That was the title of an article by David Bassanese in the Australian Financial Review last week.
Drawing from the Garnaut Report he notes that we are high emitters, the highest in the OECD at 28.3 tonnes per person of CO2e and sixth highest in the world.
We are not champion emitters because we are rich, which we are, with per capita incomes almost 20% above the OECD average. Our per capita emissions are double the OECD average. We produce more than two-thirds more emissions per dollar of GDP.
We are high emitters because of three economic activities. For starters, 33% of our emissions come from power generation, 80 % of which comes from burning coal.
Secondly, 11.5% of our emissions come from road cars and trucks, 30% above the OECD average.
Finally, agriculture is a big emitter, with 9.6% of emissions coming from ruminants.
On solutions, Bassanese favours a mix of direct action, regulation and smaller, more targetted taxes and subsidies, concentrating on the main targets, plus eliminating the various subsidies to the fossil fuel industry and looking towards sequestration in soils and trees. We have 20 times the OECD per capita average of forests and wooded lands. There should be efficiency mandates on new cars and new commercial buildings, for example.
Such measures, he suggests, might be more constructive “than wasting time arguing over a cumbersome, big new tax that will probably be riddled with exemptions.”
I’m not expressing support for Bassanese’s position. I thought you should know that at least one economist, and an economist he does appear to be, was not signed up to a price on carbon or a broad tax.
Then yesterday, I heard another one on Bush Telegraph.
First, Kevin Parton of Charles Sturt University’s School of Business gave an excellent exposition of the scheme the Gillard government is proposing. The core element is that large polluters will have to buy a permit to pollute. It would be possible for polluters to buy offsets, but only from Australian sources until the emissions trading system was introduced.
The we heard from Bill Mitchell, Director of the Centre of Full Employment and Equity at the University of Newcastle, who favours regulation, with perhaps some taxes, pointing out that the major rivers of Europe were cleaned up by regulation.
For example, he said we could regulate to say that coal exports would be phased out over 30 years and claims that we would get more and higher paid jobs as an alternative. I thought he meant coal-fired power stations, but exports was what he said.
Parton reckons that if you want to reshape the country’s energy system you need strong leadership, instancing Margaret Thatcher’s phase out of coal in favour of nuclear and oil. Mitchell claims that was all about union-busting rather than energy policy as such.
Mitchell said that there must be what he called a “just transition”, with opportunities for retraining. This contrasts with Combet’s attitude, who says as a union bloke he won’t do anything to destroy jobs in coal or anywhere else. That’s a bit of a worry.
Mitchell’s approach applies rules to the producers rather than the consumers of carbon. Combet in talking to Fran Kelly was at pains to point out that behavioural change is to be sought from producers rather than consumers. The latter would by and large be compensated.
Parton’s preference for trading systems related to the lack of a clear alternative to fossil energy. The market would pick the winner. I can’t see that Mitchell’s approach gets into picking winners either unless he wants to use subsidies. He didn’t mention them, only regulating against bad behaviour.
Of course none of these economists have to face the realities of the political situation. Regulating to phase out coal would need bipartisan support, whereas neither major party would contemplate doing it for a nanosecond.
Realistically, I think we were always going to end up with an ETS. Abbott’s direct action approach is unlikely to outlast Abbott as a leader. From what has been said so far I’m reasonably happy with the course that the government has embarked on. Targetting behavioural change on the part of the big polluters makes good sense, as does the limiting of offsets initially to Australian sources to close off the escape outlet of buying overseas credits.
Introducing an ETS after the structural changes in the Australian energy economy start to grip and when overseas trading markets are more mature also makes sense.
Christine Milne has been suggesting the importance of complementary measures. Of these upgrading the electricity grid infrastructure should have some priority. Interestingly, Combet reminded Milne that complementary measures were not part of the multi-party committee’s remit, but remained a matter for the government.
I think it is crucially important that the Government be brave and also that they win the next election. That would presumably sink Abbott, entrench the changes and is a necessary condition for a return to sensible public policy debate.
Brian,
“instancing Margaret Thatcher’s phase out of coal in favour of nuclear and oil”
That is a figment of his imagination. It never happened. There is only a single nuclear power station that commenced development whilst Thatcher was in office. There are no such oil-fired stations.
What actually happened was a “dash for gas” that followed Thatcher’s privatisation of electricity supply. This unwound the pre-existing subsidies to nuclear and coal-fired power and caused private investors to pile into gas-fired generation which was revealed to be cheaper.
In short, the market was changed and private companies seized the opportunity for profitable investment, which substantially changed the UK generation mix in less than a decade.
The analogy to introducing a carbon price in Australia is clear.
I understand UK emissions dropped 16% as a result of the switch to gas-fired power.
Speaking of which, UK govt released their latest low Carbon plan yesterday. It also seems a bit light on detail, much ti filled in via negotiations: http://www.decc.gov.uk/en/content/cms/what_we_do/lc_uk/carbon_plan/carbon_plan.aspx
I agree 100% we need to try some straight regulation on certain types or levels of emissions – eg where an industry is just being bloody lazy or cheap, improved tech is already there, they just cant be arsed buying it.
Make it unlawful, impose fines etc. Old skool.
Why on earth do AGW enthusiasts keep banging on about our “per capita emissions”?
Isn’t it time to admit that this at the very least distorts the importance of Australia’s place in the world’s energy consumption hierarchy?
Iain, down the road emissions equity is going to be an issue and the most reasonable basis of this seems to be to look at it on a per capita basis.
It’s going to take us some considerable time to approach the norm, so we best get started.
Iain: we’re the biggest coal exporter in the world. That makes us important.
Or look at it this way: we are a nation of sparse cities in a sparsely populated country. That makes our petrol consumption well above the norm. If we can cut our emissions, then almost anybody can. We’re good propaganda value for climate campaigners in the United States.
Brian: I am sure you can understand why I am pleased to see others (including economists) singing my song on the carbon price. Dropping the carbon price will help the environment by dramatically reducing the price increase/tonne CO2 abatement and make climate action much much more politically acceptable.
“Picking winners” is a cry that appears from time to time with the implication that the carbon price will somehow avoid this problem. When you think about it a carbon price has a bias against doing anything about emissions that don’t respond well to to manipulating prices. For example, the consumption of both electricity and transport fuel is not very sensitive to changes in price even though they are well worth doing something about.
In the case of the fuel consumption of cars action is well worth while. At $1.30/litre the SAVING per tonne CO2 abatement is over $500/tonne. So it is well worth looking at the use of alternatives for driving down fuel consumption such as setting up a offset credit trading system to drive down the fuel consumption of new cars.
I have long argued that it is important to understand the nature of the industries we are trying to influence and adopt appropriate approaches and appropriate boundaries to acceptable solutions. For example, in the case of driving investment in cleaner electricity the outcome of a carbon tax could well be a concentration of wind farms in the optimum part of Australia for wind power. Makes sense to investors but it means that the total power ex wind will fluctuate wildly as the wind at the optimum location varies from minute to minute. From the countries point of view it would be smarter to spread the wind farms so that the overall output of the wind farms varies less. Hard to do this in a way that is fair to investors if it is all driven by a carbon tax. Easy to do in a fair way if you are using competitive tendering for the supply of clean electricity and put limits on the amount of wind power coming from a specific area.
John D.:
What looks like a good cross-national study at http://www2.cege.ucl.ac.uk/cts/tsu/papers/transprev243.pdf
With a 10% increase in real fuel prices, then staying at that level, the volume of traffic will fall by round 1% within about a year, building up to a reduction of about 3% in the longer run (about 5 years or so).
The volume of fuel consumed will fall by about 2.5% within a year, building up to a reduction of over 6% in the longer run.
The efficiency of the use of fuel rises by about 1.5% within a year, and around 4% in the longer run.
The total number of vehicles owned falls by less than 1% in the short run, and by 2.5% in the longer run.
John D,
You don’t seem to understand how the National Electricity Market works. The spot wholesale price of electricity is set every 30 minutes, according to the available electricity supply vis a vis demand. So, at times of surplus the price will be very low (possibly negative), at times of deficit, very high (up to around $15/kWh).
So if wind-generation, by concentrating in one area, creates a generation surplus every time the wind blows, it will get paid nothing because the electricity price will crash to zero at these times. Investors do not invest where they do not get paid. That does not “make sense” to them at all.
Once again, a little bit of research would save you making these naive statements.
Coal exports and domestic emissions are two different issues. No-one at the moment is proposing a tax or ETS on the exports – the agreed international position is that it is up to countries that do the emissions to manage it, not up to those that enable them. Maybe we should be looking again at that (though it would make international agreement even harder to get), but it is not what current proposals by either government or opposition are about.
Lefty E, the whole point of pricing carbon is that it punishes corporations which are “lazy or cheap”. In fact, with carbon being priced the “cheap” corporations will be the first to move away from it. Direct regulation is a lot easier for such corporations to deal with – they just nobble the regulators (read about the term “regulatory capture” here .
Down and out @ 7, against that we are one of the most highly urbanised countries in the world.
I’ve got to go out mow, so be good and stay civil.
Bill Mitchell, Director of the Centre of Full Employment and Equity at the University of Newcastle, who favours regulation
Mitchell is congenitally allergic to anything that resembles a market solution to any problem, which a carbon price (set by ETS or carbon tax) is.
Thus a left wing economist meets Tony Abbott.
The problem with the market solution lies with the political economy of the compensation, with the polluters lining up to get double and triple helpings while the punters believe that they will be short changed.
People should also remember that regulation carries with it a shadow carbon price, except that the shadow price will vary from regulated activity to regulated activity. Not only does it create oodles of opportunities for regulatory capture (as DD said) but it means that there is no common signal across sectors of the economy. Sometimes CAC mechanisms will have low implicit abatement costs but often they will be multiple times higher than delivered through a consistent carbon price. Regulatory mechanisms are best thought of as complementary, rather than substitutes for a pricing regime. I hate it when people advocate regulatory mechanism while pretending that they offer a free lunch.
Bill Mitchell is also a labour economist and as far as I know has no special expertise in environmental economics.
We are high per capita emitters of CO2.
We are not high overall emittters.
If the true high emitters are going to continue increasing their emissions explain to me again why we are putting a boat anchor on our economy?
@6 – Yes! We are the largest coal exporter in the world. And doesn’t this expose the complete hypocrisy of the proposal.
If CO2 is so bad why then do the ALP spin the line that they will look after the jobs of coal miners?
Either it is bad and we should be doing something about it NOW – Greatest moral challenge of our time!!!!! – or it isn’t and this economic hari kari is symbolicly stupid.
And who is going to be paying if everyone is going to be compensated?
Iain Hall says:
Fallacy of construction.
What counts is the contribution of individuals, families and firms. Even Iain Hall cannot deny that Australian individuals, families and firms are amongst the greatest generators of CO2 in the world.
Australian individuals, families and firms can therefore pick the low-hanging fruit of carbon reduction more readily than individuals, families and firms elsewhere.
Only wilful ignorance or disingenuousness can explain failure to grasp this elementary point.
Ok, I’m going to ask a stupid question here… wouldn’t it be possible to drastically reduce growth in CO2 emissions via regulation? For example:
- Ban on building new coal fired power stations.
- Ban ‘petrol only’ cars.
Is this too naive? This is more of a picking losers strategy (I mean coal and oil are supposed to be the big losers from a carbon tax/ETS anyway right?).
I’m thinking there are precedents for bans: removing lead from petrol and phasing out incandescent lights. No-one seemed hugely concerned with these measures, maybe its time to try them on a broader scale.
With respect Katz this is bollocks!
If we assume for the sake of argument that the AGW theory is correct then what counts is the total amount of emissions. Thus it is nothing more than an attempt to guilt trip a people, who are responsible for approximately 1%of man made emissions on a global scale, into doing something that those who are responsible for the majority of man made CO2 have absolutely no interest in doing.
The polls seem to suggest that Australians have no interest in picking any of this bitter fruit, especially as it is now rather clear that on a global scale no one else has a taste for it either.
Must laugh: A carbon tax is not even the question … Wht is proposed is a carbon dioxide equivalent emission fee If we get an ETS, then we will trade in rights to emit within a market described by the quoat. Permits will thus be a share with a value.
Calling that is both accurate and also better PR. Let us resolve to stop calling it a tax and calli it by its right name.
Chumpai # 19
In my experience the virtues of the alternatives to incandescent light bulbs have been greatly exaggerated they don’t give as much usable light as the makers claim and the certainly don’t last as long either, at to that the fact that they contain toxic mercury and its not an improvement in any sense. That said bringing about changes by regulation would at least cut out the spivs and shysters who would profit from any ETS
The Greens are not going to get a third go at this. If a carbon tax goes down, after Rudd’s ETS went down, and Gillard goes down with it, then Tony Abbott and the Coalition are going to govern in their own right for a while. Indeed, if Abbott reads Howard’s playbook, he may well just scrap his own scheme and introduce one of the Labor schemes himself. It is not unknown for conservatives to do this “as circumstances change”.
Tony Windsor pinged the problem this morning, which was Gillard choosing to launch this surrounded by Brown and Milne. That may not appear a problem here, but it is definitely a problem in the electorate of New England, as it is in Lyne. Signing on with Labor for the NBN and some more money to regional universities was one thing. Leaving rural voters perceiving they are being governed from the People’s Republics of Marrickville (“Boycott Israel”) and St. Kilda is something else again.
There is no way Labor can win back regional and suburban electorates from the Coalition if they are perceived to be in the pocket of the inner-city Greens. Most people in the Labor Party know that in their hearts, whatever they say publicly.
@19 – what a brilliant idea – off you go then and get the electorate to support you.
Going to ban coal mining and oil and gas extraction?
You know it’s right. We are destroying the world.
Chumpai @ 19,
One weakness with a ban is it can easily be reversed. In NZ and the UK, for example, the government has banned and then unbanned certain types of new power station.
Even if the unbanning never occurs, investors will be faced with major uncertainty that it could occur at any time.
Another weakness is that carbon emissions will fall only slowly as existing coal-fired stations come to the end of their engineering life and are replaced with cleaner stations. To make emissions fall faster, you need a mechanism to encourage the dirtiest power stations to close more quickly. This could be by “paying off” individual power stations, as Abbott proposes. Or it could be through a carbon price that makes the stations unprofitable.
The ban on incandescent light bulbs worked because these have a pretty short life anyway. The ban on leaded petrol applied to new and existing cars and was feasible because most existing cars could switch easily to unleaded fuel.
There are political and technical objections to your proposal, Chumpai.
There is a huge difference between banning incandescent light globes and coal-powered electricity generation.
Fluoros were perfectly adequate replacements for incandescents. Folks hardly noticed the change.
However, there is no practical alternative to fossil fuel electricity generation. Very soon, folks would be suffering brown-outs. This becomes a huge political issue.
The carbon credits trading system serves as a kind of shock absorber. Credits would be sold by folks who found less polluting ways. Credits would be bought by folks who have no alternative.
My guess is that electricity generators will over time become major purchasers of carbon credits. As the price of these credits goes up, so will the price of electricity.
Terry 21, there are no Greens, not official ones in any case, on the St Kilda (actually, Port Phillip) council.
And since it’s an area with a large Jewish population, it’s unlikely that they would be boycotting Israel.
Agree that Labor is perceived to be close to the Greens. What Gillard needs to do is to have a quiet word with Bob Brown and agree to have a big blue over something. It would be all theatre, of course, rather like professional wrestling, but the suburban and regional punters, would lap it up. It’s in Brown’s interest too, so he might agree.
Gorgeous Gillard jumps off the top turnbuckle onto Bulldog Brown – but he rolls aside at the last minute and she crashes to the canvas. Wham, bam, thank you ma’am! Wait… Sarah Hanson-Young’s in the ring as well! Uncalled for! Completely uncalled for!
DID YOU SEE THAT?
Katz says:
“My guess is that electricity generators will over time become major purchasers of carbon credits. As the price of these credits goes up, so will the price of electricity.”
And therein lies the rub. There is no alternative, cheap form of baseload power. The Brits are already warning people of the future unreliability of permanent power because of the basic inadequacies of wind. Do you think that people will find it reasonable that they will have to pay much more for power that cannot be guaranteed to be permanently available?
There is hardly a product available now that is not cheaper in real terms than it was 10 years ago. The only reason electricity is getting more expensive is because governments have mandated the use of higher and higher levels of renewables that cannot contribute to base load power. The fuel (coal) is cheaper to extract and the generating technology is improving all the time yet we are burdened with higher costs because of government decree. The same argument applies to water availability.
The best estimate of the benefits of all this intervention is the lowering of global temperature by a tenth of a degree by the end of this century.
Is it any wonder that Swan and other government ministers will not or cannot answer the question of what outcome will derive from all these interventions?
No wonder the government is held up to ridicule.
I get so sick of the ‘Australia emits hardly any CO2 in absolute terms’ line. No, of course we’re not up there with the US and China. But on 2007 figures, we are responsible for 1.28% of world CO2 emissions, which is the 16th highest out of 215 countries. That is to say, 199 countries emit less than we do, which does in fact make us one of the top emitters.
To put it another way: it’s true that ~75% of the world’s CO2 emissions come from countries which emit more than we do. But conversely, that means that even if we gave a free pass to every country emitting at Australia’s level or less, a whole 25% of world CO2 emissions would be unregulated. That is not an insignificant fraction of the whole.
So Australia has both an ethical and a pragmatic responsibility to do its part. How could we justify not doing so, other on the basis of our own short-sighted selfishness?
Hopefully ‘the GRNs’ wont need a third go at this Terry. I think this is about the right approach – CO2 price plus some complementary measures and a bit of regulation.
I too was surprised to see Gillard announce with Brown – but I can assure you the GRNs have a solid track record of ducking photo ops in the strategic interest, so you can bet that was in fact JG herself deciding to take the multi-party group for a walk.
Here’s my suggestion: start referring to it as the ‘Carbon polluters tax’ rather than “Carbon tax’. That makes it sound like what it is, a atrgeted tax, and suggests it wont apply directly to ordinary punters (which it doesnt), and also avoid silly games around whether its a tax at all.
Chumpai @19,
Here is another reason for preferring a carbon price to simply banning new “dirty” power stations.
Suppose coal-fired generation, which becomes banned, costs $40/MWh and the next cheapest generation (gas-fired say) costs $60/MWh. That means the electricity price has to rise from $40/MWh, because nobody will invest in gas plant until the price reaches $60/MWh (I am simplifying this a lot, but the principle is sound).
So, the electricity price will rise, just like under a carbon price. But where is the tax revenue to provide compensation? There isn’t any. Instead, all of the revenue from the electricity price increase goes to fattening the profit margins of the existing coal-fired generators.
So, it is just like a carbon pricing outcome would be if all of the tax revenue were paid to the pre-existing dirty generators.
But the “banning” option does not involve a tax, so it must be a good thing, right?
What I@U said.
Restricting the output of the electricity industry (or any other industry) creates a big fat surplus of cash. Monopolists do it because they can. If the government does it for sound reasons, such as saving the planet, it can leave the cash in the hands of the electricity producers, or it can take it from them by taxing them, or it can take it from them by selling them emissions permits.
Lefty E said:
Not a tax — but a fee or a charge. Call it the greenhouse gas emission fee or perhaps the greenhouse gas effluent charge.
Fran @32,
Don’t make it too long, otherwise it will be acryonymed and lose any power that it has. Who remembers, for example, that CPRS stands for carbon pollution reduction scheme?
At least, I think it does.
Why do they refer to it as just “carbon” when it is actually Carbon Dioxide and other green house gases that are the problem?
a. – marketing – they are trying to make the punters think of dirty black soot.
I dont know if there’s a lot of future in arging about whether its a tax, Fran. Sounds like a recipe for being stuck up a blind alley for months in the debate.
Better to explain to punters that its a targeted tax that doesnt apply directly to them.
The word carbon makes me think of grey lead pencils and tennis rackets – not to mention diamonds.
You honestly think that’s the reason Razor? If it were a marketing excercise, you don’t think they would have called it something like a carbon pollution tax?
“A price on carbon” is being used ,already, by all but the ABC and other Tony lovers, so why change it?
The mention of “tax” these days seems to garner an equivalent reaction to the mention of “child molester”. And it aint worth the effort to try and change that perception for this cause.
(Though it might be worth running a campaign on that, for the long term, lest we end up as mad as the U.S. where they look like closing down all public services because of the schooled aversion to paying it.)
Brett said:
That’s true but in addition to the point you raise below, there are some basic equity questions to consider.
1. If we assume that
a) all humans have an equal claim upon the ecosystem services offered by the atmosphere
and
b) that the world as a whole must live within a budget aimed at staunching the growth in inventories of atmospheric Co2e
and
c) the amenity every human is entitled to have currently demands Co2e emissions
then it follows that evey human must live within a quota based on total allowable emissions globally divided by the number of humans globally. Hence per capita emssions is the most salient benchmark. Anything else implies that one human is not merely entitled to more amenity than another, but that they are entitled to have this at the expense of the other and without fair compensation. That, to borrow the language of Christopher Pearson on the other thread, really would be an expropriation.
Since we in Australia emit about five times as much per capita as China it would entail asking the Chinese to live about 1/5th as well as we do, merely because they belonged to a large jurisdiction. If they wanted to game the system they could declare themselves not to be one jurisdiction but 59 separate jurisdictions each having 22 million folks entitled to emit as much as Australia in absolute terms. Then the emitters emitting less than Australia would have grown by 59 and the emissions in the less than Australia category would be 45%. Imagine too that Russia and every country of Europe, Asia and Latin America above us in jurisdictional terms did likewise. Our pedants would have lost their claim. How that would help matters is hard to see. We’d have rebadged but the problem would be the same. We’d still need to get global emissions down.
The other misleading thing here is that much of the emissions of China, Latin America and Asia is associated with the production of goods in places like Europe, the United States and of course Australia. Our emissions are lower because we get someone else to produce the goods an incur the emissions. This is the work of those coal fiored power stations about which wwe hear so much. Is not the mere appeal to jurisdictional emissions simply self-serving from a western POV? I’d say so. It’s true of course that we export beef which is fairly emissions intensive, to China and other places. Who knew the world was so interconnected and that in the end Co2 was no respecter of boundaries? Oh, that’s right — everyone whio has been paying attention. Jurisdictions may be the most suitable sites for effecting reductions but in the end, given the insistence by the filth merchant lobby that Co2-emitting and wealth are strongly correlated — shouldn;t the burden be on the wealthy countries to lead the way? Again, I’d say so.
If we got wealthy by burning hydrocarbons in huge quantities for most of the last 120 years (and by “we” I means the wealthiest countries per capita) and it is these emissions within the inventory that are most important to our trajectory (for without them our timeline to abate would be a lot more forgiving, since we’d only be at 280ppmv or so) — then it follows that the wealthiest countries in the world ought to lead the way, supplying the largest share of the resources needed for abatement. We are both the principal authors of the problem and the beneficiaries of the practice and indeed specifically configured the developing world to follow our example, again in our own interest. Yes, for much of it we were unwitting, but certainly from 1950 or so onwards, we ought to have known and had reasons for acting otherwise.
So it seems to me that China and India have compelling cause to sneer at those who say countries like Australia should not lead and to howl in outrage at our insistence that China and India should step up first and that Australia should be relieved because that other serious malfeasant – the United States, is also copping out.
No, the argument that Australia only emits 1.4% of world emissions and should get a pass is just wrong all over the place.
I & U said:
Educated folk remember.
Still, for ellipsis — the effluent or waste charge could work.
@Sam at 13
That’s funny because he proposes exactly that a market mechanism to deal with the unemployment problem. An issue we’ve had since the 70s.
Peter Whitford @9: The key parts of the link say:
Of course, John D, is you abolished the tax deduction on fuels the effective increase in fuel cost would be at the corporate tax rate — about 30% since they’d be paying in after tax income.
That would entirely apply to business usages of course.
Moving to road access charges for both the public and business further adds to this cost to business because it bundles up tare, distance, contention, safety etc …
That is going to radically reduce vehicle (and passenger) miles on roads, fuel usage and help underpin urban consolidation.
I&U: I have a general idea of how the market works and how price can change rapidly in a very short time. However I hadn’t taken the logical leap to realize what concentrating of wind power would do to power prices when the wind is blowing strongly and the converse effect when the wind dies down.
Problem is that under a carbon tax or ETS a potential investor has to second guess where other investors will invest. Even then there is nor guarantee that the right investment location is also the best for the country. We would get a better and fairer outcome if there was some control over location and other factors.
Fran – we all want World Peace and no crime or corruption and no one should ever tell a lie or be mean to each other and think of the children.
In a perfect world we wouldn’t need Police or the military – but we are dealing with humans.
I am not proposing that we do nothing about pollutants – but in terms of the uncertain mix of the science, the economics, global and local politics – this is just pushing poo up hill with a pointy stick. The Less developed world want our lifestyles and that requires cheap and plentiful electricity and the best way to generate that, at the moment, is mostly with coal, which there is heaps of.
From my perspective I think the global environmental effort should be focussing on things which it can actually fix – like the CFCs issue, the Asian Brown cloud, water pollution and security (which Israel is the world leader in), stopping deafforestation (not for the carbon issues but all the others linked to it), industrial pollution in newly industrialised places like China.
FB @ 38 – and not once have you recognised that our per capita emissions are currently being compared to those of nations which have a substantial proportion of nuclear generated electricity. How much should we discount our per capita figure to allow us to compare apples with apples?
You must also recognise that unilateral action on our part is ridiculous – in the end Co2 was no respecter of boundaries?, even if we accept your CO2 budget thesis.
we got wealthy by burning hydrocarbons in huge quantities for most of the last 120 years
You need to think about why we are wealthy, I think.
FB @ 42 is you abolished the tax deduction on fuels
But why would you select this, out of all inputs to business, to disallow the deduction on? It’s a cost to business. It should be deductible.
If you want to reduct the usage of fuels, introduce a punitive tax on them.
Yes, lets merrily and happily tax ourselves stupid. Lets make ourselves shift jobs overseas to countries that don’t give a flying f**k about the problem. Lets just do it. Lets not call it a tax, lets call it a fee. What a stupid ignorant statement that is. Who cares what it is called, the effects if we do it before Asia and America could be a disaster. But lets feel good about ourselves, taxing and taxing for no real benefit.
KISSs:
this is a fee on polution and it’s an incentive to improve energy production and also energy conservation, for example, higher energy costs are an incentive to improve the efficiency energy usage in homes and electronic appliances.
You people harping on about the effect of tax etc. you couldn;t get your head around this stuff even if you were trying, which you’re not. You say this and that and what not and then you say it the other way around. You’re a sorry bloody lot at times.
Seen the news about the rate of melting in Antarctica this morning? You create pollution– you clean it up or you pay for it, simple as that.
“jobs overseas to countries that don’t give a flying f**k about the problem.”
I bet $20 right now that the specific examples Peter TB cites have a higher CO2 price than we do.
Thats $20.
PeterTB said:
Why is that relevant? I’m in favour of generating a large proportion of our energy from nuclear power.
assumes facts not in evidence — we would not be acting unilaterally. Other states are taking more action than we are, including China. Of course, if Australia took serious action, that woiuld subvert the arguments of people sharing your antipathy to action but living elsewhere. They can point to Australia as a greater miscreant.
It makes no sense to charge businesses for behaving as we encourage themn to behave by allowing deductions. It’s more coherent to not allow deductions and impose a lesser charge for emitting in consequence. Then policy is pulling in the one direction.
Dear puzzled cat,
most of us are already stupid and puzzled. This might force some of us to become smarter.
Who feels good about themselves for taxing pollution? This is a first attempt at mitigating a serious problem, not an advertising campaign. I know you’re probably jaded by all the crap that’s forced down your throat on tv and in the papers these days, but get turn off the tv and get with the program. This isn’t about option or choice this is about starting to come to terms with a serious issue: How our lifestyle effects our environment and how we can secure our lifestyle into the future.
In Europe they’re talking not only about reducing global warming, but securing an energy source. At the moment we’re dependent on a dwindling source of energy and we have to pay increasingly higher prices for it. Not have to, and we’re paying people who’s interests are their own, not ours. We need to innovate and we need to make innovation attractive. It’s going to take courage but it’s really beyond that stage. It has to happen now and getting hung up on all this micromanagement is just a mugs game.
Puzzled Cat tried:
This is a hoary old claim that makes the term simplistic seem fit to describe robust multi-factorial analysis with dynamic modelling.
There’s simply no good basis for making this assumption, as the Grattan Institute showed some time back. The carbon price is much less salient, even in EITEs than many other factors of pertinence — e.g. sunk cost; sovereign risk, demurrage, currency etc …
And in many cases the places the industry might go are already cleaner than we are. Aluminium is a good example than this but is currently heavily subsidised.
No wonder you are puzzled …
And when he does cite any of the following countries to which our industries will allegedly take flight, such as China (higher CO2 price), India (higher CO2 price), US (higher CO2 price) or the EU (higher CO2 price) or even new Zealand (higher CO2 price), why not ask him why he imagines industries will suddenly rush off to these shores if we do the same?
Cos it doesnt make a lick of sense as far as I can see.
However if we raise ours, we will contribute to reducing our CO2 pollution, and hell, we might even make some money in the coming renewable tech boom if we innovate.
Sorry, my comments were @ Puzzled Cat too.
Andrew Dyer at ABC Unleashed has written a relevant piece on carbon pricing, framing it with the question, What exactly are we trying to achieve with a tax. The effects depend on how large we make the price. Dyer provides a summary of what happens at $20, $60 and $100 per tonne.
http://www.abc.net.au/unleashed/44718.html
It should also be mentioned that there already is a price of negative $55 per tonne on carbon because of the subsidies our govt gives to the coal industry. (I hope I’ve got that figure correct.) Having a positive price on carbon means that this subsidy will be removed.
And for anyone not sick of the fetishizing of all things financial, finally watched The Inside Job last night. Stop listening to these financial liars and turn your minds to something real! Something that you can fix in your neighbourhood. You’re here on this board because you’re interested in discussing ways in which you can improve the communities you live in, well stop listening to all this economic management bullsh!t and do something real with your neighbour. Go and clean up the beach, remove Bitou bush, whatever, but coming to the internet to discuss the best way that these financial pirates can loot your money is farcical.
More power to the ALP government for having the spine to tell these masters of the universe types that enough is enough and what we want first and foremost is a secure alternative energy supply, which doesn’t adversely effect our environment and has as small an impact as possible on our high living standards.
Go Gillard, Go!
TOolman’s report last night on CO2 trading in the US was utter shite. So what if two rural states just went Republican and dropped out for purely partisan reasons? What on earth does that prove? That conservatives dont get it? Why on earth would we listen to them?
California is running its own scheme, and thats the 8th largest economy IN THE WORLD.
Note its worked before in the US: they used an ETS to reduce acid rain (SO2), by 40%, though some part of that success was the fact it was also supported by regulation. http://en.wikipedia.org/wiki/Acid_Rain_Program
Bill Mitchell may be onto something.
Maybe faze out coal and gas exports over 10 years.
That news would see coal prices rise nicely, super profit tax on exports.
We would have enough domestic energy for 1000 years.
The price Australians pay for electricity would be almost nothing.
We would have lowered global emissions because, they can’t burn our fossil fuels.
We burn bugger all, we keep it all for our selves.
They run out 1 by 1, bad luck, find an alternative.(promotes renewables by others)
We get the farmers back on their feet so we can feed ourselves.
Buys us time for technology to work out how to burn the stuff cleanly (inside 10 years i guess )
We try to make things ourselves again,steel,TVs ,machinery , white goods,ect…
Bad idea? i know. they’ll just come and take it eventually. hhhhh
@22, 25, 33 and 34. Thanks for addressing my question, those were informative points
Why is that relevant?
Fran, it is you who is claiming that per capita emissions are relevant. I am merely pointing out that your benchmark for our own country is not a fair one.
Lefty E:“such as China (higher CO2 price), India (higher CO2 price), US (higher CO2 price) or the EU (higher CO2 price) or even new Zealand (higher CO2 price)
On what basis do you make the claim that these jurisdictions have a higher CO2 price than our own?
I thought that China was yet to introduce one, India had an insignificant one, the US was thinking about one, and the EU had various ones – but was also a major user of nuclear power which offset some of the deleterious effects of their various carbonn taxes. New Zealand doesn’t have one at all.
I’m sorry if I have this wrong, please feel free to correct me if that is the case.
It makes no sense to charge businesses for behaving as we encourage themn to behave by allowing deductions.
Simplicity is important in taxes, so why would you introduce complexity into the calculation of allowable business deductions?
I say again, if you want to reduce fuel usage, bang a direct tax on the fuel.
[content deleted: please take questions about moderation to email ~moderator]
Here’s a bit of an international overview courtesy of wikipedia:
Carbon tax
There are many other articles which can be read, such as:
Carbon Pricing
Closer to home, you can read through the many articles and links that Brian has contributed on this board about the effects of climate change. I know, it’s all too hard for some of you though. Don’t worry, luckily there are still a few sensible people in your electorates. We’ll save you
And maybe all you realists should better read some of these kinds of articles:
Ponzi Scheme
Peter,
we only want what’s best for you, my dear fellow. Now, don’t fret about the details so, it’ll only give you a headache.
Thanks Joe, that’s really kind of you.
Higher CO2 price than us? The USA doesn’t want to know about it, India’s is rubbish. Have you been to California lately. They want to legalise cannabis because they are stone motherless broke. You point to a first or third world country that is a significant polluter that has a carbon tax that has caused a real reduction in pollution. I’m all for reducing pollution and carbon emissions but not like this.
It’s a dud policy because the government can’t explain it. If they could then they would. I’m no lover of Abbot’s silly plan but screeching incessantly about him and his plan is dud politics and dumb for the country. Get some detail out and stop talking motherhood statements.
Can someone take Fran’s computer off her?
On the basis that China has an effective CO2 (shadow) price of US$14, India of $5, US $9.52, UK of $29, and we have $1.70 (the MRET creates an effective impost of that amount per tonne of CO2).
These are the effective per tonne costs of producing CO2 in those countries today. Not ‘in the future’.
http://www.smh.com.au/environment/energy-smart/australia-lags-trading-nations-on-carbon-price-20101018-16qvm.html
Im not suggesting this is the end of the argument over what we should do, but PLEASE check the facts before claiming our competitors haven’t acted, and we’ll be at a disdvantage if we do. It simply *isnt true*. Abbott doesnt want people examining that too closely, of course.
NZ has not only introduced an ETS, but has an interim fixed price period first, as Gillard proposes. Its only $12.50 at present (pfft…. especially if those are NZ dollars, no offence love ya Kiwis
).
What the US is doing to move forward without a price on carbon.
Puzzled Cat @68
“I’m all for reducing pollution and carbon emissions but not like this.”
How then?
John, Lefty – price or no price.
I&U – stop burning coal.
Would appreciate it if a mod would unmoderate my comment.
Is the comment in moderation because of the number of links or the use of a particular word?
(Anyway people, wikipedia has a good overview of some of the different national responses to carbon emissions.)
And btw, our system — as in the machinations of the process, which seems to have generated so much interest in this thread — seems very similar to what the Swiss are doing.
But I guess the Swiss are better at economic and financial management than we are. We should just give up, poor us.
Wow. from JohnD’s link:
“Secretary Chu’s “SunShot initiative” will fund solar so that it provides electricity for the same cost as coal in 9 years. That means that between now and 2020, a wave of new investment in solar power will wash over the USA. Crucially, the Concentrating Solar Power (CSP) subprogram will get it to parity with thermal storage that gives it the ability to dispatch 12 to 17 hours of “baseload” power, when the sun goes down. Forget the carbon markets and the UN, that one shift will mark the end of the age of coal.”
Of course, a CO2 price is another way to make renewable investment competitive, but this looks v. promising.
Now, we are going to continue to argue about models, but lets get PAST the idea that no one else is acting folks. its definitely on for young and old. Even in the US.
PeterTB asked:
On the contrary — it’s perfectly fair — for just the reasons I outlined at some length above. You did read them right?
How each jurisdiction reduces emissions is irrelevant to the global carbon budget. All that matters is that the budget is met and the burdens are shared fairly.
Petitio principii — I’m reducing complexity by removing the deduction. That’s one of my proposal’s advantages. Rather than doing the policy equivalent of having a foot on the accelerator and hard on the brake at the same time, I’m removing the foot from the accelerator and hitting the brake more gently. That’s far less complex.
Removing perverse incentives is tidy, don’t you agree?
Puzzled Cat says:
That’s simply ridiculous. Policies are either feasible or they aren’t. Whether their advocates can explain them well is entirely beside the point, except as theatre. You bear witness to the vacuous condition of public discourse occasioned by nearly 70 years of two-party rule and the untrammelled and baleful influence of the Murdochracy.
You tried a version of that over at “The Cat” and even there, nobody has as yet saluted.
“Forget the carbon markets and the UN, that one shift will mark the end of the age of coal.”
Well, the UN has been encouraging governments around the world to invest seriously in CSP for quite a while now, so I don’t know if we should just forget them!
Left E @ 70 – thanks for the link. These figures were also discussed on Lateline just now when Tony Jones interviewed Greg Combet.
Tony Jones told us that Origin Energy has reported that a carbon price of $25 to $30 per tonne is the level which would see a transition from coal-fired to gas-fired electricity in Australia, while Combet made the point that a total transition to gas would mean a halving of our GHG emissions. Andrew Dyer has written (see my comment @ 58) that this transition would occur around $60 per tonne, so there needs to be some tidying up on this figure.
There was no mention of Combet’s opposition to losing jobs in the coal industry. Instead, Lateline attributed this opposition to Martin Ferguson. I thought this was disingenuous of Lateline. We know that Combet also opposes loss of jobs in the coal industry, and Tony Jones had a perfect opportunity to put that question to Combet, but failed.
Of course, Combet himself failed to mention how many jobs would be lost in the coal industry when gas-fired electricity replaces coal.
Lefty @61: Your sulphur link was interesting. In particular:
This sounds like a description of an offset credit trading system.
One of the important things about offset credit trading systems is that that they do not function as taxes because they do not act as a source of revenue for the government The only exchange of funds takes place between producers with the government giving saleable credits to producers who emit below the target.
By contrast both the carbon tax and the proposed CPRS are at their core taxation systems. In the case of the CPRS it is the government who SELLS the permit, not producers.
Both our MRET and my proposals for have an offset credit trading system at their core
The big advantage of offset credit trading systems is the price increases they require dont have to take account of the taxes being paid to government as part of carbon price based approaches.
Their disadvantage of course is that they are not suited to being the answer to everything.
The carbon tax and CPRS are taxing systems
My my Fran, “multi-factorial analysis with dynamic modelling”. Spend a lot of time solving PDEs and on general ergodic theory do we?
Of course it is a pre-requisite to have anything approaching an informed opinion on these things. And yet; touching as the faith of some is, that is all it would provide you with.
Silkworm said:
It’s also likely that some of the older coal plants on the eastern seaboard would be retired earlier and their load taken up by some of the more efficient coal plants in NSW. Hazelwood’s operators have been making noises about wanting to close for the right price but a measure like this could render the claim moot.
This underlines the self-serving character of the end of days talk by the filth merchant lobby.
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Fran – if a government can’t explain the policy it is a dud. They can’t explain it because the have jumped the gun and they have done themselves damage. If their is an explanation then they would give it to us.
Fran – a tax is not a tax and a lie is not a lie. You talk about the Murdochracy and yet you are exactly the same.
One of the things that I have often wondered about is the seeming reliance on distributed power systems. With the technical advances and massive price reductions in photo-voltaic cells, voltage inverters and accumulators it seems to me that the logical step is to self contained power. Granted, it is currently relatively expensive to install but the cost is only in the thousands not the tens of thousands of a couple of decades ago and would could easily be amortised into the construction of new homes. The ecconomies of scale would probably reduce this cost even more.
Just wondering
Puzzled Cat said:
Yes, but as was said by someone famous … a sigh is just a sigh, the fundamental things apply …
(As Tax Goes By)
I’d love to have the endurance of your liver Pussled Cat.
And don’t forget to use the history functionality of your browser when you get up tomorrow, because I guarantee you will not remember what you’ve said otherwise.
[Sentence deleted - mod]
I’m Jack Little.
John D @80,
The acid rain program that you and Lefty E refer to is a prototypical emissions trading system (ETS). All ETSs issue a number of emission permits to polluters and allow the polluters to trade these permits to ensure that they have enough permits to cover their actual emissions.
ETSs differ primarily on how the permits are issued. They can be allocated based on historical emissions (as in the acid rain program), auctioned (as in the CPRS), or a combination of the two. Revenue is only raised by government to the extent that they are auctioned.
Permits will have a market price in the trading system. The cost to a polluter (at the margin)of any pollution is that market price. If the permits are for CO2 emissions, we call that the carbon price.
Electricity generators will factor that carbon price into the price they charge for their electricity. It does not matter to the generator whether it was allocated permits, bought them at auction or bought them on the trading system, it will still pass on that same carbon price.
This means that the impact on electricity prices, for a given carbon price, will be the same under all forms of ETS. It will also be the same under a carbon tax, where (effectively) permits are sold by government at a fixed price.
If electricity consumers are paying more, that extra money has to go somewhere. If the revenue is not collected by the government, and is not recycled to compensate consumers, then it is collected and kept by the polluters. Thus, your comments support a system that is equivalent in its impact to a carbon tax where all of the tax revenue is paid to historical polluters.
I am sure that this is not your intention. Your problem is that you do not understand the basic economic principles described above and so any critique you make of alternative carbon mitigation mechanisms will be fundamentally flawed.
two z’s in puzzled
Puzzled Cat @ 69,
For people such as yourself who want to reduce their CO2 emissions but want to op out of a carbon Pricing Mechanism, there is scope in the future legislation to help you achieve your objective.
Once you have signed your waver the government will
1. disconnect your house from the electricity grid so that you can feel the satisfaction of not needing the burning of coal to support your life style.
2. put you on a “do not supply” list at all petrol stations so that you will not be emitting CO2 directly yourself in future.
And good on you for being so brave as to accept that part of the legislation as being your contribution to Global Warming Abatement Action. This will mean that you have reduced your personal emissions by 50%. Well done.
Nice post I&U. John needs a lesson in the meaning of opportunity cost and what that means for pricing. I think what John might be getting at in part is that a baseline and credit scheme might be preferable to a cap and trade scheme or carbon tax. However, he doesn’t seem to understand that there is no free lunch in such schemes either and that they have important downsides in that they are liable to even more rorting than C&T, are very complex to administer and offer even less certainty about emission reductions.
I am not against the Carbon Pricing mechanism announced as it works more universally throughout the economy, However, I do prefer an electricity levy to resolve the emissions from power generation. One advantage of such a levy is that it can be made simply to directly compensate the disadvantaged with a progressive application. ie up to 7000 units per year are exempt from the levy, above that the levy applies. In this way people have more choice on how they use their free allocation. Simple to manage extremely efficient. The returns from the levy then are used to directly build renewable generation infrastructure at the maximum rate. Projects to replace CO2 emitting infrastructure would have funding access and priority on the basis of their effectiveness at eliminating CO2 emissions and their projected running costs. This method complies with the KISS principle.
Bilb @92,
“One advantage of such a levy is that it can be made simply to directly compensate the disadvantaged with a progressive application. ie up to 7000 units per year are exempt from the levy, above that the levy applies. In this way people have more choice on how they use their free allocation.”
It is straightforward to do this under a carbon tax too. Suppose the tax rate is $30/tonne and you want to give each household an electricity “carbon allowance” of 10 tonnes/yr. You simply provide an annual rebate on their electricity bill (or through another channel) of $300. If they use less than 10 tonnes-equivalent electricity they will be better off than before. If they use more, they will pay the carbon price on the extra.
The complexity, of course, is in deciding what the carbon allowance should be. Should larger households get a bigger allowance, etc…? But that complexity exists in a “levy” approach too.
LO @91,
An intensity-based baseline and credit scheme was put forward by Frontier Economics for the Coalition and Xenephon. It has the interesting characteristic that it still provides the same incentives on the supply side as a conventional cap-and-trade mechanism, but it has a much lower impact on electricity prices. In this respect, it should be very much John D’s cup of tea, but I don’t think this is what he was referring to.
Various press reports say that the government is considering such a scheme, although I would think that unlikely. Despite their potential complexity, though, I think that such schemes do have some merit.
The problem with that I&U is that those on low incomes have to fund the amount of the rebate for the year. For those who are seriously in distress this would be an unnessesary impost. It is far better to not collect the money from those people in the first place. A huge amount less accounting is required. True, there is the difficulty of determining if the user is a single older person or a family of 5. But I think that this is easily handled by the electricity retailer as connections are usually stable over long periods of time. Where the distributor is dealing with difficult customers I would expect that they would prefer to bill as little as possible as this improves the probability of having their bills paid, there is actually an incentive there to handle the small complexity.
The other acvantage of a levy threshold is that it provides a progressive incentive to reduce household electricty consumption to keep it below that levy point. This can all be managed nowadays with in the “smart” meter itself.
By dividing the compliance up into 2 mechanisms we avoid the situation of having any (though there should not be any at all) industry compensation for electricity compromising the system to manage all of the other CO2 emissions.
This is smarter business, and in no way contradicts the intention of the announced Carbon Pricing mechanism.
BilB,
I did not intend to suggest that the rebate would only be paid annually. It could be paid, pro rata, on each electricity bill.
OK – who is going to get the money collected?
Is it:
a. Families – unless you are a rich family (define rich????)
b. Trade exposed industries
c. current high emitters
d. whoever the Greens and ALP think most deserving of a sound bite
e. all of the above
f. who want’s to know? – we know where you live.
97 – g. and 10% to the UN fund established at Cancun
But, it is all going to compensate families even if the answer isn’t a.
Have I got that right?
To I&U and LO, if you can convince me that the Acid Rain problem and Climate Change are comparable problems in terms of calculability of effects and political and moral consensus of the need for action, we can start talking about lessons from the US Acid Rain scheme (Clean Air Act Amendments of 1990).
For mine, trading was actually a minor aspect of the legislation compared to the political and scientific work involved in setting the cap and instituting a clever ‘ratchet’ mechanism that turned lobbying for free permits into a zero-sum game.
I know what you meant I&U. What I said was that the refund comes annually ie people in financial stress have to pay money progressively only to be given it back a year later…if they fill out their tax claim form on time. This would not be seen as being at all logical. Far better that they do not have to pay it in the first place particularly as they will be paying very marginally increased bills for all of the other things that they buy.
dk.au @99,
I referred to the acid rain program only obliquely in response to John D. So perhaps your comment is best addressed to him. Or maybe to Lefty E, who first brought it up.
I agree that the biggest problem in any carbon pricing arrangement is how to allocate the permits or proceeds. I’m not familiar with how this was done in the acid rain program but, if you think it would be relevant to carbon pricing, I would be interested in learning more.
BTW, I deleted a few lines last night @ 83 and 86 which were getting into name-calling, verging on abuse.
Please keep it civil.
I&U @88: An offset credit trading system provides a market based mechanism for setting a levy on dirty that is all used to subsidize clean. Producers who average below the emission target earn credits that have to be bought by producers that average above target. Key point: There is no transfer of money to the government. The quote @80 sure sounds like an offset credit trading system but you are right to say that the acid rain system was more complex than this.
By contrast, a Kevin Rudd style ETS provides a market based mechanism for setting a carbon tax. This carbon tax is raised by the government selling permits to pollute into a permit trading market. Key point: There is a large transfer of money to the government. The cost of this tax has to be paid for by higher prices.
Offset credit trading is attractive in situations where controlling an average makes more sense than using a cap. It also has the advantage of providing larger rewards to producers who strive to be well below target.
In terms of electricity production MRET is vastly superior to both the proposed carbon tax and/or ETS because it results in lower power prices. However, I do think that the use of competitive tendering to set up contracts for the supply of cleaner electricity is better because it provides much more certainty to both generators and consumers.
Offset credit trading seems to me to be particularly suited to driving down the average fuel consumption of new cars.
Interesting article from Climate Spectator with some hard facts to highlight the ABBOTT bullshit campaign. It is worth following the chain of links.
JohnD – thats interesting, but I dont get why ‘dirty’ producers who would be paying ‘clean’ producers under an offset credit trading system wouldn’t raise their prices exactly the same as if they had paid it to the govt instead.
I do see that might provides a better benefit to ‘clean’ producers by earning them extra income (rather than simply avoiding a tax) – but by the time an ETS was in, wouldnt it be much the same?
I agree it would be harder to stigamtise as a “tax” – but Im not sure I see why its actually much different in the end.
John D,
You are still missing the point. If polluters have to pay for their pollution, they will factor that cost into their sales prices. It is irrelevant whether that payment is to the government or to another polluter.
MRET obliges retailers to purchase renewable energy credits (RECs) to cover 20% of their electricity sales. That is to say, for every additional 1kWh of sales they have to buy another 0.2kWh of RECs. So, for example, if the price of RECs is 5c/kWh, this will add 1c/kWh to their cost-of-sales, which they will pass through to the customer in a 1c higher retail price.
If the MRET was 40%, the price increse would be 2c. 60% would mean 3c and so on. The proposed ETS is that 100% of carbon emissions must be covered by permits and so 100% of the permit price will be passed through.
So it is this percentage requirement that will determine the rise in electricity prices, not who the payment is made to.
Lefty E: What you are missing is that the amount paid by dirty producers under offset credit trading is much less than that paid under a carbon tax scheme (until 100% reduction has been reached.) Consider an example where clean has to be sold at 4 cents/unit above the price of dirty before the levy. At the 10% emission reduction point:
Offset credit system
Subsidy required by clean=4-0.9xlevy cents per unit
Levy =0.22 cents per unit
Average price increase =0.22 cents per unit
Carbon tax system:
Tax per total unit =0.9×4 =3.6 cents
Price increase clean per total unit=0.1×4=0.4
Total =4 cents unit
Average price increase = 4 cents total unit
It is a big advantage when all the noise is about price increases.
Lefty E: A simpler way of stating the advantages of offset credit trading for the case @107 is:
“At the 10% emission reduction point the subsidy per unit of clean is being paid by the levy on 9 units of dirty.”
Under the carbon tax the price of each unit of dirty has to be increased by at least the increase in price required per unit of dirty.
So why the hell is the Labor party wanting to replace MRET with a carbon tax?
Cool article, could almost fit in the Wednesday whimsy section:
The supermarket growing food on its roof