…unless you already know and like the answers you’re going to get. You’d reckon that the Opposition might have learned its lesson on that. It seems like they might need another one, given their response to the impending release of the Treasury modeling on the economic effects of the ETS:
Mr Robb says the Government must include recent global events before it finalises the scheme in its White Paper by the end of the year.
“We will be demanding that the White Paper is not released until such time as the Government has made some attempt to assess the impact of this financial meltdown around the world,” he said.
Well, the government could have done that, but Robb probably wouldn’t have liked answers when they came back.
The first and obvious point, made by Penny Wong in response, is that the Treasury’s modeling exercise extends out over decades. Over such timescales, several recessions will occur, and will have been factored in to the model; the current gyrations will have little impact on the long-term outcomes.
The second and almost as obvious point is that in the short term, the economic costs of the ETS will go down in a recession, because the reduction in economic activity leads to a reduction in emissions. People spending less money tend to drive less (though this may change in response to the drop in petrol prices). Less freight gets moved from place to place. Less electricity and gas gets used. So, if the price of permits is floating, the lower emissions should drive the price of permits, and thus the amount people will have to spend to avoid buying permits, down.
The final issue is that, as Ross Garnaut has pointed out, that recessions are good opportunities to do reforms cheaply.
Economic modeling is a funny thing, with all manner of potentially quirky results. But I highly doubt that any such modeling would suggest any cause for delay. But it sounds plausible, which I suppose is good enough for the Opposition at this point in time.
In any case, as of writing the modeling is out. Download and read here.
It has been quite shocking how much the libs have been floundering on economic issues this year, without treasury to whisper in their ear. This isn’t to complement the ALP — it merely demonstrates how little the experience of the politicians we elect matters.
“We will be demanding”
I love it when oppositions “demand” things.
What are they going to do when their demands are ignored? Stomp their little feet?
I think you’re a bit wrong, Fmark.
It shows how little experience the Opposition have as opposition. Labor, after 10 years, had lots of sources of information but the Coalition doesn’t seemedd to have developed these and does seem to stumble from one pratfall to another.
You get the government you deserve, it’s well known, but I’m not sure I deserve this opposition.
A bit OT, but Gunns have announced that the pulp mill is on hold until the global financial crisis is over.
It’s as good an excuse as any, but my guess is that when the global financial crisis is but a distant memory, there will still be no pulp mill.
All that fuss, all that angst for Malcolm Turnbull, and it turned out to be for nought.
I have just had a glance at the main report and it has some very interesting clues about what targets the government is considering. One (CPRS-5) is for Australia to have a 5% reduction by 2020 compared to 2000 levels and 60% by 2050. The other (CPRS-15) is for Australia to have a 15% reduction by 2020 compared to 2000 levels and 60% by 2050. They claim that CPRS-5 would correspond to a global stabilisation target of 550 ppm and CPRS would correspond to a global stabilisation target of 510 ppm.
There is no way in hell that the international community could accept a 5% reduction from Australia that corresponds to a 550 ppm target, or 15% corresponding to a 510 ppm target. These targets would involve Australia free-riding on other countries emission reductions. This suggests that Australia is more interested in an international bargaining position that is based on Australia doing as little effort as it can get away with as possible for a given stabilisation target.
More realistic targets for Australia that are based around these dangerously high stabilisation targets are 15-40% net reductions by 2020 for 550 ppm and 20-45% net reductions by 2020 for 510 ppm. My estimates are based on a Contraction and Convergence agreement with a convergence date between 2030 and 2050 and with international trading of emissions allocations.
Peter, I’ve just had a quick look myself. I think your analysis is spot on.
Peter, thanks for that excellent analysis. Frankly I do not see what the fuss about the costs of mitigation is all about. All I see are opportunities for new and productive economic activities that rapidly reduce GG emissions. Just one small example; in Victoria they make electricity poles out of concrete (!), the conversion of these to plantation grown timber will save massive amounts of CO2 and create new jobs and save money. I can name hundreds of such simple measures that have a huge impact upon CO2 emissions. They are mostly held back because of the conservatism of engineers and the content free management of many (most) enterprises. Coal fired generation could be switched over to gas and coal seam methane in about 6 years – all the stuff you need is standard industrial kit. Make nuclear with its 25 year first production time frame (and then 5 years to recover the embodied energy in the mines and plant) look really pathetic.
A major part of the problem is that most of our intellectuals have never opened a science or engineering textbook in their lives.
Huggy
Thanks Robert, I’ve added some more comments to my blog here.
Huggybunny,
You are absolutely right. There is a plot on page xii of the report on the difference in GNP between the different scenario’s — you have to get out the zoom tool in order to be able to see any difference!
Electricity poles made from plantation timber, being less rigid, would probably also have less mortality costs than poles made from concrete held together between two railway tracks — slightly less dangerous to crash into.
Ah Peter, you come from South Australia! There power poles (Called “Stobie poles”)are made from both steel and concrete. I guess they wanted to do something useful with all those railway tracks they tore up in the 50′s.
I think the modelling is very conservative, in fact the first cab off the rank will make a fortune selling the new technology to the laggards long before the waves wash up wall street and the tropics are afire.
But when the country is run by lawyers and pomo wankers what hope have we got?
A country run by pomo wankers???? Which country is that, exactly…. the figment of Ruritania?
The Liberals are hopelessly split on an ETS. They have a large rump who don’t even think it is needed. So of course Turnbull wants a delay so he can paper over the cracks. Labor should push ahead for two reasons one it’s the right thing to do and two it will cause maximum embarrassment to Turnbull.
A time of economic downturn is exactly the right time to be acting in these matters. There is a huge new energy industry just waiting to get started. Obama has flagged that he will make new energy his motif for his presidency including a program along the lines of the Apollo space program to fire up all that innovation energy and entrepreneurship that lurks inside very American heart.
There will be some pain but I see only positives in pushing ahead. If we find new solutions we can then flog them to China and India. The key to getting them on board is the promise of technology transfer.
Huggybunny, the Stobie pole (named for an engineer who worked for the Adelaide Electrical Supply Company) precedes the Playford-initiated destruction of Adelaide’s tram network by some decades. It was originally designed in the 1930s, I think.
More to the point, it’s rather amusing that Turnbull has gone from supporting carbon sequestration (when in government) to questioning its viability from opposition. Obviously he has both sides of his mouth working hard.
Thanks for the chronology David. Never could understand the driver for Stobie poles. Probably used all the wood for the telegraph line 30 odd years before! http://en.wikipedia.org/wiki/Stobie_pole
Well something like that.
On carbon sequestration we don’t really need it. We have vast quantities of gas with a high hydrogen content and we can burn this with a thermal efficiency of twice that of coal using combined cycle plant. Taken together the low carbon content and thermal efficiency this would reduce the CO2 emissions of our generation plant by 75%. The equipment for this is off the shelf technology just call up Siemens or ABB or even Westinghouse and place your order Kevin. The next step is to get the artificial geothermal plant up and running. No emissions at all no radioactive shite, No fuel costs, no labour to speak of an no way to extract profits.
Huggy
I understand Stobie poles were developed because of the particularly ravenoous termites you have in SA…
I like the idea of the ETS cost being lower in a recession. The Geek also observes that when an economy moves out of recession, it remakes itself, so it’s a good time to be getting used to new economic conditions.
David Irving (no relation) @ 13, that point about Turnbull and co suddenly dissing CCS grabbed my attention, too!
Blogged on it at Rooted and GreensBlog.
No, Chookie, I’m pretty sure it’s because, by then, we didn’t have any trees left. South Australia got cleared in the C19th.
Thanks for the Wikipedia link, btw, Huggybunny.