Monday 30 May 2022

Additionality matters

One basic lesson in public finance is that you need to think carefully about the effects of grants. Give somebody a grant for something they were likely to be doing anyway, and you've mainly just increased their budget set. They can do more of the thing for which you gave them the grant, and more other stuff too. 

And that can be fine and all if that's what you wanted to do. But in that case you might have just considered giving them cash. 

Here's James Shaw, who missed that lesson:

And here's what the school says, in the article that Shaw links:
The school had planned to replace the boiler anyway, and now the property money that had been put aside could be used on other projects.

Did he not read the piece? Or has he given up caring about cost-effectiveness in reducing emissions? Shaw isn't an idiot. He has to know that this doesn't make sense. 

The school was going to make a switch anyway, so Shaw's giving them money winds up just being a budget boost for that school. And an implicit penalty for the schools that switched earlier and consequently don't get to profit from this new slush fund. 

I've an OIA waiting on any evidence the government has received on net additionality for any of its giant industry subsidy slush fund for climate stuff - which is separate to the programme that the school used. 

Climate policy cannot afford to keep being this stupid. We will bankrupt ourselves getting to Net Zero if it does. 

1 comment:

  1. Don’t say that, you’re going to spoil everything. I’ve just bought my daughter a cheap car, when the “cash for clunkers” comes in I’ll cash that in and buy a new car for us and she can have our current SUV