“Hybrid” policy doesn’t make any sense

Why do economists say that using a price signal is the least cost way of reducing emissions? It’s because in absence of a price signal, there are many, many different ways that people could suggest we reduce emissions and no real good way of deciding between them. Moving to 100% renewables, retrofitting CCS to every coal plant, installing solar pv or solar hot water on every roof, forcing an early retirement of all brown coal plant, and so on. The problem with this approach is that it ignores all the other possible sources of abatement, and in restricting the supply of abatement forces up the cost of reducing emissions. The idea of a carbon price is for that price to be the arbiter of all the potential abatement sources, and to ensure economic least cost by doing the cheaper ones before the more expensive ones.

The proponents of suggestions that aren’t made economic by the carbon price will be disappointed by this outcome. Typically they will say that the carbon price is “too low” and also call for “complementary measures” to ensure that their proposal gets up. However, just because a price signal isn’t giving you the outcome you declare in advance is required, it doesn’t mean it’s a market failure.

Alan Kohler’s article earlier this week called for a “hybrid” approach, involving the Coalition’s industry adjustment (aka abatement purchasing) policy and the Government’s carbon pricing. However, it fell into the trap of deciding what the answer is in advance (shutting down Latrobe Valley brown coal) and then deciding that the market was inadequate to deliver this outcome.

The Latrobe Valley generators can’t be assessed together because they have such different emission intensities. Hazelwood, the most greenhouse intensive, will require a much lower price to shut down than Loy Yang, the latest and most efficient brown coal plant. This is because Loy Yang will be able to recover substantially more of its carbon costs in the pass-through revenue, but Hazelwood’s earnings will decline as a much steeper function of carbon price.

It’s economically irrational to decide that, on the one hand, society’s level of ambition is insufficient to price carbon any higher than $20-30/tCO2e (including a section of society saying that zero is a perfectly good price), but then that society (ie taxpayers) should at the same time fork out to purchase abatement at many times higher than this price. How is that economically efficient? It’s certainly not least cost.

Kohler’s article also relied on the idea that replacement gas plant won’t be built for a carbon price less than $80/t, quoting analysis from David Leitch at UBS. I haven’t seen this analysis but it seems on the high side relative to other studies I’ve seen. The main determinant of this is the gas price. Without question, if the gas price goes to parity with international export of LNG, then the carbon price to see new plant into the grid will be higher. But the extent to which and speed at which this happens is yet to be seen. Secondly, if gas prices up too high, then other forms of energy will come into the mix. At $80/tCO2e, for example, many forms of existing renewable energy technology, notably wind, become very profitable.

The graph highlights these points. Note that:

  • At current gas prices, quite a low carbon price results in gas plant being chosen ahead of coal plant.
  • at LNG import parity gas prices, a higher carbon price is required to see this switch.
  • Above $60/t, wind is cheaper than either coal or gas.

So the coal-gas shift happens between $10-50/tCO2e, depending on the price of gas. It also depends on the price of coal (which is assumed to be a constant $1/GJ in this graph). Higher coal price means lower carbon price required for the fuel switch. A key point here is that much of the abatement activity below business as usual is building new plant which is lower emission than it would otherwise be. Shutting down coal sounds like the right idea, but with all the sunk capital may not be the most economically efficient way of meeting any given target, especially when thinking about modern brown coal.

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  1. Xstrata moves copper processing offshore, increasing profits and greenhouse emissions at the same time. http://wattsupwiththat.com/2011/05/23/value-adding-in-australia-–-the-beginning-of-the-end/
    Why would any company here value add to their hole in the ground when you can just send your emissions offshore!
    In other countries such as spain it has been shown that every green job destroys three normal jobs.
    The US EPA has estimated that to stop 1deg of warming will cost 7 trillion dollars!
    The basis of disaster costs from global warming in the IPCC report was found to have a decimal point error and overestimate the cost by tenfold.
    Every economic study conduct has found that adaptation is much more cost effective than mitigation and yet no one ever listens to the obvious (including garnaut report)

    Can someone explain how green economic suicide is a good thing?

    • Carbon E. Coyote

      That’s incorrect. Every economic study, including Stern and Garnaut, has shown that it is better to mitigate rather than to adapt to unmitigated.

      Garnaut’s first in series of 8 Update Papers concluded:

      o the presence of uncertainty in the range of possible climate outcomes strengthens the case for climate change action;
      o the case for substantial and well-designed Australian action to encourage international agreement on climate responses remains compelling; and
      o while the current and prospective realities of damage from climate change warrant effective efforts on adaptation, this does not weaken the case for strong focus on mitigation.


      • You just proved my point! Garnaut argues for mitigation on morality and uncertainty, not on economic cost benefit analysis!

        • Carbon E. Coyote

          Again incorrect. You obviously haven’t read his report. Go and read it, get informed and then come back. He argues for it purely on a cost-benefit analysis.

          • The report you linked only shows the cost benefit comparison for adaptation vs mitigation based on the premiss that the worst case scenario actually happens. It does not price in reduced cost of adaptation if things turn out better than expected.
            The argument for mitigation is still based on “just in case its worse than the worse case scenario’s” when the current temp trends are just inside the lower limits of the IPCC best case scenario models.
            If anyone likes statistics than pop over and visit lucia (a lukewarmer) for some comparisons between model predictions and observations

          • Drederick Tatum

            Perhaps if this debate was framed in those quantitative terms then it might be easier. When I insure my car I know the loss if something happens and I’m uninsured.

            What is the annual cost of carbon “insurance”? What is the annual cost of adaptation?
            What is the annual net cost of damage caused by rising CO2 levels (costs less any benefits derived from increased CO2, if there are any). What discount factor do we use?

            The other problem is that having carbon insurance in a world where China doubles its emissions and the USA, Russia, India don’t reduce emissions is a bit like insuring your car and finding that the fine print of the policy excludes all claims.

          • The insurance fallacy has been done to death on this issue. It’s a fallacy because in order to set an insurance premium you have to know the liklihood of an event happening, you need to know the cause, the liklihood of that cause being the culprit and the costs associated with just that cause.

            If climate change insurance was something needed, insurance companies would be selling it already. Hell, I’ll sell you climate change insurance, only $500 a year, protection against any damage to any property caused entirely by man-made climate change.

            But hey, I’ll stop here, don’t want my comment deleted.

          • H&H, re insurance, a more appropriate comparison would be the question “would you drive your car to work when you could be killed by a road accident?”

            Of course you are trying to argue the precautionary principle tactic but have got it horribly wrong!
            The precautionary principle is “Don’t act unless you know the cost and consequences” or “Take precautions when there is much benefit for little cost” This is clearly not the case with climate mitigation which clearly has great cost with little benefit, especially if we go it alone.

            The argument that “we must act just in case” is in fact the idiot principle “Action without consideration” and is exactly the same method real estate agents have been using whey they said “buy now or be priced out of the market”

          • You guys are right that the difference with a standard insurance contract is that this time we don’t really know the probabilities or the cost of damage. But that doesn’t make the analogy invalid.

            It doesn’t matter what you think of the science. There are a range of possible outcomes. We might get lucky. But even if a catastrophic outcome is a low probability event, it makes sense to look at mitigation.

            As for the argument that if there was really a need for such insurance, companies would be selling it, we are talking about a pretty long time horizon here. There are plenty of risks that insurance companies are unable to price, but that doesn’t mean we should ignore them.

          • Drederick Tatum

            Rotten Apple when you say “It doesn’t matter what you think of the science.” I think you have hit on what bugs me about this. Even if you take the science as a given I think what is being proposed is total lunacy given that emissions are soaring and will continue to do so.

          • Rotten, yes in a sense you are right, but think about this. Would you pay $10,000 a year to insure your $5000 car because there is a small chance you might write it off some time in the future?

            It doesn’t make sense to ‘insure’ against all this unless we know the exact cost. More than likely it will simply be better and most cost effective to go along as usual and have a plan in case the worst happens (assumptions included).

          • MattR – I understand your point about the costs and of course this is a sensible area for debate – hence the topic of this post, which is about finding the least cost way of mitigation.

            But are you arguing that it doesn’t make sense insuring against anything when we don’t know the exact cost?

            Think of a probability distribution with a range of possible climate outcomes, with a tail that stretches far to the right. The median outcome (based on our current models) may lead you to the conclusion that mitigation is not worth the cost, but if there were even a 10% chance of a catastrophic outcome, for example, don’t you think it would be irresponsible to just roll the dice?

          • Drederick Tatum

            Rotten, the point is that rate of emissions are accelerating due to the industrialization of China, India etc. and this will continue regardless of what we do here.

            Some might reply that it is unfair to impose conditions on developing nations. Fair enough but that doesn’t change the facts about global emissions.

            So the mostly likely case seems that given we have conceded that developing nations will develop it follows that we have locked ourselves into continued high CO2 levels so get used it.

            In other words if you know that an outcome is locked in why insure against it?

            The logical response should be either do nothing or adaptation.

          • Rotten, “But are you arguing that it doesn’t make sense insuring against anything when we don’t know the exact cost?”

            What I’m saying is it doesn’t make sense to insure if the cost of doing so outweighs the cost of any potential ‘damage’ caused.

            “but if there were even a 10% chance of a catastrophic outcome, for example, don’t you think it would be irresponsible to just roll the dice?”

            The same argument could be made for absolutely ANY potential disaster. I mean, we could be hit by an asteroid and wiped out tomorrow (ironic because one is actualy passing very close to us soon), does that mean we should spend everything we have on a non-existent laser defense system? I mean, the cost of not doing this and getting hit would be immense right?

            Can you really not see the flaw in logic here?

          • Dave BD, link not working.

            Good luck getting a claim through by the way. Refer to my offer above.

          • Insurance companies make money by charging more than the risk is worth.
            If they are prepared to offer insurance then they have actually calculated that the risk is low.
            Plenty of suckers out there at the moment!

          • Rob – You crack me up. OK, so if the insurance companies don’t price climate change risk, it’s because it doesn’t exist. If they do, it’s because it doesn’t exist and they think we’re all suckers.

            Either way, the evidence is in your favour! I suggest you read up a bit on cognitive dissonance.

            It really is impossible to have a rational discussion about this issue…

          • Rotten, it’s not cognitive dissonance. If people want to waste their money on these insurance policies that’s fine. The point is they have to actually be selling too. I could offer anything to you, it’s meaningless unless enough people see it as a product worth purchasing.

            Like Rob has stated and I eluded to, the actual offering of the policy is meaningless, just try and prove man-made climate change is the cause of any damage. I’d offer this insurance and make sure that clause is in it, I’d almost certainly never have to pay a cent.

            Besides, if this is being offered GREAT! No need for the government to intervene. The private sector has taken the risk and people have a clear choice as to whether or not they are willing to pay to ‘insure’ themselves.

            The true free-market at work.

          • No rotten apple, Insurance companies don’t offer insurance on things they don’t understand and therefore can’t calculate and things that are too risky. Insurance companies are the house, they always stack the odds!

          • Hey Drederick, this is the fine print at the end of the latest
            Climate Commission Report

            This document is produced for general information only and does not represent a statement of the policy of the Commonwealth of Australia. While reasonable efforts have been made to ensure the accuracy, completeness and reliability of the material contained in this document, the Commonwealth of Australia and all persons acting for the Commonwealth preparing this report accept no liability for the accuracy of or inferences from the material contained in this publication, or for any action as a result of any person’s or group’s interpretations, deductions, conclusions or actions in relying on this material.”


      • Drederick Tatum

        Given that the climate change apparently won’t be reversed for hundreds of years (i.e. mitigation) I just don’t know how a claim can be made “that it is better to mitigate rather than to adapt to unmitigated.” That seems to defy economic logic. Time value of money. mitigation gives you a result in hundreds of years, adaption gives a result (presumably) in decades.

        • According to Climate Commissioner Flannery, a total shutdown of the human race would not “mitigate” temperature increases for centuries-to-a-millennia:

          TF, 25 March 2011 – “If *the world as a whole cut all emissions tomorrow*, the average temperature of the planet is not going to drop in several hundred years, perhaps as much as a thousand years…”

          Mitigation is therefore, clearly tilting at windmills. Unless of course, you subscribe to the idea of shutting down the entire human race.

          Both the means, and the cost, of The Final Solution so widely pushed as the only way to address “global warming”, cannot possibly be justified by any rational, non-genocidal intelligence.

          • And before I get deleted/banned for that, might I clarify that I’m perfectly aware of the counter-arguments, viz “noone is proposing total emissions reduction” / “Flannery was talking about *decline* in temps, and we’re aiming only to *Stop increases*”.

            So, no cigar.

            If it is claimed by such an “authority” as Flannery that it would take wiping out the human race “tomorrow” to *reverse* the “warming”, then it is patently obvious that “mitigating” further “increases” would still necessitate massive emissions reductions “tomorrow”.

            Which can’t happen. Absent genocide.

        • So what you’re saying is we should push through the 4-6m sea level rise of the last interglacial period and see if we can’t go jurassic, with 800ppm+.

          I suppose you dinosaurs would be more comfortable in that climate!

          • Drederick Tatum

            No, just trying to consider the facts rather than hand waving and emotions. (what model says seas rise by 6m and over what time period?)

            What I said was “Given that the climate change apparently won’t be reversed for hundreds of years”

            Flannery said that and I assume it was an informed comment. As for stopping increases, as I have said elsewhere in this thread, increases in emissions are locked in due to conceding the developing nations can emit. So if that leads to 6m sea level rises then you better get used to it.

          • Even the hand-picked “independent” Climate Commissions’ latest report was only bewailing the risk of a sea level increase of “up to 1 metre” “within a century”.

          • Drederick Tatum

            So looks like 1m not 6m. Maybe it was 6m in “day after tomorrow” 🙂

            In any case regardless of what disaster scenario is chosen as a likely outcome, some connection needs to be made to show how a carbon tax in Australia mitigates that outcome when the developing world is going to increase total global emissions.

          • I’ll post this again, hope it doesn’t go down the Orwellian memory hole.

            From joannenonva.com.au

            “The key question — with all the billions spent on cutting Australia’s carbon production: the trade and income lost; the jobs cut; the pain of living near wind farms; the foreign holidays avoided and then paying more for petrol and electricity than we have to — how many degrees will our actions cool the world by?

            Assuming the IPCC are right about the effects of CO2, and that Australia stopped producing CO2 entirely (if we all left the country) by 2100 the world would be 0.0123 degrees cooler, and sea levels would be 2mm lower. These are so small they are unmeasureable.

            Abandon Australia and save


            The statistics every Australian should know:
            Australia produced 1.38% of global human emissions of CO2 in 2011. (EIA, 2011a)
            Each year global emissions increase by twice Australia’s total annual output. (2.8%/year (EIA, 2011a). If we all emigrated and left a bare deserted continent, it puts off the warmer Armageddon by just six months.”
            The numbers were calculated with Wigley 1998 protocol assuming that Australia would otherwise have kept producing about 3% of the total CO2 emissions of developed countries. The SPPI estimate uses Wigley’s (1998) mid-range emissions scenario (which itself is based upon the IPCC’s scenario “IS92a”):

            Read the full SPPI paper by Chip Knappenberger: Impacts of Climate Mitigation Measures in Australia.

      • “Every economic study, including Stern and Garnaut”

        What a shock, can’t believe these two would say that. /sarc

        Sarcasm aside, this is nonsense. The IPCC’s own analysis concluded that the cost of reducing our emissions to nothing would be more than world GDP. Hardly ‘economical’.

        At any rate, this conclusion is only valid if you assume a certain thing, that we are not allowed to discuss because dissent is not allowed. (Hint: the cost of doing nothing could be $0)

        • MattR – You are like a broken record on these threads. Can’t we have a calm, rational discussion about the economics without setting up ridiculous straw men arguments like suggesting that those you disagree with propose reducing emissions to zero?

          • Err, I responded to what he said.

            I feel my comment was calm and entirely on topic (yeah I used sarcasm sue me), or is it that you want me to agree with your side or not post?

          • PS – The reason I used the ‘reduce emissions to zero’ point wasn’t to set up a strawman. It was to demonstrate that no matter what we do the cost will be too great thus will never pass a cost:benefit analysis.

            You could equally assume that a 5% drop would cost more than 5% of world GDP. This would do nothing for the planet (assuming “will not be mentioned”) but would certainly would create massive issues for the world economy.

  2. Just pricing carbon on very few emitters will make the energy expensive but will do very little to mitigate the warming : we are not going to reduce our emission in any meaning full way (5 or 10% less will change absolutely nothing to the outcome).

    Instead of a negative policy we could try a positive way by the public authorities pushing for a huge move to green energy and therefore making more energy available and solving our Dutch disease.

    Like a big NBN plan but for energy/productivity

    • Carbon E. Coyote

      That’s exactly my point. A public driven “huge move to green energy” is a massively capital intensive budget expense. At the same time, industry keeps on emitting unabated at accelerating pace (more coal plant, more emission intensive activity). So the taxpayer has to play catch up. This proposal would be far more expensive, and drive up energy prices far quicker, than a carbon price.

      • not if you legislate in the fashion they use in US to reduce cars emission.The government with the NBN for energy would stop (like they do with network) competitors to upgrade/develop any new plant.Over 30 years most plant would naturally shut down.

        The financing would come with superannuation funds who would be more than happy to get their hands on a safe investments with 5-6% return for 25 years.The the government borrow very cheaply no matter what.does not cost much but the societal benefit would be tremendous.

        • and of course every bit of Coal/Gas that we are not going to use is getting available for export.

          • FWIW, I think that a “rich”, coal and uranium resource-endowed nation like ours could (and should?) transition to the more expensive (and functionally proven) nuclear option for our own power needs, *thus* allowing us to sell more of our finite, lower cost coal to poorer developing nations.

            Quite irrespective of the AGW lark. Just thinking of the betterment of my fellow human being.

          • David, you will find I difficult to convince people that lowering their standard of living for someone else’s benefit is a good thing.
            The worst thing about AGW is that so much human misery could be prevented with so much less money!
            A 2c vitamina A pill can prevent blindness.
            A $15 mosquito net can prevent malaria
            Lets not talk about the human tragedy that biofuels have caused!

        • If you want to reduce car emission then all the need to do is incentivise low emission cars through discounted rego!
          I am also surprised that australia does not produce small cars that run on strait LPG.

          The future of short trip is compressed air cars that are already run in india, They have super low running costs, fast to charge, excellent torque characteristics, and no pollution. You could also attach a power generator to a compressor for longer distance travel. Much better than electrical.

      • Your graph could be very different with state financing : Most of the cost of wind/green energy is the cost of borrowing.Government/super could make it dramatically lower by financing it as government borrow at much lower rate than private entities.That why France has a proper energy infrastructure with cheap energy and UK (mostly private) does not, and pay the high price.

        Green is expensive to setup but cheap to run, no private entities can support the initial financing price they prefer invest in gas, less initial borrowing.

        • The problem with green energy is that it doesn’t run! It still has to be backed up with baseload energy from fossil fuel or nuclear. It can lead to energy spikes and brownout that have significant cost!
          It is stupid to spend money on inefficient green energy, we should spend it on developing new technology instead!

      • dam that is exactly the point of the carbon price!

        Give investors certainty, and sure enough superannunation funds wanting a secure 5-6% will invest in renewable energy companies

        • yes give the certainty that energy price will be expensive, which is not a very appealing outcome for the society.

          better get more energy at cheaper price. (France prices are already lower than Aussies ones even with all our cheap coal)

  3. This ‘insurance’ is irrelevant if the rest of the world doesn’t take it out.

    Why don’t we model the cost of taking action without the major emitters coming along?

    China reducing intensity does not equal reducing emissions as the politicians would try and have people believe.

    Dishonesty like the above in this debate does them and the scientists a huge disservice.

    • Drederick Tatum

      Exactly. There is no first (or second or third) mover advantage here. CO2 levels are global. The big emitters must move yet by China’s own publicly stated numbers if they continue to grow GDP at rates of ~8% they will double their emissions in ~15 years.

    • The mitigation model the world is proceeding on is contraction and convergence. That is, rich countries reduce total emissions whilst poorer ones keep growing theirs at reduced rates. In a decade or so carbon output per capita converges across the major countries and then we all continue to reduce absolute emissions together. If we don’t do it that way poorer countries won’t do it at all. It’s fair enough too given rich countries pumped most of greenhouse gas already in the atmosphere…it works over time to reduce total global emissions…

      • Drederick Tatum

        Well we know that emissions will be at least 20% higher than current levels at some stage in the next decade (emissions are actually accelerating) so what time frame has been proposed for when convergence is reached and global emissions start to actually drop?

        Also is any of this ever going to lead to a reduction of global emissions before we run out of oil?

      • I’m guessing you meant to say that most of the increase in the greenhouse gas CO2 is due to western emissions. Since 2/3 of todays concentration was already there!
        Most of the greenhouse gas is water vapour especially by mass.
        By effect the first 20ppm of CO2 is responsible for 50% of the CO2 warming and each doubling absorbs 50% of the remaining energy in the spectrum as is described by the Beer-Lambert law.

        Out of curiosity, did you know that Greenhouse gases have log relationship with forcing? (The strength of the effect decreases with concentration)

      • With around one billion people in the developed world, nearly six billion in the developing world, 200,000 people added to the planet every day, mitigation models predicting reduced absolute emissions in a decade would appear optimistic (if even measurable globally). Particularly when considering that most developed nations will adopt ETS where permits will purchased in regional or global markets, largely ensuring business as usual. How this system is expected to reduce absolute emissions has me confounded.

        You have 85% of the world’s population in various stages of economic development (power, food supply, transport of all kinds, infrastructure development) and an ETS that will be subject to manipulation, if not fraud. Frankly, it is hard to see any reduction in global emissions


        Would be interesting to know if David Leitch’s $80/t figure stands up to scrutiny. Almost a gamechanger.

  4. Dud article,

    The economics in no way matches the science underlying it.

    A black mark for Macrobusiness.

    • I disagree.
      I find MB is pretty much the only place where the wailing of extremists from both sides can be kept at a manageable din so that some actual discussion can occur.

      All of the political players agree ( publicly at least ) that action needs to be taken on reducing emissions, therefore discussion of policy and the economics is relevant and required.

      Opinions on the underlying science are irrelevant in this context.

      • “Opinions on the underlying science are irrelevant in this context.”

        Actually they go right to the core of the issue. Because all economic assumptions are based on a few underlying scientific ones. For the purposes of the discussion and at the request of MB I’ll refrain from talking about them (already have on other threads anyway) but to say they are irrelevant is 100% wrong.

        • Considering history shows that civilisation flourishes under warm conditions and perishes during cool conditions, There is a lot of counter logical faith been shown in economic modelling a hundred years in the future.
          Who here at Macro blogs has faith in economic models that were so badly shown up during the GFC?

          • “Who here at Macro blogs has faith in economic models that were so badly shown up during the GFC?”


            Crux of the matter.

      • Drederick Tatum

        But zentao while political players may agree that emissions need to be reduced, out in the real world emissions are increasing and will continue do so due to industrialization in the developed world.

        The argument seems to be that the developed world has had its go so we have to allow the developing world to industrialize. No beef with me on that, but you have to accept that in that scenario total global emissions are going to rise not fall.

        So the west, or some countries in the west, want to impose restrictions on themselves even though the planet will warm anyway.

      • “All of the political players agree ( publicly at least ) that action needs to be taken on reducing emissions”

        That’s a very good point zentao.

        One wonders just how much of that (mostly) bipartisan political “agreement” arises from the fact of our socialist government having signed us up to pass 10% of the $$ raised from “pricing carbon” over to the UN.

    • Your wrong dusty penny, The economics is all based on dubious computer modelling, just like the science!

  5. Thank you MattR,

    Your arguments are based on known scientific facts, they are lucid and valid, unlike the economic modelling based on GIGO (garbage- in-garbage-out).

  6. While were on the topic of cost benefit I think I should note some benefits of increased CO2/ global warming.

    1/ increased plant productivity and drought tolerances as plants evolved at much higher concentrations than today and essentially loose water to gain CO2 through the pore size/density
    2/ Decreased winter mortality.
    3/In creased agricultural productivity in fertile glacial deposit soils (Most of the worlds excess food production comes from cold marginal areas of the northern hemisphere that used to be glaciated.) Global cooling is far deadlier scenario than global warming.
    4/Greening of sub tropical belts such as around sahara.
    5/Prevention of civilisation ending return to Ice age conditions or its delay!

  7. ‘Climate Change’ is now attracting the same kind of response as Israel/Palestinian relations : there is no discussion, just poster shouting over one another.

    The rising gas prices should be ringing alarm bells. What was once a viable, cheap alternative to oil is not getting more expensive thanks to the growth of China and India. Non-renewable Energy prices is going to rise in the coming decades. If we only start our investment in renewable energy in 20 years later, it’ll be a very painful transition.

    An emission trading scheme is better than a carbon tax. A carbon tax should be imposed on imports and refunded on exports, otherwise it’s simply pushing the carbon emission to another country. However, any kind of meaningful discussion is simply drowned out by zealots who believes that oil and resource will never run out..

    • I agree the world needs an alternative to non renewable fuels, but we should be spending the money on researching cost effective solutions and let the market cost naturally increase till something else is viable. Cheap energy is essential to human welfare above all else!
      Just look at the human toll biofuel production has had!

      • “Just look at the human toll biofuel production has had!”

        This is one of the greatest crimes in human history and gets almost no coverage from mainstream sources. People are starving in Africa so that people in the US can run their car on corn.

        Decadence doesn’t have a meaning compared to this.

    • This is the thing, you talk about prices rising by themselves because of developing nations but then take the idea that we somehow need to make our current, cheaper, forms of energy more expensive now. For almost no benefit at all.

      If, as you say, demand from the rest of the world pushes the price of now cheap forms of energy up and up, then the free-market will make currently useless and absurdly expenseive ‘renewable’ power (or other forms like fission and maybe invented soon fusion) more viable. Thus investment will occur on it’s own.

      Market intervention in this manner has shown, time and time again, to create far more problems than it solves. How is investing in expensive forms now, when there are still far cheaper options, not going to cause pain, but waiting until later on, when presumably they will be the same price or cheaper, will cause lots of pain?

      It makes no sense.

      • Well said MattR, and it’s not just the gov intervention and the free market aspects, there’s also what I think is one of the most important; EROEI; energy return on energy invested.
        Back during the days when “Jed Clampett was out shootin’ up some food and up from the ground come a bubblin’ crude”, you could get a EROEI of about 100:1, meaning it took one barrel of oil to produce 100 barrels. In the doco “Crude Awakening”, I think it was the late Matt Simmons that said you could look at the embodied energy in one barrel of oil compared to the amount of work in calories a person would expend in a year and I think it was the equivalent of 12 people. In those days, (and even now), that was the closest we ever got to having ‘free energy’. A $10/barrel, (even $100 is a bargain), of oil gave you basically the energy equivalent of 12 people working for a year, hence the amazing level of affluence and standard of living we have today. That 100-1 ratio has declined significantly, not sure how low it is now, but the fact we have to go exploring and drilling in deep water and the artic regions pretty much sums up that most of, if not all the “big elephants” have been bagged, call it peak-oil or whatever. I don’t think alot of people realise that solar panals, windmills etc have a massive “Carbon” input to manufacture them and when you factor this in as to the EROEI, they are way down the food chain and need gov subsidies to be viable-hence (like the way the property re bubble relationship to FHOG,NG etc are often talked about in other threads on this blog)they aren’t really going to save us until their time comes via the free market mechanism.
        Believe me, I would love to have solar panals but grapple with the the ethics of the poorer segments of society (that can’t even afford the gov subsidised price) getting increased power bills to pay for the 2-3 times buyback one would make after putting power back into the grid. I have the same moral issues with NG RE and have basically come to the conclusion that the best “solar panal”, (whether you believ in AGW or not), one can have is to have fruit, nut trees and a vegie garden. Simply rip out, (if you have a property or access to), all those ornamental plants, lawns and trees that are fed with expensive fertilizers, trim, mow etc with electric, ICE devices and stop watching your hard earned cash go into the council green recycling bin. There are lots of things we can do that just make plain good economic sense, conserve precious natural resources and ‘satisfy many green agendas’ without having to pay an “indulgence” now for potential future sins based on advocacy science that varies little if at all from religion.

  8. Drederick Tatum

    We get told by advocates in the media that we have to act now. There always seems to be this contrived sense of urgency yet the government didn’t perceive any urgency when it abandoned a tax or ETS prior to the last election. Additionally the current rent-an-advcate mob weren’t waving we are doomed signs when the government went to the election with a no carbon tax policy. It is reasonable to think that if the government had of won a majority there would be no sense of urgency now.

    If it is important that we do this now why wasn’t important that we do it “now” last July?

    The other part of the debate that is interesting is the total lack of any connection between a carbon tax and a mitigation of the worst case scenario that is typically presented to punters. The West may or may not cut back on emissions but in the developed world emissions are soaring and will continue to do so. China announced it would reduce emissions by ~40% on NEW GDP but with a GDP growth of ~8% or more, that still sees it doubling its emissions in the 2020s. And that is just China. The reality is that despite all the hand wringing emissions are rising, accelerating actually.

    So fear of a disaster outcome doesn’t justify a carbon tax IMO. If you cannot change the outcome how can you justify taxing the bejesus out of people?