There cannot be a £20 note lying on the pavement because somebody would have picked it up. Equally there cannot be a better way to tax, that doesn’t have some hidden problem, or a government would have already adopted it. Journalists doing their job will be looking for the hidden problem that green taxes suffer. (The lazy ones will metaphorically put their fingers in their ears whenever the environment is mentioned, and emote their preference for SUVs.)

The obvious hidden problem for green taxes to have is that if they work, they will raise less revenue. Obvious, but in most cases quite wrong.

In a growing economy, if we want to levy enough tax merely to stabilise emissions, the levy will have to increase over time as society gets richer and willing to spend more money on whatever benefit the dirty process brings. This is increasing eco-tax revenues over time – and stabilising emissions. That is a big benefit to both the treasury and the environment.

You could argue that only stabilising emissions is not really changing behaviour, it is not really a success. I think for most pollutants, and for carbon dioxide in particular, stabilisation, without harming prosperity, would be a big success and set a powerful example internationally. Perhaps the levels of green taxes the Lib Dems are proposing aren’t even enough to stabilise emissions – in which case the argument that they will lead to falling revenues has no merit whatever.

But let’s suppose the idea really caught on, and we had such swingeing increases in eco-taxes that carbon emissions started to fall. Would this then cause us a problem in balancing the books? Would these increases mean falling revenues? Well no. Taxing 90 tonnes of something at £20 per tonne will raise more than taxing 100 tonnes at £10 per tonne. The tax rate at which revenues actually start to fall is much higher than the rate at which the level of emissions will stabilise and start to fall.

The demand for energy is, at current prices, still relatively inelastic. Most of us do not worry about the cost of energy when getting in the car or using domestic appliances. The downside may well be that reductions in emissions are hard to achieve, but the upside is that the potential for eco taxes to raise revenue is much higher. And as we raise eco-taxes, we cut taxes on work. Now it is possible that substituting one tax for another will hurt prosperity, but not to the same order of magnitude as raising extra taxes. And in this case we are taxing work less, so we should expect a positive effect on prosperity.

If you believe there can’t be a £20 note lying on the pavement, you won’t try to pick one up if you think you see it. And if lots of people believe the same, it is quite easy for the note to remain on the pavement for quite some time. Magician Derren Brown famously left a wallet overflowing with £50 notes on a pavement in a busy shopping street for most of the day, the only protection being a yellow circle painted round it. The impossibility theorem is proved wrong by finding the impossible thing and taking the benefit. That’s the Green Tax Switch.