cam, i am sure you do not understand the cap and trade regime. It means that that some polluters are allowed to pollute and can then pass on the cost to consumers, unless there is a contestable market then the trading has no impact ie the cost of the product is merely passed on to the consumer. This is a regressive distribution of wealth.
You assume the price signal that failed to take into account the original social cost of the externality can function for the public benefit.It is the neoclassical delusion that has led to the recent worldwide financial crisis. I would have thought the conservation/green movement would have had the sophistication not to suffer from the same delusions that exist in the world of merchant bankers, alas I am wrong.

The basic point made by Mr McKay is that CO2 reduction can not be achieved by the market without regulatory intervention by government. Suggestion made include the need for:
• R&D into technology for the transmission and use of energy, so as to promote greater efficiency.
• Restrictions on the registration of vehicles after 2020 - in order to promote use of hybrid vehicles.
• Restrictions on the export of coal so as to limit the level of CO2 emissions by user countries importing our coal.

The first of these proposals is obviously desirable, however since many smaller vehicles are much more efficient than hybrids, the second suggestion is not. However, the suggestion that vehicle registration be used to promote use of the most efficient type of vehicles - those producing the least emissions - is a good idea, though we should not wait until 2020 for its implementation.

The alternative to vehicle propulsion using fossil fuels, is propulsion using electric motors. The use of electricity is not only far cheaper and more efficient than fossil fuels but, importantly, is CO2 emission free. It is true that this would increase demand for electricity which at present is largely generated from coal but in the future will increasingly be produced from renewable sources. Vehicle registration should be used now to promote use of efficient vehicles.

Licensing coal export, then reducing the volume licensed for export would not be practical since other countries would simply fill any Australian shortfall and there would be no reduction of CO2 emissions. Rather than restricting coal exports by licensing, a more beneficial approach would be to remove government subsidies paid to assist coal mining and increase taxation of exports, applying those monies to assist fund R&D into improving battery and PVC efficiency and production of electricity from renewable sources.

As for an ETS, there is nothing wrong with the principals embodies in the recommendations put forward by Professor Garnaut – but rejected by Rudd in favour of a watered-down CPRS. The latter is an unacceptable approach to reducing CO2 emissions and assisting development of renewable energy

I am surprised that anyone would want to put CO2 permits
into a trading market. There are already companies setup to start
trading and they can hardly wait. I wonder what sort of bonuses they
will pay.

In any case trading will imply that financing will be part of the mix
in any trading, but the whole possibility of interest will be thrown
into disarray with energy depletion.

Beware making assumptions about the large scale manufacture of
electric cars, it is by no means certain that we will be able to
change more than a small percentage of the car fleet to electric.

Only a madman would advocate using food for fuel.

Mr Mackay's scheme seems to be a typical politicians solution.
Politicians are determined to ignore oil depletion so that any
solution proposed by the political arena is incomplete and will by
definition be unworkable.

So we can be assured that the government's system will not work
because it assumes business as usual.
No scheme that does not take into account a depleting energy regime
is doomed from the start.

bazz, policies were designed for oil depletion, use of electric cars (my terminiology hybrids), use of ethanol and coal to diesel
jonjay, if we abandon coal exports other countries such as china and india will not invest in coal powered energy solutions because of the strategic risk of being captured by one supplier, the usa

Slasher,
The ETS policies are not designed for oil & gas, let alone coal depletion.
Just ask them,"There is no supply risk" they will tell you.
Everything they say and do is on the premise of continued growth.
The only reason they want to cut back on fossil fuel use is CO2 emissions.

They do not accept that somewhere down the track, and not all that far,
there will be a supply crunch. The IEA suggests 2010 might see some
difficulties.
The ETS is planned for the next 50 years, what does that tell you ?
Anyone who thinks we have 50 years of business as usual is either
a madman, an economist or a politician.

Sorry IEA = International Energy Authority an OECD body.

bazz, you are missing my point that using electric cars whilst reducing co2 emmission (primary goal) and investing in infrastructure to support its use including service centres/station utilising localised solar power directly recognises oil depletion. Before the lunatics come out of the woodwork I am not suggesting localised solar power will be able to provide all power needs for electrical cars but provide some with the rest coming from power grids.
Further the use of thermal coal for coal to diesel projects directly recognises oil depletion. my direct action solutions to reduce co2 emmissions also have a look to the policy responses we need to consider for peak oil issues.again this can only be a short term policy due to the emmissions from coal to diesel projects