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The Forum > Article Comments > The biggest game on Earth > Comments

The biggest game on Earth : Comments

By Paul Gilding, published 14/2/2007

Carbon pricing - what does it mean and how will it work? What are the implications for Australia and for key industries?

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How I love politics and big business, Johnny come lately indeed!

Amory Lovins has since 1970 odd been advocating energy efficiency as the way to deal with energy needs and shown as recorded in Factor Four many examples some already adopted by business. His research unit Rocky Mountain Institute www.rmi.org has produced many commercially viable ways of reducing energy usage most paying the cost in a commercially acceptable time. Like minded people, Germany Japan Holland and more have followed years ago.
Yet Lovins is rarely cited, he has been here, and though his ideas are used by some and pushed by the States business has yet to acknowledge particularly in Australia.
Probably watching cricket!
Posted by untutored mind, Wednesday, 14 February 2007 9:28:28 AM
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Carbon trading or more correctly selling thin air.

History is full of examples of snake oil salesmen selling products of dubious value.

Remember the dot com bubble. It burst. I seem to remember an example being given about the tulip bulbs in Holland where prices skyrocketed to astronomical heights and investors got burned badly.

A trend which emerged was a countries introduced restrictions on polution by the manufacturing industry, the industries simply pulled up shop and moved to countries which did not have the same restrictions on polution. For the simple reason that it was cheaper for them to polute, than it was for them to reduce their polution emissions.

It's going to be a spectacular sight when the thin air comes crashing down and then watching the ducking and weaving of those involved trying to avoid taking responsibility for selling thin air.
Posted by JamesH, Wednesday, 14 February 2007 9:29:33 AM
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I would merely point out that emissions trading is not without precedent. It was used in North America to great success to address acid rain. Naysayers predicted economic catastrophies but the overall cost to the economy was a fraction that originally predicted. Market based measures like emissions trading allow a least cost response to environmental issues, foster innovation and new industries and are hardly comparable to the .com bubble or tulip bulbs or "selling thin air".

The only alternatives to emissions trading I am aware of are likely to be considerably more expensive for the world's economies and more difficult to implement on a global scale.

"Carbon leakage" from economies is explicitly addressed in the emissions trading design proposed by the States and Territories. For more information visit http://www.emissionstrading.net.au/
Posted by Kveldulv, Wednesday, 14 February 2007 9:59:09 AM
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Trying to disceen whether climate change (and carbon trading) is of sincere concern to the Coalition and Labour parties, or simply a timely election issue is proving difficult for me.

While the economy remains more important than the society (a la Margaret Thatcher) I remain sceptical of any altruistic motives by the politicians.

With a free-market economy that regards each person of society as a potential consumer and consequently inundates us with a variety of non-essential stuff, the most important aspect of initiating change hasn't even been whispered.

The argument as to which source of energy will triumph is predicated on the notion that consumption will continue to rise at the annual rate of 53% per annum and this has to be met to ensure continuity.

Similarly to water, where, on water restrictions we have had to learn to do more with less, as a society, we have to take personal responsibility for how much we are taking from the Earth's resources as compared to proactively regenerating them.

Do we really need the latest whizz-bang gadgets?

Do we have to have more petro-chemical derived plastics in our households when industrial hemp plastics are available (in some countries) that actually break down in a few years, rather than centuries?

In the words of Ghandi, 'be the change you want to see'. Personal responsibility is the most powerful change-agent and now is a perfect time to commence altering our own attitudes and behaviours to consume less, and be the example to other generations.

bush goddess
Posted by bush goddess, Wednesday, 14 February 2007 10:11:47 AM
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I read the editorial in to-days Australian with great interest. Could it be that the global warming scare has run its course? Are we about to witness the end of a paradigm?
Posted by anti-green, Wednesday, 14 February 2007 10:42:28 AM
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Reckon the present carbon-tax schemozzle sounds simply like
more trillions in profit for the corporate mafia.

Have a macro-economics volume here as part of my post-grad in the general social sciences in 1989.

The volume also dwells on Reagonomics and the supply side economy.

It also has a section dealing on - would you believe - environmental problems. Also so surprisingly for these days, the section contains a paragraph suggesting that all factories like Alcoa et al, should have meters fitted to their smokestacks and discharge pipes, the money used for scientific research on ways to clean the poisonous waste before it goes out.

From a social science point of view, it could be now asked why have not corporates who now own most of the world's capital, been accordingly taxed for polluting the environment over the years?

Certainly the real culprits are our leaders and politicians who seem so bent on letting the Big Biz capitalist racketeers call the profit tune most of the time
Posted by bushbred, Wednesday, 14 February 2007 11:41:53 AM
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The reason that emissions trading will have a bumpy ride is illustrated by the example you give of a new gas fired plant earning a 'carbon credit'. How's that? Sure it will produce half the CO2 of a coal fired plant but the objective is absolute reductions in emissions, not less than otherwise would be. We don't want lowered positive growth but negative growth. The alternatives are to make do with existing generation and/or install very low indirect emitters such as wind, solar and other technologies.

This is the big end of town playing silly games while the little guys struggle. Not only with bigger household power bills but stalling on climate change so that small farmers go broke even sooner. Get rid of the phoney loopholes like 'carbon credits' and emissions trading might become more politically acceptable.
Posted by Taswegian, Wednesday, 14 February 2007 12:15:17 PM
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Carbon trading schemes are supposed to subsidize the expensive low emission industries by the cheap polluters. Cheap coal electricity should be subsidizing wind and solar but that doesn't always happen.
Some industries like aviation have no clean alternative. Paying offsets for tree planting is just a cop out. We can't fill all our productive land with trees. Where do we grow the crops?
Some schemes are just nonsense. Paying people to distribute high efficiency light globes is just a con. The same globes are readily available in all the supermarkets and sold commercially at $3 to $4. Should we be paying Woolworths for putting them on their shelves or paying the consumers for buying them?
Posted by Rob88, Wednesday, 14 February 2007 12:41:37 PM
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“It's the biggest game on earth….”

NO IT ISN’T!!

The biggest game on earth is sustainability.

Climate change is a subset.

Paul Gilding doesn’t even spare a thought for sustainability. He doesn’t mention the continuously increasing numbers of consumers of fossil fuels and all sorts of other resources. He addresses only the per-capita reduction side of the equation.

“We are entering a different world. Deep turbulence is ahead. Hold on for the ride.”

The turbulence will be all the deeper if good people like Paul don’t put a good deal of their efforts directly into overall sustainability and just continue to plug away at lower levels while allowing the continuous growth paradigm and rampant antisustainability momentum to remain entrenched and unquestioned.
Posted by Ludwig, Wednesday, 14 February 2007 1:39:15 PM
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I heard Mike Hawker from IAG being interviewed on ABC radio about carbon trading. He was saying that businesses have to know now what the carbon trading scheme will look like so they can plan their investment decisions to be viable in 10, 15 and 20 years time.

This complex sounding scheme is all about reducing carbon emissions to slow down the damage we are doing to the earth so that we still have a sustainable biosphere to hand on to our children and grandchildren.

Its good to see the coal industry and Rio Tinto named as villians of the piece and the author confirmed my suspicion that Kevin Rudd lacks environmental credentials. Nope, I don't want Australia to take Argentina's place of having had a great standard of living.
Posted by billie, Wednesday, 14 February 2007 3:37:29 PM
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Thank you OLO for giving us with this article.

Using the free-market to solve problems makes sense. It is with some irony that the market economy, so often attacked by environmentalists, the only way of systematically reducing greenhouse gas emissions. Both sides of politics realise this, which is a very comforting idea.

With a price for carbon (and other greenhouse gases) dynamic companies will thrive. Innovation will continue. Human ideas and human capital will be at an advantage.

A simple example: When a business improves energy efficiency, it may take years for a return on that investment. With a price for carbon, the return is achieved faster. Dynamic efficent companies are at an advantage -- an advantage that will translate into other areas.
Posted by David Latimer, Wednesday, 14 February 2007 6:19:46 PM
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Could agree slightly, David, but there is an old saying of the 1930s - never give Big Biz too much rope. Reckon it's better to put meters on their smokestacks and discharge pipes, as was talked about years ago.

It is true that many of the big companies are now run by people whose main aim is profit, like with the big oil corporates in Nigeria, who don't give a hoot who gets the money for the big oil concessions, with beggars still in the streets and black politicians just living it up on the rake-offs they're getting.

We really don't want big corporate directors running our world, David. Which unfortunately, as with Dick Cheney, we've got 'em right up next in line.

Yes, just meter their pipes and tax the big corporates, David, for most of 'em are run by just plain racketeers who can easily afford it.

Please check on the total wealth of companies like Exxon, mate, and find out who's really calling the global tune.
Posted by bushbred, Monday, 19 February 2007 6:29:16 PM
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I can imagine a Carbon Tax. Someone says for every ton of pollution you emit you pay the govt. $50. We can imagine what could be done with that.
Carbon trading means, I think, a company or industry has a capped amount of said pollution, say 100 tons, if the industry lowers its pollution say by ten ton, they sell the ten tons worth of value to someone who has exceeded their cap?
Will there be profit in buying credits to pollute?
The brokers of the scheme are who? How much will their commision be will it be private, the stock exchange for example.
Will it be as water is, traders with a mobile phone?
I have so many ?/s can anyone "please explain"
fluff
Posted by fluff4, Tuesday, 20 February 2007 8:19:24 AM
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What do the IPCC group mean when they claim 90 % certainty? I have not read the full report (which I understand is not yet in the public domain). So this is my guess:

In statistical hypothesis testing, the conventional level of significance is p =.05 or less. This means that the chance of being wrong, that is in claiming a positive difference from the null hypothesis (in this case no global warming) is 1 in 20 or less.

Some times stricter criteria are used say 1 in 100 or p=.01. Again an argument can sometimes be made for a lax criteria p=0.1 or 1 in 10.

A possible reason for choosing a lax criterion is that the corresponding 90% confidence interval is narrower. The meaning of a confidence interval is that the expected result has a 90% chance of being in the interval. A narrow interval means greater precision at the expense of some loss of accuracy.

Conversely if the claim is made that the global warming will be in the range of .01C upwards to infinity, the statement would be very accurate. However, the precision attached to the prediction is so poor, as to be in practice valueless.

Another thing does anybody know if IPCC is using one or two tailed tests. A one tailed is less demanding. The justification for using a one tailed test is a conviction of certainty that the direction of change can be in one direction only. That is in the direction of warming. The possibility of global cooling is deemed impossible.
Posted by anti-green, Tuesday, 20 February 2007 1:00:19 PM
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Response to Fluff:

I don't point the finger at corporations for global warming. They should be part of the solution and most are willing to be part of it.

Carbon trading provides a price for carbon, which can be factored into economic decision making. This is the most reliable way of achieving any outcome.
Posted by David Latimer, Tuesday, 20 February 2007 6:37:13 PM
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I hate to be negative about a theoretically good idea, but when you get into the guts of carbon trading it just doesn’t stack up.

If it’s going to be meaningful, it needs to include China and indeed the whole world. If China was a part of it, its inevitable rapid expansion in GHG emissions would mean that it would have to be rapidly accruing carbon credits, which it would have to take from the rest of the world. So if there was a set number of credits for the planet, which there would have to be if the scheme was to be meaningful, then we in Australia would be suffering a continuously falling number of credits, or carbon emission units.

The overall number of units would have to be decreasing anyway if we are to progressively and rather quickly reduce global emissions, so the impact of China would accelerate this.

A global scheme is impossible, at least for the foreseeable future. So the next best thing is to set up a national scheme and encourage as many countries as possible to do the same. All those under the Kyoto banner to start with. But even if this is really successful, it would only amount to a small reduction overall, within those countries, and no reduction globally for as long as China bores ahead with its development.

continued
Posted by Ludwig, Wednesday, 21 February 2007 8:45:25 AM
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There are too many loopholes which allow carbon to be sequestered while we continue on with business as usual. We could plant huge areas of trees in Australia, and we could factor in the CO2 absorption in the oceans that come under Australian jurisdiction… and basically just continue with our fossil-fuel-driven society practically unhindered, while showing an overall massive reduction in GHG emissions on the books. It all depends just what values are placed on the innumerable variables, such as how much carbon a given area of forest in a given climate on a given soil type is deemed to absorb.

And of course we in Australia and the USA in particular would be doing this within a paradigm of continuously increasing population, economy and industry!

In short, the carbon trading scheme sounds like another dodgy distraction, made out be a big step forwards while we continue to bypass the issue that really matters – our addiction to continuous expansion.

Within a paradigm of no expansion, and preferably of gentle reduction of our overall extent of activities on this continent and planet, carbon trading has merit. But until we get our primitive brains weaned off this primal urge to keep getting bigger, that is until we get serious about developing a holistic sustainability strategy, it is not going to be the answer, or even a significant part of the answer, to our climate change woes.
Posted by Ludwig, Wednesday, 21 February 2007 8:47:24 AM
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