First Dog socks now in stock at the Crikey Emporium!
A cautionary tale…
Make the world pay: Turnbull’s carbon plan
|
The Coalition this morning released modelling revealing a lower-cost, more effective emissions trading scheme based on full compensation for all major polluters and lower electricity prices, which it claimed could drive an unconditional 10% cut in Australia’s carbon emissions. The modelling by Frontier Economics, commissioned by the Coalition and independent senator Nick Xenophon, centres on providing all major polluters — both groups currently above the “low” threshold for compensation, and “high” threshold polluters, will receive 100% of the cost of carbon permits, compared to 66% for “low” major polluters and 94.5% for “high” major polluters. Electricity generators will also only be required to purchase permits for emissions above a best-practice “baseline” of emissions intensity, and coal mines will be included in compensation arrangements. The greater generosity to polluters leads, under the Frontier Economics model, to lower GDP impacts and a slightly smaller employment impact, but with relatively higher regional employment. Smaller electricity price rises also requires lower compensation The Frontier Economics modelling is not Coalition policy (or the policy of Nick Xenophon) but Malcolm Turnbull this morning used the modelling to attack the Government for failing to consult on improving the design of the scheme. Turnbull and Xenophon committed to opposing the legislation in the Senate this week and urged the Government to meet with them to develop amendments to improve the design of the scheme. The key feature of the “greener” Frontier Economics model, the higher 10% emissions reduction target, is driven primarily by greater imports of permits from overseas than under the Government’s CPRS, meaning Australia’s actual emissions will continue to rise. Turnbull and Frontier Economics head Danny Price rejected criticism that the modelled scheme simply relied on greater imports of permits, arguing that the CPRS similarly relied on importation of permits from foreign — most likely less developed — countries. “This is a great opportunity for developing countries to become involved in a carbon market,” Price said. Key features of the Frontier proposal:
Comment: There’s no magic pudding, to use the Government’s term of abuse, in the Frontier Economics modelling. You really can go for cuts twice as deep while seeing a smaller economic impact. You just assume you can buy lots more permits from overseas to do so. The Government’s CPRS assumes the purchase of overseas-produced carbon permits. This will enable Australia to continue increasing its greenhouse emissions while still meeting its stated emissions reductions targets. You can complain about developed countries relying on developing countries to do the hard work of emission abatement but given climate change is a global problem, a global solution makes sense. But the Frontier Economics model significantly increases Australia’s reliance on overseas permits, assuming a big increase in the number of permits bought overseas. That would in effect be funded by the savings to businesses and households of electricity prices that are lower than they would be under the CPRS, which will significantly increase them. This reduces the need for compensation to low and middle-income households, whose electricity bills will go up by only around 5% initially, rather than 40%. In essence, households and businesses won’t be paying as much for electricity, but the money saved will be needed to fund the purchase by businesses of permits overseas, the cost of which will be passed through to consumers through higher prices. Because we’ll be doing less of the work of reducing greenhouse emissions ourselves, the costs to the economy will be lower. It’s not quite, as one journalist suggested in today’s press conference, an accounting sleight of hand. But it does rely on diffusing the costs borne by electricity producers/retailers and their customers through the rest of the economy, which will have to rely more heavily on buying foreign permits. There’s no free lunch in reducing carbon emissions. Someone has to pay. The question is whether Australia will do anything to reduce its own emissions, or simply pay poorer countries to do our work for us. |
|
|
49 Comments
Sorry to state the bleeding obvious, but the whole point of any trading scheme is to MAKE BAD BEHAVIOUR MORE EXPENSIVE!!
So talk about reducing costs to households/polluters is, by my reckoning, completely missing the point of the exercise. If everyone’s getting compensated, nobody has any incentive to change behaviour, and the whole thing becomes a complicated way of buying overseas offsets. Trading houses will make millions in the churn, developing nations will have their low-hanging fruit gobbled up by the developed world, and the temperature’s still rising.
As an avowed climate change activist, I’m really starting to wonder if we aren’t better off without this CPRS. At least that way we know we’ve got more to do. Anything set to come out of this government or the opposition appears to be nothing more than false hope and shiny distraction.
I was going to say essentially what Georgina has already stated. The whole point is to change behaviour. This will not encourage any behaviour change.
Further, I think that making the Govt responsible for buying more overseas permits will just shift a large financial risk; if more countries take this stance, the value of international permits will go up and the costs to Govt go up; all without changing anything at home. So we end up with a higher cost plus no change to the structure of our economy.
They’re both maddeningly useless models; a sad watering down of the concept to make them politically palatable. Bring on the double dissolution so the Govt can stop bargaining with the denialists who don’t want any scheme up. I’d be glad to see the Greens with the balance of power.
Finally a bit of sense is being injected into the discussion, sideling the Rudd/Wong rush to nowhere.
We cannot export our emissions offshore and wash our hands of it. Any foreign scheme is not open to Australian scientific scrutiny, nor Australian public comment. Even if it promises to cleanse us of our sins, any international trade in indulgences amounts to evasion of our moral responsibility to the environment.
The coalition needs to oppose the ETS in any form so long as the core reason for it’s existence remains the unwarranted demonisation of carbon and insistence upon providing an obscene revenue source for a whole bunch of financial charlatans. Simply toying with such a trace gas, whilst ignoring water vapor and solar input variances, will have negligible (if measurable) impact on global temperature.
Oh wow, Stuart that’s good stuff right there. Water vapour? We’d have to tax the power stations into the dark ages. And nuclear is a fail as well. Nothing makes more water vapour than power generation. Now that I think about it, your scheme is sounding better and better.
Err… Georgina Smith and Evan Beaver, the whole point of the trading scheme is not to “MAKE BAD BEHAVIOUR MORE EXPENSIVE!!”
It is to reduce pollution. Guess we know where you guys stand.
No, I stand by my statement. The point of introducing CPRS legislation is to put a price signal against pollution. The need to lower emissions exists with or without badly designed legislation.
So we move from foreign oil to foreign carbon credits, and keep digging up nasty brown coal until we finally realise that carbon sequestration doesn’t work?
Are you saying you would be happy to watch pollution rise so long as we were financially compensated.
I would rather see pollution drop.
As for whether this is a good or bad policy - it is too early to say. There will be the usual suspects on both sides spin doctoring, but if it is good, why should we not embrace it. Why should we go the more expensive, less effective path (if it turns out that is the case).
If it is cheaper, and does twice as good, then lets do it.
What? God no. I want pollution to go down as quickly as possible. Preferably to zero by next thursday.
I read through the modelling this morning and I don’t think it does the job ‘twice as good’. Australia’s actual emissions will not change; under either plan. There are no incentives in there to reduce actual Australian emissions. The ‘reduction’ is a net reduction, offset by funding projects overseas. As Roger says, this raises problems of accuracy and accoutability.
I want a scheme that encourages people to change the economy to one less heavily reliant on fossil fuels. Lots of smart people have suggested that the best way to achieve this is through a price signal in every day life. A good CPRS/ETS should patch a major hole in the whole capitalist system; ie that environmental costs are not included in goods. I don’t think that either of the schemes proposed will do that, mostly because they pay people to keep polluting.
Kevin,
as you say, the goal should be to reduce pollution. Given we live in a market-based economy, the easiest way to do that is to create a price disparity between the “good” option and the “bad” one. This provides incentives to move towards the good option. It’s basically the same reason the government taxes cigarettes - the additional cost discourages smokers and the tax collected funds remediation, in this case through health care and quit campaigns. This is the idea I was trying to convey with my comment that the point of emissions trading is to make bad behaviour more expensive. It’s not the end, it’s the means.
A good CPRS would place a significant and increasing price on carbon reductions and disallow more than a sliver of international offsets. This would strongly encourage real carbon reductions through changes in our infrastructure and practices.
What’s currently proposed will instead reward big polluters for being dirty and will lock in piddling reductions medium-term. This is because targets are set 5 years out, to create certainty. But what that also does is drastically slows down our society’s ability to respond to changes in science or the world around us.
Further, by allowing uncapped foreign offsets, this is effectively delaying even further any need for Australian infrastructure to change. We can just keep paying someone else to do the work for us until such time as it’s more cost effective to do it on-shore. This could be decades away. However we’re cutting our own throat, because the longer we delay making these changes, the harder it will be to change when the time eventually comes.
I am coming to the reluctant conclusion that we are actually better off without this CPRS. Christine Milne’s story on Crikey today does a very good job of explaining why.
Have to say guys, you (Even and Georgina) finished with two good arguments.
All I can say for sure is that I am very open to better solutions than what’s on the table.
I also agree, the model put forward by the Gov’t is not that good and appears to be revenue driven, not outcome driven (am about to read Christine Milne’s article). The opposition model may also prove to be a turkey, which means that come election time, we will once again be comparing Pimms with Pimms.
But then, I guess that’s politics.
Once upon a time the guilty party could assume that if caught they would be punished by the law. Apparently this is no longer the case. The worst thing that can happen to a crook these days is having do some public work such as raking a gravel path or two. This was the state of play up until about two-thousand and eight.
Now is the age of the New Enlightenment. Both of the major political parties, and one independent senator-Nick Xenophon, the other one, Steve Fielding, is still out there wondering if he can prove the earth is flat- have arrived at the environment’s terminal betrayal. Reward the guilty is the name of this squalid play. Don’t fine them otherwise the poor little darlings will just go overseas. (Which is bollocks because the Oz mines are in Australia)
The next thing we’ll hear from Malcolm Turnbull is his solution to the Murray Darling Basin sump-hole. Don’t for a minute fine the people responsible for this national disgrace. Give them every last remaining drop of water which is left. Together with a base rate bonus of eleven hundred thousand percent.
As GEORGINA SMITH and EVAN BEAVER have said. MAKE BAD BEHAVIOUR more expensive for the polluter. Don’t blo-dy reward them.
How much longer is the voter going to accept the lie that there are no jobs in the green sector? For this is the flag of horror the major parties wave before the electorate. And not being the home of the sharpest twigs in the nest, many of them believe it.
Georgina: well said - the whole point seems to be increasing the price of bad behaviour, and rewarding good behaviour. So giving high emitters a ‘free pass’ seems to miss the point.
If you read the political tea leaves, you could say that an ETS or CPRS, in one way or another, is inevitable. Whether we get something that is useless, or useful, seems to be the issue now.
Good on you Kevin. Look at us all, arguing like adults. Well done everyone.
And not an ad hominem in sight.
Or Claytons with Claytons…
The crying shame is that there are so many other, awesome, things we can be doing now to reduce emissions. But if this ETS gets up, we will actually have placed a floor on our emissions reductions. Richard Denniss from The Australia Institute brought this up a few months ago (apologies to whoever if I’m misattributing this; memory hazy) - the idea that with an ETS in place, any reductions that go above and beyond the 5-15% mandated will in reality only serve to free up permits, thus keeping down the price of carbon. So lets say you install solar panels on your home, thus reducing your consumption. This simply means less permits necessary for the power company to buy. The impact on Australia’s emissions? Nil.
As Bernard Keane points out here (http://www.crikey.com.au/2009/08/10/essay-why-rudds-cprs-should-be-voted-down/) the Carbon Trust, the mechanism by which regular folks like us can retire carbon permits, is a shiny piece of chicanery, nothing more.
I pray fervently that this CPRS gets voted down and something better arises from the ashes.
Yes Evan, I second what you said, and thank you Kevin for arguing with class. Perhaps we should enter parliament and show them how it’s done?!
The emissions trading scheme would be more accurately titled a Tax On Everything. A flat tax at that. It will hit the poor the hardest and do nothing to combat global warming.
Shame on the Left for supporting it.
Oh no Georgina, we couldn’t make a tough job look easy - the journo’s would never forgive us
Always found the science of global warming interesting, its a working hypothesis(as any scientific theory is), but people talk like there is a consensus on the issue.
How about no matter what Rudd or Turnbull say Man made climate change is BullSh_it. Eat that Sh_it for breakfast you socialist greenie wan_kas:)
“…What? God no. I want pollution to go down as quickly as possible. Preferably to zero by next thursday. ..”
Do tell us Evan…what do you define as “pollution”.
CO2?
Modern civilisation took 1900 years to invent the light bulb and the internal combustion engine.
Laughably, you expect an alternative energy ‘solution’ within the next decade.
The stupidity of what you are suggesting renders you beyond help.
Well, so much for our civilised debate…
I’m not going to be baited by your pointless nonsense Mama. To anyone with a modicum of intelligence it is obvious that is not what I said at all.
GRN - the Left aren’t supporting this. The Greens are going to vote against it. What more can I say? Which Left is supporting the scheme?
A lot of good points raised here. Sadly, both the government and the opposition are choosing to ignore the recommendations of the Productivity Commission for a carbon tax instead of an ETS.
A carbon tax would be levied in Australia, and the money raised would be spent in Australia to clean up our economy. An ETS, or even worse, the “mongrel” that Turnbull has proposed, would still tax us, but send our money overseas to buy carbon credits from countries with endemic corruption and questionable book-keeping. Also, how will this affect our already unsustainable foreign debt?
Then on the business side, under an ETS, it’s possible that two businesses of exactly the same size with exactly the same emission levels could pay grossly different costs for the carbon they emit due to the invisible hand of the market. As we have seen over the last few years, international markets are far from transparent, and liable to be manipulated by banks and speculators. If the cost of oil can unhinge itself from supply and demand to rocket from $40 to $140 in the space of months, what’s to stop the price of carbon from doing the same? This could be disastrous for large emitters, or more accurately, their customers.
Before this legislation is even considered by the house of reps, the government needs to address how a carbon market (local or international) will be transparent, and what measures would be put in place to avoid manipulation of carbon prices by speculators.
Just as an exercise, consider this. Abolish all current taxes, excise, income etc AND rebates and deductions (that high pitched scream would be from tax avoidance lawyers) impose a single tax on energy. The more energy a product or service consumes (in toto, calculation similar to GST), the higher its end cost.
So petrol would be (as an example - I did the figures 20+yrs ago and don’t have the stats. to hand) $10 per litre. That means than a pound of spuds would cost $X, frozen chips $X+ and crisps $X++ right throiugh to potato consume served by a flunky $X+++++++++++++ (coz the flunky has to get to work and have his servant suit laundered etc).
It’s just an example that our entire society is an inverted pyramid, resting on the capstone of underpriced, dirty energy.
Green jobs woulod be local and by definition, low tech. Any redundant auto mechanic (esp an old one pre electronic gee-gaws in cars) would ideal to make, install repair and invent a better windmill, heat pump, the list is endless.
the only people whose “skills” wouldn’t be worth a pinch of the proverbial would be the current financial shysters, management massagers and spinners. Tuff.
Why is carbon emissions even being considered as a tax. The last time I looked carbon emissions by humans was LESS THAN 1% of carbon emissions on the planet. Unfortunately this doesn’t impact on the facts that the consensus carry with them regarding drowning polar bears and sociopaths like GORE tickling their environmental funny bones. Wake up people! This is but another tax to ensure we are all burdened rather than industry. Romancing false science as religion is dangerous especially when it becomes policy no matter what forms the policies take.
http://www.vancouversun.com/news/Global+warming+religion+First+World+urban+elites/1835847/story.html
Someone’s has their eyes open.
The problem with the Frontier Economics proposal is with why there will be more purchases of international permits. More international permits will be purchased because it will be harder and more expensive to reduce emissions in Australia.
It is also interesting to note that under the Frontier Economics proposal, there will be no assistance for households.
There is just one problem with Malcolm the Mad’s final duo act with Zena…whatever his name is, his bloody party room doesnt support it. They are like the proverbial mad persons s — t, all over the place. After listening to the spaced out Feilding twin, barmy barnaby telling all in sundry he is not in Turnbulls party room but the National party room (I thought they were a coaltion), mad dog Tuckey telling all who will listen, Turnbull is a useless pratt and he better wach it or there will be ‘biffo’, sweetie Chrissie Pyne standing behind his Mal pal!!! all the way. Heffernan rumbling like a kiwi volcano waiting to blow his top, the Greens have wiped the plate with malcolm the Mad’s funny ideas and the Leader of the Opposition didnt have the guts to take the points or ideas or whatever they are to his party room before announcing today. This is a floundering pathetic big noter, who thinks he is born to be the Prime Minister of this country and he does not have the class, the ability, the sense of the moment, and finally he is not even concerned if his party room endorses the idea or not. This is a person who tells us he is the leader of his party, yes in name only. Tonights arrogant performance on the 7-30 report shows this smart arse has lerned nothing from his pathetic performances over the last 4 weeks. he is still hiding much, he is a liar and a deceptive person, not fit to be leader of the Opposition let alone a future Prime Minister.
RAYMOND CHURCH: Just to rub it in Malcolm the Mad had another go tonight. I thought Kerry O’Brien landed some good points. But there was Turnbull rattling his choppers. God those gleaming choppers. I’m telling you, this is one Mad creature. Hey, weren’t you of the opinion that he was minister for the environment in Johnny the Jinglemeister’s last Coalition government? Seems to me he fails to perceive this point.
Was talent ever so lacking in any decimated Political Party? I don’t think so.
Mr Rudd, Mr Turnbull, There may or may not be an argument for subsidising energy production, and other things. But please, please, please base any subsidy on the amount of energy and public good created, not on the amount of pollution released in doing so.
I would prefer to see a system where the existing polluters are given untied handouts of carbon credits, based only on their past pollution, independent of any future increase or decrease in emissions. Then they would have an incentive to reduce their emissions.
And it would be cheaper for the nation, compared to the cost of underwriting increasing imports of foreign carbon credits. Cheap as they may be now, they will not stay cheap, not if they are tied to real reductions in carbon emissions.
Too bad you can’t answer the questions Evan.
This forum is not your personal chalkboard where you and your sewing circle can sit and nod in furious agreement - about that which you obviously know very little - with each other.
Your gilded cage affords you the ability to only spout the religious rhetoric.
You have no real ‘solutions’ save advocating gross economic larceny at the expense of your fellow humans.
How does such a misanthrope live with themselves?
What questions Mama? The only one I’ve seen from you is the quesiton “what do you define as pollution?”
Try this.
hmmm
I read further up where it was put that if this plan costs half as much as Rudd’s yet has twice the effect, why the hell wouldn’t we do it?
But here is the next question, how much of this will Rudd copy? Will he start up a committee to talk about it so he can claim it as his idea? Will he avoid answering questions directly about it by talking in a long winded ‘Yes Minister’ manner? Place your bets here!
Malcolm gets different numbers by assuming that more foreign credits can be bought cheaply, meaning less cutting of carbon emissions in Australia.
It’s a sad day indeed when Wilson Tuckey sounds eminently more sensible than the Liberal leadership on this issue.
The Canberra press gallery’s role in this turkey of real economic pain to be inflicted on the Australian people is a nadir, but the sinners have no insight.
Good piece as usual from Gerard Henderson in the SMH:
http://www.smh.com.au/opinion/a-fatal-dalliance-liberals-who-want-to-be-loved-20090810-efje.html
When Turnbull ignored the Canberra press gallery was surely his finest hour as leader; the decision to vote against Rudd’s insane stimulus porkbarelling. He should ignore his personal conviction in an ETS (even if not Labor’s mates rentseeker bonanza) and vote this sucker down. He ain’t going to win the election anyway but he can set himself to win the one following as the dog that is this policy finally dawns on voters (even if never the fourth estate dingdongs in Canberra).
“…Try this…”
lulz, I bw to yr Ober l33t HTML skillz Evan.
And thanks for not answering my question and proving my point.
You really do have no idea.
OMG, JamesK the high priest from cr-pland. Pass the biscuits mother.
What is your point Mama?
Do you want to argue the science of global warming? Can you not see that no one cares what unqualified people think about the science? Neither you nor I are qualified to have any meaningful discussion on the warming of the planet, and I have never made an attempt to engage on the science. The only subjective, and thus debateable part of the argument is how to respond. You’ve made your point; you think doing nothing is the safest bet. Lots of other people disagree with you. We’re now talking about how to respond. You say don’t respond, so your opinion is of very limited use. Your insinuations and half formed ideas are really quite worthless.
But don’t worry, the Liberals will win the next election, and you and your kind will finally control the country again.
Hehehe ‘let me google that for you’. Sure did bring the lulz.
“Laughably, you expect an alternative energy ‘solution’ within the next decade”
Mama: the solutions already exist, Bro. PV cells, wind, hydro, Electric Vehicles (around since the 19th century) - you name it. You’re confusing ‘invention’ with ‘implementation’. Chlorofluorocarbons are the obvious example of what can be i.m.p.l.e.m.e.n.t.e.d. in a decade if the will is there.
GTFO with your dumba5s comments.
Oh Evan thankyou, a delightful smidgen of humour to lighten this sometimes deep dark discussion. The Liberals will win the next election
too much, we need more of such delights
That point about by Mr Keane noting the Turnbull model involves higher consumer prices is very interesting, if like me, you see Stimilus MkI, and Mk II as in effect a roll back of the GST revenue raised over the last 10 years or so.
I know it’s not called a GST rollback but I wish someone would do a comparison of the numbers of GST raised and cost of stimulus packages in the last 9 months.
So it makes alot of sense to me in real politik and economic terms for the party who parented the GST to want to promote a defacto form of consumption tax around energy use that is by loading on extra burden of foreign carbon permits onto consumer prices.
Leave to others to decide whether it’s ‘taking golf clubs to a cricket match’ to paraphrase Minister Wong. One thing is for sure, the ALP are using the environment as a political wedge and that’s the limit of their sincerity on green stuff. Gandhi said aim for integrity not simply to win. What a guy.
Georgina,
I hate to say this, but cigarette tax is a known revenue raiser and that’s all.
They collect over $4.00 on tax a pack, or up to $1.4000 a year per person.
$56.00 tax alone a fortnight.
It doesn’t stop anyone from smoking. It may disadvantage the poor, yet many will go without food to compensate. Or stop going out.
The government will disguise this under a health issue. They get $1.000s of dollars from tobacco companies.
If people give up, it’s for health reasons.
Cancer Council and fundraising help pay for a lot of the adds.
There are far more taking illegal drugs these days than those that smoke.
In USA they have raised the tax to almost double on smoking, to help pay for the health of those children that are poor. Which mean’s people will have to smoke, to help the poor.
TB believes people that smoke take up $$$$$$ in the public health system. So it’s really about money more than anything.
Pedro i read another article that said Rudd had already looked through Frontier economics plan last year. Yet i had an email from TB today claiming that Rudd hadn’t looked into alternates. So that’s wrong isn’t it ?
Raymond and Vernice I agree. In love with wealth and power.
“Gandhi said aim for integrity not simply to win. What a guy.”
Good post Tom.
@Chavon: Cigarette tax doesn’t stop /everyone/ from smoking. Some people, it doesn’t make a difference, some it stops, and some it causes to smoke less.
Many commenters here and in most Crikey editions don’t wish this scheme, CPRS, to pass through the Senate on the grounds that the poorer elements in the community will be slugged, won’t be able to find employment in a Green economy, and will be generally worse off.
WHY? Why are the poorer people going to suffer more than anyone else? It doesn’t make sense. In fact very little argument against having a green future does make sense. No matter if it is called global warming or people pollution, carbon reduction, WTF? The point is the planet is becoming untenable thanks to man’s greed and ability to breed. And something has to be done to make it workable again.
Is this such a radical concept? Giving the planet a helping hand? I don’t think so.
As to the woe, lamentations and shirt-shredding section of the electorate, either you are deluded, or just plain stupid. Everyone will have to pay in order to help the planet survive and have food for years to come. The longer this is put off the more expensive it will become. For EVERYBODY.
I never hear people complaining that the poor will suffer more than anyone else when a state government (VIC) pours everyone’s money down the drain in order to erect yet another gigantic sports stadium, and sacrifice yet more valuable, desperately needed green parkland in order to have the World’s Sporting Umpires Association mono-Olympics of Tiddly-winks; or something equally trifling. A few people would protest, but never in order to consider the poorer elements of the community. In short the nay-sayers are like Andrew Bolt-full of piss and wind and they use examples snatched out of the air in order to offer specious mendacity. SHAME!!!!