Peter Martin has an excellent column today pointing out what’s wrong with the dollops of dollars which are to be handed out to polluters under the Rudd government’s “Carbon Pollution Reduction Scheme”.
Australia’s existing coal-fired power stations won’t need the compensation anyway. They will be able to pass on the extra cost of the emission permits. They will be encouraged to. It is how the scheme is meant to work.
Eventually the higher price of power will prod some of us to use less of it, and eventually wind and commercial solar power generators will become competitive against coal because they won’t to buy emission permits.
Martin effortlessly and elegantly skewers the arguments for compensation.
He also refers to the GST. It’s interesting that this whole exercise has been framed as “economic reform” and compared so often to the GST. It would seem that it’s that template and that framing which has given overt permission for a rent-seekers’ paradise, and as Martin argues, has created the extraordinary situation where the profits of pollution are essentially being treated as property rights.
But as Martin also points out:
It’s the sort of endless special pleading for access to ever-widening and ever more complex loopholes that killed the goods and services tax the first time the Coalition proposed it.
Note: Earlier discussion of the ETS and extensive links are to be found on this post.
Hmmm. One wonders how keen the government would be to hand out compensation to coal-fired power station owners if those owners didn’t include, in large part, the New South Wales government…
Mark would know the demographics better than I do, but just as there are sugar seats in Qld there are probably coal-mining seats. In Mackay recently Rudd expressed his strong support for the coal-mining industry. Mackay, of course, is more sugar, but a lot of the miners live there and fly in to the actual mines.
Yes, but why would coal miners necessarily be advantaged by huge handouts to their employers?
A long time since you have been to Mackay Brian, if you say “of course Sugar”.
Sugar is very peripheral to Mackay, and a pedestrian in the city would be hard pressed to find any evidence of even this.
No surprises here. Why would one expect them to be excessively different from their predecessors on recent performance? Apart from which, since the ALP obviously intends to go into an unholy (and wholly unreliable - have they forgot 1975?) alliance with the Libs in the new Senate so they can bash the Greens,why would one expect them to do otherwise on regard to ETS?
(Can’t remember the new bullsh*t name for it.)
Carbon Pollution Reduction Scheme.
Paul Burns, the Liberal Party are the alter-ego of the ALP in a two-party system. Each will get their turn if for no reason other than the wheel will eventually turn.
The greens are taking votes from the ALP, in a permenant manner, (rather than the to-and-fro of two-party swinging votes lost, regained, lost, etc to the liberals)
On top of this the greens are ratbags, opportunistic saboteurs (in the eyes of the ALP) in a manner which the liberals never will be. The actions of the Liberal party are tempered with the knowledge that they will certainly serve time as a government, and are going to have to back their actions with results, be held responsible for their actions.
The greens face no such limitations to insanity, and are a far greater threat to the ALP.
The liberal party is to the ALP what opposing counsel are to each other in civil litigation. The greens enjoy no such insider status.
Sort of OT: Attention Sydney-siders!
Allan Jones that clever engineer chappy who was responsible for large decreases in the borough of Woking’s CO2 emissions through cogeneration and such like (featured on Catalyst) and now head of The London Climate Change Agency is giving a free talk on “Green transformers: revolutionising energy generation for a sustainable Sydney” at the Theatre Royal tonight at 6.30.
Allan Jones was also interviewed on WorldToday on the ABC today. Interesting that the town originally got into it because of cost reasons, not CO2 emissions. The cogeneration ideas sound good, though I suspect we’ll need to get used to higher density living if we want to take advantage of it.
Is it possible to see the compensation given to the coal burning power plants as a way to protect the NSW ALP ? It wants to sell it’s power stations and they will be worth much less without this sweetner being tossed into the deal.
Does another reader have a rough idea how many power stations are still government owned? In NSW I think it is all of them.
I sympathise with your disillusionment Paul Burns.
While not a committed voter for either major party I had hoped the new government would stick to it’s guns a bit more about the role of evidence based and rational policy decision making.
What has happened to the education revolution?
Allan Jones was really impressive on Catalyst, which I linked to on another thread BTW. What was also impressive that his plan for London has bi-partisan support, having been initiated under the previous mayor, but also supported by Boris Johnston.
Just imagine what could be achieved with bi-partisan support nationwide.
Of course the free permits are all about the NSW ALP Right. It’s a sobering thought that this atrocious piece of public policy wouldn’t have happened if the Opus Dei crazies had kept their patience and not torn the opposition apart before the last NSW election.
I don’t think it’s Qld coal interests that were crucial in this because they are more into exporting CO2 production than burning the stuff here.
Surely there’s other ways to hand out money to NSW than via free permits to power stations?
They need to maintain the value of the generators to do their electricity privatisation thing with any sort of hope of success.
They being the ALP in general or the NSW right in particular?
Is the tail wagging the dog?
Even without the privatisation, they need to find some way to prop up the jobs. Its one thing to point the finger at private companies who should have known better and invested earlier. Its another thing when you have to point the finger at yourself, well own party anyway.
Surely a carbon tax would’ve been a much simpler way to go, as Jeffrey Sachs has suggested. What ever happened to Keep It Simple, Stupid?
http://www.theage.com.au/environment/alarm-on-carbon-trading-scheme-20080714-3f3w.html
The NSW Government has attracted the most attention as an owner of Coal Fired generating assets, but let’s not forget that privatisation went through in Victoria some time ago
So why, for example, should the pockets of the Hong Kong based CLP Group (who own TruEnergy, who owns Yallourn) be lined with Taxpayers money?? This is what the defenders of the scheme will have to justify if they give away free permits.
While I’m not a fan of business welfare generally, there are many thousands of jobs, and dare I say it, working families, that will benefit from free permits and keeping these companies going. In the short term it is a sensible, pragmatic decision for the Government, particularly if they want to last more than one term in office.
Ramhead: perhaps you might read Martin’s piece arguments again.
Free permits or not, over time those coal plants will either start using CCS or shut down. The free permits won’t make a big difference to that schedule.
The people who will benefit from this are the shareholders in the power generators, not the workers.
You’re missing the point Mark. CPRS is not about CO2 reduction in the short term - it’s about putting in place a permit trading scheme that one day will be use to pull back C02 emissions - but not until the rest of world is moving ahead as well.
Rudd, wong et al are playing this perfectly.
One step at a time.
The whole point of the exercise is structural readjustment, ramhead - moving resources from the economy from high to low carbon intensive production. Sure this will involve retraining (an aspect notably absent from policy discussions) but no pain no gain.
With coal fired generation in particular, free permits will go straight to the pockets of the shareholders. The EU ETS has shown us that these windfall profits are going to take place in oligopolistic markets like power generation. You can say that the goal is send a long term price signal and be prudent about the risk of disruptions to the grid but that’s just bullshit and scaremongering. Does anyone seriously believe that these companies haven’t been running through these scenarios very very carefully over the past 10 years?
Andrew Jul 22nd, 2008 at 5:36 pm
“CPRS is not about CO2 reduction in the short term - it’s about putting in place a permit trading scheme that one day will be use to pull back C02 emissions - but not until the rest of world is moving ahead as well.”
Exactly! It’s what you would expect. As for:
“Rudd, Wong et al are playing this perfectly.
One step at a time.”
I can only agree. Slowly, slowly … The tar baby will be touched (or already has). The narrative is established. Or whatever words one wants to use.
“You’re missing the point Mark. CPRS is not about CO2 reduction in the short term - it’s about putting in place a permit trading scheme that one day will be use to pull back C02 emissions - but not until the rest of world is moving ahead as well.
Rudd, wong et al are playing this perfectly.”
Arrgh! The transition to a low carbon civilization (let alone a carbon-negative civilization) is expensive and complicated. We should have started 10 or 20 years ago. The time for short-term reductions was ages ago, how is it reasonable to wait still longer before starting on the short-term? The suggestion that ‘we have to wait for the rest of the world’ is just nonsense! There’s a million things that need to be done and we can get a head-start on the rest of the world just by starting NOW!
The ETS is an opportunity to kickstart processes with a lot of money, but the ‘Rudd and Wong’s perfect play’ is to give the money to shareholders in polluting enterprises, to people who have known for over a decade that this change was coming but have not made any effort to prepare for the future.
The ETS is a step forward but what’s proposed must be just about the smallest possible step that can be taken to move away from zero. Which reminds me of Zeno’s paradoxes ‘proving’ that motion is impossible. Looking at the Green paper and reactions to it, I wonder if he was right.
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I went to the Carbon Pollution Reduction Scheme roadshow presentation in Melbourne today. I didn’t hear anything that changed my mind about how weak and ineffective this “scheme” is.
The worst polluters given free permits, no cap yet, no emission reduction commitments yet. They even claimed that it was “in line with” Garnaut’s recommendations (without mentioning the petrol excise cave in or giving permits to domestic high polluters).
Not good at all. I wish they were spending all the money on getting emissions down rather than fancy hollow schemes, roadshows and advertising. It’s the Hollowmen - an episode in advance.
Only about 30 years or so, SATP.
In remember Mackay as a town of about maybe 30,000 people. I was shocked to read in the AFR later this morning that there were 90,000. This site says 75,000 so whatever you say.
Mark, you ask ‘…why would coal miners necessarily be advantaged by huge handouts to their employers?’ What then do you make of the AWU’s call today for the permits of companies that go offshore to be given to the workers themselves? Climate minister Wong has said the permits of such companies would be forfeited, but I think the AWU’s call, whatever feasibility it ultimately has, at least highlights the need to compensate workers rather than their big-emitting industrial masters.
There’s too much in the proposed scheme that rewards the actions we are trying to change to achieve carbon emissions reductions. This is no doubt due to lobbying, and the confusion of the compensation issue. There is, consequently, a strong need to address the false message that free permits and compensation to the big emitters are the best way to soften the impact of the transition to sustainability. Why should we all continue to share in the negative climate impacts of these companies when they continue to concentrate profits in the hands of their shareholders?
The ABC report on the AWU’s call is here:
http://www.abc.net.au/news/stories/2008/07/23/2311635.htm
If you want to read the original statement by the Australian Workers Union why not read this statement from the website here:
AWU wants emissions permits for workers, not just corporations
I can’t say I find the AWU’s proposal very compelling, as the premise is that companies will move offshore, and I don’t accept that premise as a serious one, just a scare campaign to keep the rent-seeking rolling.
Of course, since the biggest and most GHG emissions intensive industry in question here is the coal-fired electricity generation, the issue of industries moving offshore is of less relevance - clearly we still need electricity, and electricity generators can’t pack up and move off shore.
I disagree with the coal-fired generators being given free permits, or being allowed to just pass them onto customers - why should customers be made to feel responsible for the problem of GHG emissions, when the electricity is being generated in the most GHG intensive way known? There’s only so much of an improvement in efficiency that is practically do-able - we all still want to and need to use electricity.
The same companies that own and operate the coal-fired plants can of course - and should be encouraged to - be the same ones that build, own and operate the clean solar-thermal, nuclear, geothermal, natural gas, etc generating capacity that can and should be built to replace the coal burners. This new infrastructure can be built in the same places, such as the Latrobe valley, keeping jobs in those centers - in many cases many of essentially the same jobs, in electrical engineering, thermohydraulics, and so forth that keep the coal fired plants running can be carried across to different types of thermal power plants, hopefully.
Mark I suspect that your blanket comment suggesting that all the companies are involved in a scare campaign is way, way too sweeping.
Some may be doing this as part of an ambit claim , positioning themselves for the argument - but I would argue that it is too simplistic to suggest that all of these companies can be put into that particular slot.
We need to treat these issues a little more seriously.
If we do not treat this with a lot more gravitas then sweeping statements we could also sweep away the jobs of thousands of decent people.
These is no magic formula which says as we kill off well-paid ‘brown’ jobs we will automatically, and at the same rate, create replacement jobs, good new well-paid ‘green’ jobs, in exactly the same towns and regions where the brown jobs are concentrated.
No, there’s no magic formula, Andrew, but Luke’s comment at 30 is worth taking into account here. I do think that if there were any large scale employment displacement, that absolutely needs to be taken into account in any adjustment package. But I’m not sure that the AWU isn’t making its own “ambit claim” unless it identifies - realistically and cogently - which industries or sites might actually go offshore rather than leveraging off business’ hyperbole.