I think the value of the carbon tax will be firstly to encourage some voluntary efficiency gains and secondly as a wedge against relapses. I agree it will make no palpable difference to renewable energy (contrary to Treasury modelling) which is why subsidies and targets have been retained. Electricity price increases of 2-3c per kwh may force people to reduce appliance use somewhat. However pensioners are not going to buy six star energy rating fridges they will just keep the old rattlers going. Some targeted help may be needed in such areas, just don't make the electricity cheaper.

The carbon tax may have put an end to the building of new new coal fired power stations. Since nuclear is prohibited in Australia that means new baseload must be combined cycle gas. However that is already expensive and likely to become increasingly so within a decade or two. For example natural gas in Victoria costs many times the price of brown coal per unit of energy so it is unlikely to be adopted on a large scale.

In my opinion we should allow all technologies including nuclear while continuing with demand management in the form of carbon pricing. If large scale wind and solar prove economic without subsidies then that's what we'll get. If that approach fails then we were in trouble anyway since oil is running out and coal is changing the climate.

So pricing carbon will have no impact on emissions at the current price of $23/tonne? I would disagree but if it is the case, the price will just need to grow gradually higher, with compensatory measures all round, until it does have an impact.

Does it follow that pricing carbon will destroy the economy, simply because the "...dream that the Sun can displace carbon-based energy will not likely outlast the 25 years Akhenaten's Sun City survived after his death before its total collapse and decay."? Where in the carbon pricing world is this happening so far?

If the author is convinced emissions have nothing to do with warming, "there is NO statistically significant relationship between the undoubted rising level of the atmospheric concentration of CO2 and the very slight observed rises in global or regional temperatures...", then he should put up his argument in a scientific journal for peer review instead of trying it on as an opinion piece here.

Broadening the tax base by taxing carbon, the energy basis of our economy, is a desirable reform of the tax system in its own right. It is also the best way towards emissions reductions and an orderly shift away from fossil fuels as they inevitably run out, so let's get started.

Business investment in innovation is the key driver of change in our economy. Establishing a price for carbon no matter how small creates an additional incentive for business investment aimed at lowering carbon emissions. It is frequently surprising what enterprising people can do. Providing a financial incentive for carbon reduction across Australia's carbon emissions is far more likely to succeed than funding a few select projects whose proponents have the knack of attracting government funds. No business will invest in carbon reduction measures that do not have a chance of realising a commercial return, this is not true for government funded projects.

The final point is that a carbon tax is an efficient tax. As it costs less to collect than many other taxes, it can replace less efficient taxes to net benefit for Australia.

Luciferase and Services Economist

Look both of you show some sign of training in economics, but perhaps not enough. As Tim points out the carbon tax is simply set too low to affect any real change. About all it will really do is raise taxes. Whether its an efficient tax or not is completely beside the point. Do we want to raise taxes, given that we are not Greece or Italy and have nothing like their government debts? If so do we want to raise taxes this way?

Another point that Tim does not mention is that a carbon tax only makes sense if it is part of an strict, enforceable, comprehensive international agreement on limiting emissions. Nothing remotely like that is forthcoming, or likely in the foreseeable future. At best we have a few limited efforts by advanced countries and token efforts by developing countries.

In fact the tax only makes sense as a political move to keep the greens with the Gillard government. To suggest that it might actually be of use in reducing global emissions by anything other than trivial amounts is absurd.

It is clearly a piece of nonsense and should be labelled as such.

People have been cutting down on their electricity usage due to the GFC, rising electricity tariffs and the availablity of more efficient appliances. When electricity prices rise more than 20% in a few years, people take notice!! I know I have - we've made use of the state government programs to make us more water and energy efficient. Plus the doubling of petrol prices over the last 5 or so years has made me very conscious of how I use my car.

All this has happened during a time of huge economic turmoil,(not caused by a lefty/green carbon tax, but poor market regulation) and our economy hasn't (yet) suffered a catastrophic blow. I don't know why people are jumping up and down about a relatively small carbon tax. It's so much smaller compared to the price rises that we have already had and will continue to experience, purely due to market forces.

The plus side to the carbon tax is that it will be used to make necessary changes for the national good, not go to ever inflating corporate salaries and dividends for a few.

Curmudgeon,

"About all it will really do is raise taxes".

Hardly. What it does is shift and reweight the tax base so in order to dodge tax people and companies will make greener decisions. The price will rise from $23 to create a growing incentive to be a tax dodger until one day you will look around and see the world has changed.

"In fact the tax only makes sense as a political move to keep the greens with the Gillard government."

If you think JG is not 100% behind this reform you have misread her resolve, Curmy. She is a hard nut and will take the CT and MT all the way, as well as an offshore solution on boat people and the NBN.

Will Labor get wiped out as a consequence? Not, JG is betting, if there is enough time for the impact of the reforms to be judged before the next election. John Howard survived introducing the GST. That's why the Coalition will do all it can to delay and obfuscate along the way, as is its right but, hey, what else can it do in the face of overwhelming logic against it if it wants to win gov't?

Interesting days ahead.