Emission permits for sale: only one careful owner?

What is to be made of Rodney Chase's admission (see page 4) that an energy tax could be `a powerful instrument for changing behaviour' amongst companies such as his own BP Amoco? Could it just be that he is `crying wolf' in an effort to keep at bay the sharp teeth of the taxman? Admittedly, in his address to the Fabian Society last month Chase said that taxation cannot be ruled out `particularly if it is carefully directed and if energy users face genuine alternatives [our itals]'.

An alternative which BP Amoco favours is tradeable emissions permits. In its evidence last year to the Energy Task Force report, chaired by Lord Marshall, the company claimed that emissions trading `will deliver better results and greater volumes of reductions... because the focus is on a direct solution to cutting total greenhouse emissions'. Energy taxes, on the other hand, `reduce greenhouse gas emissions only indirectly, by raising energy costs in the hope of reducing consumption'.

Now reduced consumption is not what any oil company wants, but is emissions trading the answer? Certainly, the scale of operation amongst oil refiners and chemicals producers makes the proposition attractive. But, as Lord Marshall himself says `even when an international emissions trading scheme is fully developed, it is unlikely that all businesses will be involved.'

And that surely is the point. Capital-intensive industries may benefit from an international market in emissions permits, but the majority of small and medium sized enterprises - collectively responsible for around 60 per cent of total CO2 emissions from UK industry - will be excluded from such trading.