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October 26, 2006

Parking Gas Guzzlers

Fools and poltroons.

Millions of drivers of sports cars and 4x4s face hefty charges to park outside their own homes under a scheme being pioneered by a local council.

Town hall chiefs across the country were said last night to be closely watching a move by Liberal Democrats in Richmond upon Thames, south-west London, to target the owners of so-called "gas-guzzlers".

The borough wants to introduce a sliding scale of charges for residents' parking linked to the emissions of the vehicle. Owners of electric cars would pay nothing, but someone driving a people carrier or high-performance vehicle would have to hand over £300.

The rationale for parking charges is that there are more cars than there are parking spaces, so a charge is introduced to both reduce demand (by, say, stopping those from outside the area parking there when commuting etc) and to pay for policing that system. Fine.

Environmental campaigners were keen to see the idea spread. Tony Bosworth, transport campaigner for Friends of the Earth, said: "Encouraging people to use fuel-efficient cars is a key way of tackling climate change, so the Richmond scheme is an important step in the right direction."

This scheme intends to tax in order to cut emissions. Which it might do, a tiny bit, but it's a very inefficeient way of doing so. What you actually want to cut is emissions, something which are not caused by parking but by burning petrol.  So the tax should be, if you want to reduce the activity, on the burning of petrol.

Anyone who is advocating tax changes to curb climate change who is not advocating a rise in fuel duty simply isn't taking the problem seriously. Well, there might be one let out here.

Pigouvian taxes should be set at the level of the cost of the externalities themselves. Not above or below them. In this case the externalities are the contributions from petrol usage to CO2 emissions and thus climate change. No, I don't know what the correct tax level is in detail but aren't carbon taxes supposed to run about €30-€40 per tonne CO2 emitted? Isn't that roughly the level that's advocated?

Does petrol currently pay more or less than that? Perhaps that's why people don't mention the subject: petrol is already too highly taxed purely on its environmental impact?

October 26, 2006 in Climate Change | Permalink

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Comments

F*ck me.

I've just done the maths. Now let's assume (pace this discussion at Tim Newman's place) that you DO mean EUR40 per tonne of CO2 (not Carbon).

One tonne of CO2 contains ~273kg carbon, which would come from 324kg fuel (if it is pure octane).

Assuming density of 800kg/m3, that corresponds to ~400 litres of petrol.

Or a tax rate of 10 cents per litre. I see your point...

Posted by: The Pedant-General | Oct 26, 2006 9:40:20 AM

And here's the Carbon/CO2 confusion post:
http://www.desertsun.co.uk/blog/?p=226

PG

Posted by: The Pedant-General | Oct 26, 2006 9:41:23 AM

Wouldn't higher parking charges incentivise people with gas guzzlers to drive more mileage to find areas exempt from parking charges?

I think its the wrong kind of fiscal vehicle to disincentivise ownership of vehicles with low fuel efficiency.

Posted by: angry economist | Oct 26, 2006 11:03:51 AM

And http://neilherron.blogspot.com/2006/10/illegal-green-parking-fines.html points out they should be illegal as well, but will that stop them?

Posted by: The Englishman | Oct 26, 2006 11:09:32 AM

I don't think the above calculations are the right ones to make. The environmental cost of CO2 emissions is of course a hard thing to estimate given it requires a knowledge of the costs of directly CO2-related environmental damage, ie CO2 caused global warming.

Using the carbon dioxide emissions scheme pricing (far less than 40 euro a tonnne, btw) as a proxy, or the price of various carbon offset schemes (which should be the same broadly speaking) is problematic as it doesn't include transport emissions. Thus the price is going to be artificially low.

It seems to me it is a fallacy of composition to assume that although I could offset my carbon emissions for 10 euros a tonne, or whatever the current price is, that means everyone can. There are only so many easily scrapped coal-fired power stations in developing countries.

Tim adds: Sure, agreed. But we still have to do that calculation to get to hte optimal tax level: my suspicion is that with fuel taxes in hte UK is that we are above that tax level which is why no one really wants to work it out.

Posted by: Matthew | Oct 26, 2006 11:21:43 AM

.... except that I bet the petrol tax money doesn't go on saving the environment, but rather, on a new department for John Prescott.

Posted by: sanbikinoriaon | Oct 26, 2006 12:00:50 PM

"But we still have to do that calculation to get to hte optimal tax level: my suspicion is that with fuel taxes in hte UK is that we are above that tax level which is why no one really wants to work it out"

I'm sure they are as it raises £23bn, which must be in excess of the CO2 cost. But CO2 is not the only cost of course. and even if it is in excess of all costs, then you have to decide whether you would prefer to have higher income tax or higher VAT etc.

Tim adds: Or less government:-)

Posted by: Matthew | Oct 26, 2006 12:16:49 PM

Well that still doesn't remove the opportunity cost!

Posted by: Matthew | Oct 26, 2006 12:50:22 PM