Australia is set to introduce a carbon tax (details to be released on Sunday 10 July 2011). This post is the place to discuss this policy — the good and the bad.
A description, from the Australian Parliamentary Library:
A carbon tax is a tax on energy sources which emit carbon dioxide. It is a pollution tax, which some economists favour because they tax a ‘bad’ rather than a ‘good’ (such as income). Carbon taxes address a negative externality. Externalities arise when an individual production or consumption activity imposes costs or benefits on others. In market transactions, these costs and benefits are not normally reflected in the prices involved in the transaction, or taken into account in the transaction decision.
By placing a cost on these negative externalities the underlying purpose of a carbon tax is to reduce emissions of carbon dioxide and thereby slow global warming. It can be implemented by taxing the burning of fossil fuels—coal, petroleum products such as petrol and aviation fuel, and natural gas—in proportion to their carbon content.
There is some political support for a carbon tax in Australia as a means of implementing a carbon price. Some groups favour this approach as an interim step on the way to an Australian emissions trading scheme.
Here is what I (Barry Brook) said about Australia’s proposal a while back, in response to the 2011 update papers of the Garnaut Climate Change Review :
Garnaut has elaborated and updated his report in line with the latest science and lack of effective action nationally and globally. But the bottom line, in my opinion, remains the same. We need to scrap the renewable energy target (RET), Renewable Energy Certificates (RECs) and feed-in tariffs (FiTs), set a low initial carbon tax at about $10/t, establish an equivalent of the Board of the Reserve Bank to manage the tax and set future prices, and have some legislated schedules (gateways) such as a floor price of $20/t by 2015, $30/t by 2020, and so on. The rising price – with short-term decisions taken out of Government hands to avoid distortions arising from political expediency – is absolutely key. Finally, and in line with eliminating the RET and FiTs, we need to really level the energy playing field and allow nuclear to compete with renewables and fossil fuels with carbon-capture and storage (CCS).
Here is a useful description of some other carbon prices worldwide (Finland, The Netherlands, Sweden, India, Norway, Denmark, Switzerland, Ireland, Costa Rica).
Australia is proposing an initial carbon tax, followed some years later by a cap-and-trade system. What is the difference? Here is a brief summary (my perspective, with bad points in red and good points in green):
CARBON TAX
- Politicians or bureaucrats set costs – inefficiencies and pressure
- No guarantee that emissions will fall
- Clear forward price projection = investment certainty
- removes incentives for hedge funds, derivatives etc.
- better allows for long-term business planning
- Can use current tax system
- Better handles emission-intensive trade-exposed industries via import/export carbon tariffs/refunds
EMISSIONS CAP-and-TRADE
- Cap reductions ensure falling emissions – in theory
- Reduce inefficiencies or overpricing
- Creates both incentives and disincentives for abatement
- Chance to profit from ‘doing the right thing’
- Enrich middle men / brokers
- Requires army of bureaucrats / new system
- Encourages rent seeking – pleading by special interest groups
- Limited price certainty – requires projected ‘gateways’
Here are some further details about the history of the discussion here in Australia:
Australia has considered both cap-and-trade schemes and a carbon tax. In 2007, the Productivity Commission suggested that a carbon tax should be implemented.[0]
On 30 April 2007, the state Labor Governments commissioned the Garnaut Climate Change Review, whose sponsorship was joined by the Rudd Government soon after taking office in December 2007. The resulting report, delivered on 30 September 2008, recommended an Emissions trading cap-and-trade system. Subsequently the Rudd Government proposed a Carbon Pollution Reduction Scheme, which after much criticism, was voted down in the Australian Senate by both the Australian Greens (for being too ineffective), and the conservative Coalition (Australia) (for the effect on key economic sectors), as well as independent Senators Nick Xenophon [1] and climate change sceptic Steve Fielding.
In February 2010, the Australian Greens proposed an interim carbon tax of $A23 a tonne for two years.[2] In April 2010, academics from the Australian National University published a proposal for a carbon tax on major polluters (such as coal-fired power stations and oil companies) that would provide increased funding for Australian public hospitals and other health costs associated with climate change.[3]
On February 24, 2011, Australian Federal government announced a framework to implement a Carbon Tax from July 1, 2012. It is set to be implemented over 3–5 year period upon which it will switch to a cap and trade system. The price has not been set but various proposals have been discussed in the recent past, such as $23/t and $26/t. The announcement came after an agreement between the Federal Labor government, the Greens and two Independent MPs and included commitments to ensure all funds collected go back to homes and businesses to assist in the transition to renewables.[4] This led to accusations that Prime Minister Julia Gillard had breached a pre-election promise not to introduce such a tax where she stated to Network TEN: “There will be no carbon tax under the Government I lead”. The Leader of the Opposition, Tony Abbott, has called for an election over the issue.[5]
On June 5, 2011, the Say Yes demonstrations were held in which 45,000 people demonstrated in every major city nation-wide in support of a price on carbon pollution.[6] Many demonstrations have also been held around the country and in regional towns against the proposed Carbon Tax, albeit to a lesser extent.
For more discussion and critiquing on BNC on the topic of emissions cap-and-trade, carbon taxes and other proposals like fee-and-dividend, please consult the following posts:
Carbon tax or cap-and-trade? The debate we never had
Fee-and-dividend is superior to cap-and-trade for effective carbon emissions reductions
Hansen to Obama Pt II – Carbon tax with 100% dividend
Are voluntary actions meaningful where an emissions cap is introduced?
How to make voluntary carbon offsets a reality
CPRS vs carbon tax: Senate Inquiry
I look forward to some vigorous discussion below. Please restrict all discussion here to issues related to carbon prices, and equally, cease any such discussion on the Open Threads.
Brave New Climate 
350 replies on “Carbon tax in Australia in 2011”
I have four questions for the carbon price advocates:
1. How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?
2. What effect would such a carbon price have on the economy?
3. What would be the effect on world GHG emissions?
4. What would be the effect on the climate?
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My own position is that broadly I’m in favour of a Cap & Trade system. The Carbon tax gets a hearty “meh” from me, not because I’m against it as such, but because I have no confidence in the ability of the Gillard government to administer it.
Of course, I don’t have much confidence in Abbot & co either.
And don’t get me started on the Greens . . .
So . . any chance of the Australian Shooters’ Party getting office? :D
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Following
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Even though it keeps being called a carbon tax, it is in fact going to be an Emissions Trading Scheme, but the price per tonne of CO2 is going to be fixed (at somewhere between $20 and $25 per tonne; the precise figure will be announced on Sunday) for the first three years. I agree this is effectively a carbon tax, but it isn’t actually a carbon tax. Note that fixing the price for three years is different to the amended ETS that was negotiated in late 2009 between Rudd and Turnbull. In that scheme, there was only going to be a fixed price of $20 per tonne for the first year, and then a floating price after that.
Also, according to today’s Australian, it seems that the Greens have negotiated a floor price after the initial three year period, while the Government has won in the negotiations for a ceiling price. So even after the first three year period, it still won’t be a pure market price.
Another difference between this scheme and the amended CPRS is that it seems the Greens have managed to get the Government to knock off $275 million worth of compensation to the coal industry, again, that’s according to today’s Australian.
While I’m sure people will be able to pick at the new scheme, let’s all remember that this is a negotiated outcome between Labor, the Greens, and the two rural independents – Rob Oakeshott and Tony Windsor – as part of the Multi-Party Climate Committee. At the start of the current parliament, the Prime Minister wrote to both Tony Abbott and Nationals leader Warren Truss inviting them to nominate members to the multi-party committee, so that both of the Coalition parties could contribute to the final outcome. Tony Abbott refused to allow any of his MPs to join the committee, even though we know almost half of the Liberals supported passing the original amended ETS when Turnbull was the leader.
Therefore, I give the government a lot of credit for coming to a negotiated solution to this problem even in the face of total opposition by Tony Abbott (who in the past has at different times supported both a carbon tax and an ETS, including in 2007 when he was a Cabinet Minister in the Howard government)
If anyone believes that Abbott’s tax and spend scheme will work out to be cheaper – keeping in mind that both parties are aiming to cut emissions by 5% of 2000 levels by 2020 – then they must also believe that politicians are better at efficiently allocating resources – i.e. spending money – than markets.
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To Peter Lang in particular:
1) Human induced climate change caused by carbon dioxide and companion greenhouse gases and the associated water vapour feedback is proven.
2) Don’t let the perect become the enemy of the possible.
3) The conservative Australian populace needs to experience for itself that this carbon emissions tarriff (some call it a tax) will cause no harm. It will have far less impact than the carbon taxes we already pay such as the petrol taxes. These raise more revenue than will likely be raised from the carbon tarriff.
The Australian people need to become comfortable with the new price placed on carbon. They need to learn for themselves that the world as they know it won’t fall around them. In this new paradigm, as climate change continues to bite they will hopefully demand ever greater restrictions on carbon emmissions.
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When Germany introduced a new tax on electricity in 1999, all income from that tax was used for pension payments.
The idea was to give an incentive to save energy, but give all funds paid right back to the citizens.
There is a German Wikipedia page on this law here:
http://de.wikipedia.org/wiki/Stromsteuer
What will happen with the income from that new carbon tax in Australia?
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@ Barry — I can’t believe some think there is a conspiracy of silence about Carbon Pricing when you’ve already had 7 whole posts dedicated to pricing Carbon? That’s amazing — I had no idea you had that many threads on a rather dull administrative subject?
Whatever the thoughts about how Carbon might be priced, I hope we’re all agreed that a Carbon Price without baseload nuclear power is only going to waste money on renewables and not really do anything to stop Australia’s contribution to climate change.
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EN, agree completely. We’re all dressed up with nowhere to go.
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I could hardly believe my ears when I heard this comment from Julia Gillard on the ABC news tonight:
Silly me – I thought the idea of a carbon tax was to gradually lead to a shutdown of coal production and use. What the hell is it for then?
Here is the transcript of the news item in which she made that ridiculous statement.
http://www.abc.net.au/news/stories/2011/07/06/3262698.htm
Makes you want to pull the blankets over your head and give up on any hope for the future for our kids and grandkids. Depressing!
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(Deleted off-topic comment. Please re-post on Sceptics thread.)
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Barry, I am surprised that you think we have time to increase rates from $10/t to $30/t by 2020 etc. Katherine Wells has questioned the strategy of aiming to limit global warming to 2 degrees by 2050 (https://bravenewclimate.files.wordpress.com/2009/08/recent_climate_change_science_kw.pdf). With an impending global climate change emergency such targets seems inadequate. What is the reasoning behind your seemingly calm approach? Shouldn’t we have more significant aims?
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@ Ms Perps
Julia’s underplaying the danger to coal and being saccharine sweet and *irrational* while Tony Abbott is over-playing the danger to coal and being hysterical and *irrational*. What hope indeed?
(The comment to which you are replying has been deleted as off-topic and asked for a re-post in the Sceptics thread.)
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Peter Lang
You asked “What effect would such a carbon price have on the economy?”
I presume that by this you are asking about the effect on the economy in the short term? I would ask how this would compare with the effect on the global economy in the long term of global warming in the long term, if there is an increase of 2-4 degrees? I am not sure if either of these questions can be answered.
I am also not convinced that your four questions are the best to ask. Off the top of my head, here are some different questions that I would like to ask:
1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
2. What are the best approaches to reducing the effects of AGW?
3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible?
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Karl-Friedrich Lenz “What will happen with the income from that new carbon tax in Australia?”
The Federal government will auction off permits that businesses that release over a certain amount of pollution will need to cover their pollution liabilities. If they reduce their pollution they can sell the excess permits that they own.
The money the government raises from auctioning permits will be split about 50/50. Half will go to compensating households for price increases, the other half will be spent to compensate emissions intensive industries and invest in clean energy tech. Over time the business compensation will be withdrawn as other countries adopt similar carbon pricing.
Eclipse Now “Whatever the thoughts about how Carbon might be priced, I hope we’re all agreed that a Carbon Price without baseload nuclear power is only going to waste money ”
While I support Australia using nuclear power, a carbon price will still achieve some benefits, such as shutting down the dirtiest coal plants, and encouraging people to use less electricity.
Ms Perps “Silly me – I thought the idea of a carbon tax was to gradually lead to a shutdown of coal production and use.”
Shouldn’t we try and get the most energy possible out of the coal that we do burn? If the carbon price encourages the shut down of Hazelwood, Loy Yang and Playford, and ends up replacing them with a mix of gas and renewables, then it would’ve achieved its goal.
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Unbelievable. A carbon tax in Australia won’t make a measurable difference to CO2 concentrations or global temperature.
What will be measurable is the damage to the Australian economy.
MODERATOR
GC – this is not an opinion based Open Thread. Don’t forget your supporting referencs.
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Nuclear power in Australia will also not make a measurable difference to CO2 concentrations or global temperature.
This may surprise you. The explanation is that Australia only emits around 1% of global CO2 emissions.
http://en.wikipedia.org/wiki/List_of_countries_by_carbon_dioxide_emissions
Of course, this is a defeatist argument. “we only emit 1% of global CO2 emissions so nothing we do matters”. Oh yes very constructive attitude. A billion Chinese have no problem copying this attitude – and boy are the Chinese good at copying things.
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While it is not for me to tell Australia what to do, I am in a unique position to inform people down under of the situation in Europe, particularly from a perspective they may not have been exposed to so far from their normal sources of information. For more than two decades I help design and achieve regulatory approval for the Irish industrial sector, such as pharmaceuticals, power plants, etc. Since 2000, I worked extensively in Central and Eastern Europe on EU technical consultancy projects implementing industrial pollution control, control of major accident hazards and energy projects in the new and accession States. This has given me a rather unique insight from both a technical and legal perspective.
While people may have strong opinions on a particular environmental subject, proper application of EU environmental legislation is based on factual considerations and adherence to set procedures. One of the overriding principles is the Principle of Proportionality, in which the financial or other burden placed on the citizen must be minimised and commensurate with the objective to be achieved. The other principle is the ‘Polluter Pays Principle’. External costs arise from the impact of economic activities, such as emissions from a vehicle exhaust, which then can lead to health impacts (costs) in the surrounding population. The goal of the legislation is that these costs become internalised, i.e. paid for in the financial cost to use the economic activity and are therefore over time minimised.
Governments have of course to raise taxes. However, the manner in which this is done should not lead to distortions and all too often wasteful outcomes. Any form of carbon tax or incentive for low carbon energies has to reflect the true cost of carbon and not a political decision. So what is the damage cost of carbon? After all we have other worthy environmental causes, such as the 380,000 premature deaths that occur each year in the EU from air pollution, overwhelmingly from fine particulates. Unfortunately the carbon damage cost has never been calculated, the EU had a major research project, ExternE, which calculated the external costs of power generation, traffic, etc; http://www.externe.info/ . However, as can be seen from Chapter 8 of the 2005 Methodology Update, there was a complete failure to properly assess a damage cost for global warming.
So instead we have a programme based on nothing but political ambitions, which is not based on any proper quantification of impacts, and has lead to massive distortions in the economy. As the Russian Proverb states: “When one puts out a trough, the pigs will come to feed”. Is the public, which is financing this trough getting value, could the money be spent in a better manner elsewhere? Answers please would be appreciated, because such programmes require by EU law proper environmental assessment. The environmental objectives have to be specified; for instance how many tonnes of carbon are to be saved, what is the resulting environmental benefit (need a damage cost of carbon to do that calculation). What are the alternatives to meet those environmental objectives? What is the state of the environment without implementation of the plan?
However, none of this was ever done; it all got completely out of hand. An example would be Denmark, as part of the EU’s plan for 20% renewables by 2020 it is going to increase the percentage of renewable energy in its final energy consumption from 17% in 2005 to 30% by 2020. They have a National Renewable Energy Action Plan prepared according to the EU template. Section 5.3 on page 113 is very interesting: http://ec.europa.eu/energy/renewables/transparency_platform/doc/national_renewable_energy_action_plan_denmark_en.pdf . It is blank, they don’t know the estimated costs and benefits; no data on financial costs, no data on expected greenhouse gas savings and expected job creations. Pretty much the same for the other Member States as this Section of the plans is optional. However, the targets and massive costs that will have to be carried are mandatory.
Does any of this make sense? This clearly is not proper governance, when are people going to shout STOP. Unfortunately few have the training or expertise to realise what is going on, people do not see the ever increasing and unnecessary rise in energy costs, not only in what they pay, but in the resulting relocation of industry to locations with lower energy costs. The net result they just import those goods instead of manufacturing them, until such a point is reached until they can no longer afford them. Does any of this benefit the environment? There is no a single fact or figure to demonstrate that it does, so one has to believe in the perception that it does and the ability of populism to make correct decisions. However, as Warren Buffet says: “A public opinion poll is no substitute for thought”.
Finally, for the legal compliance case ongoing against the EU / Irish renewable energy programme see: http://www.unece.org/env/pp/compliance/Compliance%20Committee/54TableEU.htm
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What I see as the glaring anomalies of the c.t.
1) key foreign buyers of coal and LNG escape paying the tax that Australians buyers must pay on burning the fuel
2) the wind and solar build will stop dead unless there are additional subsidies.
3) carbon intensive industries need help to change technology, not wads of cash to soothe hurt feelings
4) the nuclear option is disallowed.
On renewables it seems the government will offer some very generous capital subsidies with no word yet on per-Mwh subsidies like renewable energy certificates or German style national feed-in tariffs.
Taxing fossil fuel exports; Australia has the most developed coal shipping system. It may overtake Qatar as the world’s biggest LNG exporter. Therefore if Australia makes foreign reliance on our coal and LNG progressively more difficult those customers are faced with tough choices. It might be easier just to play along with refundable carbon tax rather than source coal and LNG elsewhere. The tax revenue would go back the importing country not the private company. The money helps the foreign government implement lower carbon policies.
Cash handouts must dry up and are a recipe for prolonged blackmail. I think there is no option but to impose a carbon tariff on energy intensive imported goods. For basic steel I suggest that is about $50 a tonne and for aluminium-via-coal about $300. Thus India and China don’t get a free ride on our serious carbon abatement.
Sections of the ARPANS Act should be repealed to allow the possibility of nuclear generation. I see no way that gigawatts of brown coal generation can be replaced by gas from nearby dwindling sources. As the c.t. makes dirty power radically more expensive all options should be on the table.
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The Azimuth project’s section on Carbon Pricing says: There are three possible approaches:
– Price the energy on consumed items. So if a car is imported from China the carbon price for the construction of the car will be paid by the purchaser of the car. This might be the fairest method, but it has two big disadvantages: (a) It is probably impossible to say how much carbon went into the production in a foreign land; (b) It is probably in breach of WTO rules. To solve (a) would need something like a carbon-added tax between all participating countries, with non-participants being slugged on a high estimate basis. To solve (b) would need a fair bit of goodwill.
– Price the carbon as it comes out of the ground. Since coal is the main culprit, and there are only a small number of major coal producing countries, this is the option that might actually work. However it would require those countries to decide to forego the profit from digging up their coal.
– The third option is the only one under consideration anywhere. Tax the carbon as it is emitted into the atmosphere. This has no chance to work since it will just move the production elsewhere. In fact not only is Australia planning to move its jobs elsewhere by this method, but it will be happy to ship the coal there as well.
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Pat Swords, brilliant comment. There are some things that Governments can do, and that is to set regulations which will push society in directions that will result in less harm to the environment. The British “Clean Air Act of 1956” is a case in point.
This solved the problem of London’s smogs, which killed thousands in 1953. There was no talk of taxes or trading schemes to effect this action.
The Governments need to get proper energy policies based on empirical data, with cost/benefit analysis done on all proposed solutions.
France dropped its reliance on fossil fuels for 70% of its electricity supply in about thirty years- we can do the same given the correct policies.
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http://en.wikipedia.org/wiki/Clean_Air_Act_1956
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Can anyone please answer the following? Of the 194 nations participating in the IPCC fewer than half have pledged to implement economic interventions (carbon tax/ETS/cap-and-trade etc.). Why is that? To date only 32 countries have actually implemented such schemes. Why have the others not done so given that it is now 4 years since the IPCC published its 4AR?
Further, due diligence would seem to require that details of the impacts of such interventions on the economies of those countries should have been considered. Has that been done?
In its modelling of the carbon tax, what assumptions have been built-in to the computer models? How realistic are those assumptions?
What propotion of the Australia’s carbon tax has been pledged to the UN and its subordinates? How much has been paid to the UN climate fund? What is the schedule of payments to the UN? Will any of these questions be ansered on Sunday?
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Robert
1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
2. What are the best approaches to reducing the effects of AGW?
3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible
Hi Pat,
thanks for your very interesting post from a European perspective.
For me it’s about bang for the buck. We need to close down the worst single polluter — coal — for the climate, for our lungs, for the landscape, and for the protection of future sources of carbon for manufacturing steel. (Steel requires about 0.5 billion tons of coking coal per year to catalyse impurities out of the iron ore and make the new steel we need! Old steel can be shoved through an electric arc furnace without as much carbon.)
For me the answer is based on what the technical boffins here have concluded and makes sense of the big energy picture: how many nuclear power plants would it take to shut down all European coal fired power stations? How quickly can you get a factory to manufacture modular GenIV reactors? Say the EU goes with the General Electric S-PRISM reactor. How fast can they build the prototype and then commercialise these GenIV reactors flying off assembly line? Older reactors were hand crafted on site. Each is an individual project like a Rolls Royce, and cost as much in relative terms. These newer reactors will shoot out of the factory like so many Hyundai’s, and the modular parts will be trucked to site and clipped together like so much giant sized Lego.
Without a clear strategy for shutting down coal your ETS will end up funding toys like wind turbines and solar plants that will not result in a single coal fired power plant actually being shut down!
Now, weaning off oil and gas will be trickier as these tend to be different energy markets for different purposes like transportation and heating. But here you can teach us Australian’s a thing or two about public transport, having Dense and Diverse city cores and New Urbanism. You guys lead the way. (Apart from the very home of car culture, Portland America, where there has been a backlash against the car and for a more European city core). My personal conviction from the town planners I read is that the great cities of the world could easily install new zoning laws that would over time make each city “More European than Europe” — at least as far as Density of population and Diversity of function go. Town plans can be dense and attractive and vital and generate economic activity, provide housing for the poor, and have plenty of parks and promenades and public transit when we are catering more for people and less for parking!
Then there are schemes like biochar for agriculture, plasma-burners for recycling all our household municipal rubbish at an atomic level, repairing local ecosystems for ecosystem economic services, reinventing industry around green chemistry and better building materials, and all manner of other low carbon energy efficient processes to guaranteeing a convenient and comfortable and modern lifestyle.
But we’ve simply got to kill coal, and the only way to do that is with nukes.
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The models to which I refer are, of course, Treasury’s models.
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Dead right Eclipse and John Morgan. Ther’s already a significant nuclear build going on around the world, in 20 countries in fact. 67 new reactors if I read correctly. If we could increase this nuclear build even more rapidly, including in Australia, that could/should enable phase out of coal for power over time, around the world. That will give big reductions in world emissions and help stabilize CO2 content at appopriate levels. Nuclear is the world’s best option for a secure energy supply and without emissions.Everyone should know that. And we need to remember in all of this the billion or more who stil burn cow dung or sticks for heat thereby choking their kids and themselves and the atmosphere in the process. We address that problem by giving our mandated 0.7% GDP [all developed countries ] in aid, in the form of appropriate sized nuclear reactors so that they can turn on a light and cook a meal, if they happen to have any food. food. l
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Barry Brook,
Thank you so much for putting up this thread. Your post was excellent, and I thought you even got the tax implementation schedule about right, i.e. $10/t to start with. $20/t by 2015 and $30/t by 2020.
A similar approach is advocated here:
http://online.wsj.com/article/SB10001424052748703893104576108610681576914.html
Or Google: blinder carbon tax miracle cure
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Thanks Huon, it was interesting to see that others had been thinking along the same lines. The key to me is a rising price – it makes the whole debate about the initial price somewhat redundant, because businesses will plan for the future, not for the now, and a rising price with scheduled minimum gateways will make a really big difference to the choices being made (by Government too, if they should recommence their social duty to invest in baseload electricity infrastructure [like they continue to do for roads]).
To answer the question raised by Robert Lawrence, the general answer is that we have time to do whatever we have time to do, and failing to do that will simply mean more commitment to future problems and whatever costs are associated with adapting to those problems (and accepting that more species will probably be lost, and landscapes degraded, yes). Yes, I would like to see rapid and effective action, but that will have to be driven by some mechanism, and that’s where the reality rubber hits the socio-political road. The immediate problem I see for Australia is that the carbon price will not do anything directly to allow nuclear power to displace coal, so it will have no other direction to go than to push us towards gas, at least initially (and some improved efficiencies, although the theoretical advantage for those are already high, so there are other non-financial barriers at play here). But it will probably keep nuclear simmering on the policy agenda, and as the carbon price rises and the alternatives fail to deliver, we may get action faster than anyone might currently imagine. Remember France: 5 through to 80% nuclear in 22 years. Yes we can.
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gyptis444 the Treasury model is of course confidential information. However they conclude that a modest carbon tax will lead to runaway growth in renewable energy. This makes me suspect model formulation errors. For example the wind power industry say they need $40 carbon tax to be viable. Perhaps when Treasury input $23 carbon tax into their model they got about half the windpower takeup and this promulgated into the following years. A correct model would show nothing happening until carbon tax hit $40.
I don’t know the answers to those other questions but it is particularly disappointing that the US has wimped out. Showing leadership is important
http://en.wikipedia.org/wiki/Soft_power
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I feel like such a sycophant, but I reckon Barry’s comments up top were about right… but I have to concede that this is the right direction, it’s an important win, and after bedding it down for a year or two, pressure should build to remove the other distortions and hopefully open the door to nuclear power.
I’m annoyed that petrol seems to be excluded… talkback radio policy if ever there was with zero justifiable grounds.
I’m waiting until Sunday to see whether the eventual ETS is still set to permit unlimited international offsetts. I have concerns in this area.
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I tend to agree with Barry’s comment that a rising floor price is a necessity.
How many businesses are going to sink a few $billion into a new coal-fired plant that they know will cost twice as much to run a decade down the track?
I guess that’s where the question of “how fast?” comes in – if you ramp up the price too slowly, then new coal will still be built. Ramp it up too quickly, and it may cause serious economic problems.
Get it just right, and the pressure to come up with alternative sources of energy that actually *work* for supplying baseload will be immense. At that point, it’ll be a battle between the “renewables can do it, with a bit more development work” folks, and the “but here’s this off-the-shelf nuclear plant that can do it right now, and cheaper!” folks.
I’d take an each-way bet, myself. I think it’s worthwhile continuing to develop renewable energy sources (particularly for use in developing countries where the security situation may not be favourable for nuclear), but if the objective is (and it should be) to cut carbon emissions *now*, then nuclear is the best option on the table right now for achieving large scale cuts, and achieving them fast.
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OK, I’m starting to agree with Peter Lang.
What’s the point of a Carbon Tax if only the top 500 polluters are going to pay?
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Sorry, forgot the link.
http://www.abc.net.au/news/stories/2011/07/07/3263322.htm
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where do you stop EN… top 1000, top 2000, you always miss something. But for sure it is a flaw as a result of politics. To me it is likely that the biggest energy users are probably those who already have the most incentive to be efficient, so we are targetting companies that have already lopped off the low hanging fruit.
It is the little companies that don’t really pay much attention to their energy levels that can make a lot of changes for less $ per unit CO2.
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EN, if those top 500 happen to include all of the electricity generators burning FF for power, then we’re *all* going to help pay the carbon tax.
The incentive for smaller users to pick that low-hanging fruit (as MattB suggests) will still be there. The hard thing will be making them aware of it, and putting it into effect, without another pink batts type debacle.
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It’s quite conceivable that the ETS spot price for CO2 in 2015 could be less than $23/t. Reasons include a peak oil/debt induced downturn, a mad rush to decarbonise before then (unlikely) and market failure. The latter includes collusive bidding, weak umpiring by the government such as fee permits and officially approved carbon credits of no real merit. BTW the CO2 price cannot ever be zero in a proper market since permits will be needed to burn the final amounts of fossil fuel http://en.wikipedia.org/wiki/Smart_market
It is a bit of a worry that carbon credits or offsets will be open for business in 2015. Perhaps Hazelwood will be offset by a few hectares of PNG forest (why not Aussie forest?) or sustainable basket weaving or somesuch. Until then $23+ if evenly applied is another pothole in the road for fossil fuels. They will get additionally expensive due to local depletion and fuel switching. That’s why I predict gas will never displace more than a fraction of brown coal burning.
Example; suppose the carbon price was $23 in 2012, 2013 then say $30 in 2014 then dropped to $15 under an ETS. Would new coal stations be built? Probably not since coal prices and public opinion would have moved on.
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IN response to Peter Lang’s Questions:
1. How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?
It’s the other way around. In an ETS, the target will determine the price. ShowsOn does a neat job of explaining that the proposed policy is in fact an ETS from day 1, just with a temporary fixed price period.
2. What effect would such a carbon price have on the economy?
Not much, according to Treasury modelling, although the effects will obviously vary greatly by sector.
3. What would be the effect on world GHG emissions?
Directly? Nothing. However, an Australian commitment to an effective policy will encourage other nations to take similar action (of course many other nations have already taken similar or stronger action). This should become clear in the Durban negotiations later this year.
4. What would be the effect on the climate?
Same as 3.
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@ Cyril R., on 7 July 2011 at 3:11 AM
Well said.
Imagine if every state in the U.S. said “we’re only responsible for 0.5 % of emissions, why should we do anything”? And every country in Western Europe said “we’re only responsible for 1% of emissions, why should we do anything?” And every province in China said “we’re only responsible for 0.1 % of emissions, why should we do anything?” Very constructive.
I agree with EN and John Morgan too – being “all dressed up with nowhere to go” is about the best way to put it!
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Thanks ShowsOn above. You largely anticipated my commentary on Carbon “tax” v ETS. Well done. As a mental exercise, it would be useful for people to work out how different the structure of the scheme would be if it were a tax.
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What I like about a carbon tax is that it encourages conservation of a scarce resource – fossil fuels – and encourages innovation ahead of the curve on energy efficiency and alternative sources of energy.
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I would add that a cap and trade scheme though IMO esential, is not a total solution to the business of decarbonising. Being essential and being inadequate are not mutually exclusive.
We need to capture emissions in areas beyond scope 2 in stationary energy. We need to build new clean energy infrastructure at the expense of the old infrastructure. We need to reconfigure the design of cities to get people out of cars. We need to cut agricultural emissions.
I’d favour a progressive phase out of deductions for dirty energy. Right now it is 100% deductible. By 2020, only near zero (<5% of 2011 stationary or transport CO2 intensity) energy should be deductible, including scope 1 and scope 3 on a full lifecycle basis.
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Tom Keen, EN, and John Morgan (6 July 2011 at 10:02 PM),
Yes, nicely put.
But it’s also true that if we all get dressed up, there’s going to be lots of demand for a good party.
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John Newlands, if the wind boys reckon they’ll be unviable if the carbon dioxide tax comes in under $40 per tonne, then I for one hope it comes in well under that level and stays there for years. With luck, they’ll pack up and stop building turbines as Denmark has done.
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TK Combet has hinted that wind power will get ‘transitional’ assistance. That could be decades. If you look at any of the pro-solar websites they seem to be completely confident they will be looked after. This is despite both Garnaut and the Productivity Commission saying that all help begins and ends with the carbon price.
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Eclipse Now
I am glad you think these questions are worth asking and I guess that many would think these questions cannot be answered. Nevertheless, I hope that many people will think about how to answer them. I think it is important to learn to ask the right questions, and I would probably not be the best person to answer them. Nevertheless, I will try to provide brief answers to start answering them.
1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
The likely consequences are extremely harmful and irreparable. The changes are such that almost every ecosystem is likely to face conditions beyond their capacity to adapt within a matter of decades from now. One species that is likely to suffer in particular is Homo sapiens. Rising sea levels and melting of glaciers and changes in agricultural situations will remove suitable habit for a significant proportion of the global population. With the resultant displacement it is difficult to conceive of any economic system surviving or any government remaining in control. In short, a global emergency that is unprecedented and severe beyond the worst one can imagine. (I feel like I have completely understated this answer.)
2. What are the best approaches to reducing the effects of AGW?
I think that just asking this question makes some answers obvious and I can only start this answer. There needs to a global response to this emergency that ignores national boundaries. We need widespread and rapid deployment of nuclear power as this is the only current option for reducing greenhouse gas emissions, provided it is done with a rapid phase out of coal and other fossil fuels. Energy and resources need to be made available to developing countries with a view to addressing the critical problem of rapid human population growth at a time of decreasing habitat. While a serious effort is being made to help people in other parts of the world the causes of armed conflict or terrorism will be reduced. The threat of nuclear conflict would become irrelevant if we are all working toward the same aims.
Phasing out of coal and other fossil fuels will require some kind of economic driver. Hansen’s idea of a carbon tax at the point of extraction seems the most obvious and inescapable solution.
There needs to be a widespread call to action in view of an impending global emergency so that we all pull together to find solutions.
3. How do we best inform or educate the global community of these risks and involve them in developing and implementing the most effective solutions?
This is obviously a very difficult question to answer; those who are aware of the risks need to keep this question at the top of the agenda. We need some brainstorming on this.
My feeble effort is to start by challenging those who call themselves sceptics of AGW to provide reasons why the risk can ignored. They simply cannot answer this question because there are no logical reasons. There are reasons why the sceptics have their views, but they are so inadequate that they will not enunciate them. This weakness appears to be well worth exploiting.
4. What has to change in global governance in order to make an appropriate response to the risk of AGW possible?
Firstly I think we need to recognise that the current alliance of politicians seeking to win votes with short-term goals, a media focussed on attracting attention by reacting to current issues and an electorate that is not thinking about the big issues is totally incapable of addressing the current issues. There needs to be a completely different approach.
The internet is making communication possible across the globe. This BraveNewClimate website is an excellent example of how reasoned discussion (without personal attacks and questioning of motives) can reach obvious conclusions. Revolutions have been happening in countries this very year due to communication on the Internet. Organisations such as GetUp.org.au and Avaaz.org provide a voice to hundreds of thousands of people. No longer does change depend on charismatic leadership, with which our media is obsessed. It is people addressing common obvious problems.
I envisage the invention of a new form of interaction equivalent to Facebook or Twitter in which anybody can get involved in decision making process. The approach would be more focussed on responsibility than reacting to the issues that have caught the attention of the media for the day. There would be a focus on asking the best questions and having the community brainstorm for solutions. Each issue would be linked to other issues. Common causes of problems would be identified. Once this system started to gain momentum, reason would take over from politics.
The above seems far-fetched and highly unlikely. This is undoubtedly the case. Preventing AGW (or Catastrophic AGW) is equally unlikely, but it is certainly worth trying. Otherwise, why are we reading and commenting on this site?
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Barry
Thanks for that explanation.
I agree that while we do not have the option of nuclear power in Australia a carbon tax is not much to get excited about. The proposed tax does not seem to threaten the coal industry with its exports to other countries. Getting somebody else to burn our coal does not help the global situation. If Australia’s economy depends on exporting coal (and other primary resources), we need to find new ways to make our country viable and sustainable as a matter of urgency. I can’t envisage this without nuclear power.
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Robert
I agree with point 2: ‘There needs to a global response to this emergency that ignores national boundaries.’
However, the proposed ETS perhaps breaks this rule as it is largely a national response that ignores international coordination.
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@ Tom Keen, on 7 July 2011 at 3:45 PM
Good point.
Disclaiming the reasonableness of doing anything about carbon emissions under the notion that “it won’t accomplish anything meaningful, overall, in light of the scale of the problem” is a common tactic – – exactly what opponents of controlling emissions do in the U.S., and, probably, everywhere.
This logic is a technique to rationalize doing nothing, and it contributes to the tragedy of the commons.
If one accepts the general (not universal, but then, how many theories are universally accepted in science??) consensus of informed scientists on climate change, then it is critically important to advance carbon reducing policies and technologies as a facet of leadership, and to set an example. Doing so is an absolutely necessary and critical, but simultaneously completely insufficient (in itself), action. This is pretty much true of all initiatives to cut climate-changing emissions, as there are so many sources of the emissions, and so many different authorities and entities that can implement those initiatives. This is the world we live in.
If you accept the science, then radical emission reductions are required everywhere. Leadership in achieving them will have to begin with some nations or states, somewhere, effectively achieving emissions reductions through means that can be referenced as reasonable and not-so-costly-as-to-be-unacceptable, thus providing a viable model. Changing the framework in which the market works will also stimulate the search for, and development of, cheap ways to comply.
If everyone waits for someone else to be the first mover, then no one will move first. The consequence of that will be that the environment, and the species and individuals that rely on its relative stability, will suffer the consequences.
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Handing out billions of dollars for “renewables” is completely open to fraud and abuse and is an inefficient waste of money, with a whole industry of dodgy operators springing up overnight to get their share of the free money, just like we’ve already seen with insulation and solar photovoltaics.
To get real changes to the carbon dioxide emissions intensity of stationary energy generation, which is where the bulk of the problem is and where it’s easiest to fix, in the most economically efficient fashion possible, without wasting money, a free-market based approach, or almost-free-market approach, is best.
We should keep the market as free as possible. In a free market, however, dirty fossil fuels are the cheapest option and the option always chosen by the market, because the market does not factor in the external costs associated with carbon dioxide emissions (and other forms of pollution from fossil fuels).
So let’s implement a small perturbation to the free market, in the form of a carbon dioxide tax or emissions trading scheme, so that the external costs of fossil fuel use corresponds to dollar value that the bean-counters can understand.
However, if electricity utilities just keep burning coal and they simply pass on the cost of carbon dioxide emissions to the consumers’ electricity bills, then we accomplish nothing. We all pay the electricity bill, of course – nobody has any real choice. The carbon price really needs to motivate the utilities to replace fossil-fuel generation with clean forms of generation, and the specifics of the implementation of the scheme needs to be done with this in mind, so that it doesn’t just result in higher electricity prices and no other fundamental change.
Everybody already pays the bill, so we already have a motivation to increase end-use efficiency where practical. But it is only practical to increase end-use energy efficiency to a limited extent, especially for the householder, and you can only push it so far without spending lots of money in capital investment to increase efficiency, which many people can’t afford to do.
The notion that we must drive people’s electricity bills higher and higher to punish them harder and harder so they’ll use electricity is completely the wrong idea.
The average carbon dioxide intensity of Australia’s power stations per kWh generated is amongst the highest of anywhere in the world. It’s not right to punish the public and make them feel like they’re guilty just because they dare to use some electricity. The ridiculously high average greenhouse gas emission intensity of the power stations has to be changed.
If consumers really had a choice, and they could choose an electricity provider that would sell them electricity from clean sources at a cheaper price than fossil-fuel electricity, then of course that makes sense – but I cannot foresee that scenario happening any time soon.
Fossil-fuel subsidies should be eliminated, and there should be no special handouts or exemptions or subsidies for the fossil-fuel industry to “compensate” them from the effects of a carbon dioxide pricing system, because this of course defeats the entire point.
What we need is a level playing field – this means no fossil-fuel subsidies or exemptions, but it also means no special handouts and subsidies or hugely inflated feed-in tariffs for solar energy or wind energy. It means no special subsidies or handouts for nuclear energy or any other particular energy technology, but it also means the removal of any legislation that says that any particular energy technology, such as nuclear energy, is banned or illegal.
Such distortions of the market prevent the market from figuring out what the best and cheapest clean energy technologies to replace fossil-fuel electricity generation really are and implementing them.
A carbon dioxide pricing mechanism added to an otherwise free market, with no special subsidies for anybody, puts every clean energy technology on a level playing field, and the free market decides what the most realistic, available, scalable, reliable, useful, deployable and cheapest clean energy technologies are to replace coal and fossil-fuel based electricity generation.
Unfortunately, the current situation with Labor, influenced by both big industry and by the Greens, means that we are going to get the worst of both worlds – widespread exemptions and subsidies and handouts for coal-fired power utilities and other high-pollution sectors, and huge amounts of money spent on subsidies and handouts and mandated high feed-in prices for inefficient and expensive “green” energy such as solar. And no removal of legislation barring any use of nuclear energy.
The stupidity here is a little bit amusing:
http://www.guardian.co.uk/environment/2011/jul/01/lib-dem-rebel-nuclear-power-subsidy
Carbon price bad… because nuclear energy doesn’t emit CO2!
As far as excuses for opposing a carbon tax are concerned, there’s a new one.
We need a carbon price… but, oh, wait, nuclear energy is free of greenhouse gas emissions.
We need a carbon price… and we need special arbitrary ideology-based legislation that punishes nuclear energy, even though it is free of greenhouse gas emissions!
The whole point of a carbon price is that it’s a carbon price, not a subsidy specifically directed to wind or solar or whichever energy system you ideologically think is good and “green”.
Australia gives big handouts of money to coal-fired generators to compensate for the effect of the CO2 tax… these guys want to ideologically impose special extra taxes or something just to punish nuclear energy… to compensate for the effect of the CO2 tax.
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Thanks for that contribution Luke Weston, a terrific and very well thought out position.
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@ Eclipse Now ‘How fast can they build the prototype and then commercialise these GenIV reactors flying off assembly line? Older reactors were hand crafted on site. Each is an individual project like a Rolls Royce, and cost as much in relative terms. These newer reactors will shoot out of the factory like so many Hyundai’s, and the modular parts will be trucked to site and clipped together like so much giant sized Lego.’
Gen III+ reactors (AP1000, ESBWR) are also largely ‘modular’ with parts built in a factory and assembled on site. We can do this now. New designs should be developed, but there is no need to wait. In 10 years China will be building AP1000 (or their higher-power variant the CAP1400) reactors at rates that will astonish the world. They are building the module factories now.
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Hahaha, thanks for that Luke Weston.
If the UK doesn’t keep building nuclear, they’ve got a snowball’s chance in hell of making a 50 % reduction in GHG emissions by 2025. And Australia has a snowball’s chance in hell of a 50 % reduction by 2050 if we don’t allow it in this country!
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The carbon tax is a bit of a side show. The real policy menace is MRET. And MRET is supporter by both major political parties. MRET should be abolished pronto.
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Love the cartoon at the top of your post Barry, if only the market were allowed to use it’s invisible hand.
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It might be less distressing for the true believers if the MRET was quietly dropped. Believers that renewables will replace coal that is. If in round terms we want 20% of electrical generation in 2020 to be renewable and we are on 8% now, about half of that from mid 20th century hydro. We can assume hydro has maxed out and total generation will be roughly constant. Therefore an MRET assumes a 4-fold increase (4% to 16%) in non-hydro renewables in less than 9 years. Say another 5,000 MW average output.
But wait, we’ll have 150-300 MW peak of solar flagships built by 2015. To be generous take a third of that for average solar capacity, ignoring any gas boost. If we want that warm inner glow it will have to come from something besides renewables.
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unclepete
But then which politician is going to take all the credit for the automatic adjustments made by the market? Also each party needs a good legacy to sell to the voters.
I was wondering today just what the response would be so far if governments weren’t seen as the ‘out clause.’ Would there already be a carbon market on a major stock exchange with the ‘localised’ information already filtering through the world economy.
I still don’t think emissions per captia is a useful start for a global framework. Firstly it’s contrary to the principles of classical liberalism that the world as we know it functions. If you don’t allow accumulation of capital (to some degree) into the best hands then you get massive waste. Likewise if Australia has a comparative advantage in emissions intense industry then perhaps we should have to option to trade with another country with a differing comparative advantage who may not be able to utilise some emissions as productively as we do. Effectively paying them to forgo emissions.
Under this case if it proves no country (if we insist on national quotas) has spare credits to exchange then Nuclear power becomes a comparative advantage, if Australia choses not to bite the bullet, then it’s only logical that we give up a large chunk of current jobs and look elsewhere. The fact that there has been no serious debate as to how renewables will fill the gaps is telling. Once again Ivory Towers are obstructing the view.
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@ Robert,
I agree with your answers, especially the roll out of nukes + sustainable population policies. But don’t forget the sulphur gun if things get real bad.
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@ SteveK9
That’s a comforting post, thanks!
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[…] all the waste we need ready for the GenIV reactors when they finally come off the production line! As a friend over on BNC said, Gen III+ reactors (AP1000, ESBWR) are also largely ‘modular’ with parts built in a factory and […]
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@ Luke Weston . Yes I totally agree with Barry, it is a well written post.
Talk about the lunatics being in charge of the asylum!!!
As an interesting aside , in the Netherlands I read ads in the local papers where electricity consumers could choose “atoomstroom” ie . nuclear electricity. I assume the energy retailing authority offering this form of electricity buys their power from France ? So, it seems there could be a market for power that gives one the option to pick which form of generation one prefers.I just wish we could have that option here in Oz.
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This is a good explanation of a carbon tax and an ETS. It is another article from The Conversation – Climate Change series:
http://theconversation.edu.au/explainer-the-difference-between-a-carbon-tax-and-an-ets-1679
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Luke Weston,@ 8 July 2011 at 12:10 AM ,
Excellent post (mostly). However, there are parts I do not agree with. I won’t comment on the many bits I agree with, but will comment on what I disagree with.
Yes. We should keep the market as free as possible. However, a carbon price is a government intervention to distort the market – that is, to distort the market even further than it is already. The proposed carbon pricing scheme is being driven mainly by politics and ideology, not a rational assessment of a problem and how to address it.
You say: “fossil fuels are the cheapest option and the option always chosen by the market”. But this statement is based on a wrong starting premise. Fossil fuels are cheaper because we’ve been intervening for 50 years to massively increase the costs to nuclear while distorting the market in favour of fossil fuels and renewables. The whole market for energy has been massively distorted by previous government interventions. Instead of trying to correct the past mistakes, the carbon pricing advocates want to continue adding more bad interventions. This is a wrong approach. It will not lead to the deepest and most rapid cuts in CO2 emissions. In fact it will preserve, for much longer, the very problem that got us here in the first place. It is bad policy.
Sorry. I see that statement as silly. First, you say the “perturbation would be small. Why do you say it is a “small perturbation”? How high would the perturbation have to go to achieve the unconditional 2020 CO2-e emissions targets? What would be the effect on the economy of a carbon price high enough to achieve the unconditional 2020 target? What would be the effect on world emissions? What would be the effect on the climate? These are genuine questions. Those arguing for a carbon price cannot simply dodge them because they don’t like the answer.
True, low-cost, low CO2 emissions electricity, will not be available for as long as Labor, the Greens and the environmental NGO’s block nuclear and block low-cost nuclear. But surely, all the effort should be focused on changing the polices of those ideologies rather than implementing more, bad policies and more symbolic gestures.
True. But your words are paying lip-service to what is the real underlying cause of the problem rather than genuinely addressing it it. Over the past 18 months BNC regulars have demonstrated a strong resistance to looking into the impediments to low cost nuclear – the impediments that would make nuclear more expensive than coal in Australia. There has been no genuine attempt to look into this matter.
True. But we are never going to get to “an otherwise free market, with no special subsidies for anybody” if we keep adding more bad policies. It is naive to think that if we add a carbon price this will speed up the rate that we will address the genuine underlying problem and removing the many distortions we’ve already imposed.
Your quote from the Guardian about “Carbon price bad… because nuclear energy doesn’t emit CO2!” demonstrates that it is the ideology of the Progressive parties that are the problem. This is what needs to be tackled. Not implementing more bad policies proposed, pushed and forced on us by the Progressives – the cause of the problem in the first place.
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Cyrl R @ 7 July 2011 at 3:11 AM
I am not quite sure whether your point is:
1. it is a defeatist attitude to argue that we should not get stated on the road to implementing nuclear in Australia because it is politically impossible and won’t make much difference to world emissions anyway, OR
2. it is a defeatist attitude to argue that we should not implement the proposed carbon price because it will not cut world emisisons.
The reason I argue Australia should not implement the proposed carbon price is:
1. it will damage the economy (severely if it is raised high enough to achieve the unconditional 2020 targets). If we slow the economy we will be less able to take the best actions in the future
2. a carbon price in Australia will not reduce world emissions. The emissions will be exported to other countries – such as China. That is what EU has done. EU reduced its emissions a little, but increased the developing world’s emissions by more. Manufacturing using lower emissions EU electricity was replaced by manufacturing using higher emissions developing world electricity.
3. If Australia imposes a carbon price before we have removed the impediments that prevent us implementing low cost, low emissions electricity generation, the only option we have to reduce emissions is to export the emissions intensive industries.
4. Since an Australian carbon price will not cut emissions, it will not change the climate.
5. It is just silly to argue Australia implementing a carbon price will lead the world by example.
6. A massive increase in bureaucracy will be required to administer all aspects of the climate pricing scheme. And a massive increase in the monitoring, reporting and administration costs for business and industry. And more lawyers, accountants and court time handling the disputes. And Carbon Cops and fraud squad. The additional costs go on and on. All this extra administration is a dead weight on the economy. This is very bad policy. Once implemented it will be a dead hand on Australia’s economy for ever. The alternative is so much easier. It avoids all this extra cost.
7. We have not looked into the alternative. It is off the agenda because the Progressives don’t want to even consider it.
8. To implement a major new market distortion and serious impost on the economy, without thoroughly investigating the alternatives, is totally irresponsible.
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@ LukeWeston
I agree almost completely with your reasoning on internalisation of the pricing of fossil HC fuel combustion impositions on the commons and likewise of the principle of a level playijng field for energy technologies. Nevertheless, I’d like to make one or two observations.
(deleted unnecessary editing of a direct quote.)
It entirely depends on how these billions are “handed out”. It seems that an independent body is to oversee this handing out of funds, and provided the protocols are robus and coherently specified, and the due diligence is adequate, then the probability that significant fraud, or even poor expenditure of funds will ensue is low. What we need is for the protocols to ensure that performance specifications are measurable in something like real time and consistent with reasonable program goals in costs, LCE, LOLP, availability etc. and that auditing is at arm’s length and competent, and that those offering warranties on performance have a good deal of their own skin in the game. Once contracts are settled, their terms must not be hidden behind “commercial-in-confidence” shields and anyone who has a problem with this level of transparency ought not be permitted to access any funds or offfer for tender. If funds remain unallocated, then that’s too bad.
While I certainly agree that resort to “the market” is a key parameter of policy, this does not entail running in horror from disingenuous accusations about “picking winners”. The reality is that unlike the retail and service end of goods and services, the infrastructure options available to large communities are actually not that diverse. If we aren’t using coal and want to start tomorrow on lowering emissions the options are probably … gas. For better or worse, we have sunk cost investments in wind and also rooftop PV. We need to find a way of making these existing facilities maximally useful, even if as most of us here believe, these were purchased at well above the odds. Gas is probably the easiest way to do this over the short to medium term. Even if on Sunday (implausibly) Gillard overturned the ban on nuclear power, and The Greens and Windsor or the Opposition ran dead, we would very probably not see a single kWh of nuclear-generated electricity before 2020 and possibly not until 2025. We might not even start building until 2016. A quick changeover that is politically and technologically plausible entails lots of gas. That, along with hydro, can underpin wind and solar in much the fashion that Garnaut suggested in 2008.
The state is actually very good at doing one thing — raising loans. They can go into capital markets and raise funds more cheaply than anyone, and so a financing arrangement in which the state offered loan guarantees to successful tenderers or directly lent them the money at the longterm bond rate could in principle, be viable. Certainty about long term costs is a huge help, especially when capital outlays are large.
I agree. The performance specifications ought to be written so as to be technologically neutral but while I’m not keen on FiT I see no large problem with paying people what they would be paying if they purchased the energy at that time for energy supplied. Thus, if you are paying $0.10kWh, that’s what you get paid for supply.
I continue to believe that we need to move quickly to revisit the question of nuclear power of course, but there can be no doubt that Fukushima has chilled debate on this very severely. We are back roughly where we were politically in the wake of Chernobyl. People who were sympathetic to at least a discussion now look nervously at their feet. I am really angry that (deleted pejorative) TEPCO allowed this to happen, and thus provoked another round of angst-ridden venting on how dangerous the whole technology is. While we know how specious such claims are, the hard reality is that the public at large is back to being horrified. Even the deniers don’t bother throwing this objection at The Greens with the same enthusiasm any more. So we need to work with this new reality — favouring a new “energy commission” that can keep us all informed in a technologically neutral way about the options in clean energy infrastructure, IMO.
MODERATOR
Please post quotes as they were originally written.
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I feel compelled to repeat a comment Professor Brook posted recently on the current Open Thread.
[emphasis mine]
I think this question is important. It can be broken down a bit too:
1) Is it physically possible for it to be cheaper?
2) Is it politically possible for it to be cheaper?
And if the answer to either of these questions is “no”, and the LCOE from nuclear is higher absent a rising carbon price, how do the economy-wide costs and benefits of these generation technologies compare when externalities (climate and non-climate related) are factored in? Obviously, various assumptions come into play here too (e.g. projected differences in LCOE).
I’d be curious to hear what people think/know.
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I mystified by this news story on how carbon tax will benefit Tasmania
http://www.abc.net.au/news/video/2011/07/08/3265232.htm
Breaking it down
hydro generation – since it was built before 1997 it wasn’t even eligible for RECs which are set to be discontinued in any case.
wind generation – one perhaps two new wind farms of about 200 MW nameplate may go ahead since brown coal fired electricity imported via the Basslink cable will increase in price. This contradicts claims that $23 c.t. isn’t enough.
aluminium smelting – one establishment using a third of the State’s electricity says it will get some kind of advantage, perhaps they mean compared to Qld, Vic and NSW
zinc electrorefining – the Hobart smelter in Andrew Wilkie’s electorate thinks it will get an an advantage. Compared to whom I’m not sure.
No mention of tree planting credits. The unstated assumptions may be that windpower will keep getting subsidies and the metals industries that need baseload have first dibs on cheap hydro. The wet year c/- the winding down La Nina puts plenty of water in the dams for spot priced electricity export. Otherwise carbon tax may be of no short term benefit. That benefit is long term if it helps ameliorate climate change and weaning Tasmania off Victorian coal power.
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I think most of you are blind to what is going on. Carbon taxes are simply an ‘icing on the cake’ of renewables. Carbon taxes *will* exclude nuclear or don’t you see that? You are all playing with fire.
In *every* country in the world where renewables have taken off, they’ve *ignored* carbon taxes almost completely (and effectively) by:
1. Feed in tariffs.
2. Direct grands/subsidies for producers of wind/solar factories.
3. Most important: mandating percentage goals, not ‘targets’ but legal mandates to include specific double-digit percentages of wind and/or solar.
No carbon taxes, none, zip! Don’t you GET IT??? This is a straw-man distraction.
We should fight for nuclear in the *exact* same way: it needs to be mandated. Carbon effluent needs to be *legally phased out* and replaced MW-per-MW with non-carbon energy.
You will see carbon taxes implemented and nuclear excluded because that is the whole point of the wind and solar lobbies.
We have a means of generation and should argue for it on that basis alone.
We need a 10 – 15 year plan [COAL2NUCLEAR]:
Year 1: plans submitted by commission to eliminate coal plants.
Year 2: all coal plants placed in a phaseout mode; specific targets of nukes to be built.
Year 6: COD (Commercial On-line Delivery) for 1st set of nukes. At COD coal plants are separated from the grid and decommissioning started. MW per MW subustition or some ratio there for to account for growth (I think 1000MWs of nuclear replaces 750MWs of coal).
Year 20. 1st Gen IV reactors come on line, with rapid load changing, start replacing natural gas plants MW-per-MW.
Just do it.
David
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David Walters
I am surprised you think it would take 20 years for the first Gen IV reactors to come on line. I think there may be room for a much more ambitious target.
Perhaps more important than phasing out our use of coal in Australia, how to we phase out exporting coal to other countries?
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David Walters,
I agree we need a policy that will actually achieve the cuts. The policy must also ensure we maintain our energy cost advantage and our economic competitiveness.
I agree we need a realistic schedule. I previously laid out a schedule to 2020. https://bravenewclimate.com/2010/01/31/alternative-to-cprs/ . It does not make us achieve the Australia’s unconditional 2020 emissions targets – it is not realistically achievable – but it would set us on the fastest trajectory to the deepest cuts in the decades ahead. Once electricity is low emissions and low cost, we will be well set up to reduce emissions from other sectors – such as transport and other stationary energy use.
The worst thing we can do is to impose more bad policies that are in effect just symbolic gestures to keep the noisy groups happy and provide another symbolic “win”. The worst thing we can do is to damage the economy, especially as it is for no environmental gain. We should not follow Europe’s example, nor do what they tell us to do for their economic benefit.
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Barry
In the lead article to this thread you said:
This is not consistent with achieving the unconditional 2020 target. A $30 carbon price would not make Australia achieve the target – not even close.
Therefore what do you actually advocate:
1. a carbon price starting at $10/tonne in 2012 and rising to $30/tonne in 2020 or
2. the unconditional 2020 targets.
Do you advocate 1 or 2? It can’t be both because they are mutually exclusive.
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Peter, the answer is 1 – I don’t give a toss about short-term and meaningless political targets.
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David Walters,
I should have stated I totally agree with your opening remarks:
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David Walters,thanks for enunciating a timetable for coal phase out, nuclear phase in. I agree with you that we need to ,just do it. I think we should be able to do it a bit more quickly than twenty years. All of the regulatrory and licensing guff will take lots of time but the actual build time, depending on the type of reactor is much quicker than it was. Hitachi/GE are marketing mid sized [400-600MW and up to 900MW] with a build time of 34 months according to my reading. And PBMR’s don’t take very long to get up and running. I’ve suggested to BHP Billiton that they might look at them as source of power for their Olympic Dam expansion. They could also very usefully shift their desal plant from Whyalla to the west coast [Ceduna] and power it with an appropriate sized nuclear reactor. Those measures are part of my development plan for SA. iI think I mentioned that in a previous blog
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Barry
While I have indicated repeatedly that I agree strongly with your advocacy, I don’t agree that a $10tCO2 starting price is adequate. While I accept that the size of the starting price ought not to be a dealbreaker, it seems to me that unless the pricing scheme had near total coverage by sector and reached down to pretty much everyone with an entreprise employing the equivalent of 14 employees full time, that $10 simply wouldn’t do, unless of course
a) there was a shadow compliance mechanism which in effect, forced up the total price for non-compliance — a regulatory measure forcing BPR to achieve lower CO2 intensity
and/or
b) there was a steady progressive phase out of the deductibility for tax purposes of dirty energy
and/or
c) there was an escalator in the cost of permits that was a lot more aggressive than Garnaut’s 4% post inflation. We would need to be at $AUD(2011)50tCO2 by about 2020.
Ideally, a combination of each of these measures would be devised. We need every sector covered, and pretty much everyone above small businesses in. Fossil HC subsidies should vanish entirely.
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@ David Walters,
I can easily agree with your “Just do it” post but how do we get the vast majority of Australians on board? Say BNC all agreed with you. What then?
* Would we all contribute a bit to make a DVD?
* Would we put up more posters in University libraries and shopping malls?
* Would we just blog more about it?
* Would we agree to target certain political forums and calmly and kindly influence opinion there?
* Would we have certain ‘arms’ of the BNC community targeting different projects?
* Would we make sure our local libraries had a copy of a certain pro-nuclear book?
* What else have I forgotten?
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I’m not expecting any surprises tomorrow, just wishful thinking and preaching. From now til July 2012 I expect lobbying and special interest pleading to further weaken the impact of the carbon tax. In the ensuing first year of the tax at best I expect minor efficiency gains and belt tightening. During that time we will see renewables subsidies extended (contrary to recommendations) and hypocritical ‘direct action’ through large cash handouts to coal generators to build combined cycle gas plant. Those plants will be medium sized not full replacements.
That takes us to 2013 when we could be back in El Nino conditions. We’ll have expensive electricity but minor emissions reductions if any. It should become clear that the efficiency/gas/mandated renewables path is both inadequate and expensive. At the same time Germany and Japan will tell if they managed to reduce emissions while using less nuclear power. Thus I see the present course of action as a necessary but slow learning step.
TK agreed the Whyalla desal (for OD mine) should be relocated to Ceduna. An energy park could combine desal, 3rd generation NP, uranium enrichment and eventually 4th generation. New transmission could be regarded as a stage of an eventual link between the eastern and western grids.
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As things stand, EN, there’s no way you could “just do it”. Neither major party will touch it until the other moves, so there is a Mexican standoff. Then of course you’d need the states on board as well. This side of some sort of bonapartist coup, it’s not happening any time soon.
We must patiently explain why nuclear power is essential and ideally, IMO, have some independent well qualified body like the Productivity Commission (but with more scientific and engineering expertise and a brief to engage with the public) continually generating reports on the clean energy options in a technologically neutral way. It wouldn’t just or mainly report on nuclear power, but would look across the whole spectrum of options, giving timelines, scenarios, costs, technical feasibility and addressing commonly expressed concerns and beliefs — a kind of IPCC of Australian energy.
That might take much of the heat out of the debate forcing it away from culture and back onto the terrain of utility. I still see that as a ten-year project though.
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[First, Hi Fran! Always good to see you around here and other places…it’s been too long. Any thing new on the bio-diesel from algae stuff? I’m always fascinated with you turning me on to this.]
All, thanks for responding. On the “20 years”. We can do it in *5* but that would require a huge shift which I don’t see happening. I think with the things going on right now with IFR, and the more recent advances with LFTR (most notably the Chinese investments) I would revisit the question in about 4 years. I have zero doubts “it could be done” but realistically, that is 100% “politically”, actual commercial deployment looks to be about 20 years from where I sit. But “that’s OK”, really.
I’m maybe a minority but I want to see the success of a full on deployment of Gen III first in order to step into Gen IV. I don’t think any Gen IV is going to be acceptable until Gen III is given a reasonable shot. It’s another kind of thread but I’m convinced of this anyway.
My whole point in phasing out coal, that is in raising it, is that carbon taxes is not the way to go. This is not like H2S taxes on coal in the US or other smaller things. A carbon tax is *profound* on the economic level, even with deductions and subsidies…we don’t want to live like that. We want to produce what’s right. So it means getting down and dirty and fighting for nuclear energy in the phase of a LOT of public doubt, especially in both Australia and in the U.S.
I think carbon taxes in either country will be used to *exclude* atomic energy. I can’t see the movers and shakers in the ruling classes of either country accepting nuclear as a carbon free source of energy. The antis/Greens are very explicit about the tax money being used to subsidize solar and wind and NOT nuclear. So, I’d rather spend out time trying to convince people of the need for fission rather than trying to create a fake economic advantage for nuclear by taxing coal.
Peter, thanks for your comments, it’s good when polar opposite political people see eye to eye (then again, Adam Smith and Karl Marx both opposed tariffs :)
David
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I completely agree Fran!
Most Australians don’t blog — they’re just not interested enough. They Facebook their jokes and cats and recipes, but when it comes to thinking about the bigger issues, they just go with the current Zeitgeist.
We need meme changing action. We really need an IPCC of energy to analyse the options and tell us non-technical sorts what is actually possible now and how much it will cost. (They should always keep an eye out for might be on the horizons, of course, but it can’t be a body devoted to wishful thinking).
I’d love to see what such a body made of wind, CSP, biomass + a few big pumped hydro saltwater dams across the Nullarbor.
Compare and contrast with a Gen3+ nuclear grid, and the results should speak for themselves!
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Walters said:
Sadly, the stuff I’ve seen lately on EROEI, scale and cost don’t recommend it. At best, unless there’s a serious technological breakthrough I don’t see it being viable, which is a damnded shame. There’s some work happening around using it in aircaft but still not commercialised. Personally, I’d like someone to do a serious CBA on its use not as a fuel but in biosequestration, which might be a lot more promising. If that could be done for $50tCO2, and scale up to the levels needed then we could be onto a winner.
Sidebar: didn’t Marx give qualified support to tariffs in Ireland?
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Hi David,
is that to do with the fuel cycle? Didn’t Tom Blees say something about us needing 20 years to breed up enough fuel from the waste we have sitting around in cooling ponds?
I’m sure there’s a thread here somewhere — with a title like Nuclear pathways or something. If you wanted to write up something and ask Barry to submit it I’m sure he’d either find the appropriate thread or create a new one.
Make sure you link to it here as I’d be keen to read it.
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Re: biodiesel — I thought they were moving smaller than algae and getting into bacteria?
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RE: the “IPCC of energy”
I think our cultural preferences here in Australia are so strong that it’s Catch 22.
People love the idea of wind and solar power so much we’d have to demonstrate the NEED for an “IPCC of energy” to tell them otherwise, but it would take the “IPCC of energy” to do so!
We’re stuffed.
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EN:
Most of the people who really like wind and/or solar are also big fans of “just do it”. For reasons not entirely dissimilar ot the right, the more ostentatiously left environmentalists don’t like carbon trading/pricing either. They just want to invest directly in new technology — BZE is case in point.
Having an IPCC of energy is just the sort of thing they’d have to endorse, but in practice — precisely to avoid thwe kinds of trolling charges made against the actual IPCC, there would need to be a very non-technology exclusive brief for it. It would need to be abale to evaluate efficiency, energy usage avoidance, demand management, and the whole suite of technologies being deployed in energy systems around the world with application here.
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@ David Walters, on 9 July 2011 at 1:21 AM
I agree that the coal 2 nuclear plan is certainly the optimal way forward. The problem is, from my perspective, that it’s so far off the political radar in Australia that we’ll probably be burning fossil fuels well into the next century waiting for a plan like that to happen.
We need a catalyst to get us there, and a carbon price is on the political agenda.
I don’t understand why you think a carbon tax *will* exclude nuclear? This isn’t the case in the UK, for example. Conversely, the Australian government excludes nuclear without a carbon price. I admit it will favour gas in the short term, but resource scarcity and a rising price limits this.
And just for clarification, do you think we should oppose a price on carbon, or stop wasting time debating it and ignore it?
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Barry,
I’d agree, we should not be looking for short term political solutions.(deleted personal opinion on other’s motives)
But I don’t understand what you meant by arguing for a carbon price starting at $10 and rising to $30 by 2020? I think my question is a fair question.
I don’t understand why you are not prepared to answer it. It seems a reasonable enough question to me (along the lines advocated here: https://bravenewclimate.com/2010/03/25/gentle-art-interrogation/ ).
I believe the arguments against the proposed pricing scheme are strong and persuasive. I and others have puit them in numerous comments on various threads and recently on Open Treads 15. 16 and 17 and on this thread. They have not been refuted nor seriously addressed. Mostly they are ignored and avoided.
I hope you might consider them seriously, not just reject them out of hand. You demonstrated your ability to change your beliefs on nuclear having looked at the pros and cons. I believe, a genuine, unbiased, objective analysis of the proposed carbon pricing scheme would lead you to change your opinion about this too.
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Barry,
I think I misunderstood your short reply to my question. For others, my question was:
You answered:
OK. I understand now. Sorry for the previous reply. It is Australia’s unconditional 2020 emissions targets that you are saying are the “short-term and meaningless political targets”
I agree with this. I agree we need to focus on what will get us the most rapid CO2 emissions reductions trajectory for the long term – through until we are mostly decarbonised.
I’d now add my points.
1. We will only achieve that by taking an economically rational approiach.
2. We will achieve the goal by building a broad political consensus. It is achievable, but not in the highly confrontational and economically irrational way it is being approached by the Progressives (and been approached for the past 20 years at least).
3. Carbon pricing is failing everywhere – for many reasons. It is a wrong approach (see comments up thread and on previous threads).
4. The answer is not in carbon pricing until the major emitters agree a an economically efficient, international scheme for internalising the externalities of energy production and use and carbon emissions from non energy applications
5. In the meantime, and as the first step, Australia should put most of its effort into working out how we can get low emisisons electricity generation in Australia on a trajectory that will be lower cost than coal (I’ve suggested how we can do this on the “Alternative to Carbon Pricing” thread.)
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That’s rich Peter. You haven’t addressed all the links, but frequently just employ the “Ignore, Divert, Re-assert” strategy. I’m really tired of you whining about no one paying you any attention when you don’t pay them any attention. You tend to write off whole arguments with flippant remarks about the source of the argument, but without dealing with the material in the argument.
I don’t believe you have demonstrated *your* ability to change your mind on a *single* thing.
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GDP per capita growth averaged 2.2% p.a. for the period of the Howard government.
The Department of Climate Change and Energy Efficiency (DCCEE), following Treasury advice, assumed 1.6% p.a. in producing the Baseline CO2-e emissions projection to 2020 http://www.climatechange.gov.au/publications/projections/~/media/publications/projections/australias-emissions-projections-2010.pdf . That is a very significant cut in GDP per capita. That means considerably less for Health, hospitals, education, infrastructure and all the other services people want.
Recently, the Treasurer released some results from Treasury’s latest modelling http://www.treasurer.gov.au/DisplayDocs.aspx?doc=speeches/2011/017.htm&pageID=005&min=wms&Year=&DocType= . They assumed a $20/tonne carbon price and 1.2 % pa GDP per capita. That’s a further cut in GDP per capita growth.
Yesterday, Citi Bank economists released a report saying that at $25/tonne carbon price would cut GDP growth by 0.5% pa.
That’s a serious cut. And that is for a $25/tonne carbon price. What will be the consequence if the carbon price is raised high enough to achieve the unconditional 2020 target?
Without a low-cost, low-emissions alternative for coal fired electricity generation it will not be possible to achieve the unconditional 2020 targets other than with long, deep recession.
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It’s just tiny a fraction off the *growth* in GDP — it assumes the overall economy is still in pretty good shape actually. You’re not providing evidence of *damage* to today’s economy, by hypothetical shavings off how much *richer* we *might* have been in the future.
If you really *want* to study something which could do *serious* damage to the economy, study peak oil. But this tiny, irrelevant shaving off tomorrow’s *growth*? No, I won’t be losing sleep over that.
Ignore, Divert, Reassert. Seriously, is the above paragraph in some copy and paste software you’ve customised for BNC? I’m a fan of nukes and accept that they are the only way forward — I’m just not a fan of pointless, divisive nagging that runs this community down.
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(deleted: repetitious and adds nothing new)
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@ Peter Lang, on 9 July 2011 at 2:40 PM
Do you have a link to the Citibank report you referred to? (I googled but couldn’t find it).
I’m curious. Did you mean that a $25/tonne carbon price would cut GDP growth by 0.5 % per annum?
0.5 % of an average (e.g) 2.2 % annual growth would mean a subtraction of (2.2 % * 0.005) = 0.01 % off of GDP growth…
Unless you meant it would be (e.g.) (2.2 – 0.5) = 1.7 % growth per annum instead of 2.2 %.
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Global pollutants require global policing, implying a need for global surveillance. One nation could monitor the other nations’ emissions, and the public could monitor the emitters in their own countries.
As CO2-mapping satellite, “OCO ” crashed on launch in 2009. Its replacement, OCO2, is under budget-pressure from Congress .
Also under pressure is a successor CO2-mapping satellite, ASCENDS , a project to use Lidar for higher resolution. Presumably, suspect emissions could be targeted and measured.
I for one am grateful that Congress has funded NASA over all these years, but it is a worrying dependence. Perhaps, as climatic disasters mount, a sense of global emergency will help launch these tools for global surveillance.
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Could a carbon price of $30 make economically viable not only CCS-equipped natural gas plants and n-th nuclear, but even first-of-a-kind (FOAC) nuclear? Perhaps so. Have a look at this summary of a paper co-authored by Barry Brook.
http://theenergycollective.com/barrybrook/47728/nuclear-least-cost-low-carbon-baseload-power-source
According to final sentence of the summary, FOAC nuclear would be about $30 per MWh higher than later nuclear plants–and new coal plants. A $30 carbon charge would bridge that gap; and subsequent nuclear plants would beat the price of new coal.
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Based on Productivity Commission figures even a $20 carbon tax puts pulverised black coal, brown coal and combined cycle gas up around $105 per Mwh. We can presume the latest hybrid idea (gasified brown coal + natural gas combined cycle) is at least that expensive as well.
Now add to that the expected boom in thermal coal imports by China which will raise the world price of coal. Then add the fact that Australia’s population lives in the southeast but the best gas resources are in the northwest. Then add a predicted surge in gas demand (LNG/CNG/GTL) for transport and we have not just carbon tax but three other factors driving up the price of fossil fuels. Somethin’s gotta give.
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Peter Lang asked:
The effective (not the explicit) price is probably going to have to approach an average price of about $30tCO2. That’s the price at which the full cost of the explicit price plus any other regulatory costs, and other incidentals would make enough abatement fall under the cap. Of course, if some measures prove more costly than the $30 due to the implementation method, we might need a higher effective price. MRETs and FiTs probably need to go.
Probably very little net negative effect. One must also take into account the exposure to trade penalties for not acting. It remains unclear but we won’t know in time to adjust anymore that one can back the Melbourne Cup winner aftrer the race is run.
Mainly, transition from old coal to new gas.
166mtCO2e, obviously
On its own, not much, but as part of a move to price emissions on a world scale, quite a bit. Australia isn’t the only country whose citizens run beggar my neighbour arguments, and Australia is the leading per capita emitter amongst advanced nations
Of course, but that still doesn’t mean we don’t need a carbon price now.
We’ve been there done that in relation to carbon pricing. We need to get on with it. Of course, if your question was in addition to carbon pricing once it is done then yes. We should look at all the options without abandoning carbon pricing.
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I notice that the four questions have still not beenm answered. In fact, my reposting with link to one of the earlier posts has been deleted as repetitious. Since the catastrpophe argumetns are repeated ad nauseum without ever being deleted we can only conclude that this is avoidance of unwanted questions, and censorship rather than balanced moderation .
Why are the questions being avoided?
So much for this: https://bravenewclimate.com/2010/03/25/gentle-art-interrogation/
Clearly, this is to be used in one direction only.
Following I’ll post the questions together with my partial answers. However the intention wass not for me to answer them. It was an attempt to try to get BNCer readers to think objecively and think out side their advocacy.
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To the advocates of a carbon price,
Below is a short answer to my four questions.
1. How high would the carbon price have to go to force Australia to achieve the unconditional 2020 target?
A. CIE says about $55/tonne CO2-e. given the assumptions they used, I suspect the carbon price would have to by much higher
2. What effect would such a carbon price have on the economy?
A. see below
3. What would be the effect on world GHG emissions?
A. No reduction in world emissions. Andy savings in Australia will be more than made for by higher emissions from oveseas
4. What would be the effect on the climate?
A. None
2. What effect would such a carbon price have on the economy?
First step (determine the limit): assume carbon intensity is inelastic. In that case GDP per capita growth would have to be cut from +1.6% p.a. to -1/7% p.a. average for 8 years (2012 to 2020). That means a very deep, long recession. I’d expect unemployment greater than 20% (like Spain has now). Do we want to turn ourselves into anothe basket case lie Europe?
Second step: consider the elasticity of carbon intensity to GDP.
This is more complicated. The carbon intensity is comprised of two components: Energy Intensity GJ/$ GDP) and Carbon Inetensity kg CO2 / GJ).
1. Energy intensity – is decreasing at around 0.5% to 1%p.a. How much faster can it be reduced? One solution is to force the energy intensity industries to shut down (the growth is coming from the mining and LNG industries – so should we shut them down?)
2. Carbon Intensity – how much can we change that in just 8 years? Without nuclear as an option, how much can we do? We need to cut emissions by 160 Mt/a. Where are the cuts going to come from?
I’ve looked at this and can’t see how we can cut much, realistically, in 8 years without a massive recession. That is the one option we have if we want to achieve the unconditional targets.
I’m persuaded, at the moment, it is not practicable to achieve them. The carbon tax is a diversion from biting the bullet on what we really need to do – remove the impediments to low cost nuclear. We need to realise the 2020 targets are not achievable and we need to work on setting the policies that will give us the greatest cuts fastest. That means getting rid of the ban on nuclear.
We are doing so much wrong it is just ridiculous. The carbon price is another example of a long list of really bad policies, such as:
ban on nuclear
Renewable Energy Targets
Renewable Energy Certificates
Subsidies for renewable energy
Pink Bats home insulation scheme
Green loans
Green cars
NSW GGas
The list goes on for ever.
We have 240 pieces of legislation and regulations to cut GHG emissions. Most cost a bundle and do almost nothing, as the Productivity Commission has pointed out.
We changed incandescent lights for poisonous mercury lights in every house (Mercury is a pollutant in EU but not when used in lights – that is an indication of how ridiculous are our regulations).
As of 1 July, no more resistance hot water heaters are allowed to be installed. That’s dumb. It forces us onto gas (and heat pumps in some locations but either way much more expensive than the simple resistance hot water heater). Why I say it is dumb is because once we do get clean, electricity (e.g. from nuclear) then the best thing we can do is to go back to electric hot water instead of gas.
We are doing it all wrong. We should bite the bullet and embrace nuclear.
Now I’d urge the advocates of carbon price to justify their beliefs and support for a carbon price – not just attack these arguments.
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Following are some links to articles that may provoke questions about the Prime Minsiters’s launch of the Carbon Pricing scheme today.
Impost ‘ill-timed’ and puts Australia at a disadvantage
http://www.theaustralian.com.au/business/news/impost-ill-timed-and-puts-australia-at-a-disadvantage/story-e6frg906-1226091022972
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http://www.theaustralian.com.au/national-affairs/a-lethal-blow-for-government-scheme/story-fn59niix-1226082376158
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http://www.theaustralian.com.au/news/opinion/more-sense-from-sensenbrenner-than-from-garnaut/story-e6frg6zo-1226084425409
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Peter Lang,
Hi. May I suggest, in the interest of simplicity and clarity, that we boil down your four questions to two essential ones, and then add one relevant political question? The three questions are:
1. What is the environmental benefit?
2. What is the economic cost?
3. What is the present likelihood of enactment?
These questions can be applied both to your suggestion of a direct subsidy for nuclear and to a carbon tax. First, with your indulgence, I’ll give a rough score for the subsidy.
1. Benefit? High, probably
2. Cost? High (your figure is $20 billion)
3. Chances? Low
Now for the carbon tax:
1. Benefit? High
2. Cost? Low (assuming sensible formulation of the tax–so in doubt)
3. Chances? High
We will soon know more about Question 2 for the tax when the government releases more details.
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Peter Lang
You complained that your four questions were not being addressed. It looks to me like they have been. I would like you to address at least the first two of my four questions:
1. What are the likely consequences to global ecological systems of anthropogenic global warming (AGW)?
2. What are the best approaches to reducing the effects of AGW?
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Huon,
No. Do not rephrase my four questions to ones you want to ask. We can deal with your questions after mine have been answered. I’ve been asking them for over a year and they have continually been avoided. I mean answer them quantitatively, and appropriate substatntiation.
There is a reason for my four questions. They follow from one to another. they are the questions that must be asked and answered before we should make a massive investment and risk seriolusly damaging the economy (and all the human damage that does).
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