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The Forum > Article Comments > Ranking the CPRS: a one-model beauty contest > Comments

Ranking the CPRS: a one-model beauty contest : Comments

By Geoff Carmody, published 29/6/2009

Why would Australia unilaterally tax its exports, and effectively subsidise its imports, for no global carbon emissions reduction?

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Good article Geoff. At last some sensible debate about CPRS. The governments CPRS system will put a big tax on LPG production even though LPG will lower greenhouse gases worldwide compared to coal or petrol. Perhaps less hysteria and more debate is required.
Posted by Wattle, Monday, 29 June 2009 9:56:28 AM
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There is nothing in the rules that says that the only system we are allowed to consider has to be cap and trade. For example:
1. We don't have to have a single, ETS style comprehensive scheme. We may get a better result by using a number of schemes that adress the issues associated with specific opportunities.
2. We don't have to depend on "puting a price on carbon" to drive down emissions. In some cases it may make more sense to leave the price of carbon unchanged and use alternatives such as regulation, subsidies and/or sales/price guarantees to drive change.
3. We dont have to use use a carbon permit market to set the price of carbon.
4. We don't have to do something about all opportunities to reduce net carbon pollution at the same time. In the short term at least it may make more sense to concentrate on opportunities for which comercially viable solutions are already available. For example,if all we did was concentrate on cleaning up electricty generation we would go close to halving our emissions by the time that this was completed.

Given the above the real test is to compare CPRS with the best alternative for dealing with specific opportunities. Consider, for example,driving investment in clean electricity:
Option A (CPRS): Put a price on carbon that is high enough to drive the price of dirty electricity high enough for investment in clean electricty to become attractive. OUTCOME: The average price of electricity has to jump above the price of clean electricty and stay there for investment to take place.
Option B: Leave the price of dirty electicity unchanged and set up a series of contracts with sales and price guarantees. OUTCOME: The average price of electricity ramps up slowly until it finally matches the average price of clean electricity when the cleanup is completed.

In the short term at least the logical thing to do would be to defer ETS indefinitely, push ahead with a limited number of opportunities to give reductions that are compatable with more challenging net emission reduction targets. See:
http://www.aph.gov.au/Senate/committee/climate_ctte/submissions/sub572.pdf
Posted by John D, Monday, 29 June 2009 5:23:43 PM
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There are some very simple questions that should be asked on behalf of we the people.

1. If introduced, what will the CPRS mean in terms of increased power cost for the average Australian family? Note that government estimates in the UK place the cost at PDS 750 per family per year. In the US, the government estimates are US$4600 per year.

2. If the CPRS is introduced, what will happen to power supply? Are we likely to face power shortages? Brownouts? This is an especially important issue if we increase the percentage of power supply coming from the unreliable and episodic wind farms and solar generators.

3. What is the cost to Australian exports, GDP and jobs? Its all very well demonising the coal industry. But taxpayers need to understand that because we have a very competitive coal industry, we all have a higher standard of living, more jobs, and lower cost power than would be the case otherwise.

4. And what are the benefits? To the planet? To Australia?

5. If introduced, who benefits from the CPRS. I am afraid to say that it is the rent seekers - lawyers, investment banks, traders - who gain. And guess who loses.

My concern is that these simple questions haven't been addressed or answered in any compelling or convincing way. I venture to suggest that if the average Australian knows that introducing the CPRS would increase his power cost by (say) $2000 per year, would enrich lawyers, merchant bankers, and traders, would risk secure/stable power supply, and deliver very little benefit to the world or Australia, would he really vote in support? Come on!

So good on Senator Fielding. My concern though is that he hasn't gone far enough with his penetrating questions. All of which I note, the Minister for Climate Change and the Chief Scientist have failed to deliver anything like convincing answers.
Posted by Herbert Stencil, Wednesday, 1 July 2009 7:22:38 PM
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Geoff Carmody reports disappointing findings.
Given that the IPCC has searched for 20 years, and failed to find any irrefutable evidence of anthropogenic global warming, there is no scientific justification, and consequently, no economic justification, for proceeding with passage of the CPRS or any other CO2 taxation scheme. It is dereliction of duty on the part of Australian senators to not demand even a cost-benefit analysis of proposed climate policy.
Posted by Raycom, Saturday, 4 July 2009 11:13:52 PM
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Good questions Herbert. A few things to keep in mind:
1. The Australian per capita power consumption is about 10,000kwh/yr including power used for the production of exports. Any increase in the cost of power will affect the price of things we buy as well as the power bill.
2. Under CPRS the cost of power will have to jump above the price of clean electricty to encourage investment. Some publications talk about wind power costing twice as much as the current average. However, it is not clear what they are using as the base cost.
3. Under the alternative I mention above the impact of cleanup on the price of electricty would only add approx 2.5% to the price of eletricity assuming clean power costs twice as much as dirty and the cleanup will take 40 yrs.
4. No matter what you think of the climate science, the importance of reducing oil consumption is a no brainer.

What we need is serious discussion of the alternatives to CPRS. Too much space is being given to those who want a better deal for their mates and those who think climate change is a figment of the imagination.

CPRS sceptics might like to read: http://www.aph.gov.au/Senate/committee/climate_ctte/submissions/sub572.pdf
Posted by John D, Sunday, 5 July 2009 10:41:01 AM
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