Martin is much more generous to the MCA and BCA than I would be, he states:

Proposals of the sort placed on the table by the MCA and the BCA, and the debate they generate, can only help to deliver more sustainable policy outcomes.

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:

One consequence of this approach is that it gives rise to a saw-tooth pattern of support.
• a firm with 1499 tonnes of emissions/$m gets no free permits whereas one with 1500 gets 60 per cent of its activity emissions for free;
• a firm with 1999 tonnes of emissions/$m gets 60 per cent of its activity emissions whereas a firm with 2000 tonnes gets 90 per cent for free.
It has been suggested that the Government must not have realised what it was doing, that this was unintentional. To the contrary, the data available to us suggested that there were likely to be very few activities just below either threshold. And the focus was on reducing the very large and material increase in carbon costs for the most intensive industries.

Dr Parkinson has some criticisms of the MCA’s proposal to hand out 80% of all permits for free:

And if there is one lesson the Europeans have learned, the apparent simplicity of near universal free permit allocation evaporates as soon as the detail is examined. How to treat growing sectors? New entrants? Different technologies and levels of emission performance? The list goes on.

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:

The best analogy for us as consumers would be to look at the impact on our household budgets if the price of petrol doubled or trebled overnight – our uncommitted cash would decrease instantly and, for some, we might find our outlays exceeded our income. In this case we know that consumers have in fact responded to changing petrol prices by changing their behaviour – switching to more fuel efficient vehicles, driving less or more fuel effectively. The study suggests, though, that the solution is to provide EITE firms with support that increases as the carbon price increases.

…The ability of firms to operate in a world where prices and costs can be managed, both in terms of the prices received for a particular firm’s products and the costs it faces from individual suppliers, should not be under-estimated.

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:

The consequences of this are clear.
The carbon price will be higher, non-assisted industries and firms will have to reduce their emissions even further, and the impact on household budgets even greater. Why? Because the non-assisted firms and industries are less carbon price sensitive i.e. the price has to be higher to get the same reduction in emissions, so the more of the national reduction effort shifted to them, the higher the cost imposed on the economy.

Dr Parkinson’s thinking seems to be very much based on the issue of “carbon leakage”:

A key challenge in designing our emissions trading scheme is how to ensure we do not create an incentive for carbon leakage….

…For this reason, the Government is interested in targeting assistance to those industries most at risk of carbon leakage – the most significantly emissions-intensive trade exposed sectors.

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.

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 . . .

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.