The Fin Review reported yesterday that a host of resource company execs are descending on Canberra on Friday for a pow wow with Martin Ferguson. Initially this meeting was being presented as a way of circumventing the BCA, who released a doom and gloom laden report last week basically threatening a capital strike. But it’s now clear that it’s nothing of the sort, as Marn’s department have also sent the BCA an invite. Industry sources expressed pleasure at Ferguson’s involvement, telling the Fin that they found him easier to deal with and more amenable to their views than Climate Change Minister Penny Wong. Hardly surprising…
Further reports today (as well as Stephen Mayne’s piece in Crikey) reinforce what was being said yesterday - that the polluters and the “skeptics” are making the running on the business response to the Carbon Pollution Reduction Scheme Green Paper. What looks like being the outcome is, in my view, a default back to the Howard position. Not only was the Green Paper based on the work done for the Howard Government by the Shergold Review, but it’s becoming increasingly clear that the business position, which is falling on at least some sympathetic ears within the government, is for a very low carbon price and a stack of free permits under the aegis of “adjustment”. In effect, it’s a “waiting on the world” strategy, with the BCA’s president Greig Gailey expected to make the familiar point about Australia only creating 1.5% of the world’s emissions in a speech to the Sydney Institute tonight. Gailey will also be calling for bipartisan support to create “certainty”, and given Kevin Rudd’s previous disdain for negotiating with The Greens, it would appear that there are powerful forces at work to create a policy outcome much more akin to the Malcolm Turnbull/Greg Hunt position than what Labor was actually suggesting might occur prior to the election.
If this is what’s going on, you have to wonder why they’re bothering at all. The outcome would mean that we’d be continuing to increase our emissions, not restraining them, at least in the immediate future.
Good post, Mark.
There’s a big public forum at UNSW next monday on the Allocation Challenges of the ETS. Government and Business (both lobby groups and others) were invited, but declined - which doesn’t augur well.
Everyone talks so earnestly about the problem of ‘carbon leakage’ (a strangely natural metaphor) as if it’s some massive danger to our national economic health. 1) Do we really want businesses with massive carbon liabilities setting themselves up here?? 2) Don’t we want those carbon liabilities reflected in the share prices of our companies if there’s any hope of an ETS fulfilling its role of ‘internalising’ the cost of carbon??
I dunno. I suspect we, and the BCA, may be being played for suckers.
They’re setting up Big Carbon to believe that they’ll get everything they want. When they don’t:
a) they’ll scream their heads off.
b) we’ll be so relieved that we won’t notice the scheme is still inadequate,
c) in any case, most people will think that the fact that both environmentalists and the business lobby are screaming will indicate that the government got it right.
Yeah. Carbon tax? Carbon tax?
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No? Oh I forgot that a libertarian idea and libertarians are nuts.
Adrien: if you think that the screaming from various vested interests would somehow be softer if the government imposed a carbon tax, I’ve got a bridge to sell you.
Rob, that may be right - and certainly Rudd has already trialled the line “we must be right because everyone’s yelling so it’s a balanced solution” but on the other hand, he has to get the thing through the Senate.
It’s not the screaming that concerns me, it’s the squirming.
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As in squirming out of not trashing the Earth. With trading schemes there’s so many snags. A simple tax means: here you are, carbon spewing’s more expensive. Don’t like it? Tough. Develop some innovative efficiencies and new methods of energy supply.
Spot on Mark. They are bothering because of public sentiment to do something about climate change. Unfortunately, the Greenhouse Mafia seem to be alive and well and have seamlessly plugged in to the Rudd Government which looks like delivering no more real action on climate change than Howard would have.
They have neutered the emissions trading scheme in their greenpaper - and basically ignored Garnaut.
Rudd and co are not acting for the people or the planet. They are playing a Hollowmen game on the whole topic. As usual, the industry lobbyists prevail, and it seems the grubby coal ones are currently the most successful. Maybe when sea level rises swallow Kirribili they will wake up from their PR torpor?
A simple carbon tax would be the most effective - which is why they are not bringing one in. Meanwhile, as you point out, our emissions trajectory continues to rise.
Peterc, I’ll be interested to see what Garnaut says next time he pops up.
Mark, I think Garnaut’s road show just before the CPRS greenpaper was an attempt to build political grass roots capital for his recommendations, which were better than the Greenpaper’s even though he too subscribes to the myth of carbon capture and sequestration. Its got cost and risk written all over it, yet he endorsed it uncritically, so the Greenhouse Mafia (or the CFMEU) got to him too.
Well, he was comprehensively whacked by Wong a week later with the Greenpaper. So has he got his tail between his legs or does he come out boxing (to mix metaphors)?
I too will be interested to see what he comes up with next.
Rudd reckons it’s going to cost business something, can’t be otherwise.
The Greens reckon Ferguson is plotting to give business an easier cop.
The public service seems to be doing some special pleading too.
Rudd really needs to clean it out.
Damn. Failed link: http://www.theaustralian.news.com.au/story/0,25197,24251897-5013480,00.html
I’m sorry David, I really do not see how the Secretary of the Department of Climate Change was doing any special pleading in that article. It’s clear to me that he was politely saying we need to stay firm on emissions reductions and not alow too much special pleading. Maybe go back and read it again?
Anybody who thinks EITEs don’t deserve transitional assistance and that some degree of carbon leakage doesn’t exist doesn’t live in the real world.
wilful, perhaps you and I got something different from it (or perhaps we start from a different ideological point). He seems to me to be saying that the emissions from anything created for export were Not Our Problem, and could be exported along with the goods. I doubt that they would be balanced by the liable emissions on imports, particularly if a battalion of creative accountants were involved.
But David, he did at the very same time say that emissions created in China for import to Australia Were Our Problem.
He then spends a lot of time saying that it’s not possible to account for it properly so fuhgedabout it.
“With trading schemes there’s so many snags. A simple tax means: here you are, carbon spewing’s more expensive.”
Emissions trading may seem more complicated but it does set a hard limit: the maximum quantity of legal CO2 emissions will be determined by the number of permits available. With a carbon tax you are just hoping that emissions will fall as they’re supposed to. (We need a name for the hypothetical scenario where there’s a carbon tax and people still don’t reduce their emissions. What’s the economic term for that phenomenon?)
But this picture is then complicated by the possibility of trading with other emissions markets. Perhaps there should be a rule that you can only buy a foreign emissions permit from a country whose targets definitely fall below a certain value. One could imagine a world where you have two blocs that have implemented emissions trading, one with a 450 ppm target and one with a 350 ppm target, and the 350 bloc not allowing purchase of permits from the 450 bloc.
Your point’s a good one Mitchell but I remain unconvinced. There’s an assumption that a carbon tax won’t work because there’s nothing actually stopping people from emitting the stuff it just costs more to do so. In that event cap and trade would be the alternative.
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The trouble with cap and trade is that it precipitates a mandelbrot scenario of endless rules. How are they to be enforced? The more complex a rule system you have the more people find ways of getting around it. When they do the solution is more rules. Eventually the agents of whatever authority policing the system become so bogged down they don’t even know what’s lawful or not anymore.
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I can see where the cap and traders come from. They say “we must reduce carbon emissions” and ensure to seek laws that decree just that. They’re unwilling to put ‘faith’ in self-organizing systems affected by higher carbon costs and the attendant incentives to seek more efficient uses of power and/or alternatives to fossil fuels.
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However I feel we must ask ourselves the ‘what will actually happen’ question. Considering the unrelated topic of drugs; the authorities generally speaking these days treat drugs as an evil and amass fortunes to fund agencies to stop people taking them. But to no avail. Why? Because it’s impossible to do so. Sometimes writing laws doesn’t work.
I was chatting to someone from an NGO last night who attending a briefing last week Penny Wong and DCC person.
They thought the DCC individual (not sure who) was inordinately focussed on the “impact to business and why we need to minimise this” rather than taking immediate substantive action on climate change.
They also mentioned that Wong apparently does not connect the lack of water in the Murray Darling system with climate change! So a focus on spending/action on addressing climate change is not currently seen by the Rudd Govt as part of the solution - they will just fiddle with water market instruments & rights etc.
Personally, I find this quite staggering. Fiddling with water market mechanisms is an attempt at futile cure, while addressing climate change is tackling prevention . . .
Mitchell, while emissions trading will set a limit (cap) on emissions this has not yet been specified in the CPRS Greenpaper; it is due later this year. On current directions (go very softly on industry) it is highly likely to be not nearly low enough to drive emission reduction - apparently it will be a soft limit for political reasons. Industry lobbyists in Canberra (50+? far outweigh any other group. There are probably only 5 from NGOs - and they don’t get regular access to Rudd, Wong and Garrett (not that he really matters).
A simple carbon tax could be passed by Parliament this year and would have immediate effect.
Polluting industries will just have to reduce (or stop) their polluting - this is the primary issue of concern. Cutting them any slack just perpetuates the problem. Looks like Kirribili will go under water . . .
Sensible words from Rob Grant CEO of Pacific Hydro who discusses the issue from outside the prism of self interest in today’s Business Age.
Roger - it’s a good piece, to be sure, but I don’t know if you could describe Rob Grant as disinterested.
FDB, he is definitely interested, but he hasn’t limited his peice to his own naked self interest, which is what I have seen from every other industry pundit so far
“i” before “e” except after “c”. Sorry. Typo.
Ah.
On re-reading your comment, I see you were referring to the piece as being outside the prism of self-interest, not the man.
As you were.
Shorter Garnaut memo from today http://www.garnautreview.org.au/CA25734E0016A131/WebObj/FINALAuguste-bulletin_29Aug08/File/FINAL%20August%20e-bulletin_29%20Aug%2008.pdf : ‘Remember all that stuff I wrote about us tackling climate change?’
Dr Martin Parkinson, the head of the Department of Climate Change, has given a speech responding to both the BCA and the MCA. The text is here.
Martin is much more generous to the MCA and BCA than I would be, he states:
Martin does seem to recognise that there is a risk of perverse effects around the threshold of 1500 tonnes of emissions per million dollars of revenue, and 2000 tonnes of emissions per million dollars of revenue:
Dr Parkinson has some criticisms of the MCA’s proposal to hand out 80% of all permits for free:
He also thinks that the MCA proposal won’t address the issue of carbon leakage.
On the BCA study, Dr Parkinson has some comments on the methodology:
Dr Parkinson is critical of the BCA’s proposal for assistance to EITE’s - he sees it as shifting the burden of emissions reductions onto the rest of the economy:
Dr Parkinson’s thinking seems to be very much based on the issue of “carbon leakage”: