Alan,

Thank you for those details.. I am wondering if there a mix of figures from more than just the compliance cost of CO2 pricing? Is it justified to include the Renewable Energy Targets and Certificates and subsidies for renewable energy in the ETS compliance cost? I agree these are a cost attributable to trying to mitigate climate change. But I am not sure they can be allocated to the compliance cost of ETS and CO2 emissions monitoring.

I suspect these costs should be included in the benefit/cost analysis for all the government’s policies to attempt to mitigate climate change. You might be interested in this estimate of the benefit and cost for Australia of the CO2 price to 2050:
http://jennifermarohasy.com/2012/05/legal-challenge-to-mandated-renewable-energy-in-the-eu/?cp=all#comment-506444

In short, according to Treasury assumptions and figures [1] the cost of the Government’s policies, cumulative to 2050 and discounted, would be $390 billion.

However, the estimated benefit (cumulative to 2050), i.e. the damages the CO2 pricing scheme is estimated to avoid, would be just $41 billion. The damage estimate is probably too high; it is based on a small number of studies, mostly in developed countries and likely biased towards high damage cost estimates.

Therefore, the benefit to cost ratio is just 0.11 (i.e. $41/ $390). We should not proceed with a policy that would have a benefit to cost ratio less than 1.

The advocates argue that most of the damages occur beyond 2050. However, the damage estimates seem to be highly exaggerated, and do not make proper allowance for adaption. Projecting damages out to 2590, as Nordhaus [2] does, in order to make the damage costs seems high, and based on a small number of studies that likely over estimate the damages, is not a sound basis for policies that will seriously damage our economy now and forever.

[1] Treasury (2011):
http://archive.treasury.gov.au/carbonpricemodelling/content/chart_table_data/chapter5.asp (Chart 5:13)

[2] Nordhaus Yale-RICE Model (2010):
http://nordhaus.econ.yale.edu/

For more explanation of the calculations see my two comments on 4 May 2012 here
http://bishophill.squarespace.com/blog/2012/4/4/nordhaus-and-the-sixteen.html

Peter Lang said;
A further clarification: we do know precisely how much energy comes
from each generating plant at any point in time. The information is
available on the AEMO site.

Granted, but that does not say how much CO2 is emmitted.
The only way to measure that is with stack measurement.
Then as I was pointing out, if the tax is charged by customer meter
measurement, you need to know what percentage of, for example, wind
power was included in the meter reading.
If this is not done, then as the amount of alternative generation is
increased the tax will remain the same and wind power will be taxed
as well.

Frankly it is a control engineers madhouse !

Bazz,
a question; why didn't the Government just levy a charge on each ton of coal burnt for power, and for each barrel of oil used?

Why are they demanding that each Company/ Public Entity spend time and effort estimating their emissions?

The short answers are
1. so they can employ many more public servants checking/collating the data.
2. so the Government can collect double/triple the money.

1. is self evident. 2. is because the Electricity generator gets taxed, then the user get taxed on the estimated emissions from the electricity used (plus any other emissions).

As to the last when the NSW Gov. was fishing on emission reporting my boss and I looked at the requirements and I think he had the best comment. “if those damn public servants want accurate figures (that could only be obtained by climbing 70 feet up an exhaust stack at 300ºC ), then they can do it themselves. By the time they’ve organized themselves I have my pension”. [He was well short of 40]. Shortly after we both left the company for various reasons (retirement in my case). 


Those are the sort of figures the tax is based on

Well Graham 3 I would suggest;

3. Blind stupidity and incompetence.

I would say from everything I have read on this matter that at no time
did they get any technical advice from engineers in the generation and
electrical spheres.
I suspect that they might have tried and those that they asked just
ran away from such an impossible task.

There is another problem I have thought of and that is to do with the
trading of emission units and their derivatives.
Anyone doing so will come under stock exchange and ASIC supervision.
In the event of a dispute or complaint how could you defend yourself
in such a dodgey measurement enviroment ?

If your bank gets involved, move your accounts and sell their shares !

sillyfilly, Wednesday, 9 May 2012 12:47:28 PM

Estimates of emissions from the combustion of individual fuel types are made by multiplying a (physical) quantity of fuel combusted ... and a fuel-specific emission factor

I've retired from all that estimation but was involved when it started in NSW when I worked for a paint Company making some resins. The short answer is that we didn't know what specific fuel types or amounts were combusted in our after burner (to reduce all emissions to CO2 and some nitrogen oxides).
Firstly, a portion of the resin ingredients were chemically changed during reaction, and a mixture of the reactants and the changed substances went straight to the oil fired after burner. It was a complex and variable mixture, and analysing each reaction would have been a nightmare of complexity.
Also into the afterburner went volatiles from the paint production. As there were over 6,000 products and hundreds of volatile ingredients it was impossible to calculate emissions.
The 4 "methods" put forward by the public servants ranged from idiotic to bizarre. (No-one in the paint industry could supply the answer, but were threatened with fines if they didn't).
I moved on, thankfully, and my successor was a practical (unscrupulous) fellow who responded by generating a vast spread sheet of over 600MB. 16 pages of calculations, I’ve forgotten how many pages of information on composition, tonnage produced, batch sizes and frequency of manufacture. All in 10 point Arial font with no graphics. Factors were assumed and buried in obscure corners with no explanations.

One resin might be spread over 200 products. And with 6000 rows and 120 columns on a page, try following through that, esp. with references from page to page to another page. It looked impressive, but trying to check it was nigh on impossible, but the public servants were pleased and even recommended that other paint companies consult him! His view was that he retired in 5 years and they wouldn’t figure it out in that time.His comment was “Brains baffle b*llsh*t”.
This I add happened more than 5 years ago.

Graham 3;

Thats the way to do it !
Presumably the last calculation was divide by 10 !

A Classic !