Writing in today’s Fin, Laura Tingle, who’s normally very well informed, reports on work being done in the Department of Climate Change on a new version of the ETS, this time based on consumption not production.
The idea is that there’d be no need for handouts or compensation to rent seekers, and that households and businesses could be compensated according to their needs. The article notes that a full range of market based solutions was never really contemplated, because the international momentum had previously been towards a production based ETS.
Despite the near absence of any reporting in Australian media, and its dissonance with the ‘narrative’, Copenhagen was not without result, and there will still be advantage in, and pressure for, Australia to establish a carbon price.
I’m no expert on the design or implications of these sorts of mechanisms, and I’d welcome input from commenters who can elucidate the nature of a consumption based ETS.
Politically, I’ve been commenting for some time that it’s highly likely that the Rudd government will seek to put something substantive in place on climate change before the election. The challenge will be to explain away the backflip on the CPRS in a more convincing manner, and why a replacement model wasn’t proposed earlier (and here The Greens’ support for an interim Garnaut Carbon Tax should have been leveraged).
Kevin Rudd is said to be disillusioned with the purported strategic geniuses from the NSW Right (Mark Arbib, Karl Bitar, Bruce Hawker, Graham Richardson, et al) whose bright idea it was to dump the CPRS in the first place. This mob never met a focus group they didn’t run in fear from, and their sole solution, aside from policy cave-ins, is leadership change. Worked well for the NSW government, didn’t it?
A substantive ETS which avoids some of the political and policy problems of the CPRS would be just the tonic the government needs, and would usefully focus attention back on Tony Abbott’s ‘Direct Action’ tokenism and denialism. But the challenge will still be to fix the mess already made with the CPRS, which has been exemplary of the government’s tendency to shoot itself in the foot.
Elsewhere: Richard Green at Troppo.
I hope this is well-informed speculation, Mark. Aside from the policy credibility and grass-roots enthusiasm it would (partly) restore – there’s a world of wedging in it.
Tony – why wont you support a similar scheme to that proposed by your HERO John whatshisface? Arent half your parl party known to be sympathetic? etc etc
I hope this is well-informed speculation, Mark. Aside from the policy credibility and grass-roots enthusiasm it would (partly) restore – there’s a world of wedging in it.
Tony – why wont you support a similar scheme to that proposed by your HERO John whatshisface? Arent half your parl party known to be sympathetic? etc etc
The idea is that there’d be no need for handouts or compensation to rent seekers
The resources industry will certainly like it. Since very little of what they produce is consumed here (it’s exported), they would not be on the hook to buy any carbon permits.
But importers of carbon-intensive stuff will now have to pay permits, so they will be not pleased at all.
Nothing changes as far as coal fired electricity generation is concerned.
This will make international trading of permits very difficult.
The idea is that there’d be no need for handouts or compensation to rent seekers
The resources industry will certainly like it. Since very little of what they produce is consumed here (it’s exported), they would not be on the hook to buy any carbon permits.
But importers of carbon-intensive stuff will now have to pay permits, so they will be not pleased at all.
Nothing changes as far as coal fired electricity generation is concerned.
This will make international trading of permits very difficult.
“A substantive ETS which avoids some of the political and policy problems of the CPRS would be just the tonic the government needs, and would usefully focus attention back on Tony Abbott’s ‘Direct Action’ tokenism and denialism.”
Indeed it will Mark. Thnx for the info.
Be interesting to see where Turnbull goes w/ this. Considering his blowhard speech recently.
I think this is a good move on Labor’s part. Provided it happens.
N’
“A substantive ETS which avoids some of the political and policy problems of the CPRS would be just the tonic the government needs, and would usefully focus attention back on Tony Abbott’s ‘Direct Action’ tokenism and denialism.”
Indeed it will Mark. Thnx for the info.
Be interesting to see where Turnbull goes w/ this. Considering his blowhard speech recently.
I think this is a good move on Labor’s part. Provided it happens.
N’
sorry about the italics.
[Fixed - admin.]
sorry about the italics.
[Fixed - admin.]
Kevin Rudd is said to be disillusioned with the purported strategic geniuses from the NSW Right
Bloody oath. As you point out, those bottle-arsed squids would make a soviet nuclear plant look efficient. They have effectively handed an easy premiership to a gibbering coterie of Hitler Youth Brigade rejects and the haemophiliac, inbred remnants of a North Shore aristocracy, simply because they found the mere idea of listening to the public and/or governing responsibly gave them neuralgia.
The only thing those idiots do well is stack branches and look after themselves.
I have no doubt Rudd will launch a “bigger”, “better” ets. Tony Abbott can barely fight a fire on one front; when there’s several competing policies and competent ministers announcing them, I expect he’ll go all “Hulk Smash!” and say something stupid. I’m looking forward to it.
Kevin Rudd is said to be disillusioned with the purported strategic geniuses from the NSW Right
Bloody oath. As you point out, those bottle-arsed squids would make a soviet nuclear plant look efficient. They have effectively handed an easy premiership to a gibbering coterie of Hitler Youth Brigade rejects and the haemophiliac, inbred remnants of a North Shore aristocracy, simply because they found the mere idea of listening to the public and/or governing responsibly gave them neuralgia.
The only thing those idiots do well is stack branches and look after themselves.
I have no doubt Rudd will launch a “bigger”, “better” ets. Tony Abbott can barely fight a fire on one front; when there’s several competing policies and competent ministers announcing them, I expect he’ll go all “Hulk Smash!” and say something stupid. I’m looking forward to it.
Farken hell people.
You must, absolutely must, read and prosletyse Possum’s latest effort titled “How profitable is mining?”
It’s at least marginally relevant to this ETS issue and hugely relevant in general.
http://blogs.crikey.com.au/pollytics/2010/06/15/how-profitable-is-mining/#more-8057
Farken hell people.
You must, absolutely must, read and prosletyse Possum’s latest effort titled “How profitable is mining?”
It’s at least marginally relevant to this ETS issue and hugely relevant in general.
http://blogs.crikey.com.au/pollytics/2010/06/15/how-profitable-is-mining/#more-8057
There are a number of implications, Mark, which make me a bit skeptical.
It’s relatively simple (there are wrinkles, of course) to account for production of CO2. Hazelwood burns a tonnes of brown coal, therefore it generates b tonnes of CO2. Caltex produces c litres of fuel, therefore d tonnes of CO2 results when it’s burned.
If you have to account all the way through to consumption, it’s a lot harder.
Particularly if they’re going to tax the CO2 “embedded” in imported products – which they’ll have to do if they don’t want to disadvantage domestic producers of greenhouse-intensive products.
A de facto carbon tariff would provoke all manner of interesting reactions internationally.
There are a number of implications, Mark, which make me a bit skeptical.
It’s relatively simple (there are wrinkles, of course) to account for production of CO2. Hazelwood burns a tonnes of brown coal, therefore it generates b tonnes of CO2. Caltex produces c litres of fuel, therefore d tonnes of CO2 results when it’s burned.
If you have to account all the way through to consumption, it’s a lot harder.
Particularly if they’re going to tax the CO2 “embedded” in imported products – which they’ll have to do if they don’t want to disadvantage domestic producers of greenhouse-intensive products.
A de facto carbon tariff would provoke all manner of interesting reactions internationally.
LP, FYI
“There have been suggestions that the Australian emissions trading scheme
should base the legal obligation at the point of consumption. While this has some
attraction, it is not feasible for two reasons. First, the information requirements
to support a consumption-based approach would be prohibitively costly. Second,
there are now a number of emissions trading schemes, actual and nascent,
imposing production-based points of obligation. If a consumption-based scheme
were to be established in Australia, it would be extraordinarily difficult to integrate Australia’s scheme with those in other countries.”
Garnaut Review Chapter 14 Page 327.
LP, FYI
“There have been suggestions that the Australian emissions trading scheme
should base the legal obligation at the point of consumption. While this has some
attraction, it is not feasible for two reasons. First, the information requirements
to support a consumption-based approach would be prohibitively costly. Second,
there are now a number of emissions trading schemes, actual and nascent,
imposing production-based points of obligation. If a consumption-based scheme
were to be established in Australia, it would be extraordinarily difficult to integrate Australia’s scheme with those in other countries.”
Garnaut Review Chapter 14 Page 327.
That seems worthwhile, at least if by “consumption” you mean “net of imports and exports” not “only on households.” Something like a GST where businesses get credit for items that end up being exported could work.
That seems worthwhile, at least if by “consumption” you mean “net of imports and exports” not “only on households.” Something like a GST where businesses get credit for items that end up being exported could work.
“If you have to account all the way through to consumption, it’s a lot harder.”
Not really. If it’s not exported, then production is the same as consumption.
If it is imported, like say an iPad is, then it’s the same calculation as the country where the iPad is produced would have to make if they taxed production.
“If you have to account all the way through to consumption, it’s a lot harder.”
Not really. If it’s not exported, then production is the same as consumption.
If it is imported, like say an iPad is, then it’s the same calculation as the country where the iPad is produced would have to make if they taxed production.
Taxing it at the consumption end sounds monumentally more difficult and less reliable than at the point of production.
And how many times can you stand to hear abbott say the ‘great big tax on everything’ again? This time it would be a pretty accurate description. Rudd would want to know pretty well the carbon consumption of a birthday cake.
At any rate, assuming that rudd can hang on by the fingernails for the next election, the carbon producers will regret that they didn’t get behind the deal already offered – it’s looking pretty likely that the Greens will have the balance of power in a few months time.
Taxing it at the consumption end sounds monumentally more difficult and less reliable than at the point of production.
And how many times can you stand to hear abbott say the ‘great big tax on everything’ again? This time it would be a pretty accurate description. Rudd would want to know pretty well the carbon consumption of a birthday cake.
At any rate, assuming that rudd can hang on by the fingernails for the next election, the carbon producers will regret that they didn’t get behind the deal already offered – it’s looking pretty likely that the Greens will have the balance of power in a few months time.
Sam, would you like to calculate the CO2 embedded in an iPad?
Sam, would you like to calculate the CO2 embedded in an iPad?
Robert, I would not. But if iPads were made here and we had a production-based carbon tax, someone would have to it in any case. Having a consumption-based carbon tax does not in itself make the job harder.
Robert, I would not. But if iPads were made here and we had a production-based carbon tax, someone would have to it in any case. Having a consumption-based carbon tax does not in itself make the job harder.
That Parrot is dead.
That Parrot is dead.
I regard the much simpler option of removing deductibility of “dirty energy” from business operations (plus removal of subsidies) as much the simplest route to achieving reductions. You could add a tariff the reflecting CO2 intensity of products produced off-shore.
Then you take the money from that and you compensate individuals and households in cash, tax cuts and kind focusing on the bottom 60%.
I regard the much simpler option of removing deductibility of “dirty energy” from business operations (plus removal of subsidies) as much the simplest route to achieving reductions. You could add a tariff the reflecting CO2 intensity of products produced off-shore.
Then you take the money from that and you compensate individuals and households in cash, tax cuts and kind focusing on the bottom 60%.
Consumption based tax? On the myriad of articles made and traded??
And the Greens salivating about Senate BoP make me laugh. rudd will still deal with the Libs to get legislation he can sell to the people.
Consumption based tax? On the myriad of articles made and traded??
And the Greens salivating about Senate BoP make me laugh. rudd will still deal with the Libs to get legislation he can sell to the people.
Gees, patrickg, whaddya really think?
And this: “bottle-arsed squids” – I love.
I was wondering why Rudd doesn’t chat to someone like Steve Bracks. He managed to parlay a minority government into a huge majority and left at the top of his game. He knows a few things about politics.
Gees, patrickg, whaddya really think?
And this: “bottle-arsed squids” – I love.
I was wondering why Rudd doesn’t chat to someone like Steve Bracks. He managed to parlay a minority government into a huge majority and left at the top of his game. He knows a few things about politics.
I’m thinking there would be a number of permits, and it would be more politically poisonous than the CPRS. I doubt it will happen, or even move past the “consideration” phase.
Firstly, how do you trade permits when the consumption of emissions is spread over millions of people as opposed to hundreds of emitters.
Secondly, pricing in terms of consumption invites a GST style scare campaign more than a production based ETS, where the link between emissions and price rises is slightly more distant.
Finally, it’s totally inconsistent with what’s happening in international negotiations.
I’m thinking there would be a number of permits, and it would be more politically poisonous than the CPRS. I doubt it will happen, or even move past the “consideration” phase.
Firstly, how do you trade permits when the consumption of emissions is spread over millions of people as opposed to hundreds of emitters.
Secondly, pricing in terms of consumption invites a GST style scare campaign more than a production based ETS, where the link between emissions and price rises is slightly more distant.
Finally, it’s totally inconsistent with what’s happening in international negotiations.
I don’t see how this avoids the policy and political problems at all. If there is a carbon price that raises the cost of carbon intensive goods and services then the opposition’s great new tax line still holds. And any policy that changes the relative price/profitability of carbon intensive goods and services will invite demands from producers of those goods and services.
All I can think is that this is a way of excluding those that produce energy intenstive goods and services for foreign markets from any scheme. But even this isn’t straightforward as in any international agreement our obligations for emission reductions will be on the basis of production not consumption.
I don’t see how this avoids the policy and political problems at all. If there is a carbon price that raises the cost of carbon intensive goods and services then the opposition’s great new tax line still holds. And any policy that changes the relative price/profitability of carbon intensive goods and services will invite demands from producers of those goods and services.
All I can think is that this is a way of excluding those that produce energy intenstive goods and services for foreign markets from any scheme. But even this isn’t straightforward as in any international agreement our obligations for emission reductions will be on the basis of production not consumption.
@19 –
Just noting that I don’t assert that it does, because as I said, I’m no expert in the area and haven’t looked at any such proposals which are made in any depth. That was the claim made in Tingle’s article.
My last para would also encompass a ‘cleaner’ ETS design, so should be read with that in mind.
@19 –
Just noting that I don’t assert that it does, because as I said, I’m no expert in the area and haven’t looked at any such proposals which are made in any depth. That was the claim made in Tingle’s article.
My last para would also encompass a ‘cleaner’ ETS design, so should be read with that in mind.
Well,I just think,if the consumer of electricity had a right to set the price,all governments would feel a heavy boot going into the hidden area of underpants wearing.Earth Day with lots of lights out does nothing as the long grid vand electric poles consume the electricity to be at the meter box a resultant electric force named volts.More concerning than a ETS being modified is wether the reliance on the U.S.A. alone and its one small satellite will warn in time to turn the transformers and everything else off expected late next year or into 2012 as the Sun does whatever it is doing.Lavartus and other sites not taking up this issue,if things go badly in Aust. will be condemned.The Greens are normally good at facing up to reality,on this they have well and truly ducked.
Well,I just think,if the consumer of electricity had a right to set the price,all governments would feel a heavy boot going into the hidden area of underpants wearing.Earth Day with lots of lights out does nothing as the long grid vand electric poles consume the electricity to be at the meter box a resultant electric force named volts.More concerning than a ETS being modified is wether the reliance on the U.S.A. alone and its one small satellite will warn in time to turn the transformers and everything else off expected late next year or into 2012 as the Sun does whatever it is doing.Lavartus and other sites not taking up this issue,if things go badly in Aust. will be condemned.The Greens are normally good at facing up to reality,on this they have well and truly ducked.
OK, Canberra has 3 totally conflicting agendas here. Reduce CO2 production (by far the lesser of the agendas), appear to reduce CO2 (reasonably important), don’t hurt the coal/oil/gas/aluminium/etc industries and the rich (first priority).
So the first ‘smoke and mirrors’ failed, time for version 2. But it will still be ‘smoke and mirrors’. Remember the 1st S&M? It would have zero impact on Australian CO2 until the magical ‘carbon capture’ technology is invented around 2030 or so (roughly the same time we cure cancer, pacify Afghanistan, the US stops being at war, we build starships and politicians become decent honourable people).
The simplest way to do this (and bizzarly the Coalition is possibly closer to this position, go figure) is a carbon tax, where the ENTIRE amount collected goes into alternative energy and things like public transport, from large to small scale (ie solar thermal plants to domestic solar panels and hot water). Start at a reasonable amount first but flag it will increase by x% per year, so people can plan their cost benefits. State the apportionnment of the spending in advance, so people know that x billion goes to solar hot water, etc.
Plus you can get clever about this by adding in notional cabon calcs and taxes for imported goods … do wonders for local industry and the current account deficit.
Throw in a bunch of cash at the beginning to kick start the process and protect the people who cannot do anything to change their circumstances (e.g. rural aboriginies, retirees, poor people, etc). Plus it generates lots of jobs which will help pick up the slack as GFC part 2 starts hitting.
Suddenly you have a simple, transparent, effective system here.
Chances of it happening .. equal to me winning 1st devision lotto twice in a row.
What is more likely in this ‘rentier’, ‘looting’ World we live in is:
Massive carbon taxes that only ordinary people pay, companies (and hence the rich) are excluded or rebated (ah lah the GST). Banks are given a monopoly in calculating carbon taxes. Public transport is carbon taxed out of existence .. but more and more tollways. Tollway companies take over (or are given) existing roads, eventually every major road is a toll road. Yep, even if you walk down the road you will get a ‘notional’ cabon tax on you through a toll.
Everything costs more. Electricity prices go up by 15% p.a., petrol 10% p.a, gas ditto, food ditto.
Govt introduces debtors prisons for those who go bankrupt with a cutoff. If you go bankrupt for a million or more dollars then you are exempt, under that you go to a debtors prison which is also a workhouse. You produce things for a dollar a day, so you can get your 1,500 calories of food .. otherwise you starve. Plus you lose your vote and health and safety laws don’t apply. 5 year old children are found to be excellent at working with complex asbestos products.
Massive increase in ‘national secuity’ .. becomes the largest employer before long, new ‘threats’ are found daily (e.g. animal rights, MSF is declared a terrorist organisation, etc, all greens except those that are rabidly anti-nuclear power in Australia are rounded up).
10 years of that then we have a true capitalistic fantasy paradise. 70% of the population in workcamps toiling away, 20% guarding them, 10% getting all the rewards .. ‘work making you free … and them rich’.
Realistically of these 2 alternatives .. which is more likely to be tried?
Ah John Brunner, you weren’t a science fiction author .. you were a visionary .. except you weren’t pessimistic enough.
OK, Canberra has 3 totally conflicting agendas here. Reduce CO2 production (by far the lesser of the agendas), appear to reduce CO2 (reasonably important), don’t hurt the coal/oil/gas/aluminium/etc industries and the rich (first priority).
So the first ‘smoke and mirrors’ failed, time for version 2. But it will still be ‘smoke and mirrors’. Remember the 1st S&M? It would have zero impact on Australian CO2 until the magical ‘carbon capture’ technology is invented around 2030 or so (roughly the same time we cure cancer, pacify Afghanistan, the US stops being at war, we build starships and politicians become decent honourable people).
The simplest way to do this (and bizzarly the Coalition is possibly closer to this position, go figure) is a carbon tax, where the ENTIRE amount collected goes into alternative energy and things like public transport, from large to small scale (ie solar thermal plants to domestic solar panels and hot water). Start at a reasonable amount first but flag it will increase by x% per year, so people can plan their cost benefits. State the apportionnment of the spending in advance, so people know that x billion goes to solar hot water, etc.
Plus you can get clever about this by adding in notional cabon calcs and taxes for imported goods … do wonders for local industry and the current account deficit.
Throw in a bunch of cash at the beginning to kick start the process and protect the people who cannot do anything to change their circumstances (e.g. rural aboriginies, retirees, poor people, etc). Plus it generates lots of jobs which will help pick up the slack as GFC part 2 starts hitting.
Suddenly you have a simple, transparent, effective system here.
Chances of it happening .. equal to me winning 1st devision lotto twice in a row.
What is more likely in this ‘rentier’, ‘looting’ World we live in is:
Massive carbon taxes that only ordinary people pay, companies (and hence the rich) are excluded or rebated (ah lah the GST). Banks are given a monopoly in calculating carbon taxes. Public transport is carbon taxed out of existence .. but more and more tollways. Tollway companies take over (or are given) existing roads, eventually every major road is a toll road. Yep, even if you walk down the road you will get a ‘notional’ cabon tax on you through a toll.
Everything costs more. Electricity prices go up by 15% p.a., petrol 10% p.a, gas ditto, food ditto.
Govt introduces debtors prisons for those who go bankrupt with a cutoff. If you go bankrupt for a million or more dollars then you are exempt, under that you go to a debtors prison which is also a workhouse. You produce things for a dollar a day, so you can get your 1,500 calories of food .. otherwise you starve. Plus you lose your vote and health and safety laws don’t apply. 5 year old children are found to be excellent at working with complex asbestos products.
Massive increase in ‘national secuity’ .. becomes the largest employer before long, new ‘threats’ are found daily (e.g. animal rights, MSF is declared a terrorist organisation, etc, all greens except those that are rabidly anti-nuclear power in Australia are rounded up).
10 years of that then we have a true capitalistic fantasy paradise. 70% of the population in workcamps toiling away, 20% guarding them, 10% getting all the rewards .. ‘work making you free … and them rich’.
Realistically of these 2 alternatives .. which is more likely to be tried?
Ah John Brunner, you weren’t a science fiction author .. you were a visionary .. except you weren’t pessimistic enough.
@Mark
It wasn’t a backflip. The government said they are going to reintroduce the CPRS when it might succeed politically. If anyone backflipped, it was the Liberals, in maybe the only case of a losing party going back on an election promise.
@Mark
It wasn’t a backflip. The government said they are going to reintroduce the CPRS when it might succeed politically. If anyone backflipped, it was the Liberals, in maybe the only case of a losing party going back on an election promise.
john @ 23 – the Coalition lost the election, therefore any pre-election promises based on winning government can hardly count as promises equivalent to a winning government’s promises.
The ALP could have gone to a DD Election on the ETS if it really was that important. To defer it beyond a future election is, as we are now seeing, a gamble greater than taking it to a DD Election and therefore a political backflip.
john @ 23 – the Coalition lost the election, therefore any pre-election promises based on winning government can hardly count as promises equivalent to a winning government’s promises.
The ALP could have gone to a DD Election on the ETS if it really was that important. To defer it beyond a future election is, as we are now seeing, a gamble greater than taking it to a DD Election and therefore a political backflip.
. . . and that bird is still dead.
. . . and that bird is still dead.
Thanks for the link, Hannah’s Dad – an interesting read.
I don’t know what to make of the rumour re: the ETS. I hate to read the “world of wedging in it” comment though, LE. Can’t we just aspire to get some decent policy through on this issue – the pre-occupation with grinding the opposition into the dirt was part of the reason the last one went pear-shaped.
So anyway, I tend to get my news from PM on ABC radio when I’ve been out in the field, and what the grabs from the PM in the house today, made it seem like he had a good day, and has decided to do the hard yards with the RSPT. Lindsay Tanner was also good on the news this morning..who knows if it’s just coincidence or whether Rudd has given the NSW boys club the flick. I hope so.
[Oh, and I'm also quite fond of that "bottle-arsed-squids" quip.]
Thanks for the link, Hannah’s Dad – an interesting read.
I don’t know what to make of the rumour re: the ETS. I hate to read the “world of wedging in it” comment though, LE. Can’t we just aspire to get some decent policy through on this issue – the pre-occupation with grinding the opposition into the dirt was part of the reason the last one went pear-shaped.
So anyway, I tend to get my news from PM on ABC radio when I’ve been out in the field, and what the grabs from the PM in the house today, made it seem like he had a good day, and has decided to do the hard yards with the RSPT. Lindsay Tanner was also good on the news this morning..who knows if it’s just coincidence or whether Rudd has given the NSW boys club the flick. I hope so.
[Oh, and I'm also quite fond of that "bottle-arsed-squids" quip.]
@23 – that’s true, john, but only politically useful up to a point. The perception that Rudd had thrown the switch to inaction, lost conviction, etc. was created precisely because nothing new was proposed which was meaningful, as I suggest in the post. The Carbon Tax interim idea would have preserved the political credit involved in standing for action, while allowing for a redesign of the ETS. It was a woeful political strategy by Rudd, and while it was the result of the Liberal shenanigans which overthrew Turnbull, that doesn’t absolve the government of responsibility for a poor response to changed circumstances.
@23 – that’s true, john, but only politically useful up to a point. The perception that Rudd had thrown the switch to inaction, lost conviction, etc. was created precisely because nothing new was proposed which was meaningful, as I suggest in the post. The Carbon Tax interim idea would have preserved the political credit involved in standing for action, while allowing for a redesign of the ETS. It was a woeful political strategy by Rudd, and while it was the result of the Liberal shenanigans which overthrew Turnbull, that doesn’t absolve the government of responsibility for a poor response to changed circumstances.
oops, what a mess^^….to clarify the first “PM” refers to the evening news service on ABC radio, the second “PM” refers to the prime minister.
oops, what a mess^^….to clarify the first “PM” refers to the evening news service on ABC radio, the second “PM” refers to the prime minister.
Just let somebody build a nuclear power plant to replace Hazelwood. Simple, safe, cheaper than all these windmills and vastly more reliable.
Just let somebody build a nuclear power plant to replace Hazelwood. Simple, safe, cheaper than all these windmills and vastly more reliable.
Old Skpetic @ #22 said:
Old Skeptic is correct. Minchin’s Martyrdom Operation may have done us all a favour by sinking the Potemkin Village ETS.
And the L/NP’s technological approach to reducing carbon emission at least have the merit of being transparent. The PRC is embracing this with some success.
Carbon pricing works fine in economic theory. But only the Europeans can make it work in politico-economic practice, and even then only haltingly. In most other jurisdictions it is bogged down and rorted.
Carbon taxing taxing works in policy practice, given the ubiquity of rent seeking in most political systems. It is simple, cheap to administer and effective. It is working in Sweden.
Although a carbon tax establishes certainty in cost at the expense of certainty in quantity emitted it is certain that a Great New Tax on Everything will get the message accross.
I have been predicting that the world will move towards carbon taxing for the past couple of years. Havent given up hope yet.
Old Skpetic @ #22 said:
Old Skeptic is correct. Minchin’s Martyrdom Operation may have done us all a favour by sinking the Potemkin Village ETS.
And the L/NP’s technological approach to reducing carbon emission at least have the merit of being transparent. The PRC is embracing this with some success.
Carbon pricing works fine in economic theory. But only the Europeans can make it work in politico-economic practice, and even then only haltingly. In most other jurisdictions it is bogged down and rorted.
Carbon taxing taxing works in policy practice, given the ubiquity of rent seeking in most political systems. It is simple, cheap to administer and effective. It is working in Sweden.
Although a carbon tax establishes certainty in cost at the expense of certainty in quantity emitted it is certain that a Great New Tax on Everything will get the message accross.
I have been predicting that the world will move towards carbon taxing for the past couple of years. Havent given up hope yet.
I haven’t read Laura Tingle’s article and the first I heard of this proposal was reading Mark’s article just then. A consumption based ETS is what you get when you have an ETS but levy what are called ‘border tax adjustments’ or BTAs on imports and exports. This means that emissions intensive goods that are imported have a tax levy’d on them that is based on the estimated emissions and the domestic carbon price – one way to do this is require importers to but permits that are priced at the same price as domestic permits. Exports get exempted from the ETS.
It is also possible to just have BTAs on imports, or just BTAs on exports. BTAs were discussed last year in a report by the WTO and the UNEP called Trade and Climate Change (pdf). The report argued that border tax adjustments are probably WTO compliant. The Waxman-Markey Bill that passed the US House of Reps provided for BTAs on imports, but these would not occur until at least 2020.
The main advantage of BTAs or a consumption-based approach is that there is less of an incentive for other countries to free-ride by not reducing emissions. This is very important. A disadvantage is that emissions from imports can only be estimated; it is far less efficient to levy a carbon price on imports from somewhere than it is to have them levy a carbon price themselves. Another disadvantage is that if you have BTAs on exports, you reduce the coverage of the ETS, which is inefficient and reduces its environmental effectiveness. Finally, if you imposed BTAs on imports from a country like India, which has per capita emissions something like 15 times less than Australia, it would be considered to be highly unfair.
I might make some more comments when I finally read Laura’s article.
I haven’t read Laura Tingle’s article and the first I heard of this proposal was reading Mark’s article just then. A consumption based ETS is what you get when you have an ETS but levy what are called ‘border tax adjustments’ or BTAs on imports and exports. This means that emissions intensive goods that are imported have a tax levy’d on them that is based on the estimated emissions and the domestic carbon price – one way to do this is require importers to but permits that are priced at the same price as domestic permits. Exports get exempted from the ETS.
It is also possible to just have BTAs on imports, or just BTAs on exports. BTAs were discussed last year in a report by the WTO and the UNEP called Trade and Climate Change (pdf). The report argued that border tax adjustments are probably WTO compliant. The Waxman-Markey Bill that passed the US House of Reps provided for BTAs on imports, but these would not occur until at least 2020.
The main advantage of BTAs or a consumption-based approach is that there is less of an incentive for other countries to free-ride by not reducing emissions. This is very important. A disadvantage is that emissions from imports can only be estimated; it is far less efficient to levy a carbon price on imports from somewhere than it is to have them levy a carbon price themselves. Another disadvantage is that if you have BTAs on exports, you reduce the coverage of the ETS, which is inefficient and reduces its environmental effectiveness. Finally, if you imposed BTAs on imports from a country like India, which has per capita emissions something like 15 times less than Australia, it would be considered to be highly unfair.
I might make some more comments when I finally read Laura’s article.
It’s never Kevin’s fault. It’s either the young turks or the old fools, but never Kevin.
It’s never Kevin’s fault. It’s either the young turks or the old fools, but never Kevin.
patrickg@5: I wish you’d use your real name, Bob Ellis.
Pick the aristocrat on the Liberal benches, go on: one thing the NSW Labor right inculcates in its people is a raging sense of entitlement that mystefies Liberals. I’ll give you Victoria and SA for toffs (though they tend to be moderates), but your red-in-tooth-and-claw Libs tend to be strivers born with a plastic spoon in their mouths like Howard. It won’t just be the North Shore that is represented by Libs from next March.
Labor are out of NSW govt for a long, long time: the political tectonics of the ALP are in for their biggest shake-up since the ’50s.
Robert@7 and Kit@8: if it’s easy to get through Parliament, show me the politician who gives a toss about ease of administration. Which aspect of our taxation system is administered smoothly and has no loopholes to speak of?
TerjeP@29: once again, a solution looking for a problem. Taking the politics right out and looking purely at the challenges of engineering and a ready-trained workforce, it is so crazy to describe nuclear power as simple, let alone cheap (nuclear power everywhere requires billions in public subsidies) that you undermine your own argument simply by advertising your own ignorance.
patrickg@5: I wish you’d use your real name, Bob Ellis.
Pick the aristocrat on the Liberal benches, go on: one thing the NSW Labor right inculcates in its people is a raging sense of entitlement that mystefies Liberals. I’ll give you Victoria and SA for toffs (though they tend to be moderates), but your red-in-tooth-and-claw Libs tend to be strivers born with a plastic spoon in their mouths like Howard. It won’t just be the North Shore that is represented by Libs from next March.
Labor are out of NSW govt for a long, long time: the political tectonics of the ALP are in for their biggest shake-up since the ’50s.
Robert@7 and Kit@8: if it’s easy to get through Parliament, show me the politician who gives a toss about ease of administration. Which aspect of our taxation system is administered smoothly and has no loopholes to speak of?
TerjeP@29: once again, a solution looking for a problem. Taking the politics right out and looking purely at the challenges of engineering and a ready-trained workforce, it is so crazy to describe nuclear power as simple, let alone cheap (nuclear power everywhere requires billions in public subsidies) that you undermine your own argument simply by advertising your own ignorance.
Rather depressing really, to see Poss fall so far from grace. Cherry picking one freakish year out of an industry that invests and sells in terms of decades.
Rather depressing really, to see Poss fall so far from grace. Cherry picking one freakish year out of an industry that invests and sells in terms of decades.
“I hate to read the “world of wedging in it” comment though, LE. Can’t we just aspire to get some decent policy through on this issue ”
Sure, but what leader could resist both? Certainly none who have experienced re-election in recent memory. Im a Green – and despite all the silly nonsense that gets written about us – just as hardarse on effective electoral strategy as any ALP hack. Eyes on the prize. My concern is that said ALP hacks have been quite rubbish at it lately – not that they do it, per se.
Climate action is popular – therefore its not only right, its expedient. What part of this doesnt the ALP get?
Im for a carbon tax myself. The ALP can make that idea their own by deciding how it will be spent.
“I hate to read the “world of wedging in it” comment though, LE. Can’t we just aspire to get some decent policy through on this issue ”
Sure, but what leader could resist both? Certainly none who have experienced re-election in recent memory. Im a Green – and despite all the silly nonsense that gets written about us – just as hardarse on effective electoral strategy as any ALP hack. Eyes on the prize. My concern is that said ALP hacks have been quite rubbish at it lately – not that they do it, per se.
Climate action is popular – therefore its not only right, its expedient. What part of this doesnt the ALP get?
Im for a carbon tax myself. The ALP can make that idea their own by deciding how it will be spent.
@31 – thanks for the comment, Peter.
I should add there’s not a lot more in Tingle’s article than what I’ve highlighted.
@31 – thanks for the comment, Peter.
I should add there’s not a lot more in Tingle’s article than what I’ve highlighted.
Oh yeah, LE, I understand that regarding strategy and the Greens [and everyone really], I’m just feeling a tad jaded by the shenanigans.
Oh yeah, LE, I understand that regarding strategy and the Greens [and everyone really], I’m just feeling a tad jaded by the shenanigans.
@27
I think the delaying of the CPRS was dealt with badly, but that’s because it was leaked. If Kevin had come out stating that he had lost the battle, but was still going to fight the war, showed a bit of passion and bitterness, then this would have worked perfectly.
Politically, going to a DD would just have given the Greens a major advantage in negotiation. They would definitely have control of the Senate, but after the next federal election it’s much more likely that the balance of power will be held by the Greens OR Nick Xenophon and whichever other candidate he gets elected in SA.
And with the original negotiations, this Senate was never going to pass a ETS. If the Govt had negotiated with the Greens, Fielding wouldn’t have voted for it, and the Liberals wouldn’t touch it with a bargepole. Negotiating with the Liberals was the other option, and we can all see what happened there.
@27
I think the delaying of the CPRS was dealt with badly, but that’s because it was leaked. If Kevin had come out stating that he had lost the battle, but was still going to fight the war, showed a bit of passion and bitterness, then this would have worked perfectly.
Politically, going to a DD would just have given the Greens a major advantage in negotiation. They would definitely have control of the Senate, but after the next federal election it’s much more likely that the balance of power will be held by the Greens OR Nick Xenophon and whichever other candidate he gets elected in SA.
And with the original negotiations, this Senate was never going to pass a ETS. If the Govt had negotiated with the Greens, Fielding wouldn’t have voted for it, and the Liberals wouldn’t touch it with a bargepole. Negotiating with the Liberals was the other option, and we can all see what happened there.
Cherry picking one freakish year
That would be the year of a global recession, Jaques, where construction dramatically fell, along with most commodity prices? Interesting theory. Very interesting.
Cherry picking one freakish year
That would be the year of a global recession, Jaques, where construction dramatically fell, along with most commodity prices? Interesting theory. Very interesting.
Following on from Peter’s comments, I am somewhat sceptical that the government would even consider announcing such a change in their strategy before the election. Not only would they have to explain why they were abandoning their earlier approach, but then try and build a constituency for the new one. There would have to be a new Green/White paper process and then exhaustive consultation. I also find it hard to believe that the government would consider BTAs on imports from China and other countries given the implications for trade policy/trade relations. Calculating them accurately would be extremely complicated and there is a fair change at least one country would bring action against us at the WTO.
Following on from Peter’s comments, I am somewhat sceptical that the government would even consider announcing such a change in their strategy before the election. Not only would they have to explain why they were abandoning their earlier approach, but then try and build a constituency for the new one. There would have to be a new Green/White paper process and then exhaustive consultation. I also find it hard to believe that the government would consider BTAs on imports from China and other countries given the implications for trade policy/trade relations. Calculating them accurately would be extremely complicated and there is a fair change at least one country would bring action against us at the WTO.
I read Laura Tingle’s article this morning. Makes interesting reading. Having thought about the issue for some time, I personally think this is the only way to go, provided there is a very clear understanding of what consumption really means.
The key question that needs to be answered here (and its implications fully understood) is the following:
In a market based economy, who is the real polluter here – the producer or the consumer?
I don’t know of any good or service that can continue to be produced in the absence of some level of government, business or household end-use demand. It is this demand that provides the financial incentive to suppliers to continue the production process.
If you want to tackle carbon-based pollution you must reduce end-use demand for carbon and/or redirect this demand in favour of alternative technologies. This does not absolve energy-intensive firms or resource based industries, to the extent that they themselves are end users of carbon as part of their production processes (which forms part of their competitive cost base). Governments at all levels should bear the direct cost of their own demand for carbon, as must we consumers. After all, it can’t cost you anything if you don’t consume. The market-based incentive is there to find acceptable substitutes.
The simple reason why is has been politically unacceptable to do so until now is that all end users vote. And yet a domestic scheme based on end-use does not require prior international agreement, is trade neutral (as exports are not domestic consumption but imports are), and can be introduced at a rate that is politically acceptable to at least half the voters. I wonder if and when we will turn this corner?
I read Laura Tingle’s article this morning. Makes interesting reading. Having thought about the issue for some time, I personally think this is the only way to go, provided there is a very clear understanding of what consumption really means.
The key question that needs to be answered here (and its implications fully understood) is the following:
In a market based economy, who is the real polluter here – the producer or the consumer?
I don’t know of any good or service that can continue to be produced in the absence of some level of government, business or household end-use demand. It is this demand that provides the financial incentive to suppliers to continue the production process.
If you want to tackle carbon-based pollution you must reduce end-use demand for carbon and/or redirect this demand in favour of alternative technologies. This does not absolve energy-intensive firms or resource based industries, to the extent that they themselves are end users of carbon as part of their production processes (which forms part of their competitive cost base). Governments at all levels should bear the direct cost of their own demand for carbon, as must we consumers. After all, it can’t cost you anything if you don’t consume. The market-based incentive is there to find acceptable substitutes.
The simple reason why is has been politically unacceptable to do so until now is that all end users vote. And yet a domestic scheme based on end-use does not require prior international agreement, is trade neutral (as exports are not domestic consumption but imports are), and can be introduced at a rate that is politically acceptable to at least half the voters. I wonder if and when we will turn this corner?
Andrew E: trying to explain how this tax would be levied would be like the Hewson birthday cake all over again – not just in the complexity, but that it would directly apply to goods that Grandma buys.
Andrew E: trying to explain how this tax would be levied would be like the Hewson birthday cake all over again – not just in the complexity, but that it would directly apply to goods that Grandma buys.
We done the WTO argument before LO and there are at least two grounds for exemption from WTO provisions that this would fall under. You only need to be show that the tariff is not designed to privilege the home country, merely because it is the home country’s products.
That said, I do agree that it would be much more complex than a GST.
We done the WTO argument before LO and there are at least two grounds for exemption from WTO provisions that this would fall under. You only need to be show that the tariff is not designed to privilege the home country, merely because it is the home country’s products.
That said, I do agree that it would be much more complex than a GST.
A tax on goods and services, based on their carbon inputs. Probably through charging each person in the chain for their use and rebating them for their inputs, ensuring that they only pay the value added part of their carbon input. Leaving the final consumer to pay the tax, which the government rebates based on actual need. I like that idea except …
It’s the GST. Good grief we went through this 10 years ago, it’s been on the agenda for even longer. And I think even Rudd has mentioned that he won’t increase it. It’s political suicide, anything that even looks like a GST increase or even a new GST like charge will go down like the proverbial lead balloon. The opposition will skewer him, probably using the same lines the ALP used against Hewson and Howard.
I’m not even trying to be difficult, I like this idea, it makes sense. It’s just going to end up failing or causing a change of government. If he is planning something like this, let’s hope he has a really good approach, or a brilliant communication strategy.
PinkyOz
A tax on goods and services, based on their carbon inputs. Probably through charging each person in the chain for their use and rebating them for their inputs, ensuring that they only pay the value added part of their carbon input. Leaving the final consumer to pay the tax, which the government rebates based on actual need. I like that idea except …
It’s the GST. Good grief we went through this 10 years ago, it’s been on the agenda for even longer. And I think even Rudd has mentioned that he won’t increase it. It’s political suicide, anything that even looks like a GST increase or even a new GST like charge will go down like the proverbial lead balloon. The opposition will skewer him, probably using the same lines the ALP used against Hewson and Howard.
I’m not even trying to be difficult, I like this idea, it makes sense. It’s just going to end up failing or causing a change of government. If he is planning something like this, let’s hope he has a really good approach, or a brilliant communication strategy.
PinkyOz
Possum cites ABS stats for the profit margin for mining of 37.1% in 2008/09, the most recently available year. (And this is compared to the all industries average of 11.2%!).
So let’s go back a few years from the same data series. 07/08 – 38.0%, 06/07 – 36.1%, 05/06 – 34.9%. With the all industries average around 11 to 12%
So Jacques, how far do you need to go back to prove a point?
Possum cites ABS stats for the profit margin for mining of 37.1% in 2008/09, the most recently available year. (And this is compared to the all industries average of 11.2%!).
So let’s go back a few years from the same data series. 07/08 – 38.0%, 06/07 – 36.1%, 05/06 – 34.9%. With the all industries average around 11 to 12%
So Jacques, how far do you need to go back to prove a point?
You haven’t done it at all. These types of arrangements have not been tested in the WTO and there is likely to be considerable opposition to their use, especially if they are not introduced under the auspices of a multilateral agreement. And the difficulty of assessing accurately the carbon content of imports without the cooperation of the producing country might also invite prohibition in the WTO.
You haven’t done it at all. These types of arrangements have not been tested in the WTO and there is likely to be considerable opposition to their use, especially if they are not introduced under the auspices of a multilateral agreement. And the difficulty of assessing accurately the carbon content of imports without the cooperation of the producing country might also invite prohibition in the WTO.
Yes, whatever one thinks of the super-profts tax – surely no one can pretend with a straight face they aren’t making super-profits.
Yes, whatever one thinks of the super-profts tax – surely no one can pretend with a straight face they aren’t making super-profits.
I think the debate about Possum’s post is a bit tangential to this one, so I’ll put another one up linking to it.
I think the debate about Possum’s post is a bit tangential to this one, so I’ll put another one up linking to it.
Please direct any comments about Possum’s post, the RSPT and the mining companies’ profitability here:
http://larvatusprodeo.net/2010/06/15/possum-on-how-exactly-super-profitable-mining-companies-are/
Please direct any comments about Possum’s post, the RSPT and the mining companies’ profitability here:
http://larvatusprodeo.net/2010/06/15/possum-on-how-exactly-super-profitable-mining-companies-are/
The obvious benefit of a consumption based scheme is that it could become a defacto tariff system whereby we could selectively impose tarrifs on imports. Carbon smart companies might be given a head start manufacturing necessities for Australians. The obvious problems with that move are called the WTO and the IMF.
Everyone thinks themselves an expert in market mechanisms. The only reason for the dominance of cap and trade or a consumption based form of ETS is the dominance of neoliberal sanctification of markets. According to that faith, government regulation of markets, especially via direct mechanisms like taxation, is the moral equivalent of child violation. Beyond contemplation. The end of civilisation as we know it, etc.
A carbon tax would have a dual effect: i) allow consumers to alter consumption based on prices reflective of carbon pollution; ii) re-assert the right of the state to govern the whole of social life, including over the economy, in the name of common interests.
The obvious benefit of a consumption based scheme is that it could become a defacto tariff system whereby we could selectively impose tarrifs on imports. Carbon smart companies might be given a head start manufacturing necessities for Australians. The obvious problems with that move are called the WTO and the IMF.
Everyone thinks themselves an expert in market mechanisms. The only reason for the dominance of cap and trade or a consumption based form of ETS is the dominance of neoliberal sanctification of markets. According to that faith, government regulation of markets, especially via direct mechanisms like taxation, is the moral equivalent of child violation. Beyond contemplation. The end of civilisation as we know it, etc.
A carbon tax would have a dual effect: i) allow consumers to alter consumption based on prices reflective of carbon pollution; ii) re-assert the right of the state to govern the whole of social life, including over the economy, in the name of common interests.
I don’t disagree Anthony — and indeed, I strongly suspect that your second point — the assertion of the primacy of the state in these matters — is the most significant reason for the whole denier campaign, up to and including some acceptance by them of a carbon tax (which they figure they can later dismantle).
These matters are cultural rather more than they are economic, and so we have to act to make it as hard as possible for those opposed to present a coherent and unified response. An ETS may well fall under the description “neo-liberal” but it is also a very dangerous weapon when wielded by the state against them because it wedges them. They will never have unity in opposition if a robust and comprehensive ETS is enacted. That’s why they prefer a carbon tax as a lesser evil.
In the short run though, the idea of removing tax deductions and subsidies for dirty energy would be hard for them to resist on neo-liberal grounds, particularly if it were predicated on a 100% handback of revenue in one form or another to the worst affected sections of the public.
Later on, an auctionable quota (i.e. an ETS) could be imposed on emissions to reinforce the shift away from dirty energy, and if substantial movement had already occurred, the net effect of this ought to be modest.
I don’t disagree Anthony — and indeed, I strongly suspect that your second point — the assertion of the primacy of the state in these matters — is the most significant reason for the whole denier campaign, up to and including some acceptance by them of a carbon tax (which they figure they can later dismantle).
These matters are cultural rather more than they are economic, and so we have to act to make it as hard as possible for those opposed to present a coherent and unified response. An ETS may well fall under the description “neo-liberal” but it is also a very dangerous weapon when wielded by the state against them because it wedges them. They will never have unity in opposition if a robust and comprehensive ETS is enacted. That’s why they prefer a carbon tax as a lesser evil.
In the short run though, the idea of removing tax deductions and subsidies for dirty energy would be hard for them to resist on neo-liberal grounds, particularly if it were predicated on a 100% handback of revenue in one form or another to the worst affected sections of the public.
Later on, an auctionable quota (i.e. an ETS) could be imposed on emissions to reinforce the shift away from dirty energy, and if substantial movement had already occurred, the net effect of this ought to be modest.
Fran: a carbon tax is significantly cruder than an ETS and doesn’t allow the sort of sophisticated manipulations that you point out are possible with an ETS. However, I’m also of the view that it is time for crude answers and blunt solutions. We are treating the treacherous ruling classes with a respect they don’t deserve.
Fran: a carbon tax is significantly cruder than an ETS and doesn’t allow the sort of sophisticated manipulations that you point out are possible with an ETS. However, I’m also of the view that it is time for crude answers and blunt solutions. We are treating the treacherous ruling classes with a respect they don’t deserve.
Anthony said
doesn’t allow the sort of sophisticated manipulations that you point out are possible with an ETS
I don’t point them out. I prefer an ETS largely because it wedges them politically and is a better fit for cross jurisdictional regulation.
I have no respect at all for the ruling classes, but I also expect those fractions closest to profiting from dirty energy to try to act in their collective interest and am keen to make that as hard as possible for them to achieve.
Anthony said
doesn’t allow the sort of sophisticated manipulations that you point out are possible with an ETS
I don’t point them out. I prefer an ETS largely because it wedges them politically and is a better fit for cross jurisdictional regulation.
I have no respect at all for the ruling classes, but I also expect those fractions closest to profiting from dirty energy to try to act in their collective interest and am keen to make that as hard as possible for them to achieve.
Not sure if it’s been raised elsewhere, but it’s also worth noting that the NSW ALP, of all people, are considering a ban on new coal-fired power stations in the wake of the collapse of the CPRS (around which the next climate change plan was meant to be based).
First they reject a coal mine application (for the first time in NSW history), now this. Who has been fiddling with the water in Sussex St?
Not sure if it’s been raised elsewhere, but it’s also worth noting that the NSW ALP, of all people, are considering a ban on new coal-fired power stations in the wake of the collapse of the CPRS (around which the next climate change plan was meant to be based).
First they reject a coal mine application (for the first time in NSW history), now this. Who has been fiddling with the water in Sussex St?
Mark
“The PERCEPTION that Rudd had thrown the switch to inaction, lost conviction, etc. was created precisely because nothing new was proposed which was meaningful, as I suggest in the post.
It (CPRS deferal) was a woeful political strategy by Rudd, and while it was the result of the Liberal shenanigans which overthrew Turnbull, that doesn’t absolve the government of responsibility for a poor response to changed circumstances.”
agreed
you th first Pundit I’ve seen who agrees with my view th Liberal & Green & MSN narative that Rudd backflipped on commitment to CC polisy itself is false
yes , simply Rudd accepted Copehappen killed CPRS momentum and accepted politcal reality th Senate of Liberal & Greens majoritys had numbers and were never going to vote for a 5% CPRS , but were STILL making a politcl killing at Labors expense by rudd leaving it “on th table”
yes also agree “a woeful political strategy by Rudd” not to put up A replacement polisy concrently , instead of leaving a vacuum (for 2012 implemnt whe world agrees
LAURA TINGLE
Will be surpised if consumption based gets up
Its politcaly toxic a la a GST
Its more costly than a CPRS
Its some gues’s on assumed use of imports quatities to levy on
It provides no guarantee of ANY co2 mitigation , nor th % that will actualy be cut
Its benefit is (with exports excluded) , then problem of Greens uneconamic 25% cut proposal vs our 4 major trading partners having nil cuts , is removed It therefore allows oz “do its bit in th World on CC” (which WAS what th 5% cut ETS ALSO DID)
It may also allow direct alocaton of hige proceeds direct into R E develop , although Govt does 600 million in budget now for that…SURPRISE , no MSN airplay on that
But its at best very interim , and transition arangments then to a later CPRS horrendous Clearly a CPRS is best for numerous reasons Garnaut listed as against even a Carbon Tax alternitive
Mark
“The PERCEPTION that Rudd had thrown the switch to inaction, lost conviction, etc. was created precisely because nothing new was proposed which was meaningful, as I suggest in the post.
It (CPRS deferal) was a woeful political strategy by Rudd, and while it was the result of the Liberal shenanigans which overthrew Turnbull, that doesn’t absolve the government of responsibility for a poor response to changed circumstances.”
agreed
you th first Pundit I’ve seen who agrees with my view th Liberal & Green & MSN narative that Rudd backflipped on commitment to CC polisy itself is false
yes , simply Rudd accepted Copehappen killed CPRS momentum and accepted politcal reality th Senate of Liberal & Greens majoritys had numbers and were never going to vote for a 5% CPRS , but were STILL making a politcl killing at Labors expense by rudd leaving it “on th table”
yes also agree “a woeful political strategy by Rudd” not to put up A replacement polisy concrently , instead of leaving a vacuum (for 2012 implemnt whe world agrees
LAURA TINGLE
Will be surpised if consumption based gets up
Its politcaly toxic a la a GST
Its more costly than a CPRS
Its some gues’s on assumed use of imports quatities to levy on
It provides no guarantee of ANY co2 mitigation , nor th % that will actualy be cut
Its benefit is (with exports excluded) , then problem of Greens uneconamic 25% cut proposal vs our 4 major trading partners having nil cuts , is removed It therefore allows oz “do its bit in th World on CC” (which WAS what th 5% cut ETS ALSO DID)
It may also allow direct alocaton of hige proceeds direct into R E develop , although Govt does 600 million in budget now for that…SURPRISE , no MSN airplay on that
But its at best very interim , and transition arangments then to a later CPRS horrendous Clearly a CPRS is best for numerous reasons Garnaut listed as against even a Carbon Tax alternitive
Two quick responses to Ron:
1/ Please please please edit your posts for spelling before submitting them. It is very hard to read, and thus weakens the persuasiveness of your arguments. Use a spell check if you need it – we all do at times.
2/ The Greens’ 25% cut (their minimum, actually) is NOT uneconomic. Treasury’s own modelling made this absolutely clear. The extra cost was so small it disappared in some of their summary tables, and as I recall would have delayed the doubling of the Austrlaian economy by just 2 years (something like 2042 rather than 2040).
Two quick responses to Ron:
1/ Please please please edit your posts for spelling before submitting them. It is very hard to read, and thus weakens the persuasiveness of your arguments. Use a spell check if you need it – we all do at times.
2/ The Greens’ 25% cut (their minimum, actually) is NOT uneconomic. Treasury’s own modelling made this absolutely clear. The extra cost was so small it disappared in some of their summary tables, and as I recall would have delayed the doubling of the Austrlaian economy by just 2 years (something like 2042 rather than 2040).
Oh, and if Copenhagen had succeeded it would have been Rudd’s 25% cut too, don’t forget!
Oh, and if Copenhagen had succeeded it would have been Rudd’s 25% cut too, don’t forget!
Anthony Nolan @ 50: “The obvious benefit of a consumption based scheme is that it could become a defacto tariff system whereby we could selectively impose tariffs on imports….. The obvious problems with that move are called the WTO and the IMF.”
Quite a lot of people would regard the fact that the WTO prevents selective imposition of tariffs at an importing country’s whim as a benefit not a problem. Anyone who thinks a world trade system of that sort would benefit Australia is on the kool-aid. And it is the danger of environmental zealotry going down this path that prevents some of us from wholeheartedly endorsing environmental objectives that in their own right are unexceptionable.
Fortunately, LO is right in his assessment of the obstacles that WTO disciplines (to the observance of which Australia has treaty obligations) to a consumption based ETS imposing de facto tariffs on imports. It is theoretically possible to devise a border tax measure which preserves the essential WTO MFN principle )non-discrimination against imports), as Peter Wood points out @ 31. But the material he references makes clear that in practice, in a situation of the complexity of pricing carbon intensiveness, this simply couldn’t happen because of:
“the difficulty in assessing product-specific emissions and the fluctuations of the carbon price (or allowance price) in the context of an emission trading scheme …. difficulty in cases where imported products are subject, in the country of origin, to other climate change regulations, such as technical regulations, rather than price mechanisms such as taxes, which also impose costs.”
In other words, not only do we have Robert’s problem of assessing the carbon embodied in an i-pod, multiplied by every commodity traded, but doing this on a country-by-country, and manufacturing process by process, basis, and continuously varying the calculations to take account of explicit or implied costs of embodied carbon already imposed by the domestic laws of the exporting country and the way they change.
We would be up to our arseholes in litigation instantly, quickly followed by retaliation against Australian exports.
Anthony Nolan @ 50: “The obvious benefit of a consumption based scheme is that it could become a defacto tariff system whereby we could selectively impose tariffs on imports….. The obvious problems with that move are called the WTO and the IMF.”
Quite a lot of people would regard the fact that the WTO prevents selective imposition of tariffs at an importing country’s whim as a benefit not a problem. Anyone who thinks a world trade system of that sort would benefit Australia is on the kool-aid. And it is the danger of environmental zealotry going down this path that prevents some of us from wholeheartedly endorsing environmental objectives that in their own right are unexceptionable.
Fortunately, LO is right in his assessment of the obstacles that WTO disciplines (to the observance of which Australia has treaty obligations) to a consumption based ETS imposing de facto tariffs on imports. It is theoretically possible to devise a border tax measure which preserves the essential WTO MFN principle )non-discrimination against imports), as Peter Wood points out @ 31. But the material he references makes clear that in practice, in a situation of the complexity of pricing carbon intensiveness, this simply couldn’t happen because of:
“the difficulty in assessing product-specific emissions and the fluctuations of the carbon price (or allowance price) in the context of an emission trading scheme …. difficulty in cases where imported products are subject, in the country of origin, to other climate change regulations, such as technical regulations, rather than price mechanisms such as taxes, which also impose costs.”
In other words, not only do we have Robert’s problem of assessing the carbon embodied in an i-pod, multiplied by every commodity traded, but doing this on a country-by-country, and manufacturing process by process, basis, and continuously varying the calculations to take account of explicit or implied costs of embodied carbon already imposed by the domestic laws of the exporting country and the way they change.
We would be up to our arseholes in litigation instantly, quickly followed by retaliation against Australian exports.
Why don’t we take a look see at Article XX of the GATT?
There would be argy-bargy about these matters of course, but there are strong grounds for arguing the case for carbon-sensitive border tariff adjustments where non-discrimination applies. There are precedents here too. In 1998 for example, tariffs on shrimp imported into the US from Thailand were defended on the basis that the fishing method were endangering sea turtles and thus fell under the Article XX (g) above and the WTO Appelate body affirmed the claim. More recently, Brazil also declined to accept imports of reprocessed EU-sourced tyres on the basis that they can cause toxic fires and are a breeding ground for larvae of the malaria carrying mosquitoes (under XX(b) above).
Why don’t we take a look see at Article XX of the GATT?
There would be argy-bargy about these matters of course, but there are strong grounds for arguing the case for carbon-sensitive border tariff adjustments where non-discrimination applies. There are precedents here too. In 1998 for example, tariffs on shrimp imported into the US from Thailand were defended on the basis that the fishing method were endangering sea turtles and thus fell under the Article XX (g) above and the WTO Appelate body affirmed the claim. More recently, Brazil also declined to accept imports of reprocessed EU-sourced tyres on the basis that they can cause toxic fires and are a breeding ground for larvae of the malaria carrying mosquitoes (under XX(b) above).
Josh
at 1:39 pm
“Oh, and if Copenhagen had succeeded it would have been Rudd’s 25% cut too, don’t forget!”
No josh , your original comment is incorrect , Greens 25% cut polisy WAS uneconamic There was NO treasury modeling on effect on oz having a 25% cut (as a stand alone Nation trading against th rest of World including our 4 biggest Trading partners USA , China , Japan and India) who were promising nil cuts ,
BECAUSE results were econamicly obvious !…we would hav ended up in recession at best
No Country can trade at such masive margins of uncompetitiveness in a globilized World
As to your further coment of if Copenhaggen had of succeeded , well Rudd promised publicly a 25% cut if th World agreed to such a deel , and thus competitive disadvantage issue does NOT then arise
Josh
at 1:39 pm
“Oh, and if Copenhagen had succeeded it would have been Rudd’s 25% cut too, don’t forget!”
No josh , your original comment is incorrect , Greens 25% cut polisy WAS uneconamic There was NO treasury modeling on effect on oz having a 25% cut (as a stand alone Nation trading against th rest of World including our 4 biggest Trading partners USA , China , Japan and India) who were promising nil cuts ,
BECAUSE results were econamicly obvious !…we would hav ended up in recession at best
No Country can trade at such masive margins of uncompetitiveness in a globilized World
As to your further coment of if Copenhaggen had of succeeded , well Rudd promised publicly a 25% cut if th World agreed to such a deel , and thus competitive disadvantage issue does NOT then arise
The important thing about a carbon tax is the recycling of the money. You need a transparent model with clear timetables, such as 30% to domestic, 30% to wind/solar thermal, 30% efficiency, 10% R&D. Then hold it for a few years.
After that, as various targets are met, a new allocation for the next 5 years can be created. Using the above example, then from 2015-2020 30% domestic (great job creator), 50% solar thermal/wind with more solar than wind this time, 10% efficiency (diminishing returns by this stage you hope), still 10% R&D … and so on.
This gives guaranteed money to enable investment and production build up. You can’t create a solar thermal industry out of nowhere, it takes time to build up plant, people, skills, etc. Plus continueous R&D is essential.
Put it all together, including steadily rising levels of the carbon tax .. then you have workable plan folks.
*Note the percentages are made up, they could be anything plus you still need adjustments for poorer people who really can’t do anything themselves, the important thing is that they are transparent and stick for several years at a time enabling people to plan and invest.
The important thing about a carbon tax is the recycling of the money. You need a transparent model with clear timetables, such as 30% to domestic, 30% to wind/solar thermal, 30% efficiency, 10% R&D. Then hold it for a few years.
After that, as various targets are met, a new allocation for the next 5 years can be created. Using the above example, then from 2015-2020 30% domestic (great job creator), 50% solar thermal/wind with more solar than wind this time, 10% efficiency (diminishing returns by this stage you hope), still 10% R&D … and so on.
This gives guaranteed money to enable investment and production build up. You can’t create a solar thermal industry out of nowhere, it takes time to build up plant, people, skills, etc. Plus continueous R&D is essential.
Put it all together, including steadily rising levels of the carbon tax .. then you have workable plan folks.
*Note the percentages are made up, they could be anything plus you still need adjustments for poorer people who really can’t do anything themselves, the important thing is that they are transparent and stick for several years at a time enabling people to plan and invest.
Harry Clarke also has a blog post on the proposal here.
I have now read Laura Tingle’s article. One thing that it states is that the consumption based ETS proposal “is not believed to form part of the government’s developing plans to find what sources say needs to be a `simple but credible’ suite of measures to show the government is serious about global warming and to undo [the damage it has done it its credibility]“.
I’m not sure what the government is planning to do to restore its credibility, except that it will probably do something about energy efficiency, given than DCCEE has established an energy efficiency task force. I do have some ideas about what it should do: Introduce an interim carbon tax, which would be easy to implement by amending the National Greenhouse and Energy Reporting Act; some of this could be redistributed to households to counter any nonsense about a “big tax”; the government should also recognise the extent of international action as part of the Copenhagen Accord and increase its minimum emission reduction from 5% to 15% to also restore its international credibility.
Tingle also states that the “government is making the most of the hiatus … to assess whether better market based models for dealing with emissions may exist”. It sounds like the consideration of the ‘consumption’ model falls in this camp. This could be consistent with a May 27 report from C+E daily that Martin Parkinson told a Senate Estimates hearing that the “climate change department is building the policy equivalent of `time capsules’ so that the many years of work on a trading regime is not lost when the issue is ultimately and inevitably revisited”.
I hope that when it is looking at ‘better market based models’, the government is also considering at some of the smarter proposals in US legislation, such as price floors and allowance reserves. If the government is looking at border tax adjustments, I hope that they are looking at a variety of approaches, including ones that include BTAs on imports but not exports.
Harry Clarke also has a blog post on the proposal here.
I have now read Laura Tingle’s article. One thing that it states is that the consumption based ETS proposal “is not believed to form part of the government’s developing plans to find what sources say needs to be a `simple but credible’ suite of measures to show the government is serious about global warming and to undo [the damage it has done it its credibility]“.
I’m not sure what the government is planning to do to restore its credibility, except that it will probably do something about energy efficiency, given than DCCEE has established an energy efficiency task force. I do have some ideas about what it should do: Introduce an interim carbon tax, which would be easy to implement by amending the National Greenhouse and Energy Reporting Act; some of this could be redistributed to households to counter any nonsense about a “big tax”; the government should also recognise the extent of international action as part of the Copenhagen Accord and increase its minimum emission reduction from 5% to 15% to also restore its international credibility.
Tingle also states that the “government is making the most of the hiatus … to assess whether better market based models for dealing with emissions may exist”. It sounds like the consideration of the ‘consumption’ model falls in this camp. This could be consistent with a May 27 report from C+E daily that Martin Parkinson told a Senate Estimates hearing that the “climate change department is building the policy equivalent of `time capsules’ so that the many years of work on a trading regime is not lost when the issue is ultimately and inevitably revisited”.
I hope that when it is looking at ‘better market based models’, the government is also considering at some of the smarter proposals in US legislation, such as price floors and allowance reserves. If the government is looking at border tax adjustments, I hope that they are looking at a variety of approaches, including ones that include BTAs on imports but not exports.
Recently in response to a Transgrid plan some conservationists on the North Coast of N.S.W. suggested a gas fired power station would make their pylon towers unnecessary.Then recently Diesendorf a Green electricity expert often quoted and accepted as expert suggested that Gas couldn’t compete.It seemed like the right hand didn’t know what the other hand could of been doing! Just a sec! A gas person or the electricity corp expert said it will be competitive.So in the context of this subject blogged here,this isn’t directly relevant.Except perhaps things are on the move ,perhaps more confidently than what first appears.Transgrid could be a corp that helps pull down atmospheric moisture.Alas I am not a Indian God Icon with many many arms to make the just stated relevant or even stay within the body of the subject.
Recently in response to a Transgrid plan some conservationists on the North Coast of N.S.W. suggested a gas fired power station would make their pylon towers unnecessary.Then recently Diesendorf a Green electricity expert often quoted and accepted as expert suggested that Gas couldn’t compete.It seemed like the right hand didn’t know what the other hand could of been doing! Just a sec! A gas person or the electricity corp expert said it will be competitive.So in the context of this subject blogged here,this isn’t directly relevant.Except perhaps things are on the move ,perhaps more confidently than what first appears.Transgrid could be a corp that helps pull down atmospheric moisture.Alas I am not a Indian God Icon with many many arms to make the just stated relevant or even stay within the body of the subject.
Peter Wood
oz already has very high international creditibility from its behind scenes work for Coppenhaggen and its assistant to chair role
its domesticaly preseption is otherwise due partly from false claims & spoling asctions by Liberals and greens partys , and partly because rudd made a terrible strategic politcal mistake in leaving a vacuum when advising deferral then MSN hav run with this narative
As to suggestion of our min limit , here’s US position:
“The U.S. officially committed in writing yesterday (Jan 2010) to the greenhouse gas emission cuts proposed by President Obama in Copenhagen—4 percent below 1990 levels by 2020.”
Seeing IPPPC recomend 25% cut off 1990 levels , USA offer is useless And its quite irresponsible of oz to go it alone with high cuts with our exports exposed as Greens Party desire
We can ‘do our bit’ on CC responsibly by a Scheme excluding exports , and I believe Rudd should put up another modified 5% CPRS now …a CPRS so that cuts ar pre known will occur rather than a cigarette type tax on consumption , a carbon tax
It will be opposed by all othr Senate Partys , but it on table
I do agree with your specific proposals in last para
Suspect Laura Tingle’s article is a ‘non story’ and mmore about Govt Dept doing its normal Dept job independant of govt simply ‘planning’ future longer term options if matter re-arises, pity Whole CC issue has been politisized
Peter Wood
oz already has very high international creditibility from its behind scenes work for Coppenhaggen and its assistant to chair role
its domesticaly preseption is otherwise due partly from false claims & spoling asctions by Liberals and greens partys , and partly because rudd made a terrible strategic politcal mistake in leaving a vacuum when advising deferral then MSN hav run with this narative
As to suggestion of our min limit , here’s US position:
“The U.S. officially committed in writing yesterday (Jan 2010) to the greenhouse gas emission cuts proposed by President Obama in Copenhagen—4 percent below 1990 levels by 2020.”
Seeing IPPPC recomend 25% cut off 1990 levels , USA offer is useless And its quite irresponsible of oz to go it alone with high cuts with our exports exposed as Greens Party desire
We can ‘do our bit’ on CC responsibly by a Scheme excluding exports , and I believe Rudd should put up another modified 5% CPRS now …a CPRS so that cuts ar pre known will occur rather than a cigarette type tax on consumption , a carbon tax
It will be opposed by all othr Senate Partys , but it on table
I do agree with your specific proposals in last para
Suspect Laura Tingle’s article is a ‘non story’ and mmore about Govt Dept doing its normal Dept job independant of govt simply ‘planning’ future longer term options if matter re-arises, pity Whole CC issue has been politisized
Mark – I’m not an “expert” but undergraduate, indeed high school economics, unconvers some large flaws in the concept, so I outlined them <a href=here.
Mark – I’m not an “expert” but undergraduate, indeed high school economics, unconvers some large flaws in the concept, so I outlined them <a href=here.
Sorry
http://clubtroppo.com.au/2010/06/16/how-is-a-consumption-based-ets-different-to-a-production-based-ets/
Sorry
http://clubtroppo.com.au/2010/06/16/how-is-a-consumption-based-ets-different-to-a-production-based-ets/
Fran @ 59
That’s OK in theory, but I remain convinced that in practice devising a WTO-consistent regime to apply to imports would be impossible – the difficulties can’t just be blithely dismissed as “argy-bargy”. Your own example of the US sea turtle case tends to confirm that.
It wasn’t clear cut – the US lost, but then won on appeal, and at that it was a qualified victory in that conditions were attached that required the US to modify its regulations. The case also remains as one of the very few in which the WTO has allowed trade restrictions on the basis of production process – which is what a consumption based ETS amounts to – as opposed to product. On a very similar case – dolphins as by-catch in tuna fishing – the US lost.
And the sea turtle case was about one product, one country and an issue very much less complex than assessing embodied carbon, not an across the board imposition of selective tariffs.
In any case, judging from Peter Wood’s 62 it is all irrelevant as the whole thing is another Laura Tingle non-story.
Fran @ 59
That’s OK in theory, but I remain convinced that in practice devising a WTO-consistent regime to apply to imports would be impossible – the difficulties can’t just be blithely dismissed as “argy-bargy”. Your own example of the US sea turtle case tends to confirm that.
It wasn’t clear cut – the US lost, but then won on appeal, and at that it was a qualified victory in that conditions were attached that required the US to modify its regulations. The case also remains as one of the very few in which the WTO has allowed trade restrictions on the basis of production process – which is what a consumption based ETS amounts to – as opposed to product. On a very similar case – dolphins as by-catch in tuna fishing – the US lost.
And the sea turtle case was about one product, one country and an issue very much less complex than assessing embodied carbon, not an across the board imposition of selective tariffs.
In any case, judging from Peter Wood’s 62 it is all irrelevant as the whole thing is another Laura Tingle non-story.
Wozza …
The thing is here that the US (and other states) are in a stronger position to do border tax adjustments because
a) anyone in any jurisdiction who supports local carbon pricing doesn’t want to be on the wrong end of fugitive emissions-aided imports — politically, every compliant regime will want one
b) the UNFCCC framework is universally recognised as imposing obligations
c) the principal targets of possible border tax arrangements (China, India) have endorsed the principles
d) It could easily be structured to meet the non-discrimination principles that under pin WTO’s framework
It would be very complex of course, and doing the analysis from the point of production would be easier, but at worst, there would be a dispute and then probably some sort of “settlement on the steps” arrangement because all of the players want to avoid mapping a serious trade dispute (with all of the risks of escalation) onto the existing instability in financial markets.
Wozza …
The thing is here that the US (and other states) are in a stronger position to do border tax adjustments because
a) anyone in any jurisdiction who supports local carbon pricing doesn’t want to be on the wrong end of fugitive emissions-aided imports — politically, every compliant regime will want one
b) the UNFCCC framework is universally recognised as imposing obligations
c) the principal targets of possible border tax arrangements (China, India) have endorsed the principles
d) It could easily be structured to meet the non-discrimination principles that under pin WTO’s framework
It would be very complex of course, and doing the analysis from the point of production would be easier, but at worst, there would be a dispute and then probably some sort of “settlement on the steps” arrangement because all of the players want to avoid mapping a serious trade dispute (with all of the risks of escalation) onto the existing instability in financial markets.
I take it if it’s an consumer-based emissions *trading* scheme, every single Australian is given and/or has to buy permits in order to purchase any product whose manufacture involves the production of CO2e, and that we can trade permits among ourselves? And if I personally instituted an approved method of removing CO2e from the atmosphere, I could be individually rewarded with such permits? It’s a little hard to see how such a system could be managed cost-effectively, if at all.
I take it if it’s an consumer-based emissions *trading* scheme, every single Australian is given and/or has to buy permits in order to purchase any product whose manufacture involves the production of CO2e, and that we can trade permits among ourselves? And if I personally instituted an approved method of removing CO2e from the atmosphere, I could be individually rewarded with such permits? It’s a little hard to see how such a system could be managed cost-effectively, if at all.
It’s entirely possible to do it. You could, for example allocate every Australian a certain number of free CO2 emissions rights each month and allow them to purchase more at auction on some e-bay-like venue or perhaps at supermarket checkouts. Every head of household or single adult of at least 18 would get a smart card like those FlyBuys cards reflecting their credits. (Visitors to Australia would get no such credits and have to register for a smart card and buy their credits from an exchange.) Each product you bought would have a CO2 cost which you could find out by using a reader on the barcode or perhaps via a mobile phone app. You could always swipe your own card to see how much you had left in any given month.
The money raised would be handed back to the carriers of cards in the form of tax threshhold adjustments, cash or aaset and means-tested benefits in kind.
The tricky part would be getting the modelling right at the back end — how CO2-intensive is each service or good you buy?
Of course, such a system would underpin renewable energy since people would use fewer permits to purchase the energy. People with solar panels would not be using as much energy from the grid so they would have a loophole.
It’s entirely possible to do it. You could, for example allocate every Australian a certain number of free CO2 emissions rights each month and allow them to purchase more at auction on some e-bay-like venue or perhaps at supermarket checkouts. Every head of household or single adult of at least 18 would get a smart card like those FlyBuys cards reflecting their credits. (Visitors to Australia would get no such credits and have to register for a smart card and buy their credits from an exchange.) Each product you bought would have a CO2 cost which you could find out by using a reader on the barcode or perhaps via a mobile phone app. You could always swipe your own card to see how much you had left in any given month.
The money raised would be handed back to the carriers of cards in the form of tax threshhold adjustments, cash or aaset and means-tested benefits in kind.
The tricky part would be getting the modelling right at the back end — how CO2-intensive is each service or good you buy?
Of course, such a system would underpin renewable energy since people would use fewer permits to purchase the energy. People with solar panels would not be using as much energy from the grid so they would have a loophole.
Elsewhere: Richard Green at Troppo.
Elsewhere: Richard Green at Troppo.
What Rudd needs to do now is to come up with something simple that will result in serious climate action between now and 2013 at the very least. A consumer based ETS is going to be just as incomprehensible as the CPRS with no clear advantages over direct action.
Far better to fight a Clayton’s direct action plan with a real action plan with serious targets.
What Rudd needs to do now is to come up with something simple that will result in serious climate action between now and 2013 at the very least. A consumer based ETS is going to be just as incomprehensible as the CPRS with no clear advantages over direct action.
Far better to fight a Clayton’s direct action plan with a real action plan with serious targets.