Richard Murphy’s suggestion is.
Fair enough, glad we cleared that bit up :). I think the problem with being “realistic” is that it sets targets too low. Boundaries must be pushed, we’ve run out of time to make gradual changes.
>>To your points:
>>1/2. A [Methodology and measurement are only part of the problem. A big one mind. But how do you pass the costs on? Do you apply the costs to the producer or the end user? How do you account for all numerous inputs and outputs accurately?] B [How then do you make sure that at the end of the day it is all fair, as the likelihood is that carbon costs will get passed on to the consumer, which will affect the poor and larger families more, let alone people who live outside major cities and have less access to public transport etc.]
Ok, so this is two questions. I’ve bracketed them into A and B above to give a more coherent answer.
A – I think you’ve just said the same thing back at me. We need to define the problem properly and identify the correct methodologies to answer the relevant questions. You have provided some of the relevant questions and I agree with the tone of them. I suggested doing all of this would make an interesting PhD project — i.e. I would expect it to take *at least* three years to begin to form the correct framework and gain a reasonable understanding of the issue as a whole. From your response it sounds as though you agree.
B – I’m not entirely sure to be honest. It would have to be intrinsic to how the above mentioned metrics are interpreted. Maybe provide subsidies to help those less well off shift from fossil fuels to renewables? Maybe some form of Green New Deal to improve infrastructure everywhere?
>>3. I don’t agree here. The UK has managed to dramatically cut it’s CO2 (to 1890 levels) output without radically changing the nature of life and the economy. More can be done, but it’s most likely to be successful if the population as a whole buys into the idea — which is going to be hard if you are trying to get hem to vote for what is tantamount to throwing back the economy to pre-industrial times overnight.
Hold on, my response was to *your* question about how many companies did people think were already carbon neutral. This is goalpost shifting and you can’t have it both ways. Either, we’re doing a good job of cutting net carbon usage, in which case continuing that trend shouldn’t be over-burdensome on business, or as a country we’re not doing a good job and we will have to endure a painful transition to carbon neutrality. FWIW, I consider painful transition to be better than extinction. I also anticipate that requiring companies to become carbon neutral may result in completely new jobs, new infra-structure set-ups etc. I’ve considered local electrical generation to be a good idea for a long time; it could be time to start shuffling towards that as well. So death of the old and start of the new.
>>4. I think this point is important. The more radical the idea and the more damage to the economy, the more likely externalities will arise. If you make it impossible to manufacture things profitably in the UK, the chances are that production will shift to somewhere without the same carbon laws — or even more lax ones. Which means the problem hasn’t gone away, it’s just out of sight. I don’t think Richard Murphy accounts for this kind of thing at all. It might sound nice to say the UK is carbon neutral, but if all we’ve done is move the problem on, we haven’t achieved anything.
This statement is working from the principle that continuing with business as usual will not cause damage to the economy. The scientific evidence is that if we don’t do something soon, the damage to the global economy will be huge. I agree that we need to make sure that the problem isn’t just moved out of sight. I guess that’s why paper trails and full audits would be required when assessing carbon compliance. I don’t know how to say this without sounding snarky — your objections are all about difficulties, not impossibilities. I think we agree on the most part about what the difficulties will be. I think it is worth trying to tackle the issue. Part of this is accounting for carbon (and then requiring companies to head towards carbon neutrality). It will require iterative improvements, as almost all our laws do.
One final point — if the UK wants to remain a world leader, this is an opportune task/moment. Prove the principle, others will follow.
Thanks