Tony Abbott has been running the line that a carbon price of $40 a tonne would double the price of electricity.
John Quiggin has done the math:
For coal-fired electricity, CO2 emissions are around 1 tonne/MWh for black coal (a tonne of coal generates about 2.5 tonnes of CO2, and also about 2.5 MWh of electricity), and a little more for brown coal. So, a $40/tonne tax implies an additional cost of 4c/kwh. Electricity prices vary a lot, but currently the standard retail rate in Queensland is around 20c/kWh, so the price increase would be around 20 per cent for households. Businesses that use large amounts of electricity pay lower prices and would therefore face a higher price increase, but since the generator cost of electricity is typically more than $40/MWh, no one paying a market-determined price would face a doubling.
You didn’t even need to wait for Quiggin. The impact of various carbon prices on electricity prices and the CPI was modelled as part of the CPRS green and white papers. A cursory look at that publication exposes Abbott’s lies on this issue. What Abbott also won’t say is that ongoing uncertainty about carbon pricing encourages generators to delay new investment, which, when demand is increasing over time, will put upward pressure on electricity prices.
Looking at the headline,
I thought saw what’s at bottom of the night terrors of the mortgage belt- they are scared of getting hit for higher bills on what they’ve been told is a greens agenda.
Gee, how easily the mistrust of the electorate is aroused but just now both greens and coalition are winning as a polarisation develops.
There are so many levels of bollocks in Abbott’s claim it’s hard to know where to begin.
There are zero proposals for a carbon price that will be anything like $40 per tonne, at least out to 2015. The Greens proposal – the only explicit proposal for a carbon price currently on the table – is for $23 per tonne rising at 4% over CPI a year.
Even if there was a proposal to put a $40 per tonne price on carbon, Quiggin’s calculation represents an upper bound on electricity price rises. The whole point of a carbon price is to take action to reduce emissions to avoid paying the tax/permit cost. Such actions will have a lower cost than the carbon price, otherwise people will simply pay the emissions price.
Electricity prices will rise under a CPRS, but that doesn’t mean that people will necessarily be worse off. The money collected by a carbon tax or ETS doesn’t simply disappear. The CPRS handed large parts of it back to polluters, but also handed large chunks of it back to the general public through tax cuts and welfare increases, such that people in the bottom half of the income distribution were (in aggregate) no worse off.
It’s this kind of thing that really cheeses me off about politics as it is presently conducted. It’s rubbish. Everybody involved in the process knows it’s rubbish, including Tony Abbott. But it gets dutifully reported again and again and nobody calls him on it (with the exception of bloggers with a megaphone a squillionth the size of, say, the ABC).