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The Forum > Article Comments > ETS: unworkable, unaffordable, ineffective > Comments

ETS: unworkable, unaffordable, ineffective : Comments

By Juel Briggs, published 17/7/2009

The majority of Australians are not able, let alone willing, to pay the huge costs of a carbon emissions trading scheme.

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This is a back-to-front view. Carbon imposts don't subsidise low carbon generation; rather they handicap dirty energy by making it pay some of its hidden costs. Initially the minimum CO2 price will be set at $20 a tonne. A tonne of black coal burns to 2.4 tonnes of CO2 (call it $50 worth) and creates about 1 Mwh of electricity. 5000 cents divided by 1000 kwh gives 5c per kwh. If labour and financing costs stay the same that's the amount electricity prices should increase. Whether a CO2 price of $100 can ever be reached is unknown.

The beauty of paying those CO2 charges to the government is that it will pay for efficiency measures like insulation, solar water heaters and smart meters. Think of it like compulsory superannuation for retirement. In this case it is compulsory carbon saving. What will bugger it up is exemptions, free permits and dodgy offsets. Also some of the CO2 revenue could be wasted on clean coal which cannot work on a large scale.

As to proxy measures like SO2 limits inconsistencies will arise. The main example here is a switch to gas fired generation which may meet CO2 limits but not the 20% renewables target.
Posted by Taswegian, Friday, 17 July 2009 9:15:22 AM
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Taswegian
How is the original $20 a tonne arrived at?
Posted by Wing Ah Ling, Friday, 17 July 2009 10:08:14 AM
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Even the people who foolishly believe that Rudd’s emission control initiatives will have the slightest effect on natural climate-change don’t seem concerned about the costs. They seem to think it’s only the rich people who generate such emissions who will be doing the paying. Wrong!

Some of the more savvy greenies know that the cost will be exorbitant, but they wish to ruin the economy, anyway, and return it to something like the middle ages, where man, whom they regard as the biggest environmental problem there is, will have the hard time of it that we deserve.

And, by the way, “The scientists and climatologists at IPCC… (are not necessarily)… competent in the science and modeling of climate change.” In fact, they have used inaccurate and unconnected information to get it entirely wrong. Anyone can see that the climate is not co-operating with their ‘consensus’ and lies.

And the first people to complain, when the hugely increased energy bills and added costs of transport of goods start to flow in, will be those sheep who go along with the CO2 hoax now.
Posted by Leigh, Friday, 17 July 2009 10:49:54 AM
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"The scientists and climatologists at IPCC may be competent in the ... modeling of climate change"

Then again, they may not:

http://www.sciencedaily.com/releases/2009/07/090714124956.htm

"In a nutshell, theoretical models cannot explain what we observe in the geological record," said oceanographer Gerald Dickens, a co-author of the study and professor of Earth science at Rice University. "There appears to be something fundamentally wrong with the way temperature and carbon are linked in climate models."
Posted by Clownfish, Friday, 17 July 2009 11:12:28 AM
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He talks of a "cost per working person of more than $A12,000 per year", and "such costs will be borne by the tax-payer".

This would make perfect sense if the money were to disappear down some black hole.

In fact, with the simplest scheme of a carbon tax, it would simply be collected by the Government, and used to either reduce other taxes, or in some other worthwhile way.

With the proposed scheme, which is more complicated, the same applies - the cost of carbon permits is not money that just disappears from the economy, it just gets distributed differently.

The actual economic cost of carbon reduction schemes is completely different - it comes about from things like wind power generation being more expensive than coal power generation, etc, etc. This cost is not negligible, but it's quite is quite different from the amoount of money which changes hands in a carbon trading scheme.
Posted by jeremy, Friday, 17 July 2009 12:22:36 PM
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WAL the ETS floor price (called a 'pathway') could have been $7.50 or $32.95. I guess $20 sounded neither too high nor too low. If all big emitters had to pay it 500 Mt X $20/t = $10 bn. That's a lot of insulation.
Posted by Taswegian, Friday, 17 July 2009 12:42:55 PM
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It's also a lot of dubious Science .

My Grandfather an RC would'nt go in the Catholic Cathedral

in Bendigo because when it was started children in Bgo. were starving and dying .

To make his point he took me to the Bgo. Cemetery ; I can't quote a name but the epitaph is printed on my mind "Lifes keen Sythe did cut me down like grass" this lady had eight children and died in her late eighties outliving both her children who died as juviniles and her Husband by 50 years .

Grand Dad reckoned Hype and Hysteria triumped over dead children when all they needed was a clean water supply !

In our time we have a lanky great daft bald Pop Singer who made his fame selling the Evil of "Uranium" has now changed into a sellor and promoter of that product ! Now he is to be found rebirthed as a AGW Fanatic , same game "Hype and Histeria" ; now this Master of the third Leg has teeth and he is out and apparently influentual to commit us with hippy science to starvation and misery .
Posted by ShazBaz001, Friday, 17 July 2009 6:21:50 PM
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Juell Briggs seems to be saying because it sounds expensive we shouldn't make the effort. Like most voices arguing against climate action it's sounding more and more like a weak, wishy-washy response to the challenges of the new climate reality , an emerging theme of "they must be wrong, let's wait and see, it sounds hard to do anything about, it'll be expensive, fixing it will be the end of civilisation". Under the bluster that's what the doubt, deny, delay crowd are beginning to sound like. Wimps proposing we cover our eyes, block out ears and pretend it's all a mistake or hoax or something! Anything but face the new climate reality head on.

We need to Tax carbon and feed the money to efficiency at consumer level and emissions reduction at the producer level. What's so freaking radical about that? Well before carbon taxes hit $100/ton CO2 it will be available from clean alternatives for less. Juell really thinks it can't be done? Whether it's predominately wind and solar and - when the costs overwhelm mainstream Australia's reluctance - new gen nuclear like IFR, it can be done.
Posted by Ken Fabos, Friday, 17 July 2009 10:25:52 PM
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This cap and trade foolishness is just another way for the gov't to tax the citizens. If you think the taxes will be used for environmental goodness think again. It is just a tax when there is no justification for it. Labor governments around the world love it.

The most sensible approach to total emissions reduction is two pronged: 1) simply pass a federal law stating that the emissions from the electric generator smoke stacks can not exceed some amount by some date. Since most generators are owned by state governments there should be little problem with this other than the perennial squabbling about who has the money and who is responsible. Simple, raise the price of electricity to pay for the low/no carbon enhanced generation. The price will be less than if we had trading of pollution licenses because there is far less government bureaucracy in the process and far less chance of bureaucratic bungling in the initial allocation of free pollution licenses.

Secondly, adopt the motor vehicle emission and mileage standards currently in place for California - including the "gas guzzler tax". These standards are probably the highest in the world and all auto makers that want to sell in the California market know how to build to these standards - therefore no new technology required. This will be a gradual implementation as the public buys new cars. It may take 10-15 years before a reasonable percentage of cars are low emission vehicles but there will be a continuous improvement.

The "gas guzzler" tax? It is a rather hefty tax (several thousand dollars) on the purchase price of a car that does not meet the mileage requirement. It allows the rev-heads to have their V8s but they will pay for it twice - once upon purchase and continuously with lower mileage.

There we have it folks. All problems easily solved and all the gov't needs to do is pass a couple laws. No need for all the complexities and extra expenses of taxes.
Posted by Bruce, Friday, 17 July 2009 11:03:55 PM
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What a great idea Brucie , will you help finance me into one of these here Camel Cars cobber , I am a 66yr old pensioner with 3 dependants .
Posted by ShazBaz001, Saturday, 18 July 2009 12:43:08 AM
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I personally am in favour of a simple carbon tax ratcheted up over the coming years.

The cap and trade with carbon credits are bogus accounting schemes that allow people to fudge the figures.

A simple carbon tax encourages lower emmissions energy use and provides an alternative tax for the government that can help Rudd pay off the huge deficit that is coming.
Posted by SM2, Saturday, 18 July 2009 9:38:42 AM
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Juel don't blame the ETS for a carbon price of A$225. It has nothing to do with the ETS. It's the price we will pay to stabilise GHGs at 450ppm CO2-e.

It's not difficult to see now why governments all over the world are "dragging their feet" on climate change.

Yes it will be expensive and hurt the economy. Let's hope the climate scientists have it right or some of them may be swinging from the end of ropes if the science is shown to be wrong in a couple of decades.
Posted by Martin N, Saturday, 18 July 2009 10:13:57 AM
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ETS = "Socialism by Stealth"

and as such should be resisted at every opportunity because, as we all know,

"Socialism" is just another name for "Fraud".
Posted by Col Rouge, Saturday, 18 July 2009 12:16:04 PM
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I agree with Bruce and the others who advocate a simple tax system. Carbon trading is already being tried in Europe, and has proven to be another tax funded source of revenue for polluters, and done nothing to reduce emissions.
As to renewable energy being of necessity more expensive, I see no valid reason for this from an engineering point of view. The mechanical infrastructure of a windfarm need be no more elaborate or expensive than an oil well, with lower transport costs. Also as commodities inevitably grow more scarce, the price has to rise; something that will never happen to wind.
Remember also that the recent spike in fuel prices was not due to an interruption or restriction of supply, or an increase in demand. It was largely due to the fact that a lot of those barrels of oil were traded up to 47 times, between the well and the bowser.
If you want to make renewable energy cheap and affordable, just keep the free traders away from it.
Posted by Grim, Saturday, 18 July 2009 1:11:03 PM
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'Secondly, adopt the motor vehicle emission and mileage standards currently in place for California - including the "gas guzzler tax".'

Is that the same California that has to issue IOUs to its public servants because it can no longer pay their salaries? The same California that is going bankrupt because its loony citizens have had power handed to them on a platter and can't cope with it? (The same California, incidentally, that voted to repeal its gay marriage laws?)

http://www.independent.co.uk/news/world/americas/jobs-terminated-as-california-goes-bankrupt-1624892.html

What a great role model! Yes, let's copy California! Nothing could possibly go wrong!
Posted by Jon J, Saturday, 18 July 2009 4:09:53 PM
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The argument that a ETS would subsidise renewables to the point that they would become a fait accompli and remove any incentive to improve efficiency is economically baseless. Competition amongst the various forms of renewable energy for market share will ensure innovation, as has driven the prices of solar, wind and other renewables over the past decade. An ETS is not an alternative solution to efficiency and innovation, it gives economic incentive to harbour such a solution.

While the US $180 per tonne (only be about US $107 if the figure is nominal) would create a significant taxation burden, the increase in government revenue would allow reduction of income and other taxes calibrated to maintain a relatively progressive taxation system as is current.
Posted by Lilleym, Saturday, 18 July 2009 4:57:58 PM
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Hay, Martin, that sounds like a damned good idea to me.

I've got quite a bit of very good rope, I've been saving ever since I sold the yacht. I have been looking for some really worthwhile use for it. That sounds like the best possable use for any rope.
Posted by Hasbeen, Saturday, 18 July 2009 5:37:40 PM
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Spot on Juel. An ETS is a big stick as first response without any carrot being dangled in front of us at all. Trading in carbon default swaps, derivative forestry futures, shares in great southern, timbercorp, etc, will bring about the next Global Financial crisis before doing anything about co2, etc.

Why cant we have lower rates of corporate taxation for "Good Corporate Citizens" who satisfy a standard set for their industry to aspire to as a first response. Then gradually increase the standard rates of corporate taxation for those businesses that do not aspire to higher standards in all they do, as well as polluting.
Posted by Formersnag, Sunday, 19 July 2009 2:31:47 PM
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Given that we want investment to reduce greenhouse gas concentrations in the atmosphere there are two general approaches.

One is to penalise or charge extra to people who pollute and the second is to reduce the cost of investing in ways to reduce the level of ghg in the atmosphere. As the article points out the first method is going to cost us a lot and is unlikely to happen.

The second is the simplest and least costly (where cost is the total cost including lost opportunity cost of investing) in fact it can be shown it will cost us less for energy over the next ten years if we move to renewables.

So to reduce ghg concentrations we can "subsidise" investments rather than charging more to pollute.

If we subsidise investments we know that the "learning effect" comes into play. As we double the capacity of any technology we know that we learn how to use it better and this knowledge does not go away and compounds. This means - for example - that within half a dozen doubling of capacity of generating energy using solar arrays the cost of energy from this source will be less than cost of energy from burning fossil fuel.

This means we get compounding on our side whereas a simple penalty for polluting remains linear in effect.

Increase investment (even if it is a lot more expensive initially) and we will soon see ghg levels drop.

My calculations are $30 billion invested per year for 10 years to give Australia zero net emissions by 2020. This will result in electricity at at least half the current wholesale cost meaning that by 2020 we will be much better off than we are now. As we need fiscal stimulus packages to get our economy moving again $30 billion invested in ways to reduce ghg concentrations seems a sensible thing to do rather than waste time on less effective permits schemes. So instead of giving billions to people to spend give people money to invest in ways to reduce ghg concentrations.
Posted by Fickle Pickle, Monday, 20 July 2009 4:58:28 PM
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YES! YES! go Col! Socialism by Stealth. I love it. Made my day!
Posted by Houellebecq, Tuesday, 21 July 2009 10:26:33 AM
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