Coal might be 20% of our comodity exports, but its only 3-4% of GDP, which is the same as tourism.

The entire mining sector accounts for about 1.3% of employment, which is less than agriculture at about 4% and which is about 25% of our export earnings.

So basically, if you get rid of the entire mining industry - not just coal but all the iron, zinc etc - you lose about 1 in 20 jobs. And on a business case, quite apart from wanting to keep eating, it would be a better business choice to save the Murray Darling than the coal industry.

Of course no-one is planning to go without energy, its just energy so cheap that it is economically viable to waste it that is likely to be lost.

All of those in the know, favour a nice clean carbon market without any weird distortions; like giving 90% of permits out free as a not necessarily true example. All over the world though, politicians have taken this information and implemented what they believe to be a best practise system (a carbon permit market; the Cap and Trade classic) then completely buggered it with concessions and politically motivated greasing of palms.

I would argue that Australia has done exactly that. The system of seeking advice, then allowing input and amendments lends itself to overly complex system design, and very often such distortion of the original scope that the final solution no longer solves the problem as neatly.

In isolation, and I believe this is the view point Garnaut is arguing from, a carbon market with international tradable certificates is definitely the best way to find ‘lowest cost abatement’. But now that we’ve fiddled so much with it (and introduced the utterly pointless MRET) I’m starting to think a carbon tax would be a lot more useful.

Hmmm?

Still no worries…….I’ll bet all those jobs , that cheap energy and all that money much of it from tax, funding significant public spending will be replaced by The Brave New Green World and its Royal Highness King Barack’s gifts to his chief lackey Rudd for unilaterally putting our body on the line first……

However, I cannot accept:

“There’s been criticism of the support for CCS technologies, mainly from green groups because it’s seen as supporting an old industry, the coal industry. CCS research investments are thoroughly justified.”

I cannot think of anyone I know in the renewable energy industry who opposes CCS on the grounds that it supports an “old” industry. They do so because it is as yet unproven technology and both wind and large scale solar thermal are not - they are ready to go and both run with no fuel cost. I have no objection to CCS investment but NOT at the expense of renewables.

Our present and past governments have succumbed to the coal lobby and stifled the potential of all renewables. The renewable energy industry requires investment and that requires stability and certainty. That is NOT forthcoming.

Implementing a national ETS will make it easier for us to link our economy in with an international carbon market. Once that happens we’re locked in for good, for better or worse. Carbon credits will become a form of global currency issued by an as-yet unknown organisation (UN, IMF, World Bank?), and as a result, carbon costs will eventually show up on our bills for goods and services much like the GST does now.

That’s the naked truth proponents want to dance around. International taxation.

While Americans (and JamesK) are frothing at the mouth at this idea, I’m not inherently against it as long as it’s a transparent system that is not being set up as a racket for bankers to abuse.

Without the Government assistance, the main impact on households will be more expensive electricity. Then, this embedded energy will also add to the price of goods that use electricity to be produced and this cost too will be passed on to consumers. Lets say it’s a 50% increase in the cost of electricity (most estimates are less than that), this is only 25% to the consumer, since actual energy use is only half of most electricity bills.

Also, Robert, the technology exists, it really does. Anyone who tells you different doesn’t know the full story. The technology for a near-zero carbon energy sector exists and is mature. Problem is, it’s more expensive. My point in these 2 paragraphs is not that it is a small task, just that the difficulty is not cost to individuals, nor the technicalities, but getting an international agreement.

This is entirely a problem of politics. No country wants to act alone (particularly democracies) for fear of giving the impression that they’ve ceded some sort of advantage to their ‘competing countries’. As Garnaut said; it’s the classic Prisoners Dilemna. If everyone agreed to act at once, there would be virtually no reason not too.

Provide the market, they believe, and the innovators will move in. Theoretically this sounds great. The problem is that it only works providing that the open market is free of powerful encumbants who corrupt the market place by influencing politicians in order to maintain the status quo. The other problem is that unless the market participants can underpin research by being big, being highly profitable and able to absorb large R&D risks then no innovation will occur.

As we have seen the powerful encumbants in the energy and mining sectors in Australia have played the political game superbly. Ross Garnaut admits this with his notion that we must avoid any more distortion of our ETS. The politicisation of the ETRS is complete.

The idea that innovation can only be carried out in the presence of a competitive market is of course patently false. Many of the fundamental innovations that has propelled the technology of modern western societies has been developed through government funding of major universities, major undertakings such as the US space program and the development of modern weapons. These innovastions were all underwritten by the tax payer. There were significant innovations from the private sector, however the companies were generally very large and in monopolistic/ologopolistic markets where high levels of retained earnings brought about by the lack of competition were enjoyed. The transistor was developed in the AT&T Bell labs laboratories, before AT&T got broken up into the mini Bells is a typical example.

Highely competitive markets where costs are driven down, do not have players with sufficent retained earnings to do expensive research and innovation. These companies are good at optimising existing technology to suit the market place and reduce costs, but they rarely produce fundamental innovation on a large scale.

The carbon problem is huge. It requires leaps in technology and implementation of such technologies on an unprecedented scale in a very short time. Using the open market, with carbon trading is like trying to move the elephant by pushing it’s rear with a piece string. A rather futile exercise.

Of course the argument is that Governments never pick winners. The problem is that they aren’t picking anything, they are being told by the encumbants what the winners are. CCS is the big winner here. Why? Because we get very rich selling coal. That’s hardly letting the market decide.

My take on the Garnaut Report is that it is more about extracting additional taxes through an ETS, ideally managed by the banks, than it is about solving the problem of dirty energy over the next ten years. These taxes would be extracted ultimately from the long suffering public in much the same way as the GST because we all happen to be locked into a petroleum based economy for another half century. If this problem were real, surely we would have already started the move to new energy with no questions asked!

I am compelled to assume that the people who want this punishment regime in place aren’t all that interested in solutions but very sympathetic to new taxation opportunities.