In this guest post, John Davidson suggests that there may be more practical and effective ways of reducing net carbon pollution than an ETS. John is a semi-retired chemical engineer who has spent most of his life in the construction and mining industries. His work has ranged from formal research through to design, commissioning and operations management. John has had articles published in Australian Options on work sharing and the future of the left.
Our government is claiming that ETS is the answer to the net carbon pollution (NCP) problem. However, I suggest that ETS is part of the problem, not the answer. ETS is a problem because it has so many people spooked that governments worldwide are looking for excuses to defer or water down action to reduce NCP. ETS basics may be easy to understand but the details are anything but. There is widespread uncertainty about how serious the impact will be on us as individuals, business and the community in general.
ETS-style schemes are claimed to have been successful at dealing with the specific issues associated with sulphur emissions in the US power industry. However, this doesn’t automatically mean that it makes sense to try and use ETS as the grand answer to reducing NCP. There are four key potential problems that are fundamental to ETS:
- 1. ETS aspires to be an answer to everything. Logic suggests that better outcomes might be achieved from case-specific schemes that address the specific issues associated with a particular industry or sources of emissions.
2. ETS depends on “putting a price on carbon.” Other options are not considered.
3. ETS uses an “emissions trading market” to determine the price of carbon. Note however, that EU permit prices have dropped from a 2008 high of over €30 down to €8 early this year.
4. ETS depends on a total emissions cap to drive down total emissions. May result in blackouts and other problems if future demand is underestimated.
The fundamental flaws of ETS can be best understood by comparing alternatives for dealing with specific problems.
Example 1 – Driving investment in clean electricity:
- 1. Option A (ETS): Carbon permits are used to drive the price of dirty electricity high enough to justify investment in clean electricity.
PRICE OUTCOME: The average price of electricity has to jump above the price of clean electricity before investment in clean electricity starts.
2. Option B: The price of dirty electricity is left unchanged and investment in clean electricity justified by price and sales guarantees for the supply of clean electricity.
PRICE OUTCOME: The average price of clean electricity will ramp up slowly as the percentage of clean electricity increases.
Example 2 – Driving down the average fuel consumption of new cars:
- 1. Option A (ETS): Carbon permits are used to drive up the price of fuel in the hope that this will encourage people to buy more fuel-efficient cars. OUTCOME: The price of fuel will increase and this price increase will flow through to the price of food, etc. Effect on average fuel consumption of new cars is uncertain.
2. Option B: Regulations combined with an offset trading system are used to ramp down the average fuel consumption of new cars.
OUTCOME: Fuel prices remain unchanged and the average fuel consumption of new cars is kept below a predictable level.
In both cases ETS was clearly inferior to option B despite the implied assumption that the permit price would be appropriate for solving these specific problems. Equally important, the alternatives suggested were quite different for the two examples. (NOTE: that no claim is made that some option C won’t be better than both option A and B.) For more detailed discussion of the general problems associated with ETS and carbon taxes plus the issues associated with cleaning up electricity and reducing fuel consumption, see Senate Climate Submission 572 (pdf).
The interesting question: Why is there such unquestioning acceptance of the idea that we must put a price on carbon? If I were Kevin Rudd I would want to be very sure that there wasn’t a better alternative to ETS before trying to back Malcolm Turnbull into a corner over ETS. It is only smart politics if Malcolm doesn’t come up with a better alternative.
John,
I would tend to agree with your belief that the cap and trade method of CPRS is not the best one – but not for the reasons given.
For example – in your example 1, option 1 the price outcome is simplistic at best. If the cap is put in at the current GHG production level the permits will start out at a low price level – meaning that prices for affected commodities will not increase by much early on. Provided the scheme allows for a reduction in the number of permits issued over a reasonably long time period then it will be fairly obvious to most entrepreneurs that early investments in low GHG emissions technologies should produce a reasonable return in the future.
To say that the price level would need to rise to the point where the low GHG technologies are viable before there will be any investment is clearly and demonstrably wrong.
In example 2, option A – this is (partially) correct. The outcome is uncertain, but we can be certain that it will result in a reduction in the use of fuel. Again – the price will be low at first, but increasing over time. People react to this sort of information. They invest in vehicles that use less fuel. This is not rocket science.
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Your suggest solution – that of using a welter of individual programs – makes no sense to me. The amount of legislation that would be needed to cover virtually all industries and sources of emissions would lock up some carbon – but only in the paper required to make it work. Lawyers and consultants would make a fortune in their attempts to work around them, as currently happens with most legislation of this type.
Sorry, but I cannot see it working.
Thanks for the post, John. I agree that there’s a lot of confusion about the role of an ETS, but I think you’ve confused a political failure (of the government to establish a firm line with ‘stakeholders’ initially) with ‘the fundamental failings’ of an ETS. Thanks largely to savvy legislators and some fortuitous circumstances (rail deregulation), the Title IV of the Clean Air Amendment Act – instituting emissions trading in the USA – meant that rent seekers only hurt each other.
Not sure how you arrived at the conclusions for 1-2. Wilkins Review is far more nuanced. 3., Sure – but see Grubb vs. Quiggin. 4. Please show your working: only rent seekers like ESAA have raised this as a serious concern so far.
John, the problem with your idea is that sectoral schemes don’t allow the market to figure out where we can make cuts with the least pain.
For instance, your proposal doesn’t take into account that there are two ways to reduce emissions from cars – make them more fuel efficient, and drive them less.
Similarly, it will be much easier initially to use less electricity than switch to clean generation.
Policy inertia: It will take time to wind down support for an ETS, and time to build support and conduct studies/inquries into an alternative. I would suggest that the minimum practical delay in action from swtiching policies would be 5-10 years, maybe even longer.
That is a big reason for not changing.
Also, I’m not sure about your examples:
From my understanding, carbon permits are not used to drive the price of dirty electricty high enough to allow investment in clean electricity. Rather, liable parties need to ensure that their emissions are less than the cap they are allocated. They do this by either buying more permits, or else investing in clean energy to reduce their emissions. So the additional money they spend is just the cost of clean energy or permits to get under their cap. Maybe they need to buy enough clean energy to reduce their emissions by 5%. The cost of this is spread over all of their other electricity generation. So rather than needing a 100% increase in dirty electricty costs so that clean energy becomes competitive as you suggest, perhaps only a 1% increase in costs is needed, to fund sufficient purchases of clean energy to get under the cap. So your Option A and option B are actually the same price outcome.
In the car scenario, option A doesn’t have the goal of trying to increase the price of fuel so that people buy more efficient cars. It could also drive a decrease in the emissions intensity of fuel (just add ethanol!) or might mean that people drive less. The point is that the most economically efficient outcome wins. Picking a winner (supporting fuel efficient cars) might end up costing more money.
This is wrong. The point of an ETS system is to reduce prices in the areas where it is cheapest to do so. For example, there may not even be an increase in clean energy in the short run, rather the price signals from increased price of electricity will decrease overall demand for energy as firms and households try to conserve energy to decrease electricity costs.
Second example of cars. Increased cost of fuel makes individuals demand more fuel efficient cars, or use alternative transport, thus decreasing total petrol consumption. This occurred with the petrol price spikes in the last two years. There neednt always be a ‘technological fix’ when a change in individuals incentives will suffice.
Thirdly there might not even be reductions in this manner. energy consumption and fuel consumption may stay relatively stable, but new production techniques in high emissions industry (such as aluminium smelting) may drive the overall reduction of emissions in the economy.
The heatwave in Victoria killed over 350 people last summer. Increasing the price of electricity is going to cause a lot more people to go without airconditioning and cause more deaths. The truth is that while we are dealing with the cause of climate change, we also need to deal with the symptoms of climate change. An ETS is a particularly barbaric market driven way of tackling climate change. It’s not something I would expect from a social democrat government such as this current one has pretenses of being.
http://www.health.vic.gov.au/chiefhealthofficer/publications/heatwave.htm
PDAA: we’ve discussed this in the past in the context of smart meters.
Either pay pensioners higher pensions, or give them a discount on their electricity bill.
It’s not rocket science.
Or not put up the price of electricity and deal with the problems on the supply side between the government and the electricity generators.
It’s the market games which make rocket science out of a simple problem.
PDAA how many is ‘a lot of people’?
I would suggest that on very hot days, the use of airconditioning is pretty price inelastic, and hardly anybody will go without a/c on really hot days specifically because the price of electricity has gone up. If the price of electricity goes up a little bit, then people on a budget will probably avoid using the airconditioner on milder days when it isn’t really needed, and maybe they will avoid using it on warm days. But in dangerous heatwave days, the will have it on full bore.
Using an a/c for a couple of weeks a year doesn’t cost much money. Using it week in week out for months at a time does.
We have an a/c in our loungeroom, but for both price and environmental reasons we avoid using it. But if it is really really hot, we turn it on. We use it for a couple of hours per day on maybe 5-10 days over summer.
That of course is no good for peak demand, but I always hated the way that greenhouse emissions and peak demand are crudely conflated in these sorts of debates.
How do you account for the billions of dollars of peak supply infrastructure that has to kick in?
Here’s another view pro-carbon tax and anti-ETS.
“How do you account for the billions of dollars of peak supply infrastructure that has to kick in?”
I don’t see how that would factor in to an individual’s decision as to whether or not to use a/c on a heatwave day, which was the line of argument we were considering.
The problem is that the externalities associated with CO2 and methane production (predominately) are not factored into the price of commodities producing those by-products; Stern and Garnaut have given us a fair idea about what those costs are. The answer from an environmental and an economic one is to move to a low (net) carbon future; to do this a price needs to be put on carbon that drives investment into low carbon technologies (be they renewables, CCS, carbon mineralisation, energy efficiency etc). Placing a cost on carbon has its own costs associated with the transition to low carbon technologies. The Government, based on consistent advice over the last 10 years or more, has determined that an ETS is the most efficient way to achieve this transition coupled with other policy responses (such as direct investment in low carbon technologies like renewables and CCS, R&D incentives, subsidies for energy efficiency projects, MRET etc).
While the CPRS has been criticised, I simply can’t see an ETS design that wouldn’t be subject to criticism. Similarly, a carbon tax, while simple in its idea, would still require exemptions, carbon sequestration credit inputs and a heck of a lot of modelling and guess work to identify what the appropriate level of the tax should be to deliver the necessary price drivers to deliver the target reductions. These aspects of a carbon tax would be as actively (if not more so) debated than the current ETS design.
The targets (regardless of whether the policy mechanism to deliver the cuts is an ETS, carbon tax or something else) will never satisfy everyone, they will either be too high or not high enough.
Coming up with something other than the CPRS will only delay action in Australia and increase the size of cuts needed when the policies are introduced. The rural sector has already taken the brunt of reductions to date through restrictions on land clearing, it’s time for other sectors to pick up the slack.
Debate all you want about whether an ETS is the best option but the research to date indicates that it is, even though it’s complicated. The Government has worked out the complicated bits and its reflected in the CPRS. Sure, it doesn’t deliver everything I would like, but its a damn sight better than more delay and obfuscation.
Steve, I don’t believe that the 2 issues are incorrectly conflated. An ETS will place a cap on emissions at the same time that we are going to get more hot weather. If we get smart meters as Robert has suggested, then it would not be beyond the rounds of possibility for a power company to kill 2 birds with one stone by jacking the price up which reduces demand and peak load and keeps the company within it’s emissions cap. All while earning a tidy windfall profit. The Enron doco of a couple of years ago demonstrated perfectly how these markets operate in practice.
The net effect on the community will be increased deaths amongst the less well off through being priced out of the market, especially the undeserving ones who won’t get their electricity subsidised.
PDAA that assumes that the price will rise high enough that people will turn off their a/c when it gets really hot. I just dont see that happening. Sure they might moderate their use, and spend more time turning the a/c off and on, to maintain a tolerable (though perhaps not 100% perfect) level of comfort, but I doubt anyone is going to sit in extreme heat with the a/c turned off because they simply can’t afford to have it turned on. Especially if they run the risk of dying.
Steve, I think you have a pretty naive view of what a restricted income does to people. Particularly the elderly who don’t live off their credit cards and value thriftyness. Why does anyone die in a heatwave if you are correct? Whay are hospitals reviewing discharge procedures for elderly patients on hot days after last summer?
One thing that’s being done in the US is companies setting up PV on peoples roofs. They provide the upfront investment and maintain the panels, charging the customer a bit extra for the power to cover costs. The money comes more from the PV subsidy right now, but at a larger scale it will start to affect peak load sizes. Unfortunately our government has seen fit to ensure that the company that pays for the lines is different from the one that sells power to the consumer so there’s no reasonable way to pass that saving on to the consumer (viz, use the cost saving to pay for the PV).
I’d like to see the extreme cost of peak load used to fund local generation, but it doesn’t seem likely to happen. Even less likely is that same cost diverted to pay for house insulation, let alone planning regulation requiring low peak loads (easy to design in, impossible to refit without using a bulldozer)
I dont think so PDAA. People might die in heatwaves because they dont own an a/c in the first place.
And the reason they dont own an a/c is not because they are concerned about the price of electricity and running costs, its because they are concerned about the up-front cost of having one installed ($500-$20,000), when they can just buy a fan for $50, or have a cold drink of water for cents.
Do you honestly think someone is going to go to the trouble/cost of owning an a/c and not turn it on when they are stinking hot just because the price of electricity is 30c/kWh instead of 15c/kWh?
Poor people definitely have less access to effective cooling solutions, but the price of electricity is not the main issue, and the impact of an ETS is not as straightforward as you seem to think it is.
To support what i’m saying, look at heating solutions. Wealthy people use gas or wood or reverse-cycle airconditioning, which have high up-front costs but lower per-unit-heat operating costs.
Poorer people use $50 electric resistance heaters with very high running costs and you typically need a few of them for a house.
In fact, because of this, I would say that any increase in the price of electricity due to an ETS would have more of an effect on heater use on very cold days than it would on a/c use on very hot days.
Steve, your scenario on installing an air conditioner then not using may make sense in some instances but not others. What about a renter who moves into a place with a/c but doesn’t use it because they can’t afford it? What about a retired/disabled/unemployed person who’s income situation has changed?
In the case of heating, I would say that most people who don’t use a/c would also be more likely to wrap themselves up in bed during winter rather than run a few little heaters.
In any case we are just proving how an ETS or any price based solution to carbon emissions can quickly spiral into minutae and unnecessary complexity. Far easier I say to just deal with the generators and develop a plan to reduce their emissions.
ETS create a scenario where rent is collected, but cedes some portion of this rent to the private sector. This guarantees there will be speculation at the expense of the public. I find this completely unacceptable.
It’s a difficult question.
On the one hand, nobody ever abolished anything by creating a market for it. With revenue from an ETS, especially if other taxes are reduced or abolished to balance it out, there’s a danger that governments will become fond of that revenue and not want to see it reduced – see for example gambling revenue in Victoria.
In theory, they can raise the carbon price while decreasing permits and thus get the same revenue, but the temptation will always exist to issue “just a few more” for some extra cash, especially just before elections.
On the other hand, while things have been taxed into reduction, they’ve never been abolished by taxation; see tobacco. And some things while taxed, they’ve barely reduced at all; see liquor. Commonly, you get a slight dip in consumption when the tax first comes in, and then people adjust to the new prices and consumption goes up to its old level or beyond; see the GST.
The only guaranteed way to keep consumption of the thing dropping is to keep raising the tax. We’re talking about changes over 40 years or so. Can anyone really imagine a government raising a carbon tax every year or few steadily for 40 years? Sounds politically difficult, to say the least.
So from my point of view, there’s not much to choose between the two. The important question really is what the revenue raised gets spent on. After all, there’s no point in (for example) raising the price of driving if people have no buses and trains or bike paths to change to.
I see lots of talk of how the money will be raised, but I don’t see much talk of how it’ll be spent. We’re missing half the story, here.
On 1: almost all serious participants in the debate are not suggesting that an ETS is the only thing we need to do, and that we need to address market failures in infrastructure, transport, technology and so on. Same for 2. On 3., this is a valid concern, but price floors address this (as dk.au hinted at). On 4, I do not see any evidence for the possibility of blackouts.
An ETS will not rule out investment in clean energy or better vehicles. Without some form of carbon pricing, the carbon price is zero. This will almost certainly lead to continued increases in greenhouse pollution unless there is a mammoth effort — that will have to be paid for by someone. At least carbon pricing is a way to get the polluter to pay for it – provided we do not have excessive free permits. And while there are a lot of problems with the CPRS, the amount of permits that are auctioned is greater than in most other major ETS proposals.
Thanks for the comments. Some interesting discussion. First some points of clarification:
The examples were both chosen to provide a simple demonstration of two proposals:
1. That there are at least some cases where ETS is clearly not the best option.
2. That the best option will vary depending on the case.
More details re the issues involved and my thinking can be found starting pp6 in
Senate Climate Submission 572
What was proposed there is that investment in clean electricity would be driven by government invitations to tender for the supply of clean electricity. The price and sales guarantees would be set during contract negotiations. Advantages of this approach include the option for the government to specify location, technology etc. if appropriate.
Nothing said in the article rules out the possibility that the most appropriate way of dealing with a particular issue may be a targetted version of ETS or a carbon tax. The important message was that the issues of a particular case should be considered and that there shouldn’t be artificial restrictions on the options that could be considered.
To answer some specific comments:
Andrew @1 comments that: “using a welter of individual programs – makes no sense to me.”. There is nothing in the rules that says that all emissions have to be dealt with at the same time. While I don’t recommend it, we could go close to halving our emissions by 2030 if all we did between now and then was concentrate on cleaning up electricity.
My view is that we should proceed by getting action started on a limited number of emissions sources and then gradually expand the programme. For example, there is no reason why the government could not have accelerated investment in clean electricity and introduced the regulations and systems to drive down the average fuel consumption of new cars before the next election. Beats going into an election saying “ETS will sort of start sometime in 2011 and run on cheap permits to 2012 unless we come up with another excuse.”
Starting by concentrating on a few specific issues and expanding avoids the problem forseen by Dave55@ 13 and others that “Coming up with something other than the CPRS will only delay action in Australia”
Steve@4: I hadn’t thought about how a company that produced both clean and dirty electricity would see things. However, you are wrong to talk about liable parties being allocated a cap. The cap is on Australia’s total emissions so a power generator has to pay for permits to cover all the electricity it uses. The price they have to charge for dirty electricty becomes the pre-permit price plus the price of the permit. Justification for investment in clean electricity still requires that the price for (dirty electricity plus permit) is higher than the price required for clean electricity as stated in the article.
Steve@4 is right to say that increasing the price of fuel will, at least to some extent, drive down total distance travelled. However, in 2008 we did a big experiment on the effects of increased fuel costs on fuel consumption. My understanding was that the reduction in fuel consumption was quite small because most of the distance travelled was not an optional luxury. Has anyone got some hard figures?
John, I believe the technical term for the amount consumption changes according to price is “price elasticity”. Here’s a nice summary discussing gasoline (American context, I’m afraid), and they report numbers from the economics literature of -0.26 for the short run and -0.58 in the longer run. That is, in the long run a 1% increase in petrol prices produces a 0.58% decline in usage.
Further to your point about sector-by-sector application of reduction measures, you’re by no means the only person to suggest it. But I don’t think you’ve responded to the key problem – we don’t yet know where the cheapest reductions are going to come from, so sector-by-sector measures will most likely result in very expensive reductions from one source (hybrid cars, solar PV) and miss others (energy efficiency is the classic example).
An ETS alters the price signal, but leaves the economic infrastructure intact. This means that the decisive and acting bodies are still private companies, competing with each other for short-term arbitrage opportunities and profit. This means that there is a massive incentive to hide emissions, circumvent regulators, escape legislative jurisdiction, pass on liability, buy influence to weaken the scheme, and allow international carbon leakage.
This behaviour is extremely well-established in the financial districts of the world (and has been barely shaken by the GFC), and when combined with an underlying asset (carbon) that much harder to quantify than most, poses a significant barrier to emissions reductions. Saying ‘play nice’ to companies, or to government ‘close every loophole’ misses the point – core interests trump marginal incentives every time.
The ETS, brought in to deal with the ‘greatest market failure we’ve seen’ will also feature massive market failure. Garnaut was quite explicit in saying that to go lower than 450ppm CO2 (even based on old science that really means 550ppm) would break the scheme. Basically, to set an appropriate trajectory for the cap would mean that the ‘carbon price’ would have to be very high. This would mean that companies would not have time to internalise the costs: gradually phasing their polluting investments into non-polluting investments.
For the energy companies an effective price would result in a rapid shutdown of coal plants, and then… workers are fired with no training or new industries ready for them… the value of the investment is simply written off… dispersed capital ownership makes it impossible to develop a viable renewables grid rapidly (due to free-riders)… energy shortages damage other industries… banks seize up… and? Government has to resort to massive non-market solutions to fix an even bigger problem than when they started. It’s like trying to run a major construction site like a flea market.
If we travel by the usual roads in the usual vehicles, then the usual speed limits apply. Unfortunately, if we go above the speed limit in the ETS model Ford we’ll lose control and hit a tree, while if we go below it the engine will stall (meaning that an low-price ETS will not entice investment to a loss-making infant solar industry to a still-profitable coal industry).
It is true that we could take the South Korean tiger economy method of mandating capital concentration, employing a large army of regulators, and then using huge artificial industrial conglomerates – augmented by state micromanagement in education, trade and finance policy to overcome many of these barriers – but if these changes are made then an ETS is redundant anyway. Also, in South Korea, the building of the urban sectors came on the back of the surplus from the rural sectors, so it’s hard to find a comparative option here, and it was still slow compared to the pace we need to see.
The ETS has a raft of other problems too. The secrets of efficiency gains in one company will be jealously guarded against it’s competitors, restricting future efficiency gains. The costs of the scheme will be borne primarily on consumers and employees, rather than those more responsible for emissions or better able to afford paying for them. If we are linked into the global market then every problem with other schemes (i.e. such as all of those with the EU scheme now) will be fed back into our national scheme. One tonne of carbon emitted as jet exhaust will be treated exactly the same as one tonne of carbon in a pine plantation under an ETS, when it most certainly shouldn’t.
One other problem is that the operation of the capitalist economy is far different from the operation of other systems (such as ecosystems), and this can cause disaster when you tie the operation of the latter into the former.
As an analogy, take retroviral drug treatments for AIDS sufferers in Africa. The drugs are expensive as their prices are set by global supply and demand. Whether someone can buy them depends on whether they have a job, whether they can get credit, what they can sell, etc. So, there’s an economic system for the drugs. The drugs, however, work on another system – the human body. Retroviral drugs need to be taken in the correct courses and in the right doses (say, 2 red pills every three hours and then a blue pill at night). If you take the wrong dose or take it at the wrong time, or if you miss a course, then the drugs have no effect (or can make the treatment less effective when you start again). So what happens when an economic system is tied to another system (human and viral, in this case)? Well, we know because AIDS in Africa is well documented. Basically, if someone loses their job, or is denied credit, etc, they are often unable to continue buying the medicine they need – so they miss a course or two and the treatment doesn’t work. When you subordinate a system with it’s own requirements to an economic system that does not take account of these requirements RATIONALLY, then systemic failure is a normal feature.
We can see the same thing now in renewable energy – where graphs of investments look like the electrocardiogram of someone on bad amphetamines. Renewable energy needs the sustained training of thousands of engineers, the sustained expansion of manufacturing capacity, a coordinated linking of them to an grid that is undergoing simultaneous upgrading. It’s a system of transition at top speed, but link it to our current economic system and you get the heart attack ECG (workers hired and fired within a year, factories opening on one coast while closing on another, investors running a mile from the risk, etc).
Sure, some stability can be built into the system with a price floor, but then you’re really getting closer to a tax if the government sets the price rather than the market. Of course, if you set the price floor at the necessary level then get ready for some serious market failure (as above). Just as an aside though, if a cap and trade scheme is only better than a tax because a trading scheme has a built in target (if it’s kept isolated from the global scheme and from offsets), then what happens if the target is wrong (god forbid)? If it’s locked in, then we’re stuck with a bad target, but if we can vary it – then there’s little difference to a tax on the issue of building in a target.
Plus, a tax is a lot simpler and has far lower administrative costs.
But, that said, I don’t think we need a tax or an ETS as our flagship policy. Both have many of the same problems as the other. We need to propose a scheme which has, as it’s starting point, the technical changes that need to occur over the next decade (in energy, transport, etc) to meet a target that is scientifically sound. From this, we need clear legislative support for the changes, including the empowerment of democratic bodies to decide on and enforce transition. And from this we need to be clear on what government needs to do to ensure that transition is possible (i.e. ensuring jobs, etc).
This scheme is straightforward, can move at the speed of what is technically possible rather than what is allowed by the volatility of the market. There is predictability, the possibility of grassroots control, and above all, it operates DIRECTLY on production according to rationally and scientifically made decisions, rather than inprecisely through uniform price signals.
As Einstein said “We can’t solve problems by using the same kind of thinking we used when we created them”, but that’s exactly what emissions trading tries to do. We are in a climate emergency and we need an emergency response, not the very definition of business-as-usual: an ETS. I believe my idea above is an appropriate alternative, but of course, its not worth talking to the government about any scheme if they still aren’t serious about tackling climate change at all.
Just lastly, I thought I’d add a quote from James Hansen’s draft letter to Obama:
“Beware of alternative approaches, such as ‘percent emission reduction goals’ and ‘cap and trade’. These are subterfuges designed to allow business-as-usual to continue, under a pretense of action, a greenwashing. Hordes of lobbyists will argue for these approaches, which assure their continued employment. The ineffectiveness of ‘goals’ and ‘caps’ is made blatantly obvious by the fact that the countries promoting them are planning to build more coal-fired power plants.”
Leigh, the point (which Robert has made) is that we don’t know what “technical changes … need to occur”. We need a myriad of changes in people’s behaviour and in the production of various goods and services, and even if we could enumerate them we couldn’t manage them centrally. That’s why a mechanism which treats all GHG emissions equally — either via a tax or tradable permits — allows this process to manage itself and produce the desired reductions with the minimum cost to people.
Unless you want to use climate change as a stalking horse for hair-shirt environmentalism or for a government takeover of the economy, pricing carbon is a far better way to go.
Thanks Robert Merkel @24. Found the Phil Goodman et al UK study based on a wide range of sources particularly interesting. Anyone interested might look at Effect of fuel price changes. Among other things, for a sustained 10% increase in fuel price, a 2.5% reduction in fuel consumption within one year building up to over 6% in the longer term was predicted. The report details the relative contribution of changes in distance travelled etc. Nothing was said about larger price increases but it seems reasonable to assume that the reductions would drop off because there were fewer easy options. I am assuming that the Australian data would be of the same order. Comments:
1. The average fuel consumption of Australian passenger vehicles was 11.5
litres/100km in 2007 compared with 11.4 litres/100 km in 1963. See Changing fuel consumption. There are some cars on the market that consume close to 3 litres/100 km and a number of low cost cars that consume less than 5 litres/100 km. So we could rapidly reduce the average fuel consumption of new cars by over 56% to something under 5 litres/100 km without any incease in the average cost of fuel or cars. It would be very surprising if there were no plug in hybrids on the market offering petrol consumptions below one litre/100 km for urban trip mixes by 2015. The point that I am making is that much larger long term gains can be made by driving down the average fuel consumption of new cars compared with pushing up the price of fuel.
2. ABS data gives a total fuel consumption of 30 billion litres/yr for registered vehicles in the 12 months to 31/10/07. See ABS Vehicle Data 2007 On this basis a 10 cent/litre increase in fuel price equals $3 billion/yr worth of extra pain to consumers. It might be more cost effective to understand the issues tha effect km travelled and deal with these instead of taking the easy way out by pushing up prices.
Robert also said that “But I don’t think you’ve responded to the key problem – we don’t yet know where the cheapest reductions are going to come from, so sector-by-sector measures will most likely result in very expensive reductions from one source (hybrid cars, solar PV) and miss others (energy efficiency is the classic example).” Comments:
1. ETS and carbon taxes are not very cost effective:
a. The ETS options in the article both required much larger price increases than the suggested alternatives.
-b. In many cases polluters will decide to pay the price of carbon, pass this cost on to their customers and do nothing at all about their emissions.
-c. In many cases, lowest cost doesn’t=best option. For example, wind power is more reliable if wind farms are widely spread even though the cheapest option may be to concentrate wind farms about a single windpower hot spot.
2. Brisbane acheived dramatic reductions in water consumption during the last drought despite ignoring calls for a cap and trade system to be used. An important part of this sucess was community commitment. We knew there was a problem, the pain of water restrictions was being spread fairly and we also knew that any saving we made was a contribution to fixing the problem. So we took shorter showers etc. etc. even though the effect on our pockets was negligible. If we had used cap and trade, the price of water would have risen much higher and people would have been irritated when they saw that only the better off could afford to keep their lawns green. Worse still, there would have been a feeling that all that would have been acheived by taking shorter hours would have been more water for the gardens of the rich. The same arguments apply to ETS.
3. I can’t see any real difficulty in sorting out which ideas are worth pursuing at this stage. The drive to invest in clean electricity will dominate the price of permits for a long time to come. The key test will be whether a proposal is likely to be more cost effective than investing in clean electricity. It is important that evaluation is carried out by a competent organization that is independant of the goverment’s pork barreling dept.
4. In addition to calling for tenders to supply clean electricity, it would make sense to regularly call for tenders for the reduction of net carbon pollution. This would help sort out what is worth pursuing.
Peter Wood @22: I think we have to get over this “punishing the polluters” mindset. Unless we are talking about lawbreakers it will be a lot more productive to focus on making it worthwhile to those who want to reduce net carbon pollution.
Paul Norton @11: Replacing carbon permits with carbon taxes provides more business certainity than traded permits. However, the problems with my ETS options would be the same if carbon taxes were used to put the price on carbon. I have no problem with Kenneth Davidson’s proposal to use low level carbon taxes to raise the funds to subsidize emission reductionaction – Provided the homework has been done to check what other effects the tax would have. The simplest system would tax fossil carbon as it leaves the mine/well and arrives in the country.
Sounds great Tom, but effective carbon pricing requires well co-ordinated, clever political work to ensure that you don’t just entrench the interests that have caused the problem.
Modern Energy systems have been hugely innovative ‘government sponsored’ collective enterprises until very very recently. The efficiencies of thermal coal weren’t reached overnight with venture capital. You can’t just bracket out that fact with the dreams of a carbon price.
John @ 23.
“My view is that we should proceed by getting action started on a limited number of emissions sources and then gradually expand the programme. ”
For example require the water supply and sewerage industry in Australia to either purchase ALL its power from renewable sources or offset it by paying for the installation of solar hot water systems to the equivalent total power cost.
Could be mandated, could be done within existing technology within a year at a pinch. That’s right folks the whole of the water supply and sewerage industy in this country could do it simply with existing technology and no convoluted complicated pollie fest schemes required. Yet rather than follow your line of reasoning John, the economists, pollies and lawyers in this country want to debate some arcane scheme that may or may not work. It is almost as if sitting down and arguing about stuff is better than doing stuff. How about we get a two tier management system going for this country? One tier can sit and discuss and debate and hum and haw about CPRS ETS carbon taxes etc over a glass of whatever. The other tier can target all that lovely low hanging fruit out there and actually reduce our carbon footprint. I’ll vote for you John on that other tier.
FWIW the water industry in Australia uses for all its pumping and treatment and distribution power about one third of the amount of power consumed in heating water. Yes folks, if the water industry in this country installed solar hot waters on one third of houses (plus a bit for those installations where you can’t do it), it would completely offset the power used for pumping, treatment and distribution.
John D @ 27, I forgot to say that the moderation trigger is set at 3 links or more, so your comment has unfortunately been sitting in the moderation bin for over 7 hours!
John Davidson @ 27:
I agree that there are more important issues that whether the “polluter pays”, but I don’t see this as being part of a “punish the polluters” mindset. I see the right to a safe climate being owned by the public, so if someone wants to emit greenhouse gases, they should pay the public in order to do so.
What is more important is that polluters face a marginal price — so whether they have to pay to pollute or not, they have the right incentive to reduce emissions. Under an ETS, firms will face a marginal price whether they receive free permits or not. As someone concerned about climate change, I do not care whether firms receive free permits. As a taxpayer, I am very concerned, because the opportunity cost is huge.
Some comments in response to Leigh @25:
Firstly I don’t think that emissions trading or carbon taxes, or hybrid approaches to carbon pricing are the only thing we need to worry about. There are other policies that need to be implemented as well, especially in buildings, transport infrastructure, energy transmission infrastructure, land use, and technology research. ETS or no ETS we will definitely need significant public investment in a renewables grid, for example.
If you are worried about a too high carbon price leading to coalplants shutting down, job losses and stranded assets, then a price ceiling could be worth considering. I’m skeptical of price ceilings, but have an open mind (provided that they are sufficiently high).
I agree that a tonne of carbon from pine plantations should be treated differently to a tonne from jet exhaust. that is because the pine plantation won’t hang around forever, while the jet exhaust will hang around in the atmosphere according to the lifetime of CO2. The pine plantation probably won’t hang around for long because it is not a self-perpetuating ecosystem, this is one of the reasons that I do not support the inclusion of land use activities in an ETS. However, I don’t see any difference between a ton of emissions from burning coal and a tonne of emissions from making cement.
You are right that a price floor is very similar to having a tax. I would set the floor to be quite high, making it more similar to a carbon tax. In fact, my preferred mechanism for a price floor is almost equivalent to having an ETS and a tax. You are correct that an ETS with a price floor will have more administrative costs than a tax, but the main costs with any carbon pricing are measurement, reporting and verification — the extra costs from permit trading are likely to be quite minor. The issue of international cooperation is the largest and most difficult, and the target based UNFCCC process is the only game in town (you might want to check out Frank Jotzo’s blog post on this). In my opinion the international and environmental benefits from guaranteed targets greatly outweigh the small extra administrative costs. A carbon tax is simple in theory, but there will still be firms trying to undermine and distort it, which is why we have thousands of pages of taxation legislation, and why countries (such as in Scandinavia) that have a carbon tax have many exemptions.
I don’t have a problem with legislative technical changes to infrastructure and so on — this is very important, especially considering that much of this infrastructure will influence our emissions for at least the next 50 years. The way I see it is that these infrastructure and technical issues are a complement to carbon pricing, rather than a substitute. An ETS with a steadily increasing price floor, or a steadily increasing carbon tax, provides a much better long term price signal than an ETS, and partially deals with some of the long term investment questions. But there is a need for regulation and public investment in many of these areas.
If you think that relying on public investment and regulation can get emissions down without carbon pricing, thats fine. But to make the case for that, you need to be able to demonstrate how this framework can used to achieve or overshoot a target, be it a 5%, 25%, 40%, 60% reduction or whatever.
Peter @31: My problem with “punish the polluter”, “polluter pays” and similar emotional thinking is that leads naturally to the “put a price on carbon” approach as the first solution we think of. Even worse, it encourages us to stop looking for a better approach as soon as we convince ourselves that this emotionally satisfying approach will work well enough to do the job. Think for example, how much effort this government has put into trying to debug ETS without looking properly at the alternatives and how it has not put in the effort to stop the decline in the rate of investment in clean electricity.
My key message is that we should be taking the effort to seriously consider alternatives and to be as lateral as possible. To my mind artificial price increases and restrictions on production should be seen as the last resort, not the prefered solution.
Tom @26: You say that: “We need a myriad of changes in people’s behaviour and in the production of various goods and services, and even if we could enumerate them we couldn’t manage them centrally. That’s why a mechanism which treats all GHG emissions equally… allows this process to manage itself and produce the desired reductions with the minimum cost to people.” Comments:
1. Putting a price on carbon is a lazy governments way of managing the issue.
2. I have given you two examples where putting a price on carbon is very clearly not the solution that gives the minimum cost to the people.” Processes that involve competitive tendering are more likely to minimize costs for cases where capital investment is required.
3. The combined cost of getting to the contract signing stage for a single power station is millions of dollars. It would seem irresponsible to want to drive investment in clean electricity without spending serious effort understanding the issues and developing plans to deal with them.
4. In business you identify the important issues, the actions that will have the most effect and the actions that should take top priority. Right now we should be trying to get action started on the important emitters for which current technology offers cost effective solutions. The emphasis in the article on cars and electricty is because, between them, they are responsible for over 50% of our emissions and the technology is available to reduce these emissions by over 90%. (At least for cars with a normal trip length mix.)
Peter Wood @32: Yes, some of the problems with ETS can be avoided by the use of caps and floors. The disruptive effect of unexpected shortages can be overcome by the government agreeing to supply an unlimited number of permits at the cap price. The government can also help boost investor confidence by agreeing to buy any permits offered at the floor price. One of the problems with a floor price is that it can never be reduced, since this would undermine the whole purpose of creating investor confidence. I suggest that competitve tendering and the negotiation of separate price guarantees for each contract will give both lower prices and more investor confidence.
There is also no reason why some isssues cannot be handled outside of any ETS or carbon tax system. Driving investment in electricity and reducing the fuel consumption of new cars are two obvious candidates. Exclusions might also include those isssues for which it makes sense to put in the too hard basket for a number of years. Setting up ETS may not make sense once all the logical exclusions have been made.
You say that :“..you need to be able to demonstrate how this framework can used to achieve or overshoot a target, be it a 5%, 25%, 40%, 60% reduction or whatever.”. Reasonable question given that the big attraction of ETS is that, in theory, the declining cap gives certainity re emission levels down the track. (However, do you believe a government would stick to the cap if economic recovery was being slowed by cap related shortages?)
I have spent a fair bit of my life optimizing and operating mineral processing plants. The process consists of a cycle of determining where potential gains might be made, setting priorities, research to gain a better understanding of what is going on, developing/applying solutions and monitoring/infuencing research etc. What I see happening with emissions reduction is much the same. Plenty of data on where the emissions are coming from. Plenty of information about what might be done now about all the siginificant sources and an amazing amount of effort going into serious R&D into new and better ways of reducing our dependance on fossil fuels. What is missing is any serious investigation into alternative ways of managing emissions reduction. The economists seemed to have stopped thinking once they had checked that ETS conformed with pre-GFC economic orthodoxy.
I cannot see any real difficulty in developing action plans to meet the proposed targets. The action for at least the next 20 yrs will be dominated by the clean-up of electricty. The impact will be easy to calculate and the process of letting a series of contracts to supply clean electricty (or reduce net carbon pollution) will give a predictable rate of reduction. Other logical activities such as “harness community support” will have less predictable effects. In the case of meeting 2020 targets my inclination would be use a very conservative estimate of the effect of the less tangible activities.
All my cases assume private investment. Public vs private is a separate argument.
Labor’s Five Tests for an Effective Emissions Trading Scheme, as delivered exactly 2 years ago:
http://www.alp.org.au/download/now/070530_sp_8th_annual_fraser_lecture__canberra.pdf
Labor supports the establishment of an emissions trading scheme and identifies five tests for an effective scheme.
First, an effective emissions trading scheme must be a cap and trade scheme to be internationally consistent. A cap and trade approach is the most widely used scheme design, in which total emissions are ‘capped’, permits allocated up to the cap, and trading allowed to let the market find the cheapest way to meet any necessary emission reductions. The Kyoto Protocol and the European Union emissions trading scheme are both based on this approach.
But this is not just a European approach. Arnold Schwarzenegger’s scheme in California is cap and trade and so is the trading scheme of nine North East US states which enjoys bipartisan support and was initiated by former Republican Governor Pataki of New York. Given that climate change is a global challenge requiring, ultimately, a global solution that includes all major emitters, a cap and trade scheme is the only logical choice for a domestic scheme.
Second, an effective emissions trading scheme must effectively reduce emissions. Such a scheme must stop further growth in Australia’s emissions and set Australia on a path to reduce emissions by 60 per cent by 2050 – the minimum required to avoid dangerous levels of climate change.
Third, an effective emissions trading scheme must be economically responsible. Such a scheme must provide the right incentives to drive investment in low emission technologies and renewable energy while keeping the total cost as low as possible. In taking the lead before an effective international agreement is in place, it is also vitally important that a domestic scheme does not undermine Australia’s competitiveness and provides mechanisms to ensure that Australian operations of energy-intensive trade-exposed firms are not disadvantaged. A scheme will also need to be complemented by measures like a Mandatory Renewable Energy Target to encourage the domestic development and use of new technologies.
Fourth, an effective emissions trading scheme must be fair. An effective scheme must allow both the costs and the benefits to be shared across the community.
This means additional complementary policies to make homes more efficient and comfortable while saving money on energy bills.
Fifth, an effective emissions trading scheme must recognise the need to act now. A scheme needs to commence as soon as possible to minimise the costs of inaction because economic modelling clearly shows that early action is far less costly than delayed action. Work should progress on developing a national emissions trading scheme starting no later than 2010 with the detailed design finalised by the end of 2008.
Meeting each of these tests will provide for an effective emissions trading scheme.
That’s neat and very useful, dk.au.
I don’t know a lot about the structure of the electricity industry and haven’t tried to keep up fully on ETS. So I don’t have a settled view, simply some concerns. The main ones are fourfold.
Firstly, installing an ETS is of course a massive government intervention which involves picking a winner in terms of the options available in the design. I’m concerned with Kiashu @ 21 that a market tends to be self-perpetuating, so may not be able to dwindle to nothing or to the size we need it to dwindle to. In the long run I’m not sure it’s what we need. In the long run in principle I think emissions should be controlled at the consumption end of the chain, with behaviours coming right down to the individual level. In John D’s Brisbane water analogy we were each given an allocation of 140 liters per person per day and certain behaviours were proscribed. There was monitoring at the water metre level and excess water users had to explain themselves with the ultimate sanction of limiting the supply available.
The per capita notion was put forward by Monbiot in terms of global equity, which we had a look at here.
If we have to approach zero emissions, making choices on encouraging or discouraging certain behaviours will have to be made. In fact public policy works in this territory all the time.
Also consideration needs to be given to Australia as an exporter of minerals and food. We should not have emissions counted against us for producing food consumed elsewhere. Ditto for minerals.
Secondly, I’m not sure an ETS will actually reduce emissions at least cost. John’s idea asks us only to pay the marginal cost as we go, which has some merit, it seems to me. (I’m focussing on grid electricity here.)
Thirdly, in the CPRS there is a lot of money being shifted around to avoid unintended consequences. Yet unintended consequences will almost inevitably remain. Again I’ll use the example of food production, where if we are not careful we will make many enterprises unviable. This isn’t smart when one of the biggest threats is to world food supply.
Fourth, if we go the expected Copenhagen route, gas can have a strong role as an interim technology. If we think we need more drastic action, then it has to be largely bypassed, at at least for stationary power generation.
While many lines of simultaneous action are needed, there is little doubt that priority needs to be given to decarbonising the electricity grid. Along with this a vigorous program of energy saving is a no-brainer. If the electricity grid is decarbonised the business of dealing with mobile emissions, eg. via electrified public transport and plug-in hybrid cars, becomes easier.
I haven’t yet had time to look at the Government’s approach to MRET or RET as it is being re-badged. Worried about the dropping of the “M”. I wonder if a strong MRET, policies to prohibit the building of new coal-fired power stations (possibly unnecessary), a program of decommissioning the dirtiest existing power stations, the commissioning of new power with specified proportion of mandated renewable energy (without specifying which type) would get us to the point were we could turn the whole emissions thing around.
Sorry this is long, but three final points.
Firstly, John @ 23 talks of commissioning new capacity. Unless we have a program of retiring existing dirty capacity this will lead to more emissions, not less.
Secondly, we need to take into account the policy framework in terms of the urgency and extent of emissions reductions. The best we are likely to get from Copenhagen is an 80% target for developed countries by 2050 (which should be 90% for Australia because of our higher per capita starting point) and 25-40% by 2020. To achieve the first we could go a long way by energy savings, converting to gas for power and mobile transport, and an MRET of say 20%.
That won’t get the world to peaking emissions by 2015. Also clearly if you want to decarbonise the grid by 2020 or ASAP thereafter, as I think is warranted, you would need to take a very different approach.
We really need to decide.
The third point was to be that if we need to raise revenue to do good things, we could do this by a small carbon tax, as in the $10 per tonne suggested Kenneth Davidson in the link provided by Paul Norton @ 11. But we raise only what we need. An alternative, sorry, would be to introduce a very selective wholesale tax (no, I haven’t gone nuts) on sinful, frivolous or undesirable consumption, thus avoiding the disgusting diversion of money intended for schools to pursue ‘clean coal’ as happened this time.
You see we already make value based decisions about what activity is more important.
My comment about John @ 23 commissioning new capacity was assuming that nothing is entirely emission-free. But if it’s 100% renewable being commissioned it’s a minor point.
DK @35: Part of my problem with Labor is that it has leapt straight into “Five Tests for an Effective Emissions Trading Scheme” instead of keeping their options open by setting out the “tests for an effective emissions reduction scheme”. Additional tests might include:
1. No potentially destabilzing price shocks?
2. Cost effective? For example, do average prices only ramp up in line with increases in average costs?
3. No unproductive price increases? Will price rises occur that do not drive any reduction in emissions?
4. No economy restricting shortages if future demand is higher than expected?
5. Have artificial limits been placed on the alternatives that have been considered?
I would suggest CPRS would fail all of these tests.
You are right about the number of countries that have adopted/plan to adopt some form of emissions trading. However, despite emission trading being in place for a number of years, there is little to show for it apart from active trading markets. My observation is that governments are saying the words while procrastinating as much as they can because their gut feel is that ETS will damage their economies and end up making them very unpopular. (High caps, free permits etc.)
The delays and gradual entry the government is now proposing mean that CPRS is unlikley to have any practical effect between now and the next two elections.
I think it is important that Australian per capita targets are in line with world expectations. However, this doesn’t mean that every country has to use the same methods to achieve these targets. Australia’s best chance of having a real impact on world emissions may be to demonstrate that there is are better alternatives than ETS. Alternatives that, among other things, pose fewer risks to the economies.
Brian @36&37: Agree with much of what you said. Would point out that using competitive tendering to drive investment in clean electricty does allow options to be excluded. An invitation to tender can specify what it likes.
However, not sure I agree with you about natural gas. My understanding is that the cost of converting a pulverized coal furnace to natural gas is negligible. This makes it very attractive when gas pipelines are already close to power stations. (Such as the new gas lines in central Qld). In addition, a natural gas power station can evolve by adding on CO2 sequestration and/or solar thermal augmentation. My RAG calcs say this combination would give an emission reduction better than a 95%. I recognize that there is widespread aversion to putting money into CO2 sequestration. However, it is the only practical way I can think of at the moment that has the potential to dramatically reduce emissions from cement and steel production.
I would point out that one implcation of providing price and sales guarantees to clean coal producers is that priority will be given to the use of clean electricity. Dirty electricty will only be used to make up the short fall.
FIY, the following were the features of a good scheme for driving major investment in clean-electricity identified in Senate climate submission 572:
1. Investors will be seeking certainty re future sales and prices.
2. Customers will be looking for:
a. No large, sudden jumps in the price of electricity.
b. Low average prices.
c. Price certainty.
d. Reliable supply:
i. Additional capacity sufficient to meet growing demand.
ii. Enough surplus dirty-electricity capacity retained to provide a
capacity safety margin.
2. Dirty-electricity producers will be looking for:
a. Certainty re:
i. Order in which dirty-electricity generators will be shut down.
ii. Approx timing of these shutdowns.
iii. The extent to which a plant would have to reduce emisissions/kWh to
delay or avoid the need for shutdown.
b. Reasonable profits during the running down of dirty-electricity
production.
3. The government should be seeking a system that would:
a. Not have the potential to destabilize the economy.
b. Have a positive effect on employment and economic growth.
c. Have a positive effect on nett carbon pollution reduction efforts outside of Australia.
d. Give government control of the rate of clean up.
e. Give government the option of putting limits on technology, location,
ownership, operation etc if required.
f. Provide a reasonable compromise between the needs of customers,
investors and dirty-electricity producers.
g. Include provisions for ongoing planning, research and development.
Hope this helps to clarify where I am coming from.
Yes, it does, thanks.
What you say about gas is interesting. It seems therefore that it has potential in converting coal-fired power stations so that the actual physical infrastructure doesn’t have to be redundant before its time.
I note in 2 (b) that you mention reasonable profits while running down dirty power. At the hearing the Greens in particular were inclined to say “tough” to ‘stranded assets’. The guy promoting gas power stations said that no decision to build a coal-fired power station has been made since 2001. I think that compensation is reasonable under these circumstances if such power stations have to be closed early.
I said I didn’t know a lot about the structure of the electricity industry. I don’t know how new capacity is initiated now. Some states are more privatised than others. Where does the initiative come from – private enterprise or government?
The notion of calling tenders suggests that in the future at least it should be government.
Brian @39: I am not an expert on power generation so my comments on gas fired are more gut feel than based on detailed knowledge. I did have a look at how Gas Pipelines and Australian Power Stations match up. Looked like most coal fired power stations are not far from current or proposed gas lines. However, I am not sure how much the connecting lines would cost or how much excess capacity is available in the main lines.
My take is that the justification for switching to gas should assume that the power station may shut down after say 10 yrs operation. Not sure how well solar thermal augmentation and sequestration would compete with wind etc. I know a study was made of solar thermal augmentation for Stanwell power station.
You might be interested to note that there are arguments that say CO2 sequestration might help us get closer to zero net emissions by sequestering CO2 arising from the oxidation of biocarbon or collected from the atmosphere.
The real profit/cash flow problem for dirty power producers will arise if competition starts forcing down their prices once the supply of clean electricty has grown. This may also be a problem from the countries point of view since we will need dirty electricity for many years to come and the rational plan for ramping down dirty electricty is a bit more subtle than shutting the high emission, high cost stations first.
Thanks, John, I guess reality always mugs the armchair view.