“Most economists understand politicians hate new taxes.”

It’s hard to believe that some economists ‘understand’ anything! One who thinks that politicians hate taxes doesn’t know much. Politicians are always imposing new taxes: they are not always called taxes of course – but unlike many economists, the citizenry knows when they are being hit by them.

Whatever nonsense the Rudd Government comes up with, it’s going to cost Australians money, no matter whether the rip off is called a tax or not. It is also going to cost jobs, particularly in manufacturing where ALL governments have sat back and let most of them go overseas without a whimper.

Politicians, and what they have done to Australia, are far more of a worry than climate change. And, when you have economists putting their oars into the useless attempts to halt or mitigate natural climate change, we know it’s going to cost us big time.

This character talks about “political courage”. The only courage we need from politicians is the decision to accept climate change for what it is, and work out how to adapt to it; not try to overcome it. But, ‘politician’ is synonymous with ‘coward’ and ‘twister’, not with courage.

A bugbear of the European ETS is not only free permits but lavish use of questionable offsets. From what I've seen of the foreboding ETS draft legislation offsets are excluded. The supposed advantages of carbon tax will come to little once the lobbyists latch on to 'tax exemptions' and 'tax deductions'. The fact of a variable CO2 price under an ETS could be a selling point not a negative. We can lower our energy costs even more through voluntary efficiency and alas through involuntary recession.

I think carbon leakage also has several countermeasures. Export levies could be added to coal and LNG which Australia has and the rest of the world wants. A carbon tariff could be imposed on imports from greenhouse rogue nations. I see China has launched a pre-emptive plea on that very topic. Floor and ceiling prices for first issue permits may reduce volatility. Whatever the charging mechanism the revenue should be redistributed immediately to give people the chance to reduce their bills via simple technology (eg insulation) or conservation (ie using less).

Note that it is widely believed that all fossil fuels coal, oil and gas will be in severe decline on a global basis within a generation but not enough to slow excessive warming. We have to do this exercise sooner or later.