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The Forum > Article Comments > The ultimate compliance cost for the ETS > Comments

The ultimate compliance cost for the ETS : Comments

By Peter Lang, published 7/5/2012

Does anyone know what the real cost if implementing the ETS will be?

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Graeme 3, thank you for an excellent explanation of what would be involved in CO2 monitoring at the level where the work is done and the information provided.

Here we have an example from an engineer who has worked at the level where the measurements are taken and the calculations are done. It is rare to get such an insight. From the explanation you have provided we can envisage what would have to be done, eventually, by all businesses that emit CO2. I wonder what would be the total cost to the country?

Graeme, could you post another comment and explain the resource requirements and the costs to the company where you worked? Perhaps you could also comment on what might be the consequences for small businesses, especially those competing in a world market.

The US EPA has estimated that its costs, if it were to comply with the laws passed by US Congress, would be $21 billion per year. What would the total cost to US businesses be? Would they be 10 times, 20 times, 50 times the EPA’s cost? I suggest, given this law has already been passed in the USA, it is only a matter of time until equivalent requirements are imposed on all countries. What would be the cost in Australia (our GDP is 1/15th of USA’s approximately, but our productivity is much lower and out labour rates much higher, so perhaps use 1/10th as a reasonable approximation)?

When we start to think about the consequences to businesses, as Graeme 3 has explained, we can start to recognise how important it is that we be informed of the compliance cost of the ETS before it is implemented. I urge Minister Combet to instruct DCCEE, and the Treasurer to instruct Treasury, to do the estimates, do them properly, and also to fund a proper external due diligence of the results the government comes up with
Posted by Peter Lang, Thursday, 10 May 2012 9:18:48 PM
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‘The Australian’ this morning:

“ONE of the nation's leading carbon-pricing experts has described as "unrealistic in the extreme" Treasury's budget forecast of a $29-a-tonne carbon price in 2015-16, and warned of a multi-billion-dollar risk to the budget and a failure of the scheme to change emissions behaviour if a floor price is not maintained.

Frank Jotzo, the deputy director of the Australian National University's Climate Change Institute, told The Australian an oversupply of credits in the UN's Clean Development Mechanism meant carbon prices would stay low and a more realistic estimate was $5.”

Read the article here:
http://www.theaustralian.com.au/national-affairs/treasury/carbon-price-denounced-as-unrealistic-by-expert/story-fndbwnla-122635251771
Posted by Peter Lang, Friday, 11 May 2012 8:26:19 AM
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ETS is a highly evolved mechanism based on POWER heirachies in social systems.

1. Men basically want sexual pleasure

2. Women want the tools to deceive men into thinking they are fountains of sexual pleasure when all they want is to hatch their eggs and create bigger populations. If that causes overpopulation, climate change, war and ultimately disease epidemics is calculated to be MEN's problem.

3. Politicians and Business CEOs have outgrown both the primal urges through luck and intelligence. They see Power as the ultimate goal. Power being the ultimate aphrodisiac means these elites don't have to grovel to satisfy primal urges as they get IT thrown at them. Nice gig! However Power depends on a continuous growth in population and that means a continuous increase in POLLUTION based climate change and increased intensity of wars, failing infrastructue, externalising debt and danger costs to constituents and civil strife like drive by shooting.

What to do? This limits growth in population and thus growth in POWER.

Smart political managers thus embrace CO2 climate change because it means they can have an ETS and a DIVERSION. They say they are taking care of all the ugly overpopulation problems , pay baby and family bonuses and keep the growth going against the inevitable tide of overpopulation destruction. They KNOW or guess that by the time they die the world will erupt into overpopulation wars but hey they will have achieved the ultimate life that can be lived.

Why more people don't want to be politicians is beyond me. So cool. More deceptive and cunning than any mere woman!

Oh and then there are lawyers .. the Jackalls. Scavenging for all the leftovers! Perhaps the biggest winners in the longrun.
Posted by KAEP, Friday, 11 May 2012 10:37:25 AM
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Peter Lang,

I have no specific cost figures. All I can say is that the original NSW survey involved about 2 weeks work for 2 people (Engineer & Chemist) by which time we decided the queries couldn’t be answered.
The CO2 emissions from the after burner were, as first comment above, impossible to measure. Installing a spectrophotometer 70’ up (as was suggested by the public servants) exposed to the weather and to 300ºC exhaust gases didn’t appeal as reliable.
The point was that the highly variable flow of flammables from the resin plant and/or the paint factory was balanced by the oil firing to maintain the right temperature. Since we could only get an average figure for the oil consumption, and no figures at all for the flow of flammables, there was no way you could get the amount of CO2 emitted.

The Government assumptions were from a paint plant with 2 bulk tanks (of water based resin) and 3 mixing tanks. They assumed that all paint companies were similar. We had over 200 tanks of varying sizes. Even the bulk holding tanks could hold different materials at different times of the year.

Also, we had over 6,000 products. Classed into categories of similar composition, and in groups of 20 to 200 (roughly). The public servants came to a meeting and faced with arguments that their 4 suggested methods wouldn’t (and couldn’t) work, suggested that we install recording spectrophotometers at suitable points in the paint factory. We estimated we would need 112 measuring heads, and the figures would have been worthless without simultaneous air flow measurements.
Posted by Graeme No.3, Friday, 11 May 2012 6:33:31 PM
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Peter Lang continued

All the other paint companies were in the same position. One of the public servants got very agitated and arrogant about the lack of response (so much so that complaints from other companies resulted in him being disciplined and removed).

As I said the two of us worked on it for solid weeks, then had 2 or 3 meetings with the public servants over about another 6 weeks. All up about 10 weeks work for nil result.

The new engineer took that different approach. I think it took him 5-6 weeks to prepare the spreadsheet, which I think had to be copied onto a DVD to give to them.

The public servants were delighted, they had numbers! Other paint companies got together with him, and prepared their own sets of figures. And I believe for some years these were up-dated annually (at a cost of 2 weeks work).
As I indicated the figures were quite dubious, but that didn’t seem to matter. I have no doubt that figures like this were carefully integrated into their planning.

I don't believe that many companies can make accurate measurements of all the emissions which the public servants want. They seem to think that everything is measured as a matter of course, and that Companies employ lots of people to do that, regardless of cost.
Personally I think the cost of accurate measurements will be beyond most companies resources, and an approach like the above will be adopted. After all, the public servants won't be able to measure them anyway, even if they wanted to do so.
Posted by Graeme No.3, Friday, 11 May 2012 6:51:26 PM
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Graeme3,

Thank you for the valuable input. In short, measuring CO2 emissions from most sources would be impractical.

Thank you to ‘On line Opinion’ Editor for running this thread. I wonder if there is a way to publicise this sort of information more broadly. It is rare to get someone like Graeme, who has retired and does not have a job at risk by explaining this publically, to provide such information.

We can also see why Treasury and DCCEE have not attempted to estimated the compliance cost. If they did their figures would be exposed by people like Graeme as nearly meaningless. However, I do believe it is important to publicise the issue of the ultimate compliance cost before we commit any more deeply to CO2 pricing.

I’d also urge readers to urge others, who may have something to add to this discussion, to post their comments.
Posted by Peter Lang, Friday, 11 May 2012 7:11:17 PM
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