The Prime Ministerial taskforce’s emissions trading report is out now. Get it while it’s hot (pardon the pun) from here.
Based on a very very quick flick through the executive summary, some of the key points:
- Argues for carbon trading rather than a carbon tax, because “Emissions trading will ensure that the policy focus remains on the ultimate environmental objective of reducing the output of greenhouse gases
- The scheme would involve compensation to two groups of businesses: One-off compensation, in the form of free permits, to “existing businesses identified as likely to suffer a disproportionate loss of value due to the introduction of a carbon price”
- There would be free permits handed out on an ongoing basis to “trade-exposed, emissions-intensive industries while key international competitors do not face similar carbon constraints, but which also provides ongoing incentives for abatement and adoption of industry best practice”
- At least in the executive summary, there is no explicit statement of what emissions reduction targets should actually be set, but the tone is of fairly modest initial targets.
The devil, as always, is in the detail – as previously discussed, the overallocation of permits could leave a future government facing massive permit buyouts. Worse, a token scheme could intensify rather than relieve the impending energy infrastructure crisis, because business won’t invest knowing that a dud scheme will have to be changed later. But let’s see what the report actually has to say.
It recommends trading but it’s really a hybrid trading scheme / carbon tax because they propose a ’safety valve’ fee. The idea is that the government stands by ready to charge a ’safety valve’ fee to emitters that don’t have enough permits, so that sets a maximum price on the permits: if it’s cheaper just to pay the fee than to buy the permits, you’ll just pay the fee, so the permits won’t rise above that price.
But that means that the cap on emissions isn’t really a cap. If emitters pay the fee rather than buying permits, then the cap will be exceeded. From business’s point of view it’s a good thing: it means there’s a known worst-case-scenario in terms of the costs it will impose. But if it’s set too high, the reduction in emissions could be much lower than anticipated.
I guess it’s a question of whether business or the environment bears the risk of abatement being more expensive than anticipated.
Will be interesting to see Howard’s response on Sunday.
My favourite bit so far is on setting targets – which they call goals, just to avoid using the green language:
“The Task Group believes Australia should examine all the issues necessary to determine a long-term aspirational goal – the abatement opportunities available today, including the scope for greater use of existing low-emissions technology; the technological breakthroughs necessary to deliver deep emissions cuts into the future; the policies required to promote greater use of existing technology and the development of new technologies; and the costs involved.”
Anyone else spot the elephant in the room?
Erm, what happened to climate change? They don’t think that climate science and estimates of what atmospheric CO2 levels we can bear might have some bearing on setting targets???
This hasn’t moved the political or policy debate one jot. It’s obvious and uninspired and will simply entrench the positions of the government and opposition. Could be worse, of course, but I don’t think much of it will ever be used. Howard will lose and the ALP will do their own thing.
tim: yes, Howard’s really setting himself up to go nowhere on this issue if he thinks caution on climate change amounts to this sort of timidity. At first glance this report seems to be endorsing a whole lot of nothing much — there’ll be a whole ‘nother electoral cycle before Howard’s basic, limited, still uncapped trading scheme even starts operating!
Isn’t this directly contradictory to the prime minister’s position ?
Tagcrowd.com map of the executive summary:
Erm, what happened to climate change? They don’t think that climate science and estimates of what atmospheric CO2 levels we can bear might have some bearing on setting targets???
Exactly. I heard Howard on ABC TV last night say (not exact quote but as close as I can remember) “We’re not going to go with some target that’s plucked randomly out of the air” and I thought to myself, “Randomly?!!!” He’s talking as if none of the UN scientific reports or the Stern Report exist.
He can’t be allowed to get away with that rhetorical nonsense.
This could be the industry protection of the 21st century, with all the market distortion, public-sector boondoggles and massively unplanned-for consequences that go along with that. Don’t put your daughter on the stage Mrs Worthington, put her into a lobbying job quibbling over definitions of “one-off” and “disproportionate”. Could be lucrative, as long as you like your lucre big and short-term (and hey don’t we all)
Whatever happens I expect ‘Howard neutralises Labor on climate change’ articles in ‘The Australian’ in the next few weeks.
The latest Morgan poll is here.
What a disaster. I guess this is another example of, if you stack it, you get it.
Howard’s emissions trading is a greenwash that won’t address climate change at all.
The scope isn’t broad enough – it needs to cover production and import of all fossil fuels.
Emissions trading in Europe (where they have been doing it for years) has not benefited the development of renewable energy.
With no (or soft) targets/limits, there won’t be any reduction in carbon emissions. At least $35 per tonne for carbon is required before wind can compete on a level field with coal.
Interestingly, over $50 per tonne is required to make carbon capture/sequestration competitive due to its very high development cost (and don’t forget the risk that it may not actually be economic to do). It listed at the first option on the AGO website though.
Permits must be auctioned, not given away to polluters. Otherwise the worst offenders such as coal fired power stations get a free concession to pollute, and the value of the permits is devalued.
Permits must be temporary licences, not property rights, otherwise owners can (and will) claim compensation if they lose them (in the event we actually do succeed in cutting emissions).
Howard has quite obviously been forced by public opinion to reluctantly do something to look like he is addressing climate change. Unsurprisingly, he has failed to address the root cause – which is the burning of fossil fuels.
Amazingly, Turnbull was quoted on the ABC tonight saying that “the long term direction is for zero emission energy”. The Howard government is nowhere near this, it is not on their roadmap. It will be interesting to watch them put more lipstick on the elephant-pig of the coal industry.
Here is the roadmap they are studiously ignoring:
* reduce consumption through efficiency measures (this is the easy part)
* substitute gas (transition) and renewables (biomass, wind , solar) and geothermal for coal-fired generation
* reduce emissions by 20% by 2020 (at a minimum) and up to 80% by 2050
* use the world global average temperature to measure progress, if it keeps rising more stringent measures are immediately required.
I must be the last of my type.I think the problem of why Howard isnt grasping something is essentially everytime there is valid reasons to criticise him,it turns into a intellectual windbaggery.So what he does is choose pliant wind bags on his side..that simple.So instead of discussing what to do at real sites as immediately as possible ,the windbaggery starts up again,and blows away as theme park news.We have companies in Australia who deliver carbon dioxide gas as article.We have tank makers metal,including silo makers.Sims is in to metal pipes.it is just a hop step and a bloody jump away,and yet the Greens the Labor and the Academics will go on and on forever about economics etc.You build something then if it works at present sites it works…all thes delaying tactics are the fears of people who are not even interested ,yet people go on like they are.Has there been any place as record where the main political players have been seen or heard to ask an intelligent question relating to flue and site-based emissions.Do people at this blog totally satisfied, they ,or you have asked some basic questions around the gases and flues,materials and the seemingly large volumes out of flue stacks!? I think choosing other options besides coal fired stations as thought construct is fine,but, what about using the stuff,experimenting with stuff tonight,that is available in Australia to add to reduce emissions. Stone motherless silence like nothing has been thought up already.Really!?They these fearing creatures on about taxesand trading,have the right to consider what is practical..you cannot do that ubtil there are comparative examples.It is another con show of the largest type like Iraq again.
Yes, I heard him say that too so he must have indeed said it.
On The World Today Eleanor Hall said:
Boshier said:
I recall more criticism from industry on PM but the transcripts aren’t up yet.
PM this arvo finds Industry critical of carbon trading plan.
Warwick McKibbin also chews it over.
Peter Martin seems to think it is a solid piece of work but it still hinges on the ability to implement from Government. From the way workchoices was implemented, this is not necessarily a given for this Government.
Certainly seems that Howard has been intent on shifting power from Europe to the US on this issue. Let the Europeans do the hard work and then swoop in at the eleventh hour and scuttle them is so typical of Howard.
He has been ranting and raving with his anti European line in parliament all week.
Sorry, the link
John Quiggin doesn’t like the post Kyoto starting date.
The move away from Kyoto by this Government is confirmed in comments here.
“Whatever happens I expect ‘Howard neutralises Labor on climate change’ articles in ‘The Australian’ in the next few weeks.” said Guido
“Howard closes gap on climate” is todays Pravda headline. Nearly there, Guido, but top propaganda needs to be quicker and sharper.
http://www.theaustralian.news.com.au/story/0,20867,21835049-601,00.html
All the huns men are in furious agreement that climate change is going to cost the poor ol’ battler, big bucks. And guess which party leader is going to make it easier on that hard pressed wallet?…why, Super Rodent , of course.
Giving away free permits is a disaster. Experience shows that this will result in windfall profits for big polluters and will remove from society the choice of investing the gains fo auctioning into equity measures or other greenhouse gas abatement measures.
If one free permit is given away this scheme will be a massive business boondoggle
Stand by for a massive reversal of opinion on what should be done about climate change.
Just wait until the average punter realises how much a carbon trading scheme is going to raise the cost of living.
Funny how the report uses the term “aspirational goal”, and is released simultaneously with Bush’s statement that the U.S. also wants to set “aspirational goals”.
Johnny’s still got his head stuck so far up Bush’s ass it ain’t funny.
So whose ass should we stick our head up?
Steve,
Nobodys arse – thats just the bloody point!
So we should do something totally different, just to prove how “individual” we are?
What is the negative for us if we just happen to be doing the same thing as USA, or UK, or NZ, or Singapore or somewhere?
Nope, we should do what is right, regardless of what anybody else is doing. Thats what leadership is.
John Howard has never been a leader, he has always been a follower.
My comment grows largely out of my longing for a time when Australia finally has an independent world view, free from the need to hide behind the apron strings of a colonial mother – be it Britain, the US, Japan, or perhaps in the future, China.
I think I’ll have a long wait.
I hope you do have a long wait, for the sake of my country I do.
At any one time, at least one of those countries has got it right.
Steve,
Now is not the time or place to debate Australias doctrine of reliance on “great and powerful friends”- we as a country have always done it, many will say it has served us well, but I dont believe we have reached our potential as a country, partly because of this mindset. I suspect you and I dont agree on that so lets agree to disagree.
Just out of interest which country is yours anyway?
Steve, you can go stick your head up whoever’s ass you like. It ain’t a good look. Pardon me if I refrain.
pdl, Bush might be powerful, but he certainly ain’t great. You’d think Howard would at least have the brains to distance himself from the worst president the U.S. has ever had. Bush only has the support of a small minority of the U.S., there’s no reason why we should be forced to give the appearance of support for the freakin’ moron.
Shock! Horror! Do you mean just like the Introduction of the GST, the never ending cost of implementing Workchoices, the blowout in the balance of trade figures, the increasing personal bankruptcy rates, the rise in credit card debt, having an unsigned and unfunded Commonwealth State Disability Agreement, fighting a war in Iraq that’s lasted longer than the second World War, an inability to hold down petrol price increases, wasting Money hand over fist on Taxpayer funded Party Political advertising, budget bribing of senior citizens, the usual porkbarrelling of rural electorates,overseas junkets on a regular basis for Federal Government Ministers and their spouses and the lowest home affordability ever?
I’m sure that if the current Government is left in power at the end of the year with the introduction of twenty five nuclear power stations on top of the carbon trading scheme at a cost of $6Billion each you may be right but the polls seem to indicate that risk is receding.
The pro Howard view of the report is here.
Now how has their head inside a bowel cavity?
No it will not be like the introduction of GST, or any of that other stuff.
When GST was introduced a lot of stuff went down in price, which will not be happening with carbon taxing. The rest of your blither is about stuff which has definitely no direct daily extra cost to the wallet of the average punter.
Contra to what Howard and Turnbull are saying Labor’s approach to carbon trading specifically seeks to look after energy-intensive industries in the first instance.
I agree with Harry Clarke that exporting operations that are already world’s-best-practice is pointless and counterproductive.
In fact in time the world should take into account which activities are best placed where around the world. If it is policy to export manufacturing jobs to Asia (as it surely must be from the trade policies we pursue) then we should be comfortable in giving those countries the necessary leeway to do the manufacturing on our behalf.
Similarly we should be given leeway to produce aluminium for the world, perhaps.
That’s rational isn’t it? I have the impression these sorts of considerations apply within the EU.
I agree that we shouldn’t be exporting operations which are worlds best practice, but the figures suggest that for Australia’s aluminium industry this is not the case. Figures from an Australia Institute Discussion Paper suggest that Australia’s aluminium production produces much more emissions than other countries. This is because the carbon intensity of our electricity is so high. Unfortunately this means that other trade exposed energy intensive industries are also likely to have more emissions than in other countries, depending on where they get their electricity from, how much of their energy use is from electricity, and what their other emissions are from.
Peter, see the Queensland Government climate change policy released today on the other thread. The next powerstation due in 2011 -2012 is to use clean coal technology, they will have to provide for carbon capture and storage too.
Electric Hot water systems are to be phased out. They have set a target of gas powered generation to be 18 per cent by 2020.