EU leaders at a Brussels summit have agreed a plan to cut emissions. This will involve the 27 EU countries cutting greenhouse gas emissions by 20% by 2020 compared with 1990 levels. The aim is also to try to raise renewable energy sources to 20% of total energy use. The package has become known as the 20/20/20 package, but scientists have already argued that these measures may not be sufficient to prevent serious climate change.
Fiddling with words as the world melts The Economist (18/12/08)
Climate deal is far too little too late Guardian (15/12/08)
EU leaders claim historic agreement on cutting pollution Guardian (13/12/08)
Climate change: EU leaders reach compromise deal on emissions Guardian (12/12/08)
World needs ‘climate revolution’ BBC News Online (11/12/08)
EU climate package explained BBC News Online (5/12/08)
EU leaders reach new climate deal BBC News Online (12/12/08)
Questions
- Identify two external costs that result from climate change.
- Using diagrams as appropriate, illustrate the impact of the EU climate change deal on the market for electricity.
- Discuss the extent to which the EU climate change deal will lead to an increase in the supply of renewable energy sources. How quickly are these changes in supply likely to take effect?
- Examine two other policies that national governments could implement to reduce carbon emissions.
Billions of plastic bags are used and discarded each year around the world and these cause considerable environmental damage – a form of market failure. In this podcast we consider the extent of the problem and policies that countries around the world are adopting to try to minimise this market failure. Many countries, including China, have banned single-use plastic bags completely, while others, such as Ireland, have chosen to tax them to try to limit their use.
Britain’s recycling strategy is under risk following a collapse in waste paper prices. Three quarters of UK waste paper is exported to Far Eastern buyers, but demand from this region has collapsed in recent months. The price collapse has led to a surplus of recyclable paper and some local authorities have proposed using Ministry of Defence (MoD) sites to store the waste while there is no market or use for it.
Paper price collapse blows hole in Britain’s recycling strategy Guardian (11/11/08)
Recycled waste could be stored on MoD bases Guardian (16/11/08)
Questions
- Define the terms (i) private cost and (ii) external cost.
- What are the external costs resulting from disposing of waste paper and other recyclable products in landfill sites?
- Using diagrams as appropriate, illustrate the changes that have taken place in the market for waste paper.
- Evaluate two strategies that the government could adopt to increase the price of waste paper.
- Discuss the likely success of a policy of storing waste on MoD sites to await an upturn in the recycling market..
One of the key Budget measures was a change in the car tax regime. The Chancellor, Alistair Darling, introduced a new banded system annual vehicle excise duty (VED) based on the level of emissions of the vehicle. The cars with the lowest levels of emissions will be exempt from VED, but at the other end of the spectrum, the highest polluting vehicles will face an annual VED of around £440. However, this will be substantially higher in the year of purchase of the vehicle and this so-called ‘showroom tax’ will raise the tax level to £950 in the first year of purchase.
Gas guzzlers hit with higher taxes Guardian (12/03/08)
New taxes on gas-guzzlers will raise an extra £1.2bn Guardian (13/03/08)
Spared at the pumps – but hit in the showroom Guardian (16/03/08)
Q&A: Showroom tax BBC News Online (12/03/08)
Gas guzzlers set to face £950 tax BBC News Online (12/03/08)
Questions
| 1. |
Explain how the highest polluting vehicles affect the socially optimal equilibrium in the market for car travel. |
| 2. |
Using supply and demand diagrams as appropriate, illustrate the likely impact of the new car tax regime in 2009-10 on the equilibrium in the market for car travel. What is the significance of the concepts of price elasticity of demand and consumer surplus in your analysis? |
| 3. |
Discuss the likely effectiveness of the new banded car tax regime at reducing the average level of emissions from cars. Would raising the tax on petrol and diesel be a more efficient method of achieving the same goal? |
2008 may yet come to be seen as the year that marks the death of the single-use plastic bag. Many countries around the world, including China, have banned their use and February 2008 has seen Marks and Spencer announcing a 5p charge per plastic bag in an attempt to reduce their usage. Even government departments have faced criticism over their use as promotional tools. For more details on plastic bag bans and policies relating to limiting their usage, see our 2007/8 podcast on The economics of plastic bags elsewhere on the site.
M&S hopes to cut plastic bag use with 5p levy Guardian (28/2/08)
Brown may legislate against free plastic bags Guardian (29/2/08)
Q&A: Plastic bags Guardian (28/2/08)
M&S to charge 5p for carrier bags BBC News Online (28/2/08)
Brown threatens supermarkets over plastic bag reduction Times Online (29/2/08)
Government accused over plastic bag waste Guardian (29/2/08)
Agency scraps use of plastic bags for Whitehall promotions Guardian (1/3/08)
Plastic bag bans around the world BBC News Online (28/2/08)
Videos
M&S to charge for carrier bags BBC News Online (February 2008)
M&S boss on plastic bags BBC News Online (February 2008)
M&S to start charging for plastic bags BBC News Online (February 2008)
Questions
| 1. |
What are the social costs and benefits resulting from the use of single-use plastic
bags? |
| 2. |
Using diagrams as appropriate, show how the equilibrium price and quantity of plastic bags differs from the social optimum. |
| 3. |
Evaluate two possible policies that the government could use to reduce the use of plastic bags. |
