The theoretical advantages of an ETS, namely no technology preference, a flexible carbon price and a bullseye target, seem to have been irrevocably undermined. I expect the same bugbears to come back under a straight carbon tax. For example alumina producers who plant a few hectares of trees will want an inflated carbon tax deduction in lieu of an ETS offset. Maintaining a simultaneous renewables target (RET) will further confuse the issue. For example gas fired electricity is lower CO2 than coal but not renewable so no doubt there will be a fudge as is done with the 'solar multiplier'.

Someone needs to explain why residential PV deserves a generous feed-in tariff (say 60c per kwh) and commercial windpower gets Renewable Energy Certificates worth 4-5c a kwh. Yet both need expensive gas fired electricity to cut in when the sun goes down or the wind stops blowing. All nuclear wants is a carbon price and loan guarantees, both too much for the governments of the UK and Germany. It also appears that the Chinese and the Koreans can build the AP series of nuclear plants in less than half the time and cost of the rest of the world. So in the West unreliable energy sources get subsidies while a reliable source gets red tape and hindrance.

Therefore a carbon levy might be the way to go, starting at say $10 per tonne of CO2. Make it revenue neutral and cut out offsets/deductions and special exemptions. Add the levy to coal and LNG exports. Meanwhile cut subsidies to uneconomic sources of power.

A carbon tax with no exemptions makes good economic sense and would be the best means of delivering the intended outcome - ie reduced carbon emissions. Indeed, a carbon tax could easily be tweaked up or down to meet target outcomes that might change as the science of greenhouse gas and climate develops further. Problem is, many of the people who say they want a price on carbon also say they wanty somebody else to pay that. That's why the ETS has been more attractive politicially - it's smoke and mirrors that creates the illusion that the big end of town will pay. An ETS is, as the author says, an absolute dog of an idea in terms of its likely success.

The idea of a price on carbon only works if we all pay it - and do so in a way that we know we are paying it. Otherwise we won't change our ways. So, an increase in fossil-fuelled energy prices for everyone - no exemptions.

If a tax on carbon is the answer, it must have been a stupid question. Can Geoff Carmody spell out the question? Just what is a punitive new tax on carbon dioxide intended to fix? Carbon Dioxide is a trace gas in the atmosphere, and there is abundant evidence that man-made carbon dioxide is a drop in the ocean compared to natural cataclysms such as the recent Icelandic volcanic eruption in changing the climate of the planet. Solar cycles are the principle cause of climate change, and we need access to cheap power to enable mankind to live with these natural cycles. Modern coal-fired power stations use scrubbers to remove particulate matter and other nasties from the stacks, and allow a wonderful plant nutrient called carbon dioxide to increase plant growth (including crops) in the vicinity (carbon dioxide is heavier than air). Trees in plantations near Tarong Power Station grow twice as fast as trees 20 km away. I am in favour of penalties for real pollution, but life-giving carbon dioxide is not a pollutant.

We need a carbon tax to reduce the squandering of fossil fuels.
It is so easy to do.
For a start increase the tax on petrol.
It is already taxed so just change the numbers.
No unproductive extra government workers needed.
So that the average worker does not suffer ,ALL the extra tax can
be returned as a carbon allowance on their income tax bill.

Print "CARBON TAX ALLOWANCE $1000 " on the tax bill.
Each year tax more carbon sources and increase the allowance.
We already have a tax bill so just change the numbers.
No unproductive extra government workers needed.

Individuals who reduce their carbon pay less carbon tax but get to
keep the allowance.
Save some fossil fuels for our grandchildren.

Dear Mr. Carmody, your resume is stunning and your experience in economics is unquestionable and well respected.

So why am I so disappointed with your article?

One of the key principles of managing any business is to fully understand the causes (situation analysis) before attempting to apply a solution. I cite the Kepner/Tregoe methodology as just one example.

There are, as you would well know, a number of key elements in every “situation”. These are the key factors, their causes, their effects, their weightings and their interrelationships that “describe” any situation.

What these processes do is to ensure that any solution does indeed fit the problem. With respect I would like to offer a perspective that is based upon internationally recognized business analysis and invite you to challenge this thinking.

The key elements:
We have the key elements comprising but not limited to; consumer energy costs (industrial/domestic), energy security, energy production capacity, national economic impacts, carbon based energy production, non-carbon based energy production, renewable energy production, alternative technology readiness/cost, carbon efficiency (Carbon Capture), transition planning (Bell Curve), future technologies and carbon emissions.

The Energy Situation:
For perhaps the past twenty years and in the past ten years in particular, the specter of some sort of carbon “penalty” (on carbon emissions) has increased risk of and choked investment in traditional carbon based energy production. This is reducing supply against increasing demand, directly increasing consumer costs, created production “outsourcing” which has reduced energy security (as evidenced in Europe).

This situation then brings into play the issues of possible solutions which are non-carbon based energy production (nuclear), carbon efficiency and renewable energy production. (I omit consumer demand reduction as I cannot imagine majority public approval of such regressive austerity, although this may be forced up on us).

The Economic Situation:
Due to the risk aversion for investment in traditional energy production, developed nations are now facing a production capacity deficit, a significant catch up. The economic impact of today’s “catch up” build costs (coal/gas or nuclear) when compared with the missing progressive capacity build over the past twenty years is stark.

Continued;

Continued;

The result is that very large funding is now required in “something” to meet demand. Public funded subsidies, rapid technology development in clean coal, renewables and catch up on existing production capacity. Add to this the soaring energy costs for domestic and commercial consumers and we evidence that our economies are already taking multiple hits.

The Technology Situation:

We have existing coal/gas and nuclear production capabilities, we also have renewable energy sources and we have potential future technologies. This brings me to transition planning. The life cycle of any product/service mix is described by the “Bell Curve”. This describes the point at which the “previous” reaches maturity and is ready to be replaced by the “next”.

One fundamental and overriding principle of transition planning is that the “next” is ready to take over without a gap. The readiness of “next” is determined by its ability to both “replace” and “improve on” the previous. If the “next” cannot meet these criteria then there is a gap and disaster is imminent.

Do our renewable options “replace and improve on” the previous? The on-shore wind farms in the UK deliver a cost per Megawatt at twenty times the cost of coal, average efficiency is 25% and still needs base load backup from “previous” which is coal. As many in the UK are beginning to realize, disaster is imminent.

That “business needs certainty” draws us to the cause of the uncertainty, which has always been the prospect of carbon pricing, your mitigation options only deal with the symptoms.

A Tax to cut emissions offers a solution to 1.5% of the global emissions. This is pure advocacy with no economic case. As an economist I would prefer you to tell Australians how much tax needs to be raised to pay for catch up on existing base load production, fund an effective transition to a “ready” product, invest in future technologies and reduce energy bills.

I think it is fundamentally dishonest to dress up as “carbon reduction” the price we must pay for energy rather than recognize systemic failure of our energy policies.

The best action is none of the above.

The best action is to constitute a balanced and impartial commission to evaluate the scientific evidence. Proponents and antagonists of anthropogenic global warming theory should be subject to severe cross examination under oath. What we want to know is this.

Is global warming real? What is the evidence? How is it measured? What are the assumptions in the sampling process and aggregation of results? Can we be given proper statistical confidence limits and not subjective guesstimates?

If global warming is rigorously established: How important is this to the human situation? Wild and imaginative scare stories are not acceptable evidence.

Geoff Carmody should get his thinking straight, as his persistent carbon levy push is having a bad influence on politicians -- witness John Brumby's irrational proposal to prepare for the introduction of a carbon price as laid out in his just released White Paper.

Carmody should first consider the need for reducing carbon emissions, instead of unquestionably accepting anthropogenic global warming . Anthropogenic CO2's alleged influence on climate is an hypothesis which has yet to be proved scientifically. Warmists have failed to produce that proof , after searching for over 20 years.

Consequently, there is no scientific justification for reducing CO2 emissions.

The introduction of a carbon levy as proposed by Carmody would raise electricity prices substantially, do irreparable damage to the Australian economy, but have no impact whatsoever on climate change

Waiting for the world scientific community to finally agree on the amount of man-caused global warming might take for ever, given that many scientists are employed by vested interests capable of demanding the answers that suit them. A bit like the occasional doctor who still claims that smoking is not harmful.

I prefer to reach my own conclusion based on a bit of common sense. It seems that with all the fires, reactions, and friction that mankind has caused since being here, it would be logical for some degree of warming to result. We have also been busy consuming oxygen and converting it largely to carbon dioxide, to the point where I would believe we now have more carbon dioxide than we need. Australia being a rich country can afford to do something to reduce both these problems, perhaps setting an example to others currently messing up the planet faster than we do.

A straight tax on emitting carbon and carbon dioxide seems to me a simple thing to do. Far easier to apply and understand than the complex trading game proposed by some politicians. Such a tax would focus the minds of all industries paying it to look seriously for better alternatives. The tax collected by government could be applied (if the government were wise) to pay a research organisation (such as the CSIRO once was) to also research better alternatives. If Australia was to just that little, I would feel happy that we were doing our share to minimise our damage to planet Earth.

SURE...a price on emissions....

BUT...

NOT A "MARKET BASED TRADING" approach to dealing with the collected levy.

NO NO NOOOOO..(yes..I'm SHOUTing) Sorry Bob (Carr) Envex is not going to pay you a stupendous CEO salary on MYYYYY carbon doller levy! grrrr

If we collect money for reducing emmissions... it should go STRAIGHT to reducing emissions HERE.. in our country..

BASIC setup

SOLAR panels + Grid Connect inverter.

ADVANCED setup

The above plus Battery storage

All this in a context of high efficiency lighting and gas heating and cooking.
*voila* we have made progress. (and we are all the richer in our hearts :)

I’m with you anti-green and Raycom, it seems that Julia Gillard is also supportive when she says of the Citizens Assembly, that the fundamental science needs to be examined. Unfortunately, she also has a bob each way when she says that she believes in AGW but wants to provide deep community consensus for people who “disagree” with her. Quite what this means I’m not sure.

Will we ever get a review of the science? That’s doubtful.

I’ll stake my claim to being skeptical and qualify that by saying if ever the two sides of science do get together and produce an opinion, I would support that opinion. Why is it so hard to get the international community to offer us a joint review body? If the issue remains so contentious and divisive it is because it remains unresolved, so why not resolve it?

It is also frustrating that we have so many well respected economists who are willing to abandon years of training and business principles to leap to an advocacy position and avoid examination of the “causes”. This has been my criticism of Mr. Carmody’s article and I have already documented the principles that from my experience have been violated or ignored.

I say again to Mr. Carmody, you have solutions to the problems defined by the pro-AGW movement. In light of the hundreds of scientific papers expressing contrary opinion, would you be prepared call for and apply internationally recognized decision making principles and examine both sets of input criteria?

Otherwise we have to assume you have adopted an advocacy position.

Spindoc.

I understand that the French Academy of Science will be undertaking a scientific review starting in September or October.

Also as a result of dissension from Fellows of the Royal Society against the stated views of their President, the Society will re-look at the evidence.

I also believe that members of the American Physical Society are also doubting the veracity of the Anthropogenic Global warming
theory.

You’re right anti-green and there are many other reviews that have recently concluded and some yet to take place. The problem remains that there was only ever one internationally recognized, official body for AGW assements, the UN’s IPCC. This is the only body that is recognized by governments for the formulation of policy. It is these policies which are now driving the business community.

Those recent reviews that concluded AGW is correct are then quoted to support government action. Unfortunately, those bodies that question the AGW orthodoxy simply go into the “political flat earthers” box. No matter how many other bodies review this or what conclusions they reach, we will still have divided scientific, political and public opinion.

This is a monumentally stupid situation.

Encouraging though it may be to hear some contrary views to AGW orthodoxy, this divisive debate remains contentious, in fact contrary scientific views only make it more divisive. It will only ever cease to be divisive when a new, internationally recognized, official and politically supported body is formed with a mandate to include all scientific positions.

Only a new but open “equivalent” to the IPCC will now satisfy both sides.

In the meantime we have the international business community responding economically to government policies which are in turn based on half a scientific picture. Mr. Carmody’s article is a classic example of this. Like I said, his proposed “solutions” based up on half the information are advocacy, not business, not science and most of all, not valid.

We need to understand that it is not a question of which input, if any is flawed, this is a distraction. The issue remains that if only partial input is considered it is the decisions that are flawed.

My challenge remains, I defy anyone who promotes action on AGW to demonstrate that all decision criteria have been accommodated in that decision, and I mean anyone. This includes direct action, carbon pricing/trading and even the UN’s “precautionary principle”.

I believe that the absence of responses to my challenge will demonstrate all we need to know about “climate change action”.

I cannot understand you people who continue to play the rhetorical game when the fat lady is singing

The question of global warming is not a plaything for the erudite. It is here and now, real and awesome. If we have no more

than ten years to fix the problem it is already too late and continuing to play at the edges is ridiculous.

If the cause is fossil fuels then we must stop using them and we must pay the price here and now and, because no other

solution will work, we must stop the use by putting the price beyond reach.

We have to face up to the fact that the problem is serious. Either it will eliminate the human race or it won't. If, for some

reason or other you have the believe that some humans will survive perhaps you should do a survey on how many dinosaurs

are still around after the last climate change. Either you're serious or you're just fear-mongers and if you're serious you must

admit to the need to pay the piper and pay bigtime.

Where should payment start? It should start by attacking the cause not some process downstream. It makes no sense to pay

a price for our own pollution whilst giving some other country supplies of coal, gas and oil to undo all our fruitless frugality.

The price needs to be put on the basic commodity not on some later processing action. The culprit is the source not the

consequence.

Then comes the question of what to do with the revenue received. That's easy! It ought go directly towards the building of a

replacement energy infrastructure.

What is wrong with you people that you can't see the facts that lie there staring you in the face?

Billiam

bILLIAM, << you cannot understand you people who continue to play the rhetorical game when the fat lady is singing>> That’s OK, you can’t understand. We can live with that.

When you do, please get back to us with something sensible

My comment relates to Julia's proposal for a 150 layperson 'Citizen's Assembly' do assess what to do re AGW. I was recently part of an exercise that I suspect was a pilot program for the Citizen's Assembly. 40 lay people, supposedly of diverse views on AGW (ie those concerned and sceptics) were subjected to a series of presentations over 3 days. At the beginning we were asked to respond to a voluminous set of questions to determine our attitudes to AGW, and our willingness to pay to correct it.

We were then subjected to a series of what can only be called 'alarmist' presentations of 'the science'. The question sessions were tightly controlled so that no 'inconvenient' questions could be asked.

It was clear that most of the lay people in the audience, when presented with 'the science' by the 'eminent scientists', were persuaded. Subsequent surveys showed increased concern re AGW, and increased willingness to pay.

The problem with the whole process is that it can only be called propaganda. There was no opportunity to hear any sceptical views. Sceptics were dismissed as 'denialists'.

An appalling experience. If Citizen's Assemblies are approached in this way, we will get a very unfortunate outcome.