Wonder how many of the Politicians have restructured their share portfolio's and family trusts to enjoy the benefits of this redistribution of wealth.

I agree that Australia's carbon tax is not going to make much difference unless there is a contagion effect. CT should be more like $40 in order to dispense with renewable subsidies and replace brown coal with gas. However gaming of the system will ensure the international carbon price stays on or below $10. That low price is because the EU 'grandfathers' free permits and also allows lavish use of CDM offsets which many believe are an accounting fiction. In theory the EU ETS should toughen its rules from 2013 but I doubt they have the cojones.

Then there is also the slight inconsistency of coal and LNG exports. I estimate they generate 770 Mt of CO2 a year as opposed to 550 Mt of domestic emissions including transport, land use etc. Globally it would be more effective to cut our coal exports 5% than domestic carbon. That 5% domestic cut 2000-2020 is rather pathetic given our world leading emissions. We should aim for 25-40%.

Ideally Australia should be able to retain a high CO2 floor price and not have to buy fraudulent carbon credits from the EU. I wonder if we should use carbon tariffs as a support mechanism. It might catch on.

I agree with the thrust of the article, and add that voters by now must be wondering if anyone at all is able to say how climate will shift in the years ahead. The prognostications of what will happen to us don't mesh with what has happened. Yes, the AGW people will say that this is weather, not climate, but temperature has stopped following carbon dioxide accumulation in the atmosphere, as it was doing in the 1980s and 1990s.

I have a post or two on carbon tax and the climate change issue on my website: www.donaitkin.com

Good article Geoff.

One has got to wonder: if Infrastructure and Transport Minister Albanese can see these fundamental flaws in the carbon tax methodology and can freely express them, then why are they there?

His Labor colleagues, or some of them at least, can surely also see the fundamental flaws in the system, and could do so well before the nature of this tax / pricing scheme was finalised.

I suspect that there are some fundamentally good people in Labor who wanted to see this policy developed in the most effective manner, but that vested-interest big-business donations and other pressures rendered it basically neutered.

You wrote;

< Any benefits from pricing carbon come from reducing global greenhouse gas emissions compared with ‘business as usual’. >

Trouble is; with this tax, it IS effectively still business as usual, just with a light green veneer!

The thing that would surely have made a huge difference in the level of acceptance by the community would be the factoring in of peak oil, or of the prospect of rising oil prices in the near future.

There is much more merit in spurring a reduction in oil usage and a development of alternative energy sources for this motive than there is for addressing climate change.

And yet our government has completely left this out of the picture and apparently refuses to acknowledge that there is any probable looming oil crunch!!

I've also got to wonder about the enormous hypocrisy of implementing a policy like the carbon tax, which is designed to reduce average per-capita carbon emissions, while our government is at the same time imposing upon us a very rapid ongoing rate of increase in the number of 'per-capitas' via record high immigration and a spurring of the birthrate!

Why don't we have a Stupidity Tax ? Now there's an un-tapped pool of revenue !

Geoff Carmody,

Thank you for a clear explanation of some of the problems with our carbon pricing legislation. The legislation is so bad it is hard to understand how our Federal Government could have decided to impose it on Australia.

I recognise that you and many economists who specialise in carbon pricing studies advocate carbon pricing, by one mechanism or another, as the least cost way to reduce global GHG emissions.

However, I am far from persuaded that any of the various carbon pricing schemes will reduce global emissions significantly without doing great damage to the participating countries’ economies and the global economy and, therefore, to human well being.

For example, it seems the Australian CO2 tax and ETS will cost at least $10 for every project $1 of benefits. Furthermore, it seems the costs will be far higher than the $10 and the actual benefits far less than $1. The basis of this is laid out here
http://jennifermarohasy.com/2012/06/what-the-carbon-tax-and-ets-will-really-cost-peter-lang/.

Is there any error in this benefit/cost analysis (which uses Treasury’s figures)?

A good summary of how the ALP has piled this Pelion of stupidity upon the Ossa of its incompetence. Here, as I see it, are the points that the responsible Minsters need to 'explain' -- if they can.

1. Atmospheric CO2 levels are going up. (Fair enough.)

2. This will cause dramatic changes in living conditions. (Pull the other one.)

3. These changes will be for the worse rather than the better. (Highly unlikely.)

4. These changes can feasibly be stopped or ameliorated. (Oh, come now!)

5. The cost of stopping or ameliorating the changes will be measurably less than the costs of adapting to them. (Says who?)

Any Minister who can successfully 'explain' all of these deserves a Gold Medal in the Olympic Discus for spin alone.

Geoff Carmody,

I suggest this statement in your article makes an unjustified logic jump:

“Any benefits from pricing carbon come from reducing global greenhouse gas emissions compared with ‘business as usual”.

I suggest the statement would be more correctly stated as:

‘Any benefits from pricing carbon come from reducing the estimated damages of global greenhouse gas emissions compared with ‘business as usual’.’

The estimated net damages are due to the estimated damages exceeding the estimated benefits of projected man made contribution to climate change, and the estimated damages of projected sea level rises.

I am not aware of any study that estimates the probability that the proposed CO2 tax and ETS will actually achieve the expected benefits – i.e. of controlling sea levels and of making the climate better than it would be without the CO2 tax and ETS.

Can anyone refer me to such a study?

Geoff certainly makes some good points. As it is presently designed the carbon tax is basically a nuscience that will harm our trade position and do nothing about global emissions.

The real problem, however, remain the renewable energy targets. these are far more onerous that the carbon price and the government has shown no signs of changing the targets, although they were set for different demand levels. But the power wholesalers have shown no signs that they intend to meet the targets..

Ludwig - "peak oil" .. time to start reading. Even the environmental movement has grudgingly agreed that it isn't going to happen. (Although there may be a supply squeeze while new sources come on line.) time to update yourself..

Even if it were proven that increased CO2 is an environmental problem, it has not been proven that the increase in atmospheric CO2 is due to human emissions; and even if the increase in atmospheric CO2 is due to human emissions there is no way China and India, the world's largest emitters are going to stop emitting.

The Carbon tax is a sop to the Greens by an ALP government which has betrayed the interests of Australia to stay in power.

Boring. Roll on the election. We've all made up our minds.

might smell a rat.
Geoff Carmody,
I think it's more like having smelled the rat long before the CT was implemented. The odour of stupidity re the CT is wafting all over the place. It's only a matter of a few months before then stench becomes unbearable unless Julia Gillard keeps CT real low profile & hopes that Tony Abbott will be silly enough to keep it.

<< Ludwig - "peak oil" .. time to start reading. Even the environmental movement has grudgingly agreed that it isn't going to happen. (Although there may be a supply squeeze while new sources come on line.) time to update yourself. >>

Curmy, there is bound to be a peak oil phenomenon to some extent, where supply of the current cheap stuff simply can’t meet the still rapidly increasing demand. Yes there are other sources, but the economics of bringing them online are very different and they will therefore have a huge economic impact (and environmental impact. Eg: Athabasca tar sands).

So please don’t dismiss peak oil / oil crunch / or the considerably increased price of oil or oil substitutes. It is very real, and it should be something that our government is telling us about and planning for, with a very high priority.