The Australian Greens have written to the Prime Minister suggesting Ross Garnaut’s interim proposal on carbon trading as a mode of breaking the deadlock on the CPRS legislation.
Details are here.
On SBS news tonight, Kevin Rudd stated he was open to negotiations with all parties represented in the Parliament. The current ETS bills obviously have no chance of passage via Liberal votes since Malcolm Turnbull lost the leadership. It’s intriguing to contemplate Labor reaching an accommodation with The Greens. In many ways, Labor doesn’t need a double dissolution, as it would increase the prospects of non-major party Senate candidate. The current CPRS has also now lost its utility as a political wedge against the Liberals, and in an election year, there may be some value in Labor being able to demonstrate something has actually been done on climate change.
The sticking point, of course, would still be Senators Xenophon and Fielding.
Isn’t Bob Brown six months too late here?
Why?
The wind has gone out of the sails of climate change as a voting issue after Copenhagen. Bob Brown and Christine Mine thought that a maxmimalist position would see them surf the tide of history. But its now apparent that no-one wants to mention “Copenhagen”, and all that it signifies. You won’t hear much about it from Barack Obama in 2010 after the Mass. Senate result.
I don’t agree.
Labor needs a viable position on this issue, having staked so much on it, and it’s still very much a useful electoral one, particularly among younger voters, and female voters. It remains in their interest to paint Abbott as a climate change denialist (“extremist” is currently the line from ALP-bots), and it would also be in their interest to counter the charge that the Rudd government is all talk and no action.
About fucking time.
Rudd’s not going to sacrifice jobs for a deal with The Greens. He remembers what happened to Mark Latham in the Tasmanian forests in 2004.
Have you even looked at what’s being proposed, Terry? It’s not their previous position, but Ross Garnaut’s suggestion of an interim carbon price for 2 years. It would ‘sacrifice jobs’ only in the realm of beat up territory.
Sorry, I meant to do a post on this myself. Thanks for covering this Mark.
It’s a sound, serious proposal, as far as I can see. The sting in the tail of the Greens proposal is the lack of compensation for generators. I can’t see the government agreeing to that, much as I’d like them to.
The trouble in the short term is that the Greens can’t deliver it. Xenophon might be induced to cooperate if you build the Nick Xenophon Center for Summoning Rain in the Murray-Darling Basin. But Fielding is a lost cause.
“Rudd’s not going to sacrifice jobs for a deal with The Greens.”
No jobs lost at all. That’s just Liberal propaganda. A whole industry is just waiting to get up and running.
@8 – Rob, it would of course, one imagines, represent a negotiating position on the part of The Greens, not a final offer. It might also be possible, if unlikely, to pry a Liberal vote away instead of Fielding’s. But it would also give Labor more heft in the political stakes if the Coalition voted en masse against an amended bill, which covered their bum. And something that could be legislated in a new Senate, while the international negotiations proceed.
“But Fielding is a lost cause.”
Won’t he be happy with that internet filter thingy? Just add a happy clapper rebate of some kind.
NSW and Rudd’s home state of QLD is too coalpromized to put a real price on carbon. Sure we’ll do something domestically, but never, ever, threaten coal exports or ASIO will start a file.
Had Bob Brown and Christine Milne chosen to engage in the world of serious proposals six months ago, when Turnbull was Liberal leader, then we may not be having this conversation. Instead they chose street theatre and policy absolutism. With the wisdom of 2010 and the failure of Copenhagen, this has now been revealed to be a major tactical blunder. Bob Brown is trying to turn back time.
Which is precisely the point Robert.
Kev and Bob can point the finger at those who are the ‘blockers’ ie the Coalition and Fielding and Mr X.
I agree with Robert. I think this is very unlikely to happen. The government wants to compensate both generators and TEEI industries using a very similar formula to that embedded in the legislation. Just because you are replacing the CPRS with a carbon tax in the short-term doesn’t change the underlying issues of whom to compensate and how much. The greens are proposing this as a kind of delaying tactic until they have more clout in the Senate in a few years time and they hope there is an effective international agreement. Then they hope to be able to force the government into tougher targets and less compensation. I doubt this is what the government wants because its eyes are still on covering themselves against a scare campaign from the right. Note also that the ALP and the Greens are still a long way from agreeing on targets and I find it unlikely that the Greens, Fielding and Xenephon will all agree to the same interim policy.
The Greens’ proposal is a very good one. I’ve written a blog post here. A similar proposal might also work with carbon pricing legislation in the US Senate, which has just become more difficult with there being one less Democrat.
The last time the CPRS was put before the Senate, two Liberals crossed the floor. There is a possibility of that happening with this proposal.
There’s only 421 words in the abstract linked-to at the press release, you might as well reproduce the whole thing here. The pdf file doesn’t look much longer (three pages), though there are charts that give the numbers of the Green proposal.
Is this really the amount of material you come up with when you have every second environmental wonk Phd in the nation willing to write your position papers for you? I can imagine taking this to Xenophon if you want to enter into negotiations with him—not so much Wong.
There were the two Liberal senators who crossed the floor on the ETS vote, Boyce and Troeth, and the latter is retiring at the end of her term.
Bob brown doesn’t have to worry about how “Ute Men” vote. Kevin Rudd does. He will be very loathe to sign off on a policy deal that delivers the “Ute Man” vote en masse to Tony Abbott and the Coalition, even if it somehow gets him the numbers in the Senate (and my own view is that the opportunity passed late last year on that).
Actually, environmental wonks won’t help them much – the greens need to hire a few economists if they want to frame things in a way that will persuade Wong and co – the the senior DCC people (Parkinson, Comley, etc) are almost entirely economists.
They are probably relying on the fact that Garnaut has done all the hard work for them….
Oh, and the Greens appear to be going with a fullblooded Carbon Tax, with no emissions trading outside our nation.
That should please the edgy conservatives who were coming out for a direct, non-subsidised levy scheme, as it’s the most honest solution
I won’t hold my breath for the likes of Michael Stutchbury to endore this policy.
@19 – Terry, I don’t think “ute men” exist. What do you actually mean by the phrase?
There are seats where coal mining is a major industry – some held by the Coalition, most reasonably safe Labor. That’s where any electoral impact is going to show up, if at all.
There just isn’t an identifiable constituency elsewhere which could be captured by that label. If it’s supposed to mean building sub-contractors, etc., then they’re very well aware that they’ve been kept in work by the ‘Education Revolution’ (one of its political points).
There’s no evidence to date that Abbott has made any discernible electoral dent in Labor’s fortunes.
“There’s no evidence to date that Abbott has made any discernible electoral dent in Labor’s fortunes”
Todays Morgan poll [face to face] has ALP:COAL 2pp at 58.5 : 41.5
The 3 F2F polls since Abbott became leader have virtually identical results to the 3 prior all in the high 50s to the ALP.
There is an additional point of significance here which is the high level of technical education of many miners in coal and elsewhere which allows them to well and truly comprehend the issues. So far as the coal miners I know go they are well aware of the issues to do with global warming and the impact of the industry in which they work on ecological conditions. They are smart people and understand that they’re on borrowed time. Many feel their compromised position especially when their kids raise ecological issues with them. So I wouldn’t count on a strong defensive reaction from miners. Mine owners, yes, but not necessarily the miners.
I agree with Andrew. Miners are just people who are doing the work available to them. You can go to pretty much any established mining town and find that the locals are experiencing the detrimental health effects from these industries, and the locals will be aware of it.
Closing down mines isn’t enough, what the government needs to do is encourage alternative employment in the mining towns. Economic rationalism does not support this. Services are few and far between in the bush and the young move elsewhere further driving the local economies to the brink, and making them more dependent on unsafe industries like mining.
I fail to see how the CPRS will resolve this issue. It’s just a way for big polluters to literally pass the buck. The same industries will still be hanging around, doing the same old things, and the pollution will still be in the air- which defies the supposed point of the scheme in the first place.
If the Greens are against the CPRS, I support the Greens. Do I think Labor will negotiate with the Greens? It depends. What risks do the Greens have if they maintain their co-existence with Labor? They lost senate seats last time round but they gained seats in the lower house, if I remember, but this can change in 2010. Now, on the back of what amounts to mostly empty promises by Labor (with related issues like continuing the reinvasion of the NT ongoing even after saying sorry), the Greens would be stupid to negotiate with the Labor party, at least if they want to maintain the voting patterns of their current constituents.
@24 – indeed, anthony. And the CFMEU has encouraged and facilitated debate on climate change responses among its members.
@23 – that raises a question, which is no doubt one for the polling wonks; has there ever been a government that’s been ahead in the polls throughout its term, with no exceptions, let alone with the consistent leads Rudd Labor has had?
Two things I find rather amusing are firstly the idea that the Greens think they can be taken seriously when they do their policy releases like the local gym does when it has a new deal going for a new membership drive.
The second is the idea that the Greens are on their way to a future where they will have the balance of power in the senate! In my view the Greens are at serious risk of decimation at the next round of voting.
The wedge is not being targeted at the Liberal Party but between the Liberal Party and the Greens. Like a darkly brooding tango its beauty is breathtaking!
@24 completely misses the point. It doesn’t matter whether miners are educated enough to understand the unsustainability of some aspects of mining activity. Their jobs represent a small proportion of those that would disappear because it is the multiplier effects on incomes and employment of those that depend on the mining sector that are most relevent to the total effect on outcomes in regional centres tied to mining. If you think this doesn’t remain a live issue in regional centres you are kidding yourselves.
In the longer term carbon pricing, or carbon regulation will have little impact on aggregate employment and incomes, but it will have important effects on the distribution of employment and incomes across regions and industries. You need strategies to deal with this logical outcome – pretending it isn’t an issue won’t cut it.
The Greens are proving to be the only fluid thinkers in the game. Rudd needs a method by which to back away from his failed CPRS, and this could well be the vehicle. Whereas I applaud the move, I feel that it does not offer enough to make a magnitude of improvement. Obvously ,I prefer the electricity levy system to effect change without disruption, not only because it offers maximum impact for minimum cost but also because it should be more pallatable to the coalition if they could only take their fingers out of their ears and stop chanting rhubbarb long enough to hear the logic.
But, thank you Greens for injecting some real flavour into the environmental soup. Also, thank you Kevin Rudd for expressing openness. Please follow through.
Opinion piece from Christine Milne on the proposal here
You’ll note that the Greens are proposing to retain compensation for TEEI industries along the lines of the Garnaut report – I suspect that they could be persuaded to keep something more along the lines of what the CPRS ended up as.
Where they differ from the amended CPRS is compensation for the domestic electricity generation sector. It’s not Queensland exporters who would be worried about that principle, it’s the Latrobe Valley.
That’s right, CLH, you’re just a messenger. Vacuously repeating whatever talking-points you’ve been fed. My Speak ‘n Spell can do that. No sentience required!
You have as much understanding of the contents and meaning of the message you deliver as a carrier pigeon. Keep up the good work, and you’ll be promoted to Senior Pigeon. You’ll get fresh straw, and an extra sip of fresh water, while supplies last. Well done!
I may be wrong, but I thought that Labor’s aim with regard to the formulation of policies to deal with global warming was to marginalise the Greens. Rudd’s claim that the door has always been open to all parties as far as formulating policy to deal with global warming goes is typically disingenuous. The door had always been shut to the Greens who would not support the Rudd/Wong “claytons” CPRS policy.
Demonstrating to the electorate that Labor and the Liberals could control the situation and that voting Green is a futile gesture has been high on Rudds agenda.
Labor’s fear/concern about the Greens is highlighted by Michael Danby’s warning to his party that the public funding of elections should not be introduced because it would favour the Greens.
I’ll go first & put my hand up for this thread not to turn into yet another round of AGW vs AGW denialism /scepticism on LP.
Someone suggested the Greens would be decimated in the next round of voting – no evidence for that in the polls – if anything a continuing incremental rise as ALP votes, particularly younger ones peel off and a trickle of Liberal voters shift as well. the evidence is that 25% of the increase in the Green votes comes from the Liberal Party.
I think the interim carbon tax is an excellent idea and would be much better than the political duck soup (CPRS, Copenhagen) we have been served with to date.
However, I don’t think Rudd/Wong will go with it for the following reasons:
1. They wan’t to continue the “extreme greens” meme that both Labor and Liberal parties keep pushing – to polarise opinion and keep support from the Greens pegged back.
2. Their industry and union masters – Rudd and Wong are in reality just sock puppets for both – won’t like it because it will be effective – and they really don’t want to change business as usual energy use & exports (and associated emissions).
I would be happy to be proven wrong on this.
There are dire times. The sham CPRS is a lame (or dead) duck, and the delusionists are succeeding in shifting political and public opinion into their targetted “confused and questioning” zone. Which means no further action.
Meanwhile, people are dying in heatwaves, more savage bushfires are imminent and Melbourne is still on a trajectory to run out of water.
I’ve always thought a straight out carbon tax is the best approach but have been pragmatic that globally a CPRS is the way to trade internationally. Since Copenhagen didn’t get a result (realistically it was too big an ask) I’ve heard that Penny Wong and one other representative asked for some kind of scheduled undertaking (forget what it was called) for nations to individually go about their own initiatives and declare their intentions as an interim way of moving forward. This proposal from the Greens would fit nicely and break the deadlock with the coalition while also sidelining them further – just imagine the redneck knee-jerk response they’ll have to this which will only serve to disenfranchise coalition supporters who feel their party has been highjacked by the far right.
Peterc @ 43 the only point I’d disagree with you on is 1 where you say the ALP would want “to polarise opinion and keep support from the Greens pegged back” the thing there is that most of the support flowing to the Greens is actually coming from the ALP base (me for 1) so to align with them would be a benefit not a loss. If that were to happen then people like myself would have better satisfaction in the ALP and not need to shift to the Greens.
Myriad, seconded. Seriously, I’m all for debate, but can we please bin these trolls? They bring nothing to the discussion.
Rudd to negotiate with the greens would be very exciting to me, but I would be shocked – shocked – if it happened. There’s no electoral mileage in it. Greens votes as they currently stand simply end up with Labor anyway. Better to wait till after the election, green have BOP and Rudd “doesn’t have a choice”, then they push through some not piss-weak policy.
It’s best just to ignore trolls like CLH. They’re not interested in being educated and they just railroad the debate.
yeah sorry for the hand feeding.
I agree with PeterC*, Rudd wants to be seen to be doing just enough on climate change, compared to the Opposition. Given the position they’ve taken, this lowers the bar substantially.
*Though Melbourne is not on a path to run out of water, the whole recent thing about the N-S pipeline is that it’s unnecessary.
In response to Terry further up the thread, the Mining and Energy Division of the CFMEU is a completely different beast from the Forestry Division of the same union, it experienced unremitting hostility from the Howard Government and coal industry employers for the best part of 12 years and the last thing it wants is an early return to that situation, as Mark said it has done the hard yards to educate its members and involve them in policy development on climate change issues, and it will not under any conceivable circumstances repeat the Forestry Division’s treachery of 2004 (which has been much mythologised by the usual suspects in terms of its actual electoral impact).
I agree Fine … following CLH will thread-hijack. There are any number of other old threads where CLH‘s talking points have been canvassed and exposed for the agnotology that they are.
On the substantive matter, as a longterm proposition, I’d regard a carbon tax proposal as a step backwards, since it retains most of the negatives of an ETS (and makes some more salient) without having some of the advantages (jurisdictional inter-operability). Still, if the vision is to get started early and transition fairly quickly to an ETS-based system as the modelling is bedded down, and the matters of hypothecation of revenue can be sorted through in an equiatable and transparent way, and if the proposal is broadly-based then it’s a step forward.
I don’t like the idea of exempting EITE’s or the prioce quoted — $20 per tonne –this is far too low a base and will prompt very little movement. We ought to be aiming for a price around $100 (which is after all the price quoted to make CC&S viable), but if a start is needed $40 might be an entry level price signal.
Oh, and when the Japanese decide they want to buy their wood from Forestry Stewardship Council-certified forests (and it’s a matter of when, not if), Latham’s $800 million restructuring package of 2004 is going to look like the mother of all missed opportunities for Tasmanian forestry workers thanks to the stupidity of their employers, their union and their State politicians.
Voxpop @ 44, your (and others) drifting to the Greens is precisely why Labor (and Liberals) both greenbash to discredit them and greenwash to appeal to you. They tolerate some voter leakage up to a point, but then take action when they perceive the leakage is shifting from a nuisance to a political problem.
Greens is the Senate are a given now, even if they are starved of political oxygen and often marginalised by the old parties.
The real battlegrounds are state and federal lower house seats. Green are now going head to head with Labor in several of these, albeit still as outsiders. This is political dynamite. Two Greens in House of Reps could mean a Labor-Green coalition government if they hold the balance of power. A Liberal-Green coalition is far less likely, but who knows? Abbot is now spruiking his green cred
In Victoria, if seats such as Melbourne and Richmond go to the Greens, a state Green-old party coalition government could also be the result.
Wilful, while recent rains have made it even more obvious that the disastrous North South Pipeline (which steals water from the dying Murray Darling) is not needed – Labor is is still going full steam head on the greenhouse belching Wonthaggi desal plant – because are still panicking and think Melbourne is on a trajectory to run out water.
They are still studiously ignoring the simple fact that enough water still falls on Melbourne roofs and roads to meet Melbourne’s entire water supply needs.
yes but peterc, not to disagree with you, just to point out that the desal plant is a fact of life now, it will be built whatever anyone thinks, and it will generate water whether or not it’s needed.
LO @15, I think this is a more likely scenario- “:The greens are proposing this as a kind of delaying tactic until they hope they have more clout in the Senate in a few years time…..”
Lo @28, spot on. If the miners go, it could mean that a small town dies and that’s when unemployment really starts to bite. Mine workers could probably be shoe-horned into alternative employment, but finding jobs elsewhere for whole towns-full?
I’ve deleted the comments from CLH. This thread is about legislative and political aspects of Australia’s climate change response, not an opportunity for random trolling about AGW.
Just to correct statements about Melbourne and water: what the drought made the State Government realise is that it is foolish in the extreme to rely on one source of water (in this case, dams) for any city.
The failure of Wangaratta’s water supply (due to someone letting the dam empty prematurely) and the threat to the Thompson due to fire brought this home to them.
Therefore, wherever possible, the Victorian government is putting in multiple sources of suppy. If they’re never needed, they’re never needed; but it sure beats trucking water into Melbourne should the worst happen.
The furphy that the NS pipeline was a stop gap for the desal plant is simply laughable and why anyone bought that line was beyond me. NS water will still be cheaper than desal. Desal is more for if it doesn’t rain.
And desal plants don’t generate water whether or not its needed. You can turn them off, something I understand the government is quite prepared to do. Then – surprise – you can turn them back on again. Magic.
Peterc, as for your Green fantasies, none of those scenarios are likely to happen any time soon, on current polling. And we did have a couple of goes at Green – major governments, in Tasmania, where Milne & co formed government with both majors. Effectively this showed that such governments don’t work, and is a major reason why the Greens haven’t been allowed any where near the levers in Tasmania since.
Back to the topic of this thread – I saw the media conference and have to say I was quite impressed with the ideas put forward (pity they didn’t do this back in November). However, Milne was emphatic that the ‘big polluters’ would get no compensation under her proposal, but I haven’t seen that stated clearly elsewhere. It troubles me that this might be the fine print which derails the whole deal.
It will be interesting to see what the tallied intenational ‘committments’ under the non-binding Copenhagen ‘agreement’ add up to – though I note they’ve even backed off the jan 31 date for submitting those.
I suspect the way this plays in terms of national “groupings” may influence immediate policy developments here in AU.
The ACT ALP minority government working under an agreement with the Greens is working well, no reason why it can’t work with careful thought and a bit of good will on both sides.
In Tasmania the issue of minority government may have to be face after the election in March.
mehitabel, I laud your belief in the rationality of the Vic ALP in managing the PPP contract for the desal plant. Of course it should happen the way you say. Whether it does or not we will find out.
Voxpop#44
Negotiation with the Greens, and the prospect of enticing 3 Libs (why not include Turnbull) and Mr X, has to be a viable option.
Mr X concerns (and support overall from States facing elections) could be met with negotiation outcomes that inluded support for the States eg to harness stormwater (per Peterc#52), and help hospitals, schools etc face increased energy costs as for households/individuals.
The drift to the Greens from the ALP is related to their historic ‘green’ credentials (they have shown consistently that they stand for something-a replay of keeping the bastards honest); and
their members have an equal vote in decision making. This alone must be a tantalising prospect for ALP members.
The flirtation with ‘others’ eg in SA with Ms Maywald from the Nationals has actually worked reasonably well – a coalition with the Greens would liven things up a bit – and allow the ALP to go beyond navel gazing.
Yep, political dynamite.
Jane52
That is the huge advantage of CSP (Concentrating Solar Thermal Power). Each gigawatt of capacity employs at least 500 people directly. So at any one site where there would be a minimum of 6 gigawatts of solar fields there would be a support town of around 20,000. And even though these towns would be built in fairly arid environments they would have all of the scope to develop to small cities with many of the same features (gambling aside) of Las Vegas, with bountiful electricity and solar desalinated artesian water. There are many business classes that would find the combination of features attractive. Loosing coal fired electricity and the associated mining is not a bad thing.
Inland Australia faces a envigeration never before possible. In time with a string of new inland cities spaced to take best advantage of the solar sweep providing electricity to both ends of this country it is possible to imagine a trans national high speed electrically powered rail system. With new industries providing added value processing of many agricultural materials across the centre there will be significant new flexibility for exporters and the ports they choose.
Now living in the centre may not be your preference, but it is for many rural Australians, and it will be for many of the millions of new Australians projected to arrive here in the next 30 years.
Bilb@31: You are right when you say:
but are wrong when you say
The problem with the Greens proposal is that it still locks Labor into putting a price on carbon. Fran is right to say that the proposed tax will need to be at least $40/tonne to have any real effect. A tax of this magnitude will disrupt the economy and will still require most of CPRS style compensation and special deals to minimize the unproductive damage.
The political problem Rudd faces now is that Abbot is proposing a real alternative to the “we must put a price on carbon mindset.” We are all waiting for the details but my expectation is that the direct action plan will be easier to understand and look clearly superior to CPRS on the issues Tony is proposing for direct action.
Rudd needs the CPRS legislation blocked again so he can get on with some direct action after he has seen what Abbot is proposing.
The Greens might be smarter to keep an open mind on direct action, continue to argue for more challenging targets and to start doing the homework required to allow them to participate in the debate.
Xeno could definitely be convinced to vote for something reasonable. Senator Steve, no way, he’s out there. So one or two defecting Lib senators would have to make up the numbers. Well anything can happen these days… but i would have thought that party discipline would prevail.
But anyway, Rudd’s not going to agree to this. Too much action.
“…disrupt the economy..”
Yikes! We can’t have that can we?
Much better to stew in our gas emissions and all the far greater expensive economy changing consequences that will follow from doing nothing cos, heaven forbid, we could ‘disrupt the economy”!!!
Lets wait and see.
There is no hurry.
Next century should give us enough time to tell us what to do to avoid ‘disrupting the economy’.
Point take, JohnD. As you know I now see a better way forward, at least for the power generation and much of the transport fuel section of the emission problem. But as for the other half a tax or an ETS may well be a workable device to collect and redistibute funding for greener industry and agriculture. I don’t know what is best here. I suspect though, that every action taken will lead to more sustainable agriculture and industry, higher productivity and reduced resource consumption. It would be interesting to see if each force of politics could specialise in an aspect driving our sustainable future.
JohnD @ 54, I think the Greens would support anything that promised to be effective. After all, an ETS doesn’t preclude direct action – it’s not a binary choice.
Hannah’s dad@56: So are you telling me that it is not smart to avoid disrupting the economy when a better, faster result can be achieved without all this unnecessary chaos? And are you telling me it is not OK to wait till next month when CPRS is unlikely to have any effect on emissions for years.
Investment in clean electricity is lagging because the price of MRET credits has dropped to the point where the investment is hard to justify.
It is about time the government stopped stuffing around with grand schemes and got some real action started before the next election.
John D said “The Greens might be smarter to keep an open mind on direct action, continue to argue for more challenging targets and to start doing the homework required to allow them to participate in the debate.”
I don’t know where you’ve been John but the Greens are way ahead of you on all three points.
JohnD @54 says:
It may look clearly superior to some, especially some who want to do nothing, but it will certainly be radically inferior in its mitigation effectiveness and cost-efficiency. Any scheme capable of mitigating on the scale proposed by Rudd would cost a lot more through “direct action”. It would harm industry a lot more by creating anomalies within the system.
Of course, it could be packaged to look like a soft option, but all it is really doing is presenting a figleaf with which to shield Abbott from those who worry looking like enemies of the environment could cost them soime preferences in marginals.
I find it ironic though that Abbott, of all people, is now claiming that state intervention can do a better job than market forces. Maybe we should focus non making him make this argument explicitly.
Its the ambiguous fits any size you want slogan nature ‘disrupt the economy’ that irritates me JohnD.
Its seems to put the economy as a shibboleth that must not be disturbed, woken from its peaceful slumber.
We can have poverty increasing to rates of nearly 12% of all Aussies, we can near totally destroy our major river system, we can have increasing social inequality but heaven forbid ‘we disrupt the economy”.
A most unfortunate unspecific ohrase.
C’mon Fran,
You cannot say this
“Any scheme capable of mitigating on the scale proposed by Rudd would cost a lot more through “direct action”. It would harm industry a lot more by creating anomalies within the system”
It just simply isn’t a given outcome.
I’ve demonstrated that a simple levy system has the potential to reduce CO2 emissions by over 90% in half of the equation (the stationary and transport sectors combined) in just 30 years and for a cost that does not even rate a mention on balance sheets. Far sooner, more thorough and more certain than the Rudd plan. This is a direct action device.
Abbott could very well come out out with some similar device, in which case everything that you have put forward above is total nonsense. My greatest fear is that he will implement such a device but position it to fund future CCS or Nuclear disasters. I personally see it as blinding stupidity that so many people appear determined to have a future based on anything at all but solar energy. There has to be some reason for this schism, maybe some secret lobotomy that I missed having because I was away in NZ, or something. I’m determined to get to the bottom of it.
Mehibatel @ 48,
Tim Holding has made statements very recently about the Vic Govt’s long term goal to get off water restrictions.
My understanding of the PPP structure is that the private investors want to maiximise their return on investment.
This means running the desal 24 X 7 at maximum output and piping the water into Cardinia Reservoir – there are Govt statements about this too.
Then when the storage levels rise, restrictions come off, so water use rises again. Based on current policies & remuneration, it is highly likely that the desal will never be turned off, or even down. That certainly is magic for private enterprise.
If haven’t been hiding under a rock you would know that there are some very nervous sitting Labor MPs, some of them ministers, who conduct trench warfare during elections to save their bacon. Tanner and Pike spring to mind.
John D, as per Salient Green, the Greens have been advocating “direct action” for several years now. Some of this has been picked up by Rudd (e.g. the housing insulation component of the Sun Fund), and Abbot has branded some of the rest as “direct action”. The reason that sitting governments avoid this like the plague (as Abbot would if elected) is that direct action on improving efficiency would mean less power is sold, which would upset their carbon lobby puppet masters.
Again, I predict that Wong/Rudd will fudge around and find a some lame excuses to avoid any carbon tax.
If they were really nervous, Peterc, they wouldn’t be Ministers.
So the 24 X 7 desal operation actually is locked in?
peterc, you and I will never know. But I wouldn’t be at all surprised.
BilB: “I’ve demonstrated that a simple levy system has the potential to reduce CO2 emissions by over 90% in half of the equation (the stationary and transport sectors combined) in just 30 years and for a cost that does not even rate a mention on balance sheets”
Any chance of a link to the detail of teh plan?
BillB – “And even though these towns would be built in fairly arid environments they would have all of the scope to develop to small cities with many of the same features (gambling aside) of Las Vegas, with bountiful electricity and solar desalinated artesian water.”
I just wanted to clarify this…..BillB, do you support not only maintaining the mining of artesian water, but also the expansion of mining of artesian water in the Great Artesian Basin? And you support this because you consider it an environmentally sustainable outcome?
I better make another trip to the mound springs ASAP, seems like both nuclear and anti-nuclear advocates don’t seem to give a rat’s about them. Really, I do strongly advise anyone who has a sense of wonder and enjoys nature to visit the mound springs of northern South Australia sometime, they are what made the overland telegraph and the old ‘Ghan railway possible, and they are an amazing feature in our landscape. They wont survive the over-extraction of Artesian water.
wilful
I think people WILL know. It’s a bit hard to hide it if the desal plant isn’t operating…and vice versa.
What I said was that there is water available if properly used in various parts of the centre, more than enough to support communities. Artesian water is like any other water source in our drying continent. It needs to be evaluated and managed appropriately. Water for cooling towers is another matter. I am imagining that there is scope for combined technologies where cooling is concerned. Clearly anything that is built to last the next two hundred years must be sustainable over that time frame. It is my impression that the centre does get water in quantities suitable for human use, it just runs off and evaporates so retention is the issue. There is the backup option of pipelines if there is sufficient electricity to do the pumping.
But good point, I will do some reading on the matter.
I must admit that having had a look the basin isn’t where I thought it was.
http://geoheat.oit.edu/bulletin/bull23-2/art5.pdf
http://www.adelaidetalkbacksa.com/forum/showthread.php?t=889
But I suspect that it isn’t as fragile as your comment suggests. Global warming also promises to increase water flow into the basin in the north.
By coincidence, from today’s Crikey email bulletin:
That just about sums it up.
Agree Peterc I’m totally against Desal for destructive practice and unneccesary use as well as cost.
We put water tanks on, 15,000 ltr (in suburbia) and spent over 9 months of last year off the town water supply only reconnecting when we ran out. We plan to put on another 5,000 to 10,000 capacity so as to avoid having to use town water at all and be self sufficient. Yes there’s an outlay and we haven’t bothered as yet with rebates (too many restrictions) but FFS this is the ‘simple’ solution that everyone should be doing. It’s disgusting to let all of that water just run off into the ocean and then say we need desal to recover it.
You don’t invest in a $5B boondoggle asset just to let it sit around depreciating.
Peterc
And there again is the strength of the levy funding system for electricity infrastructure. With the funding secure in advance the public (that is us guys) occupy the driving seat. The public also gets the most say in what the product (electrcity) will cost. Where merchant bank investment funds hold the aces the public get a raw deal, the least product at the highest cost. Whereas I applaude the profit motive, it is not always the best approach.
Danny
I’ve pretty well wallpapered the webb with the details but here
http://www.greensmps.org.au/blog/ask-your-questions-emissions-trading#comment-6557
is a brief of the proposal. I fully expect to be scolded and told to shut up about it, but I do think that it is important to see that there are other believeable options to CPRS’s, ETS’s, and Carbon Taxes. I think that this best demonstrates that the cost of change to a renewable sustainable future is not at all expensive when seen in the contexts of Incomes, Energy Industry Turnover, GNP and Time.
Voxpop
1. Tanks are only good if it rains (and if you have the roof space; we want – I hope – higher density living in Melb, which means less roof space for more people).
2. Tanks are a very expensive option, and if you’re talking public policy, you’d rule them out on that basis. (Individuals can do what they like…)
3. Tanks (which, remember, used to be the main water supply for most areas) are a health risk. Cleaned out your gutters recently? Seen what’s in them?
I know there are ways to mitigate these, but again you’re talking extra expense, and a degree of maitenance not required by other water systems.
4. What’s wrong with sending water to the ocean? Isn’t that where it’s meant to go?
Mehitabel @76, a couple of questions:
1. Agree that tanks only work if you have reasonably regular rainfall to keep the tank full when you need water most. It depends on the rainfall pattern. They work just great in Qld, which has summer rain, but less well in Perth which has winter rain.
We would need a humungous tank in Perth to store up enough winter rain to last through the summer months. However, a relatively small tank in Brisbane will get regularly topped up in the summer months so that you can water the garden in the dry weeks. Not just speculating – I checked the Bureau of Meteorology and did the calcs.
2. Tanks are “expensive” in what respect? Capex, Opex, or Lifecycle operating costs? Against a desal plant in Capex, Opex, or Lifecyle operating costs?
There is often a Capex/Opex tradeoff in purchases. Sometimes an item which is cheap to buy (Capex) has very high running costs (Opex), such that its lifecycle operating costs are worse than something which looks initially more expensive. Printers are cheap to buy, but what about the cost of replacement cartridges? A “gas guzzler” may be cheaper than a Prius, but it may cost a fortune to run in a few years time.
3. Health risks depend on what you use the water for – domestic or gardening. Studies have shown that Aussies use almost equal amounts of water on their garden as they do in the house. Rotting leaves in the gutter are not a particular problem for gardening water. Natural forests are full of rotting leaves, and the vegetation doesn’t seem to mind a bit.
This would open up two possibilities, at first guess: (a) water tank for gardening use, or (b) greywater recycling from the house onto the garden. According to my limited understanding, greywater is not always suitable for the garden, depending on the soil type and the impurities in the greywater. In those cases, a rainwater tank would be the better option, provided the rainfall pattern is suitable.
4. What’s wrong with putting the water that fell onto the roof, into the ground, where it would have gone if you hadn’t built a city full of McMansions and covered the area with roofing?
How did we get onto water?
Anyway, entering the discussion on tanks and storm water.
If you google “Mark Parnell” you will get the Greens MLC in SA, go to ‘campaigns’, click on ‘Water that won’t cost the earth” and check out the sustainable water report for Adelaide that comes up.
{Why the roundabout route? Well I’ve lost my copy of the report and I’m on my download limit so cant link directly or even quote accurately.]
Now I know its for Adelaide but there are some general principles that are worth noting in the report.
For example the comparative costs, dollar wise and envirnmentally and the benefits received in water volumes that result from various ways of getting water for a city.
You may be able to transpose the principles to your city.
Some points.
Desal is far far far from the desired option. End of story. Sadly we have got one such since the report was written. There is a moral there.
Tanks are lovely things. [My entire water supply comes from one.] But they are expensive and yield bugger all water. Their chief value is their educational value.They teach the value of water.
Water efficiency is one good way to go.
Check out per capita usage of water in Adelaide.
Check out the same in SEQ before and after efficiency methods were utilised.
See the impact such has on the need for water?
Storm water is another good solition but may depend on local conditions. See what it says.
Anyway I recommend the report.
Hannah’s dad @78, agree that simple measures with water efficiency can have a significant impact on consumption.
We decided to try and halve our water consumption, using all the standard efficiency measures. We achieved more than that, with no loss of comfort and no loss of plants in the garden. They are virtually all natives, and didn’t need as much watering as we thought. Our consumption is now well below that of the rest of the suburb. Too easy.
With regard to your comment that tanks “yield bugger all water”; that would be SA that you are talking about, I presume. Not exactly world-record rainfall figures there. Lowest for any Aussie capital, isn’t it?
Mehitable LOL
it tastes better and is healthier than the chemicals they add to yours. I grew up on it as a child and my mum has been on it for 50 years with no ill effects. BTW thanks for defence Elise but yes we use it for 100% supply + use grey water on gardens. Oh and the reason they turned people away from tanks in the past was in order to get everyone dependant on the supply to raise revenue and control health = dental etc.
1. I said I got 9 months out of 12 tank usage (I live Newcastle region not Melb but same principle applies) and I reckon based on my mums place where she has 100% tank usage 24/7/365 with a 25,000 ltr tank I can do the same ie. be totally self sufficient.
2. It cost us around $2,500 for the tanks (could have been cheeper if we had 1 instead of 3 = space). We saved $200 on water usage last year and they say prices are going up. If we get an inspection we can probably get over a grand rebate though I’m happy enough with the outlay.
3. Health risk be damned
4. Umm… useless application of cost and infrastrucure to recover it = desal
You’ll probably think I’m a greenie nut but I’m not.
Oh and how would you feel about drinking recycled wastewater since you seem to have a problem with rain?
BilB – you do realise that a levy on electricity to raise money for investment in renewables is more or less the same thing as a carbon tax don’t you? The difference is that your levy is imposed on all electricity consumed rather than proportional to the amount of carbon a particular activity emits. Note also that your supposition that this is less costly than a carbon tax or a CPRS is not necessarily correct. For a start, I want to see your plan independently modelled for its impact on emissions and the assumptions about costs. Second, both a carbon tax and a CPRS recycle revenue raised back to households and firms (and help to pay for public investment in R,D & D of alternatives), so only a small proportion of the money raised represents a true cost to the economy. Third, your plan effectively implies a government takeover of all electricity investment and seems to pay no regard to uncertainty about future relative costs of different renewable energy costs. There is also no role for CCS or nuclear in your plan, which seems rather presumptious.
So, my conclusion is that you are far from demonstrating that you have a superior plan. You have put forward an alternative. Now I’d like to see an independent evaluation of the cost effectiveness of the plan and the implied cost of abatement built into it.
Sorry to go off topic
Back to the Greens and ALP, I would like to see them work out an interim system – far better than compromising with the coalition. I understand that Rudd is interested in keeping the middle ground while the coalition take themselves further right but I think an alliance with the left would be a huge benefit for them. You have to think of it in the context that there are more lefties (and I use that term loosly) out there than given credit, due to the rise of conservative journalism during the Howard years.
Elise.
Tanks are not efficient water sources as far as cost goes using dollars per litre.
Obviously the greater the rainfall, catchment, the better they are in that respect but even then water quality is, despite what Vox says above, ‘doubtful’, city roofs [ves?] are dirty things as regards chemicals. Sorry Vox I wouldn’t drink water off a city roof.
We at my rural place rely entirely on catchment to our tanks in a rainfall regime of about 200mm per year and that gives us about 25,000 litres per year to use.
We cope [don't have a helluva lot of choice in the matter].
But our tanks are big, 27,500 litres each and that is not an option in a city.
Water efficiency is a major key.
Without too much fuss or too many dollars the ability exists to halve per capita water use from about 200 litres daily to about a 100 litres daily [I'm doing this from memory].
Ours is less than half that, probably about 20-40 lires per person per day.
That alone would go close to solving Adelaide’s water problems now and in the future and people wouldn’t have to shower only once a month, give up gardens and so on.
I really recommend the report [not the brief summary but the report itself] cos it goes into detail and in the process widens the options from the lazy politician inspired we gotta spend billions on desal whatever to a whole range of methods that are far better from a whole stack of criteria including ease of achieving.
Oh, looky, not arguing that tank water is lovely – I’m on one, well, three actually – but just that it isn’t a solution for cities.
Firstly, the water supply isn’t reliable enough – OK if you have fall back options, but all you do then is delay the onset of restrictions, not eliminate them (as you can with desal). Three months without rain would empty most tank systems, and in a drought of epic proportions, such as we’ve just had/are having, three months isnt’ long at all.
Where I live, one of the (traditionally) highest rainfall areas in Victoria, we had all sorts of hardship cases a couple of years ago. 50% of our population doesn’t have any townwater at all and many rely totally on tanks. Of course, this also tends to be the less well off of our citizens.
The long dry stretch meant that many of these residents exhausted their tank supply and had to truck in water. Very expensive option.
Tanks are expensive, compared with other water systems (and, a year or so ago, I did do the math!) The set up cost is high (purchase of tank and plumbing), and there’s also maitenance. From memory, there’s a cost comparison chart on Melb water’s website.
Getting enough rainfall is fine if you live in a stand alone house, not so good if you’re in an apartment (particularly high rise), semi detached or flats. Go for it in a leafy suburb.
The health costs are real. Again, OK if you’re relatively young, fit and healthy – you probably have the energy to maintain the thing properly. If we’re talking about tanks as a general solution, then neglected tanks lead to all sorts of problems: increased mosquito populations, poisoning (not just the normal e coli stuff but truly awful things such as dead possums), the bird poo disease (a real killer, we had a local die of it), and, in cities, pollution run off from roofs.
Tanks are fine as an individual solution, where circumstances permit, and as a supplementary water supply. But large scale, they’re not economical and present many practical problems.
mehitabel, I’d agree that tanks are a limited solution for the high density part of cities. But we’re less than 10km from the centre of Melbun and “high rise” here is two stories. Even with the most optimistic projections we’re not going to see more than 4 stories here. And Melbun is like Brisvegas, the summer rain is usually intermittent but plentiful, so even a kilolitre tank will keep a few squares of veges going. What seems to stop people is the hassle of having to think about tank water vs tap water. Much easier just to turn the tap on…
We struggle a little with grey water as our shower consumption is less than our toilet flushing consumption, so we periodically use rain water for some flushes. But that’s on less than 40 litres/day/person, which most Australians are not close to. I’d love to see more people with that problem
I’m pleased that you raised those points, LO. Verification of the impact of the 3 cent increase is actually being played out in NSW right now. 6 months ago electricity prices rose by just that amount. Tell me if you notice any difference in your spending power for anything other than electricity. So far nobody has. Impact on emissions will be zero as the 3.3 billion dollars (adjusted to national scale from just one state and collected so far) is entirely in the hands of electricity distributors. However this money in public hands would now be paying for the construction of the first gigawatt of CSP. The public programme is clearly defineable as it is a straight linear relationship to levies collected.
“The difference is that your levy is imposed on all electricity consumed rather than proportional to the amount of carbon a particular activity emits”
This comment points out a huge weakness of the ETS/carbon tax/CPRS. The performance of these is a limiting sum. The nearer they get to their target the less effective they become. The levy maintains its effectiveness up to the point at which it has fully succeeded and then abandoned. The CPRS backed compensation programme is entirely political and again highlights a weakness. It would be a permanent obstacle to political harmony as it effectively becomes a redistibution of income from business to the public on one plane and from the better off to the less better off on the other. As fair as that sounds to one group it will sound equally unfair to the other, and would therefore become a continuous bun fight distracting from the whole purpose at hand. Clearly evident in the very position of the CPRS right now.
On the cost to the consumer? The 20% electricity price increase already applied is part of a set of increases bulletined to progrssively sum a total (for NSW at least) of 75% by 2013. The CPRS is offering compensation to low income families of $250 (if I recall correctly) whereas the electricity price increases indicated by the pricing body will cost the average family an extra $700 per year leaving these families $450 out of pocket. The 3 cent levy will cost the average family of four around $250 dollars per year, $200 less than the CPRS after compensation.
This is not a government takeover of electricity. This is the public investing in their future, ie Nation Building, and as far as NSW is concerned represents a contiuation of the status quo, a status that the NSW public have repeatedly demonstrated they prefer over private ownership of electricity infrastructure.
The levy does not define the infrastructure chosen. This simply has to be an immediately available technology which fulfills the objectives of emissions offsets, delivered electricity price, and local economic stimulation. The technologies would certainly vary throughout the 30 year life of the levy.
I recall going through all of these points with you last year OL when you were trying to say that a 3 cent per unit levy would destroy the Australian economy and drive us into the third world. Well the 3 cents has been applied as a price increase (to prepare for the CPRS introduction) rather than a levy so the experiment is under way. Please advise at which point you feel the economy is in jeopardy.
At this point I feel that you have failed to identify any weakness at all in the levy proposal.
“On the cost to the consumer? The 20% electricity price increase already applied is part of a set of increases bulletined to progrssively sum a total (for NSW at least) of 75% by 2013. The CPRS is offering compensation to low income families of $250 (if I recall correctly) whereas the electricity price increases indicated by the pricing body will cost the average family an extra $700 per year leaving these families $450 out of pocket.”
That is a terrible comparison!! The increase in electricity prices talked about by the pricing body are only partly related to the cost of carbon credits! They will take place regardless because they are related to other cost factors!
The government have made it completely clear that compensation under the CPRS for low income and most middle income families will be HIGHER than the increase in electricity prices attributable to carbon pricing.
Even you are acknowledging that you are proposing to reduce household disposable incomes by $6.6 billion per year without any compensation to the household sector. The impact of the CPRS on HDI will be far less than that because of the way the revenue from selling permits is recycled.
I never said that a 3c levey would be disasterous. What I doubted and still do, is the cost effectiveness of what you are proposing. I think you are likely to be significantly underestimating the cost of your scheme and fail to understand how the CPRS or even a carbon tax works (by changing relative prices, not through income effects).
Come back to me when you have had a credible economic modelling agency cost and evaluate your proposal.
The other thing you don’t seem to understand is how changes in RELATIVE prices affect incentives. A carbon tax/CPRS does not work by imposing a blanket increase on all electricity. It works by having a different impact on different sources of electricity depending on their carbon intensity. It makes some activities less profitable than others and helps to incentivise changes in investment behaviour.
I also have no idea what you mean when you say that the nearer you get to the target the less effective a CPRS is. The CPRS aims to progressively reduce emissions over time and that is achieved through a real relative increase in carbon intensive goods and services over time. The CPRS will only fail to be effective if the targets are ineffective. And as I have said elswhere, if that is the case then why would a government replace ineffective targets through the CPRS with effective targets through CAC mechanisms? It doesn’t make sense.
Your scheme will never fly because it provides no scope for compensation to households or firms. In practice it is little different from an MRET that is scaled up to 100% over a given time frame.
So, get the modelling done and until you do, stop claiming that you have come up with a solution to climate change mitigation in Australia that is cheaper than the alternatives.
If not for the handouts, where is the risk mitigation for business? Risk mitigation is the way forward for this debate.
Never mind Copenhagen, Labor will latch onto any solution that helps them go forward. The way forward is not to quibble about temperature graphs, or projected carbon price impacts ($21.37? $11.85? $37.64? Pull a number out of your arse too, it won’t help a bit in clarifying the issues for the wider public but it might make you feel like a playa), or fish in some exotic river, it’s to brandish the Stern Report as the only responsible way forward.
Responsible, sustainable risk management would get Xenophon on side (note his earnest joint report with Turnbull six months ago or so), and might also get you a moderate liberal if Abbott’s cracks start to show by then. Fielding is random, getting him off side is no worse/better than having him on side.
Sad to say it, but even after reading the whole way through the posts (even the sidestep into water), I am with Terry @1 and 3.
But then again, I’m still mad at them all for their posturing pre-Copenhagen, and mad at everyone else for Copenhagen, so I’m probably not longer objective.
I am not sure it matters what passes now … we won’t get past the Accord.
Wow, LO. You’ve managed to bamboozle even yourself.
The only way that Australia’s emissions from electricity power generation can ever be reduced or eliminated is if new power generation infrastructure which does not emit CO2 is built and emitting facilities are shut down. Now regardless of how that process is induced to occur these new facilities have to be paid for. That cost will be faced by every consumer by way of price increases in the cost of the product.
What you are trying to say is that the CPRS is an agent of change which ultimeately carries no burden to the public as consumers are fully reimbursed. But what you are trying also to imply is that families also face no cost increase for the infrastructure replacement. That is just nonsense. The figures are far too large for any more privileged section of the economy to benevolently pick up the tab so that the lower incomed will not be disadvantaged. The CPRS seeks to stimulate the private sector to spontaneously seek the most innovative and cost effective technologies to replace the evil emitters supplying electricity under the restricted carbon supply affected price where it is hoped a profit can be made. There is an immense amount of wishful thinking in that little plan. Wishfull thinking that will ultimeately make NSW PPP trafic flow projections seem unrealistically low. At the end of the day the infrastructure has to be paid for, and the users are the ones who have to do that. The cost of that burden under a carbon tax or an ETS, or a CPRS can only be higher (and realisitically a lot higher) than a levy. The levy will cost a typical family of four $5 per week above what they are already paying. That is predictable. There is absolutely no way of predicting what the cost will be under any of the other proposals, only that it is certain to be significantly higher. All of the press that I have seen is predicting $500 or more.
Here is a link to the announcement for NSW
http://news.smh.com.au/breaking-news-national/nsw-may-pay-62-more-for-electricity-20091215-kt6g.html
You might like to explain how this part correlates with your beliefs
The federal government has also said families earning up to $160,000 a year will be fully or partially compensated for the impacts of the CPRS
“fully or partially compensated” in government speak reads as “some will be fully compensated but most will be partially compensated”
The limiting sum item refers to the fact that the nominal CPRS incentive applies to the balance of the system still emitting. Therefore as that balance becomes the smaller part of the total generating system the incentive becomes less effective and must therefore be exaggerated to maintain the determination to replace the full emitting system. This sets up a dangerous precedent whith regard to electricity pricing for the entire system.
Sorry LO you haven’t made a single meaningful point yet. Furthermore your understanding of the full CPRS process is sadly lacking.
MargiP,
Terry misses the point that a responsible government does not need international concensus to take action to protect its people from known dangers. The Greens take this view, and have acted to find a way through an impasse. The other aim here is to force Rudd to show more of his hand. “No communication equals no information”.
You really are off your trolley BilB.
I understand emissions trading better than you ever will.
The point is not that there will be no burden from policies to reduce emissions.
The point is to identifty the strategy that will deliver a given emissions reduction at least cost.
Your plan simply levies an effective tax on electricity consumers (and producers as the incidence of the tax will be shared) that does not differentiate according to emissions intensity and does not return any of the revenue generated by the scheme to consumers, and so produces an INCOME effect as well as a SUBSTITUTION effect.
Your scheme takes $6.6 billion from consumers directly and then funnels the money directly into renewable investments.
A CPRS sets a limit on emissions and then lets the market determine the most cost effective way to deliver a given emissions reduction. Emission reductions are largely driven by changes in relative prices that offer signals to firms and households to change their investment and consumption behaviour. That signal carries an economic cost that is distributed across firms and households but IS NOT equal to the magnitude of the tax because PART of the revenue raised is REDISTRIBUTED to firms and households.
What about this process do you not understand?
YOu have produced NO evidence to suggest that the economics cost of your scheme will be smaller than what the government is proposing for a given reduction in emissions.
I have read mountains of papers about how to achieve deep, long-term emissions reductions at least economic cost and I have never seen a single, credible paper suggesting that a scheme such as yours is the most cost-effective way to reduce emissions.
You make no attempt to vary the price signal according to emissions intensity, you limit the technologies that qualify for support, you provide no mechanism to allow firms to manage their carbon risk, and lop households with a large income effect. The main people that will benefit in your scheme relative to a carbon tax that recycles revenue or a CPRS that does the same but allows permits to be traded are the people that own the renewable assets that your scheme funnels money into.
As for the claim that you can guarantee the plan will cost $5 a week per family that is BS unless you think you can predict the long-term cost of research, developing, demonstrating and then implementing all the renewable technolgies you have mentioned. Indeed this future uncertainty is the MAIN REASON why some sort of ETS or a carbon tax is better than your scheme because it does not rely on some planner thinking that he/she knows what the future cost of different technolgies will be!
It is almost guaranteed to be more regressive and less efficient than a well designed carbon tax or ETS.
I suggest you go to your local library, take out an undergraduate economics textbook, and familiarise yourself with some basic microeconomics.
“The limiting sum item refers to the fact that the nominal CPRS incentive applies to the balance of the system still emitting. Therefore as that balance becomes the smaller part of the total generating system the incentive becomes less effective and must therefore be exaggerated to maintain the determination to replace the full emitting system. This sets up a dangerous precedent whith regard to electricity pricing for the entire system.”
I still have no idea what you are getting at here – this paragraph is almost unintelligable.
There are two people who matter in getting this up, and they’re not Xenophon and Fielding. Their names are Rudd and Troeth. Xenophon will back it if its explained to him well enough, and if there are a few titbits thrown in for SA. I don’t know what Troeth will do, but given that she voted for the CPRS, has nothing to lose as is retiring, and would love to give Abbott a black eye its pretty reasonable to think she’ll go for it.
Rudd probably won’t, but you have to wonder why – because he doesn’t like it, or because the Greens thought of it first?
I would like to think this plan will go ahead, but my suspicions are that the Greens have set it up to fail, so that they can rid themselves of the obstructionist tag they’ve acquired.
Firstly, they’re a little dishonest quoting Garnaut but not acknowledging that he thought a scheme such as they propose was a ‘second best’ option – with first best being an ETS.
Secondly, if the Greens had either (i) not filibustered in the Senate, allowing time for the Turnbull coup; or (ii) joined Troeth and the other Liberal defector in supporting the ETS once MT was rolled, we’d have something in place by now and the game would now be pushing for higher targets.
Thirdly, Milne was emphatic at the press conference that there would be no compensation for ‘big polluters’ under her scheme. However, this information is (at best) obliquely referred to in, or downright excluded from, her media releases since.
I can’t see the government going from considerable compensation for industry to none at all, and if they did, it would probably be a deal breaker for Troeth.
The mysterious absence, post press conference, of this part of the Greens’ package leads me to suspect that they have deliberately put it on the table, knowing the government won’t support it.
This would allow them to go to the election saying that they had tried to negotiate with the government, but that the latter had caved into the interests of big business (which suits the Greens’ mantra to a T).
This would allow the Greens to mitigate the obstructionist image that’s been building in the community since last year.
I hope I’m wrong, but it’s how I read the politics of it.
We’ll go through your problem bit by bit, LO.
The “limiting sum” sentence is convoluted, not unintelligible. Keep working at it you will get it eventually.
On the cost to households of the CPRS you completely ducked the issue by declaring you have read everything, understand everything and then fail to answer the question. There is a cost to households, that cannot be avoided, so what is it. The answer is that you don’t know. This is one of the weaknesses of the CPRS approach, this is left to “the market”. In this, there is one inescapable reality. Alternative infrastructure has to be built and that has a price which must be paid for by the users of the end product, no matter which system is used. The government can collect carbon credit charges for all it is worth and give the proceeds back completely for all its is worth, that has no bearing on the underlying cost of building infrastructure and running it.
The CPRS has only one possible virtue, and that is that it may induce a lot of infrastructure building all at the same time. If there are ten electricity companies all facing the same pressure of rising input energy costs due to the limits of their quotas then they may all be driven to build at the same time. And the CPRS thinking is that each business will seek the least cost most effective solution for their own circumstances. The key failure if this approach is that the response is fragmented. Fragmentation leads to the inefficiencies of poor coordination, clustering, duplication, nonuniformity and higher overall cost.
The economists argue that the carbon credit mechanism gives greater certainty of adherence to emission targets. Well to date, all evidence is to the contrary. The levy system has an exactly defineable emission reduction rate.
“does not return any of the revenue generated by the scheme to consumers”
Here is the heart of the levy system. It absolutely does return revenue to the consumer. And it does this with avoided costs. For the private sector to react to the pricing signals of their quota limits they must borrow capital (or draw down on their holdings) to build sufficient low emission intensity infrastructure to stay within their quotas and remain profitable. This places a premium overhead on the delivered electricity price equal to the amortised capital share plus interest plus profit. In the levy system this figure is $5 per week per household of 4, in the CPRS system this is anticipated by IPART to be 2 to 3 times higher. It is all there in the SMH article and will be confirmed in IPARTS final report this year. And there is no certainty that real emissions will actually reduce. Private companies have the option under an international ETS of producing “apparent” emmision reductions by buying anti emissions from some other place, like the Cayman Islands. And the other levy system cost saving to the consumer is that they own the infrastucture in common. This is an asset that carries the option of being sold at some future time.
“You make no attempt to vary the price signal according to emissions intensity, you limit the technologies that qualify for support, you provide no mechanism to allow firms to manage their carbon risk, and lop households with a large income effect. The main people that will benefit in your scheme relative to a carbon tax that recycles revenue or a CPRS that does the same but allows permits to be traded are the people that own the renewable assets that your scheme funnels money into”
There is no point in having price signals for the staionary energy sector, the levy system just gets on with the job of replacing the lot in a guaranteed manner. Managing business carbon risk is a different issue, that falls into the other 50%. The CPRS attempted through all of its complexity to provide a universal system and failed setting its sights, in the end, on just the big bit of the problem, the stationary energy sector. The levy system is task specific and makes no attempt to solve the other 50% of emission from industrial processes, aviation and agriculture. The beneficiaries of the levy system are the owners of the renewable assets funded by the scheme, the consumers themselves.
No BS, the cost is $5 per week. There is no development cost for the preferred renewables, this has all been done. The scheme draws on the 30 years of experience gained running these facilities and the viability is based on their 25 year real time operational “out in the weather” experience and data. There is however ongoing research and development all of which points to greater efficiency and significantly lower operating costs which will all serve to maintain the lowest delivered electricity price into the future.
The Rudd government formulated their CPRS to solve all emissions, then discovered that agriculture and industry do not lend themselves to hard target driven solutions. Such an approach would drive both sectors to a near stand still. So they put both into the “too hard basket” an focussed on the big easy bit.
The levy system for stationary and light transport energy says that we will install a simple, direct, automatic, guaranteed delivery system for the big easy bit, then focus all of our energy and creativity on the hard bits, agriculture and industry. And equally importantly the levy system achieves its goals with out stressing the economy in any way.
This is called the strategic business approach. Something which I suggest you begin to familiarise yourself with. Business constantly reminds itself that “there is no free lunch”, and there is no enterprise where this is more true than where energy is concerned. Costs in the CPRS debarcle are like a shell and pea game. You can cover them up and move them around, but they are still there. But unlike the shell and pea game, the more you shuffle the costs around, the bigger they become.
It may also be on Kevin Rudd’s mind that he has one of his most capable ministers tied up in what is increasingly looking like a dead end portfolio. If he gave Jenny Macklin the flick, and put Penny Wong in her portfolio, I think you would start to finally see action on indigenous housing, for example.
mehitabel @ 95, I’d just like to introduce you to a few facts about the Greens.
For starters, the party’s official policy supports an ETS, just not one that is set up to achieve nothing. That’s why they voted against the Clayton’s scheme the government put up.
For seconds, the only people who’ve been painting us as obstructive are the ones who’ve proposed a variety of schemes that will not reduce Australia’s CO2 emissions by a gramme – the government and the opposition – and, of course, the fine journalists of The Australian, who are not noted for honesty on climate change.
Great. Now you’ve told me lots of things I already know, explain why something Milne emphasised during her media conference does not appear in her subsequent media releases.
The hard reality Mehitabel is that the government at not stage put a deal on the table which the Greens in good conscience could support.
If anyone was being “obstructionist” it was the government, but of course their preference was to cut a deal with Turnbull regardless of how flimsy it was because they thought this would wedge the Libs.
IMO, the Greens have acted reasonably in this, all things considered.
Bilb@86,
You state “the CPRS is offering compensation to low income families of $250 (if I recall correctly)”. The correct figures are significantly higher than this, and are on the DCC website. For low-income single people, payments are between $315-390; for sole parents with one child, $648-1022; single income couples, $548-1015; etc.
You also state (@91) that “the only way that Australia’s emissions from electricity power generation can ever be reduced or eliminated is if new power generation infrastructure which does not emit CO2 is built and emitting facilities are shut down.” This is incorrect, emissions from electricity generation can also be reduced by reducing demand for electricity through energy efficiency and not buying things like giant TVs (i.e. substituting goods), and switching fuels from brown coal to black coal, coal to gas, etc. If I understand your levy system correctly, gas would be treated in exactly the same way as brown coal.
mehitabel, I’m unsure what I told you that you already knew: your post @ 95 indicated (to me at least) that you didn’t realise the Greens support an ETS, and that they aren’t the ones who’ve been obstructing progress.
As to why Sen Milne hasn’t mentioned the undesirability of handouts to industry since her initial statement, who knows? It’s not like it’s a secret that the party disapproves of them, after all.
mehitabel, from the Greens release here, http://greens.org.au/node/5624
“The interim scheme is a building block for future action that’s got real teeth. It will give certainty to increasingly impatient investors and will direct billions of dollars to Australia’s householders instead of paying polluters to keep polluting.
“If we can get broad, cross-party support for this proposal it will show both investors and global negotiators that Australia is serious about tackling the climate crisis.”
and this
“The beauty of this interim proposal is that it sends investors the beginnings of the signal they need without locking in climate failure, as the CPRS would do in its current state,”
You are almost implying there is something sinister about the Green’s proposal but I think this is a genuine attempt to get things moving for investors let alone AGW. Of course there is a sting in the proposal for those who choose not to take it up because they will “show both investors and global negotiators that Australia is” NOT “serious about tackling climate change”
Peter W.
I’ll have to take your word for the compensation figures. If they are published we will have to see how that pans out, though they seem to conflict with other published information. Of course this is all mute if the CPRS never eventuates. However I would comment that for there to be a need for compensation of $648-$1022 for a 2 person family there must be an expectation that the price of electricity will skyrocket under the CPRS.
This will be a significant problem for SME’s. It is this very issue that the levy system attempts to avoid. The levy is set at a level that keeps the cost of adjustment to being a marginal increase in the electricity price, rather than a significant increase which would cause a repricing of all goods and services. A repricing of all goods and services is a consequence for which the CPRS cannot attempt to compensate.
In my business electricity is about 2% of my gross turnover. So a 20% increase of that 2% is insufficient to cause the need to adjust my prices. If under the CPRS the price of electricity doubles taking my electricity to 4% of my turnover I would have to take that into consideration when next pricing new work. For a plastics business where electricity would 15% of gross turnover a 20% increase of that 15% would cause pricing pressure, whereas a doubling under a CPRS taking that margin to 30% of gross turnover would force and immediate repricing of all products. That is the difference in the approaches.
Good point on the energy savings item, technically. My personal feeling is that any savings created by better efficiencies will be swallowed by increased demand for airconditioning and vehicle charging. I anticipate that consumption will remain constant until the population increases significantly.
The levy system is simply a funding method to ensure certainty of outcome at minimum cost. Whatever is replaced is what is necessary to eliminate emissions. In practice gas fueled Gas Turbine plants would remain for backup and emergency functionality. CSP uses a small amount of gas, or optionally biomass. Gas Turbines can be run on biomass as well. Otherwise, yes, gas is a CO2 emitting fossil fuel in the same way as brown coal is, though not to the same degree.
Natural gas (essentially methane) is a special case as it is a byproduct of oil extraction (I believe) in many places and is either consumed productively or flared of at the well head. It is also a convenient fuel for coping with situations where base energy supplies are unsuitable.
We have an election coming and as Terry #97 has alluded, perhaps Kev needs to get Penny onto other things. I would think a determined person as she obviously is, would want to see it through. Speaking of intestinal fortitude, I wonder what will happen to Ian Macfarlane – seemed pretty fair dinkum to me – he deserves better than having to work in the oppositions recycling depot.
Is everyone anticipating a double dissolution election?
If MrX came on board then the bill would only need Troeth to abstain.
If the government agrees to this proposal then it will be a big symbolic win for the Greens. The ALP would not want to give this to them. Perhaps the ALP could say ‘No’ but then turn around and propose their own bill with a different name but which essentially does the same thing. That way they would get the credit for it.
BilB
I’m expecting a double dissolution election (not necessarily on climate change) in August/September, so as not to muck up the Senate.
Hans M.
I see it differently; this appears to be a figleaf for the Greens, so they can say they haven’t been obstructionist.
I think -as I have indicated, above – that the devil is in the detail, and the Greens are deliberately hiding the fact that there are elements of their package they know will be unacceptable to the government (lack of compensation for industry).
Thus they don’t expect the package to be accepted, but will be able to go to the election saying that they tried to negotiate but that the government put protecting big business ahead of an agreement, which would suit the Greens perfectly.
I think there’s some muddled thinking here about the Liberal dissenters Boyce and Troeth. They voted for the CPRS with the $7 billion in handouts to big polluters that Macfarlane negotiated with Penny Wong. They also registered their dissent in part as a gesture to signify their disgust with how Malcolm Turnbull had been treated by his own colleagues.
The idea that this indicates they would sign on for a Bob Brown/Christine Milne proposal which would presumably have no handouts – because Brown/Milne always opposed both the handouts and the low targets – is fanciful in my view. Moreover, Troeth was explicit in saying in her Senate speech that she wants nuclear power on the agenda, and I can;t see that getting traction with the greens.
I don;t think Rudd has any intention of going to a double dissolution election with CPRS as a trigger. The issue has becomea complete pain in the ass for Labour, and provides all sides with endless opportunities to take potshots at the government. They would much rather run on their economic performance, which means bringing down a May budget, and I think their reading of Abbott is that time is on their side in terms of public perception of his leadership qualities.
My sense is that Rudd would like to kick the issue into the same long-grass paddock where the promise of a laptop computer for every school child currently sits. The failure of Copenhagen and the state of the Senate provides them with two “get out of jail” cards here, which I think explains the sudden conversion on the part of Brown and Milne. The real inidcator here would be a Cabinet reshuffle where Penny Wong is given a ministry where she can actually do something, rather than have to sit around in Senate committees with the likes of Steve Fielding and the Nationals person who thinks the way to deal with climate change is to shoot all the camels in Australia.
Er…laptops in schools is being delivered, it’s not lost in the grass. Taking longer than expected – my nephew has one from his school, we’re still waiting for ours, but they’re getting there.
A DD doesn’t have to be on CPRS, as there are a couple of other lurking triggers, such as the Youth Allowance legislation. I will also point out – at the risk of boring those in the know – that (a) a DD doesn’t have to be called immediately after the relevant legislation has been rejected, so a DD on CPRS could well be held in Aug/Sept; (b) most DD election campaigns don’t focus on the nature of the rejected legislation.
As I said, I don’t think the Greens package (because it rules out compensation for the ‘big polluters’) is designed to be accepted by the government. And certainly, if it was, Terry is right to say it would probably lose the support of Troeth-and-the-other-one, who for some reason is always nameless.
Mehabitel, the “other one” is Sue Boyce, a Liberal Senator from Queensland, who if I recall rightly got her Senate seat when Santo Santoro was cuaght with his fingers well and truly in the till. As Sue Boyce is not really known as a Liberal dissenter along the lines of Judith Troeth, Marise Payne, Petro Georgiou and Russell Trood, I suspect her vote may have had a lot to do with anger at the bad faith with which Minchin & Co. dealt with Malcolm Turnbull and Ian Macfarlane.
Good to hear about the laptops in schools. Quiet achieving with the Rudd government. I’ll try “ending the Federal/state blame game on public hospitals” as a promise currently sitting in the unmowed paddock.
My hunch has been that some of the renewed urgency on Brown and Milne’s part about wanting to deal with the Government on climate change comes from a growing awareness that the issue is on the ebb tide among voters. A very recent Roy Morgan poll would support this:
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BilB, I have to say, having heard pretty much all of the economists plans for the cheapest or most efficient way of reducing emissions, I’m with L.O. here, you seem to be picking winners, not something that has worked well historically. Seems to me we’ll pay a quite unnecessary shitload for electricity with your plan.
BilB
Will you now acknowledge that you were wrong on the compensation question? There is no conflicting material. All you seem to have done is read a press release or a couple of newspaper articles. The compensation mechanism is set out clearly in the legislation and in the government’s white paper. I suggest you read those documents.
As for the point that you can know, up front, the cost of your scheme just by virtue of your prior experience is ridiculous. You can determine the size of the levy. But whether that levy is sufficient to pay for the infrastructure programme you have in mind depends on the future costs of research, development, demonstration and then investment. You cannot know how these will evolve over the next 30 years.
Perhaps you should give thought to how the MRET works? Your scheme is more or less identical to an MRET except rather than the target being 20% by 2020, you would have it rising to nearly 100% by 2030 and then all revenue raised being recycled to pay for investment in renewable energy infrastructure. What do you think the price of RECs would be if the government announced an MRET on that scale over the time scale you are talking about? They would blow through the roof and be significantly higher than permit prices under an ETS.
And why is that? Well, it is obvious. Your policy cannot possibly be cheaper than an ETS because you are limiting the technologies that can contribute to emission reductions without knowing whether those technologies will be the most cost effective over the relevant time horizon. An ETS (or a carbon tax) is technology neutral and so cannot be more expensive than your scheme for a given emissions target.
I simply do not believe your $5 a week figure until you can provide a credible independent verification of your estimates from a firm with expertise in energy sector and economic modeling. Given the current price of RECs for a small MRET it seems incredibly unlikely that you could replace Australia’s existing electricity infrastructure for the cost you are talking about. You cannot mandate a higher cost technology be introduced by fiat and then claim it is cheaper without modeling the general equilibrium effects of what you are proposing. The higher cost has to be absorbed by someone!!
Just so it is clear, what you need to provide is evidence from a CGE model that the net present discounted value of the reduction in Australian GDP under your scheme is less than an ETS that set an identical emissions target for the stationary energy sector over the same horizon. Your model would need to take into account uncertainty about abatement costs under different technologies and the impact of not allowing permits to be imported from countries where abatement is cheaper. You would need to model the different impacts on the household sector from your scheme and an ETS, including the distributional effects. You also need to take into account the impact of not allowing a secondary market for firms to manage their carbon risk under your scheme and the impact your scheme would have on asset values and supply of the existing energy infrastructure that you will be signaling will be replaced within 20 years.
If any credible model can show that your scheme is more cost effective I would be truly amazed.
LO,
Compensation? Yes and no. The question with the compensation must be, is the compensation reimbursement for the extra burden placed on households by the CPRS ie repaying the extra over and above what the householders regular electricity bill would be, or is it paying part of the electricity bill itself ie subsidising the householders electricity costs. If the answer is the latter then I am wrong and that then leads to a whole lot of questions about the logic of the CPRS and the politics of income redistribution. If it is the former then that is a neutral position and the next question then is what will be the increase placed on households by the electricity companies to cover their own compliance costs.
I’ve just checked my family of 4 power bill and “ouch” we used 4000 units in the quarter. Now that did include a lot of pool pump running and we leave some lights on permanently (might have to change that) so I will revise the the $5 per week to $7. So the levy system will cost my target family of 4 consuming 16,000 units per year on the pre increase rate $350 per year extra. Under the CPRS compensation if my family of 4 received the full $1000 would not be disadvantaged at the scheduled 75% price increase. Note also that they equally have no incentive to reduce electricity consumption. Compare that to the levy system they would be disadvantged by $350 per year but there would be no price increase pressure. But the next step is what happens when the electricity companies run out of carbon credits and either have to buy more at a penalty rate or start building renewables.
At this point you have to look at the industry as a whole. All of the figures are behind paywalls so I am going to make assumptions. On the surface the electricity industry market size is $35 billion dollars. When you think about that 30 billion in a trillion dollar economy is small cheese until you look at its CO2 emissions which amount to roughly 40% of the national total. But this industry will have to rebuild itself at a nominal cost of some 200 billion dollars. That figure can range anything from 30 billion for nuclear at the Fran Barlow low end price to 90 billion at the Switkowski price to 350 billion at the US and European industry standard price, or be 210 billion for CSP at the European price. There are of course many other possible combinations but 200 billion is a reasonable budget in todays prices for a 30 gigawatt baseload replacement programme. This is a big undertaking for 35 billion dollar business to take on over a 30 year period. So now we have to look at how the financing of that programme will affect electricity prices. The 75% price increase brings in to the industry an addition 26 billion dollars. Deduct the anticipated 11 billion dollars for carbon permits leaves 15 billion dollars, which over 30 years amounts to 450 billion dollars. This should be sufficient to finance the 200 billion dollar rebuild bill. So with the most family households compensated from the CPRS carbon credit fund who is picking up that 26 billion dollar tab? Well business is of course. With business facing a bill of that magnitude there will be a wave of price increases across the board, and not just direct increases but induced increases as well. So the Coalition actually had it spot on. The CPRS is a great big tax on business times 2.
Getting back to the compensation question. Yes and no. Yes I was wrong superficially. No I was right absolutely because the whereas families are not disadvantage in their direct electricity bill, they are disadvantage through all of the goods that they purchase. Therein is the lie. And the second lie of the CPRS is to do with the emissions outcome. From a creative accounting point of view there are many possible opportunity scenarios for foreign companies to buy energy assets and manage the cash flows to strip significant profits from the country then abandon the assets when as the emision permits run out, leaving the public to pick up the bill in the form of higher electricity prices above the 75%.
At the end of the day the levy system is cheaper over the 30 years by 250 billion dollars, the interest/profit on the funding of the infrastructure replacement. I know which path I would guide the country down. The only true advantage of the CPRS, now that I have thought it through a little more thoroughly, is that it is possible to commit to the complete rebuilding programme immediately if sufficient capital was available to borrow at a suitable rate. From the atmosperic point of view that is a huge advantage. But I would share the Coalition’s concerns with regard employment and international competitiveness.
Your MRET’s and REC’s item is about pie division creative accounting and therefor conceptually meaningless. International trading of credits is a false concept as the planets CO2 absorbing potential is already over subscribed. Any improvement of carbonsink vegetation is taking the carbon balance from a huge negative to something slightly less negative, so this should not be seen as transferable asset. I believe that this will become a common understanding in the near future.
In conclusion, I stand by my claims in principle if not in absolute detail. I now see the CPRS as being unnecesarily expensive with that expense falling principally on SME’s. I see significant scope for mismanagement and profit stripping under CPRS. I also see it as a hamfisted way of achieving a relatively simple function.
Wilful 111,
Please read the post above. I have been spreadsheeting here for the past 4 hours and from what I can see under the CPRS the public gets to pay more than double to achieve the same result. The difference between the 2 systems is that under the CPRS it is possible to finance the infrastructure replacement sooner, but at a premium cost, and with the risk that excessive profit stripping may occur. The economy is also weakened under the CPRS.
“No I was right absolutely because the whereas families are not disadvantage in their direct electricity bill, they are disadvantage through all of the goods that they purchase.”
Actually, you are wrong here too. Treasury didn’t just model the direct impact of the CPRS on household energy bills and design compensation around that. They included the indirect effect as well – that is, energy is an input into the production of goods and services so the extra cost is passed on by firms to households (well some reduces profits). What treasury have done is to estimate the impact of a given carbon price on the CPI – direct and indirect effects – have called that the change in the cost of living due to the CPRS – and made sure that low and most middle income households are at least fully compensated for the change in the price level.
Before you make claims about the design of the compensation package you really should read the relevant materials. It is all there in black and white if you care to look.
“At the end of the day the levy system is cheaper over the 30 years by 250 billion dollars, the interest/profit on the funding of the infrastructure replacement.”
Really mate, you haven’t demonstrated this at all. You have claimed it but I find it simply unbelievable.
Your last comment to Wilful demonstrates your problem. To model the relative impact on welfare, incomes and output of your scheme and the CPRS you need a complex CGE model. You can’t do it with spreadsheets!!
The economic system is far more complicated than you seem to understand.
Finally, I’d claim that a proper carbon tax would also be far more cost effective than your scheme.
“Actually, you are wrong here too. Treasury didn’t just model the direct impact of the CPRS on household energy bills and design compensation around that. They included the indirect effect as well – that is, energy is an input into the production of goods and services so the extra cost is passed on by firms to households (well some reduces profits). What treasury have done is to estimate the impact of a given carbon price on the CPI – direct and indirect effects – have called that the change in the cost of living due to the CPRS – and made sure that low and most middle income households are at least fully compensated for the change in the price level”
The only way that this can possibly be correct is if treasury assumed that people would drastically reduce their power consumption. So I will declare that to be absolutely false because that just will not happen. Secondly, the compensation has a maximum amount. For people who need to use more than that level covers they are already out of pocket before the secondary effects are encountered (the maximum compensation only just covered the projected cost increase for my family). The compensation does not cover all households, so those people outside the envelope are not compensated. So your belief is completely false straight away. I’m impressed that you have that much faith in treasury’s abilities but sympathetic at the same time.
The problem here is that giving business a nation wide necessity to reprice will unleash restrained pricing pressures that would otherwise stay contained. As an example I have been manufacturing a product for a national franchise business for the last 8 years. Throughout that time I have maintained the same pricing with only one minor adjustment. And my key suppliers have supported that restraint. However by 2013 when the full price adjustment has hit we will all have a need to move together to find a new pricing level. An not just because there will be increased supplier pressure, because the customer will be expecting a change. So that change will be structured to cover the next 8 years. By 2013 there will be a nationwide pricing earthquake with a series of after shocks triggered by successive waves of wage increases. I do not believe your claim that this has been calculated to fully compensate. That argument just does not sack up.
“Really mate, you haven’t demonstrated this at all. You have claimed it but I find it simply unbelievable”
It is simple maths, LO. The levy system is entirely transparent, and the accruals are obvious. But so, too, is the CPRS once the price impact had been announced. The entire system can be analysed in block form. And that is what I did. ((Industry market value 2) minus (industry market value 1) minus (compensations payed out)) times (the emission reduction time window) gives (the allowable budget for change). It is a finite number with which there are things that have to be achieved. There is no great mystery to it once the core parameters are declared. Now that is probably a little too well defined for you to accept as you appear to prefer to believe the economist hype, but there it is plain and simple. If the government had only spelt it out in those terms at the beginning they would have had a better chance of selling their CPRS. Or not.
There is nothing more to say about it other than
2 systems
one with a direct minimum levy to directly accrue the capital to effect the essential infrastructure change leaving the funds in the hands of an executive authority
one with a pricing mechanism and regulated control device to accrue the capital for infrastructure change in the hands of the industry players.
both systems with different economic impacts and environments for infrastructure change.
one opportunity to make the right choices to prevent climate change
one limited time window
Take your pick.
LO, you are fighting against faith not facts. I admire your valiant efforts, but they will not overcome.
Other way around there patric, LO is fighting with faith against reason.
But here is an interesting thought, and I have to point out that this is guesswork on my part which the widely read LO might shed some light upon. The first of the scheduled CPRS electricity price increases has been installed and we here in NSW have had 2 elctricity bills containing the increase (mothers are now talking about it). There are a staged series of price increases totalling 75% for NSW to 2013. Now it is my vague recollection that even if the CPRS were introduced tomorrow, it does not come into effect until 2013 ie payments on credits do not begin until 2013 and the government has no money for compensation until at least the first quarter after the introduction in 2013, 3 years from now. Therefore the public are facing the progressive cost of the CPRS with out compensation.
And then once the scheme is under way the government has guaranteed that there will be no changes for the next 11 years.
Perhaps LO might care to comment about these matters.
Michelle Grattan suspects that Rudd is happy to see the ETS disappear into the netherworld of Senate Committees, especially if Abbott’s alternative turns out to be a cluster of easily derided gimmicks.
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BilB: “The first of the scheduled CPRS electricity price increases has been installed and we here in NSW have had 2 elctricity bills containing the increase” …
How does that work? You saying there’s a line item on your bills with CPRS against it? That can’t be because, as I understand it, there is no CPRS legislation, so billing against it would be an il/legal fiction.
In what manner have CPRS increases been billed iin NSW?
Danni,
http://news.smh.com.au/breaking-news-national/nsw-may-pay-62-more-for-electricity-20091215-kt6g.html
The first 20% scheduled increase has alrady been installed in NSW. Other states as well by by a different amount, you would have to talk to your electricity supplier to find out what happened in your own area. Robert Merkyl was the first to report this last year.
BilB@122: You can’t really call them ‘CPRS’ electricity price increases: the IPART media release (the SMH story you link to) says that of the cumulative 58%/44%/62% increases in EA/IE/CE customers bills till 2013, the CPRS component is only 23%/25%/21%.
Note the variation: CPRS being blamed for 60% (25/44) of IntegralEnergy customers’ increased billage, while for CountryEnergy its 34% (21/62), nearly halved. The actual network charge component variation between the businesses is 31/16/35%: IntegralEnergy only using 36% (16/44) of its increased billage to pay for network charges cf EA’s 53%, a 50% difference: Integral taking the money, and not giving customers service?
I note it was Integral who blew the whistle and sent JackGreen (Australia’s largest specialist renewable retailer) into administration when JG had a prolonged heatwave-associated (=inflated supply spot prices) cashflow problem. Integral made the call on the basis of a lousy half mill owed.
Result: Integral, and their partners in 20%-delivered-energy-efficiency-crime, snapped up 75,000 voluntary-vote-with-their-wallet JG customers, worth on average $1000 each, on the basis of a $5 million outstanding account. No matter that JG had $25 mill in outstanding customer accounts that JG could have used if they were given the time.
Take note any would-be independent Green Power utilities, the established big black-power bovver boys do not want anyone else in their game, they play hard-ball and take no-prisoners: they leveraged JG’s $5 mill temporary cashflow problem to seize and divvy-up $75 million in customers accounts, which is a hell of a leverage in anyones language. With the 10% bit player IntegralEnergy doing the dirty work. A pox on them.
That is a matter of how you read that, Danny. If you read every thing that was said above you might start to see that without global warming and the CPRS there would be no increase other than an inflation adjustment. What the article is spelling out is that the CPRS is demanding that power generators reinvest in non carbon emitting infrastructure. This requires funding. So IPRT have said that the CPRS mechanism requires funding which in turn forces investment which requires funding. That is what the 2 parts of the increases are about. You are paying the power generators to build machinery that they will own. LO above pointed out that under the CPRS you, the householder, are fully compensated for both parts of those increases, in theory anyway. So who is actually paying the bill? Business is. They are paying their share and yours as well. That is why prices will go up once the full impact of all of the increases has hit balance sheets. So once prices have gone up the person who is left paying the bills is?…YOU.
Doesn’t that make you feel good.
This is the distinction between the levy mechanism and the CPRS mechanism.
Under the levy system you pay all of the bills but own the system in common at the end, and get electricity at rough the same price as now.
Under CPRS you pay all of the bills and they own the product and you pay more for the electricity at the end but where you are compensated against most of the cost along the way (maybe) most of the things that you buy go up in price.
That is my assessment of it. Labour Outsider thinks differently, fair enough. What do you think?
By the way, if you think that the JG thing (I didn’t know about that by the way) is dirty, you would do well to be reading up on all things Enron. Because these price increases, even though a chunk of them gets handed to the government to for Kevin to disburse and compensate the voters and his favourite political funders, the balance is to be accrued in the power company’s honey pot to build new power plants. And, well, we’ve all seen what happens when businessmen find honey pots.
The political economy of the climate debate: skeptics have all the PR money.
http://www.abc.net.au/news/stories/2010/01/25/2800992.htm
“The sceptics are so well funded, so well organised. “They have nothing else to do. They don’t have day jobs so they can put all their efforts into misinforming and miscommunicating climate science to the general public, whereas the climate scientists have day jobs and [managing publicity] actually isn’t one of them.
“All of the efforts you do in an IPCC report is done out of hours, voluntarily, for no funding and no pay, whereas the sceptics are being funded to put out full-scale misinformation campaigns and are doing a damn good job, I think.”
Seeing Monckton on the news, he struck as being some freekishly bizaar anti particle of Al Gore. If his arguments are anything like the way he walks this will be, at least, entertaining.
http://www.smh.com.au/opinion/blogs/greenlines/lord-monckton-is-on-the-fringe-barnaby-joyce/20100120-mlfq.html
and I was directed to this website by someone sprouting Monckton’s views
http://www.newswithviews.com/Daubenmire/dave177.htm
Maybe the whole thing will be just plain embarrassing.
BilB I heard Monckton on Counterpoint yesterday. Coming to him cold he sounded very knowledgeable and plausible!
You’ll be pleased to know that the science on climate sensitivity is now quite settled, established beyond all reasonable argument. The answer is 0.43C not 3C as those drongos at the IPCC think.
Also the world has been cooling quite sharply since 2001 (not 1998 as previously advised.) How he gets this out of the latest NASA GISS data from Open Mind I really don’t know. Last night on the TV I think he said it hadn’t warmed in the last 15 years. It’s hard to work out how he came to that conclusion.
And BTW he has irrefutable evidence that the real agenda is world government.
Rudd to take on a Greens idea? Are they worried about vote leakage to the Greens, or the preference pudding being taken away?
On the face of it, since Ross Garnaut, (who after all was very prominently a Rudd choice from back in opposition, with the backing of the states), reckons it’s a good idea, he should be able to reframe going along with the Greens idea as a bold interim step in the right direction made necessary by the coalition’s intransigence blah blah.
But Tone, who if I remember rightly has done a few miles in a previous incarnation as a press mercenary, got in first in the re-framing stakes,..
“(it’s) very significant that Professor Garnaut has urged the government to dump its emissions trading scheme”,
taunting Kev like a schoolboy “picking” another, trying to get him to crack. ..
Taking a leaf out of Kev’s “mess with his head” play-book perhaps, with blunt designed-to-get-under-his-skin language .. “we are on the verge of a humiliating backdown by Prime Minister Rudd who I suspect will not bring this legislation back because he fears its failure yet again”.
The fact that he had to roll out Julia to go to uncharacteristic lengths of mendacity as a distraction, in twisting Abbot’s answer to “what would you say to your daughters” into a moral prescription for all womanhood, is telling. Rudd hiding behind her skirts, she’s supposed to be the secret weapon, with Abbott’s measure?
He won’t be distracted, reeking as Rudd does of the smell of hoisted-on-own-high- flown-CPRS petard. Labor muck rakers bringing his daughters into it might gone just a bit too far and riled him. Presumably he’ll have learnt from his Roxon episode not to bite back directly at PrtyGrls when they have a sly go at you, it’s not a good look.
Should be an interesting parliamentary session, and it just could be that the planet and the Greens will be the winners in it.