There’s money in muck – and in carbon emission permits. No wonder the states are willing to push their own emission trading scheme as they are looking at windfall revenue of $20 billion and perhaps as much as $100 billion by auctioning off the permits.
And therefore it’s similarly no wonder federal treasurer Costello will want a piece of the action with the financial imperative sure to make Canberra a party to the cash.
The AFR’s Angus Grigg spells out the money lure in a piece based on documents from the states’ National Emissions Trading Taskforce. The $20 billion would result from the states auctioning off just 20 per cent of the pollution permits – the proportion recommended by the taskforce.
But it could be more – as much as 100 per cent if the recommendations of University of NSW Institute of Environmental Studies Professor Frank Muller are taken.
“If you give them away, it is often just for the benefit of shareholders, and where international companies are involved it can be a net transfer out of the economy,” Muller told the Fin.
“Costs to the overall economy would be lower the more permits you auction.”
The allocation of permits in any field is an area where governments routinely fail – whether its over-allocating water licences or maintaining the taxi licence racket. The European carbon trading system is already an example with permits given away to power companies and heavy industry, resulting in over-allocation and windfall profits for industry.
The initial state government proposal is flawed by being limited to power generators. The AFR suggests the state treasuries could make more money by extending the scheme to include energy-intensive industries such as cement, steel making and aluminium.
But state governments are notoriously prey to doing deals and favours – and it’s already happened in NSW by the government indemnifying Bluescope steel against any future carbon tax, as the SMH reported.
It’s all part of the argument in favour of a revenue-neutral carbon tax with no exemptions.