The key point Geoff Carmody makes is that the problem is global and needs a global solution, whereas Australia is setting itself up as a pacesetter in the absence of such a solution. Geoff concludes that “Persisting with the same failed approach in future and expecting different results is the classic definition of policy insanity”.

Nothing new there. In a recent published letter for example I said “With Australia contributing only a trivial amount to global emission cuts, future generations will see our pioneering carbon strategy as a costly product of mass hysteria.”

The two counter arguments are that a ‘synchronised global emissions program’ is indeed emerging, with various lists of participants offered, and that the sacrifices that ‘first movers’ like Australia make (as Geoff puts it) will provide moral or some other form of persuasion for others to follow.
As usual, these are arguments about an unknown future and people take from them what they will. My own view, and I am guessing Geoff’s too, is that they are both wrong.

However, the main point that seems to be missed is that there is a rational response to all this. Before setting out on our own (more or less) we should engage with the world in devising and broadcasting a truly compelling argument that reducing emissions is going to be good for everyone. That is, the first step is not to set up an individual ETS and then live in hope that others will follow but to take a global lead in persuading others. The cost would be a fraction of an isolated ETS and the results would be clearly measurable. Such a program would no doubt take many years. If in the end it fails to gain the global agreement that would legitimise an Australian ETS then so be it. The arguments were not sufficiently persuasive and the costs of reducing emissions were seen to exceed the benefits. QED

"If anthropogenic emissions are warming the planet, this is a global problem requiring global mitigation action. So we need a global deal."

But they're not. So we don't. And we wouldn't get one even if we did, people in China and India being justifiably more concerned about being able to cook tomorrow than cutting down on invisible gases that might conceivably give their great-great-grandchildren a mild case of heatstroke. So what we actually need is a way to back out of our commitments without looking too slimy about it.

The main advantage of an ETS over a carbon tax is that an ETS can be quietly scaled down as more and more people come to their senses without embarrassing all those people who made so much noise about 'the greatest moral challenge of our generation' and suchlike. It's an escape hatch for the rats; and after all, who wants to keep the rats around?

Scams being the operative word for the dog's breakfast of complex rip-offs and rorts?
If the actual goal is to reduce carbon emission, rather than churn money thorough and around the economy, creating a brand new bureaucracy, and making a few select players very rich in the process. The latter seems to be the priority?
If the actual goal is to effectively and efficiently reduce carbon emission, then all we need is a cap and tax paradigm.
We/the ETS creates a cap.
An arbitrary number which could be current emission levels, or one agreed as the most common or average international standard/sliding scale?
Then all that then is required is a tax only applied to numbers above the agreed standard?
As time passes, the cap can be progressively lowered, and the tax applied only to carbon pollution above any new or lower cap!
And that tax can also be progressively increased or made progressively more punitive, to ensure we do actually reduce carbon in a timely manner, without also mugging what is left of our economy or our manufacturing base!
If we send the right signals, those needing to accept change, will modify their behaviour, and that timely modification will be both affordable and occur!
In fact, much of what industry and business needs to adopt and or accept, already has been shown to have commercial imperative and advantage!
And this tax would work best if we can actually design it, so as those who could be penalised by it, can successfully avoid it!
A win/win outcome for both our economy, our environment and generations as yet unborn!
Rhrosty.

As Geoff says, international action simply is not going to happen.. at least, not for the forseeable future.. until then, if the community wishes, an appropriate policy response would be to put the basics in place of a low carbon tax and be ready to spring into action if and when the rest of the world gets there.. that means the debate is over as sceptics should not mind a low carbon tax.. there is virtually no point to any other policy response..

Curmudgeon, why do you think that sceptics will not 'mind' a low carbon tax? Speaking for myself I mind it just as much as I would mind a tax on the production of sunshine, or seawater, or any other harmless and largely beneficial substance. Carbon taxes are fractally stupid; they manifest the same level of stupidity no matter what distance or angle you contemplate them from.

Geoff Carmody,

Thank you for an excellent post. I am persuaded by all you say.

I would, however, like some more facts and figures. One thing I'd be particularly interested in is estimates of what the compliance cost of the ETS might be and become? Not just at the beginning, when we have very rough estimates of emissions from the 300 or 400 largest emitters, but what the compliance cost would become when all GHG emissions from all sources must be measured and reported to the level of accuracy and precision that will ultimately be required for international trade.

I presume the compliance cost per tonne CO2-eq would increase as smaller and smaller emissions sources are included in the scheme. Eventually agriculture will be included. What will be the compliance cost of measuring and reporting emissions (to the standard that will ultimately be required) from domestic animals and soil carbon uptake?

I wrote to the Minister last year about this but received a 14 paragraph reply expounding the virtues of the government's policy and just one sentence responding to my question, but not answering it. My letter and the relevant part of the response are in an Online Opinion post "The ultimate compliance cost of the ETS": http://www.onlineopinion.com.au/view.asp?article=13578

I hope you might write another post to provide some estimates of the compliance cost of the ETS - at the start and when implemented with near 100% participation of countries and near 100% of CO2-eq emissions in each country are measured, reported and verified.