In this guest post, John Davidson suggests that there may be more practical and effective ways of reducing net carbon pollution than an ETS. John is a semi-retired chemical engineer who has spent most of his life in the construction and mining industries. His work has ranged from formal research through to design, commissioning and operations management. John has had articles published in Australian Options on work sharing and the future of the left.
Our government is claiming that ETS is the answer to the net carbon pollution (NCP) problem. However, I suggest that ETS is part of the problem, not the answer. ETS is a problem because it has so many people spooked that governments worldwide are looking for excuses to defer or water down action to reduce NCP. ETS basics may be easy to understand but the details are anything but. There is widespread uncertainty about how serious the impact will be on us as individuals, business and the community in general.
ETS-style schemes are claimed to have been successful at dealing with the specific issues associated with sulphur emissions in the US power industry. However, this doesn’t automatically mean that it makes sense to try and use ETS as the grand answer to reducing NCP. There are four key potential problems that are fundamental to ETS:
1. ETS aspires to be an answer to everything. Logic suggests that better outcomes might be achieved from case-specific schemes that address the specific issues associated with a particular industry or sources of emissions.
2. ETS depends on “putting a price on carbon.” Other options are not considered.
3. ETS uses an “emissions trading market” to determine the price of carbon. Note however, that EU permit prices have dropped from a 2008 high of over €30 down to €8 early this year.
4. ETS depends on a total emissions cap to drive down total emissions. May result in blackouts and other problems if future demand is underestimated.
The fundamental flaws of ETS can be best understood by comparing alternatives for dealing with specific problems.
Continue reading ‘Guest post: ETS is the problem, not the answer’
John Hepburn was the only one who noticed Labor burying the Wilkins Review in budget media releases. It’s becoming increasingly clear why it was buried. The CPRS discussion has thus far failed on its own terms to “change … relative prices [by providing] businesses and consumers with incentives to adjust their behaviour, invest in low-emissions technologies and help Australia reduce emissions.” As Giles Parkinson noticed in the transcript from the Senate Climate Policy [pdf] hearing to get the various stakeholders’ reactions to the changes announced by the government, the handouts are settled – and have been since at least last July when Citi released their first report on ‘likely impacts’:
“My mainstream fund manager clients are generally taking the view that, having established that the likely impact of the scheme on [heavy industry eg. aluminium, steel, cement, paper, LNG, chemicals and mining] is small, they do not need to be continually updated,” she told the committee.
“They are actually getting a bit bored with it. Most fund managers I speak to are pretty sanguine, feeling that the impact of the CPRS will be small given the number of free permits that will be allocated. They feel that other influences like commodity prices, exchange rates and the state of the global economy are more important to their investment
They’re not just bored of it because of the quantity of emoting, but because it’s completely empty rhetoric: Continue reading ‘Carbon price taking a back seat’
Those coal eating surrender monkeys sure get defensive when cornered. The latest shrill squeaking comes from Heather Ridout of AIG with the plaintive request to cut carbon dioxide later. Ali Moore nailed this duplicitous bullshit argument in an interview, pointing out that we’ll have to deal with it at some point in the cycle. Ridout’s response is to start with a ‘dry run’:
Well a dry run can take a number of forms. One approach is just to require reporting without a carbon price. Another might be to set a fixed price. So there’s a variety of things that could be put in place. We would still say we have to have a definite transition set in place so that after that dry run we move into a freer market regime where we ratchet up the targets. Hopefully by then we’ll know what the rest of the world’s going to do.
Heather, it’s called NGER. The legislation passed in 2007. Continue reading ‘Redundant Ridout’
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