The author is quite right to suggest that carbon trading schemes will do very little to limit emissions, particuarly in the form suggested by the Rudd government. Whether there is any real interest in his drastic alternatives remains to be seen, particularly as there are flaws in the suggestions. One of these is the proposal that we should switch over totally to hybrids.
There have been serious suggestions of late that hybrids are actually less efficient that the most efficient petrol and diesel driven cars. In any case, such a move would simply make drivers hold on to older, more convenient petrol cars for much longer. It would create an industry in reconditioning older cars.
As for the business about using fibre optics for high voltage transmission rather than telecommunications, is anyone actually doing this at present? Transmission lines get replaced and changed all the time, and one would think that if fibre optics were more efficient it would have happened by now. Curious on that point.
Localised power networks: oh wow! This writer is really ambitious. Some sort of neghbourhood battery storage is about the only way renewables will ever ofset any signficant amounts of emissions, incidentally, but the expense would be collosal. the proposal is worth a whole extra article - not that it will ever happen but it would be fun to kick the idea around.

My biggest problem with the proposed ETS is that with all its measurements, rebates, caps and trading, the paper work and monitoring is going to need an army of beaurocrats.

Energy consumption is not price elastic (consumption changes with price) in the short term as people are take time to replace fixed assets such as cars and production equipment, but in the long term, this has been shown to be so.

The simplest solution would be to introduce a smaller tax on carbon across the board at a level that has a lower effect on the economy, with an indicated time line for the tax to increase.

This would lower the immediate impact, but give businesses and consumers fore warning that things will change and they need to plan ahead.

The revenue can then be use to subsidise non GHG producing technologies at X cents per kWhr in such a fashion that they can also plan for the future.

Under an emissions trading scheme, the market doesn’t determine the socially optimal level of emissions, the government does. It may guess wrong, but any form of abatement policy is vulnerable to the same problem.

Under the CPRS the role of the market is to ensure that the desired level of emissions is reached at the least possible economic cost.

The article doesn’t address this principle at all – throwing tired slogans like “economic rationalism” and “trickle down” at the CPRS hardly constitutes a sensible argument against it.

The problem with Ken’s solutions are that they will impose even greater costs on the community than the CPRS, distribute those costs less fairly, and fail to achieve the deep cuts in emissions needed to prevent dangerous climate change.

For example, it is debatable whether a switch to ethanol has much net benefit in greenhouse gas emissions. If Australia reduces its coal exports China will not stop burning coal, it will buy it from somewhere else. Improved energy storage could indeed be the magic bullet that allows us to reduce emissions. But then again, it may not, in which case investing billions in this technology would be as dumb as investing billions in CCS. The benefit of price signals is that it provides the private sector with the incentive to explore all the possible ways of reducing emissions, including these and others. Government has neither the skills or the resources to do this.

Shadow Minister
I agree that a carbon tax might have been a simpler way to set a carbon price. However, in the long run, I suspect the best structure for achieving global emissions reductions will be an international emissions trading scheme, and the CPRS is a step in that direction.

A few points to allay panic:

Crop rotation
Is an almost outdated farming method of naturally fixing nitrogen in the soil.

Economise beef production.
The modern feed lot method of beef production is hugely wasteful. By-pass animal feed lots to feed humans directly with grain. Eat less beef generally.

Improve the use of natural fertilisers.
Encourage more local intensive farming methods mixed with alternative lifestyle aspirations.

Develop engineering systems to produce more economical extraction of nitrogen from the air.

Abandon cropping for ethanol production immediately.

Et al…

rhian,

your blind faith in the economic rationalist religion is touching. you say that the market delivers the result with least cost to the community is interesting. where is the empirical evidence. it is the same argument the friedmanites and the chicago school use for welfare reform, health reform, that the invisible hand magically weaves a spell through our community to deliver the best result. The argument against direct regulation is that it will result in a "misallocation" of resources.

this was not the case with the abolition of lead in petrol, nor in the abolition of cfcs. Your energy arguments bely the fact that our national grid was designed by economist, huge centralised power stations to reduce unit cost/production no comparative on lost power during transmission. dc, fibre optics reduce power loss. thus unit cost of production not the whole answer but i will not try and explain physics to someone hooked on the religious fervour of the power of the market, as there is no invisible hand in physics.

@slasher- I'm not sure you understand the basic principles of the cap and trade. The cap is a regulation. It sets a limit, just like the standards for lead in petrol, and the type of regulations we see every day. The trading, simply allows those who can reduce their emissions more easily to sell their permits to others. The net result is that the cap is met with least disruption. It is similar to fishing permits on the reef, water permits, and many other current schemes.

@Rhian - Very good explanations and ideas there.

@shadow minister - there are of course major problems with measurement that are present no matter how you try and tackle the problem. Hopefully there are some good minds working on that part.