Geoff Carmody, there is a third option: wait and see. Given that there is an enormous elephant in the room that very few wish to acknowledge, that being there is a logarithmic decay of CO2 related to temperature such that between around 250ppm and 800ppm temperature increases, which always precede CO2 increases, are less than 1 degree Celsius. Even with a fully functioning globally-implemented emission tradings scheme the end result will only be a reduction in CO2 of, at most, several parts per million that will make no difference whatsoever.

Which brings us to your idea of reducing consumption. This is unlikely to happen given increasing population pressures and the need for a functioning economy to keep producing goods and services. Much better, I think, to look at ways of improving the efficiency of delivering those goods and services, including energy production and delivery. That, of course, should include incorporating ecological principles and good stewardship of the planet.

In the meantime, the means are already available to reduce emissions from carbon-based power stations. One process captures around 90% of the CO2 emitted from power station emission stacks. By using the waste heat generated by the power station the captured CO2 is mixed with sodium hydroxide to produce sodium bicarbonate or baking soda. This process also removes most heavy metals from the emissions as well as sulphur and nitrogen compounds, and produces chlorine as a by-product – both chlorine and baking soda are saleable products. Such a system would produce around 650,000 tonnes of baking soda per annum per 500-megawatt power station (thus possibly leading to a baking soda disposal problem!). This system has undergone trials and should it prove feasible on a larger scale then it may overcome the engineering, transfer, storage, potential leakage and economic problems involved in carbon capture and sequestration. Another CO2 absorption system utilising hyperbranched amino-silica material, though still in the experimental stage, is also showing some promise.

I've said it before. Emissions trading is a Bankers solution to a technology problem. Given that bankers cannot even keep their own house in order, this does not bode well. Politicians are pathetic for being led yet again into *clearly* stupid behaviour.
Emissions trading is an excuse for business as usual, with the bonus of screwing consumer/taxpayer one more time.
I am reminded of the saying: "when you discover the horse you have been riding is dead, the best strategy is to dismount".
Our economic woes will not be over until those who wish to dismount are allowed to do so, and people stop listening to the skeleton riders riders waving swords.

Geoff, Rudd's ETS has got the balance completely wrong under the production method of cap and trade. It's so weak it will be rightly derided globally. It reeks of back-room deals and failing to meet meaningful greenhouse reduction targets. It should be voted down in the senate.

Your consumption method whilst being a huge improvement and deserving of serious political support, should not be the only policy tool to dramatically reduce carbon emmissions.

Direct government support for re-newables and innovative and proven carbon capture technology ought to be the other tool to move Australia forward to dramatic carbon reductions.

The superiority of the consumption model can be found in its equity and its elimination of political influence and high corruption risks in 'special' deals with the gross polluters.

Best of all, a carbon consumption tax can relace the GST and be revenue neutral, by making Australia’s existing Tax Invoice system the vehicle to pass carbon cost signals openly down the supply chain onto consumers whilst zero-rating exports (which, we hope, will also face a carbon consumption tax imposed by the importers' countries).

Politically, consumers would love to see how much carbon is associated with the goods and services available on the market. A high tax for a high carbon product makes sense and tax free rates for carbonless goods and services is justified and merits support.

Sure, there will be winners and losers. Aluminium cans may well be priced out of the mass market, while recycled glass containers could take primacy as the container of choice. Consumers do expect change - to be effective it must have teeth.

Our national wealth is built on our exports. A consumption tax is trade-neutral and WTO-compliant, unlikely to breach our Free Trade agreements.

All countries should adopt a carbon consumption model - the production model is so clearly a dudd and a real liabilty for Rudd and Turnbull. If the new US administration runs with a carbon consumption model, it may well become the world's standard.

Mr Carmody is indeed a smart man it’s a pity his chosen career is to prop up magic pudding economics…business as usual.

He is right that emissions trading won’t make a flea’s fart worth of Methane of a difference to the problem for the reasons given. Then again neither will his consumption option. To expand Ozandy’s valid observation both are market based (bankers) options and both are towards the same destination… business as usual …albeit by different roads.
In the absence of something substantial he appears to be suggesting that Aust simply put a tax on consumption.
The inequities in this proposal are start as they are discriminatory. Ultimately the less well off would pay more unless Government compensated them. The scale of which would impact the economy anyway, deficits and the like.

Meanwhile business is clear to pollute to its greedy little heart’s content. Subject to them pressuring governments into neutering all anti polluting legislation by threatening to move overseas (where there is less enforcement and cheaper labour) that is. A prospect not dissimilar to current tactics.
Then there’s all the other cornucopia of pollutants they pump into the environment .Only recently have people started to wake up to the untested combination are causing problems too.

As I said reducing Australia’s contribution to global warming isn’t so much in our 2% (domestic) CO2 despite it being shameful on a per head per capita it’s our export industries stupid. We are simply producing the raw material for others to produce excessive CO2. We need a solution to that.

Why can't economists/governments don’t see that there is a Family of Elephants in the room and ALL of them need to be dealt with now before they trample us to death.

The idea that we can grow indefinitely with impunity (magic pudding syndrome) is demonstatebly absurd. Widen your perspective before it’s too late