The carbon Budget

One of last week’s hot political issues was whether or not the budget would include the carbon price. Today’s blog looks at what the budget would have looked like if it included the carbon price.

REVENUE

The starting point is to recognise that the creation of a carbon scheme creates a new set of assets. Whereas previously the ability to emit greenhouse gases to the atmosphere was without cost, once carbon is priced such a right becomes of valuable. The value of this asset is represented by the emissions to be coverage by the scheme multiplied by the carbon price. Emissions covered by the scheme will be approximately 450million tonnes CO2e per year. So a price of $20/tCO2e yield a value of $9b.

The price is set to increase by 4% over CPI, let’s say 7%. So it would be $21.40 in 2013/14, $22.90 in 2014/15 and so on. At the same time, as a result of the price signal, emissions will be reducing, and if there was price on carbon they would significantly increase by +24% according to the projections. If emissions need to get to 5% below 2000 levels by 2020 (ie around 420MT), assuming a constant linear reduction, collections will increase over time:

Year Emissions (Mt) Price ($/t) Amount ($m)
2012/13 450 20.00 9,000
2013/14 445 21.40 9,523
2014/15 440 22.90 10,075

This assumes no contribution from the Carbon Farming Initiative or import of international permits, which would each reduce the revenue.

EXPENDITURE

It is important that the revenue is fed back into the economy in some way, so the carbon cost does not become a dead weight loss. If there were no other calls on the funds and no political considerations, economists would argue that these funds should go to remove the most distortionary and productivity-zapping taxes in the system, such as payroll tax, and to reduce rates on income (business & household) taxes to stimulate the economy.

In the real world, however, there are many calls on these funds. Principally, this is a question of equity, and carefully targeting how the impacts of the carbon price are felt across the economy. The principal calls are for:

  • Emission Intensive Trade Exposed (EITE) industries; with the risk of carbon leakage if they are to face a carbon cost before the price of the commodity they are producing includes the impact of a global carbon price;
  • Households; who will be paying higher electricity, fuel and, to a much lesser extent, other prices;
  • Coal-fired electricity generators; who while not trade exposed are emission intensive, and face significant changes to asset values;
  • R&D & Infrastructure; as Garnaut identified in his 2008 Review, funds raised from carbon price can be used to address market failures not otherwise corrected by the implementation of the carbon price.

Dividing up the $9-10b pie is one of the current activities of the Multi Party Committee on Climate Change. But the indications are that around half will go to households and a majority of the remainder to EITEs.

Note that it’s the job of the carbon price itself to be the main driver of redirecting financial and economic resources away from highly emission intensive activities and towards lower emission intensive activities. It is not the job of the allocation of the budget. That’s why the government (and previous governments) have in the main rejected calls for the use of the funds for deploying renewables. This logic can also be seen in the axing of several Rudd era initiatives from the budget, including funding for the CCS Institute and some of the solar projects.

INFLATION

The carbon price will have an impact on inflation by increasing the cost of a range of emission intensive household goods, mainly electricity (~20%) and petrol (~6-7c/l). All other goods are not that emission-intensive, and it’s likely that we wouldn’t even notice the impact at the check-out.

Not having the modelling capability in-house, I turn to the modelling work done by Treasury in 2008 on the CPRS, on the basis that the price impact of the CPRS will be broadly the same as that of the proposed carbon price under the MPCCC, and that it’s the carbon price itself that determines inflation and not the budgetary allocations.

Emission pricing produces a one-off rise in the consumer price index (CPI) of around 1-1.5 per cent for emission prices in the CPRS scenarios, which start at around A$23-32/tCO2-e (A$20-28 in 2005 dollars). Emission pricing is expected to have minimal implications for ongoing inflation; however, changes in coverage (such as extending the Carbon Pollution Reduction Scheme to agriculture in 2015) could produce additional smaller increases in the CPI at that time.

Cattle-related goods (milk, beef) would also go up (eg milk ~2c/l) if agriculture, particular ruminant methane, was included in the scheme (which it isn’t).

GROWTH

In a previous article, I touched on the impact of growth.  The modelled estimate is a shaving of 0.1-0.2% of GDP per year, again based on Treasury modelling (which is currently bring updated). While this is the headline figure, underneath this occurs a restructuring of the economy, with some sectors (eg abatement activity, new energy plants) seeing higher growth than previously and others contracting.

AFTER 3 YEARS

Note that once we move to a floating price and fixed target, as opposed to the initial fixed price period, revenue will come from auctioning of permits rather than selling them at a fixed price. Around half the permits may be auctioned, with that amount still going to households. But the allocation of free permits to EITEs and other sectors would not be seen as a cash item in the budget.

So that’s it at a high level. Sounds like we’ll have to wait for the MYEFO to see it in the detail.

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Comments

  1. In lieu of the fact that the whole carbon debate is so controversial and divisive, are we supposed to believe that governments, market exchanges, taxes and rebates will somehow save us without any cronyism and un-intended consequences? Uh-huh…

    Anyway, maybe we need to approach this from a different angle and think of CO2 as a resource, (plant food), and not a pollutant, much the same as market gardeners do when they add CO2 to greenhouses to increase plant yield and therefore their bottom line.

    If CO2 is rising in the atmosphere, it would send a signal to entrepreneurs that an opportunity is opening up and agriculture, (CO2 capture), forestry etc will become more profitable thru increased yields naturally.

  2. “…creation of a carbon scheme creates a new set of *assets* … once carbon is priced such a right becomes of valuable.”

    Right.

    *Exactly* like an ink scratch on paper – a signature on a mortgage – creates a new “asset”. To be traded, securitised, leveraged for the benefit of morally bankrupt parasites.

    *Exactly* like the “right” to spend 30 years working as a debt slave, becomes “valuable”.

    To banksters.

    Permitting the creation of artificial “commodity” markets worked a treat for the USA / human race last time, didn’t it.

    So of course, why not let the banksters (and legions of hangers-on) have an even *more* artificial one.

    Why not let them have an “independent” Carbon Bank while they’re at it. And let it *borrow* against the future earnings of taxpayers to boot –

    http://barnabyisright.com/2011/05/17/our-squeeze-pop-carbon-bank/

    I am disgusted and appalled that this otherwise fine blog – whilst brilliantly poking holes in other dubious areas of finance and economy – continues to happily accommodate propaganda for this mother of all bubble schemes.

    • Agree with you David, well said. That sentence captures the truth of any carbon scheme. A tradeable (“valuable”) asset class.

      The financialisation of carbon has always been the only goal. The environmental movement has been played perfectly by the global finance industry that created the ETS and orchestrated its blind acceptance.

    • This blog needs an “edit” function.

      How apropos – Freudian, indeed – that this article introduces the fundamental issue (money) with this statement:

      “REVENUE

      The *starting point is to recognise* that the creation of a carbon scheme creates a new set of assets…”

      By their own words they stand condemned.

      • Carbon E Coyote

        This is government revenue, not what you call “bankster” revenue. In fact, the banks have got nothing to do with it in these first three years: while there’s a fixed price there’s nothing to trade and so no profits to be made from trading.

        You rail against the concept of the creation of an “asset”, but it’s exactly the same as the auctioning of radio spectrum. There’s no asset value if there’s no economic scarcity; the creation of the constraint is what causes the commodity to be priced and the asset to have value.

        • I wasn’t aware that international banks had created departments solely for Radio Spectrum Trading Schemes!

        • >”This is government revenue, not what you call “bankster” revenue.”

          Government revenue is the sweat of taxpayers. And we both know that the new ‘government revenue’ titled “carbon tax”, is to be churned through the bankster system. Hence the push by our ‘leading clean energy’ lobby group for a Carbon Bank to administer it, from Day 1.

          >”…the banks have got nothing to do with it *in these first three years*…”

          Exactly. And their having “nothing to do with it” in “the first three years” somehow negates the openly conceded fact that the banks will have an awful lot to do with it *after* 3 years, does it? When a “fixed price” “carbon tax” transitions to an “emissions trading scheme”.

          I note that banksters like G.Kelly/Westpac are leading the charge, presently calling for an ETS sooner rather than later.

          >”You rail against the concept of the creation of an “asset”..”

          Fallacy of oversimplification.

          >”..it’s exactly the same as the auctioning of radio spectrum..”

          Utter nonsense. With respect CC, the attempt at misdirection in your final paragraph is so blatant, it does your credibility more harm than good.

          Let’s not beat about the bush.

          Do you refute the basic assertion, that the proposed financialisation of “carbon” – and in particular vis-a-vis the mechanism of creation of an emissions trading “commodity” market – represents a profit-making opportunity for banks?

          • Carbon E Coyote

            You’re missing the main point of the carbon price if you think it’s all about banks making profits. We don’t have an equity market just so equity traders have jobs; it’s so the market can determine what the value of equities are. Same with interest rates, currencies, metals, oil, other commodities. These markets don’t exist just to create trading profits; they exist so that the economy can see the price signal of the commodity and make decisions and manage risk on the back of seeing this price.

            So, yes, at the risk of feeding your conspiracy theory, some banks will see an opportunity, and of these some will make profits and some will make losses.

          • “We don’t have an equity market just so equity traders have jobs;”

            The difference being (that you conveniently leave out) that the stock market exists with or without government intervention. Ditto for metals, commodities and tradeable goods and to a lesser extent currencies and interest rates.

            This is not a ‘market’ and to say so is to push a myth and a government lie. This is nothing but a massive intervention in an otherwise free market.

            The market has already decided on a price for CO2 emissions. That price is $0.

  3. I find it difficult comprehend the view that the imposition of carbon pricing schemes could only ever produce negative outcomes. There will be some poor outcomes, but there are also lots of opportunities that will open up. an innovative people would look for those opportunities.
    For example a couple of years ago I spoke to a representative of Danone (a very large agricultural company) at a workshop in Geneva who told me that the necessity to reduce their carbon emissions and lessen the tax burden…emissions mostly from cattle… had led the company to investigate alternative feed stocks and that had led to far more efficient feeds that not only reduced their emissions, but also saved them a lot of money in feed costs. Is that such a negative outcome? The company did not think so.
    Incidentally the workshop was examining the development of carbon sequestration schemes through forestry…and in particular the use of tidal wetlands as carbon sinks. Wetlands which are being cleared throughout the world because the current political/economic model does not have anyway of pricing the value of the organic carbon produced in those wetlands, and upon which coastal fisheries yields are dependent, to allow landholders to receive a return for the opportunity cost of holding that carbon in the wetlands pool of fixed (organic) carbon. Will such schemes work? No idea at this stage, but they offer more hope than any of the other restoration schemes funded by development aid money over the last 20years…but are dependent on a realistic and stable price for carbon.
    To me the whole argument about emissions has been debased and sidetracked into squabbling over minutia about whether there is global warming and whether we are responsible(I guess that is the human way), whereas there are obvious and tangible benefits to all if we just focus on reducing our carbon based energy footprints in a finite world.

    • To me the whole argument about emissions has been debased and sidetracked into squabbling over minutia about whether there is global warming and whether we are responsible(I guess that is the human way), whereas there are obvious and tangible benefits to all if we just focus on reducing our carbon based energy footprints in a finite world.

      Well said Russell.

      Unfortunately its impossible to have a discussion about pricing carbon without the thread being overrun with denialists and other nutters. Its already started above.

      • Resisting the idea of granting banksters a global monster market trading on CO2 derivatives – with taxpayers on the hook for it all – is “squabbling over minutia”?

        And one is dismissed as a “denialist” for disapproving *specifically* of this particular idea/scheme?

        Hypocrisy rules.

    • 1.”the necessity to reduce their carbon emissions and lessen the tax burden…emissions mostly from cattle… had led the company to investigate alternative feed stocks and that had led to far more efficient feeds that not only reduced their emissions, but also saved them a lot of money in feed costs” Why wouldn’t they be trying to reduce costs anyway to gain a competitive edge?

      2. “carbon sequestration schemes through forestry” We should be re-foresting anyway however you only have to look at the Indonesians cutting down their forests to plant palm oil plantations for bio-fuels. On the agricultural side, US gov subsidies to create biofuel from corn has led to an escalation of corn prices causing social unrest and hunger in those countries formally importing the corn at a cheaper price; all for a EROEI of 1:1-whoopee, except for the US corn farmers celebrating their gov subsidised good fortune.
      3. “the whole argument about emissions has been debased and sidetracked into squabbling over minutia about whether there is global warming and whether we are responsible”, I think this is the whole point, we have wasted an immense amount of time, money and resources, (on whether AGW is real or not), that could be invested to solving the real problems in the world.

      And by the way it’s not “Carbon”, it’s Carbon dioxide, (CO2), everything organic is made up of carbon.

      “Ruddprime loans will eventually blow the warm air out of Juliar’s sails”

      • In response…

        1.yes they should have been investigating all potential cost saving measures…but obviously overlooked at least one..
        2…I didn’t get your point about palm oil production?
        3. agreed, but setting a price on carbon is one such mechanism for solving some of those real problems

        Lastly, it IS about carbon, it’s fluxes, pools and sinks, and specifically the size of the pool of C02 which is growing as a consequence of reducing the size of the other sinks and pools of carbon. And yes, as a biologist/ecologist I am acutely aware of the role of carbon in life on Earth.

        • Hi Russell,

          2. regarding indo palm oil;

          “Indonesia eyeing $1bn climate aid to cut down forests, says Greenpeace
          Vague legal definitions may allow Indonesia to class forests as ‘degraded’ and ‘rehabilitate’ the land with palm trees and biofuel crops

          Indonesia plans to class large areas of its remaining natural forests as “degraded” land in order to cut them down and receive nearly $1bn of climate aid for replanting them with palm trees and biofuel crops, according to Greenpeace International.

          According to internal government documents from the forestry, agriculture and energy departments in Jakarta, the areas of land earmarked for industrial plantation expansion in the next 20 years include 37m ha of existing natural forest – 50% of the country’s orangutan habitat and 80% of its carbon-rich peatland. More than 60m ha – an area nearly five times the size of England – could be converted to palm oil and biofuel production in the next 20 years, say the papers.

          “The land is roughly equivalent to all the currently undeveloped land in Indonesia,” says the report. “The government plans for a trebling of pulp and paper production by 2015 and a doubling of palm oil production by 2020.”

          The result, says the environmental group in a report released in Jakarta today, would be to massively expand Indonesia’s palm, paper and biofuel industries in the name of “rehabilitating” land, while at the same time allowing its powerful forestry industry to carry on business as usual and to collect international carbon funds.

          “[Money] earmarked for forest protection may actually be used to subsidise their destruction with significant climate, wildlife and social costs,” said the report.

          But weak legal definitions of “forest” and “degraded land”, have allowed the global logging industry and officials in some governments to take advantage of an ambitious UN forest-reform scheme known as Redd (Reduced emissions from deforestation and degradation). This would pay countries to replant trees and restore land. Indonesia has pledged drastic action to reduce its greenhouse gas emissions by 26% on its own and 42% with international climate aid. If it agrees to a binding deal to limit deforestation, says Greenpeace, this would send a powerful message to other forested countries.

          Read more at The Guardian- Nov 23rd 2010”

  4. I dont know how the greens can support this piece of crappy legislation.does hurt everywhere, does not help our dutch disease, does not create/support any new tech/jobs.

    What a waste.a Shame.

    hope the backslash will be enough to stop it for good.i dont see it going anywhere.Another Guillard idiocy.

  5. Carbon E. Coyote, do you mind to make any disclosure if necessary.Your posts are sweating vested interests.I find them out of place on MB.

    • Exactly.

      Something transparent and *honest* – a la that offered at the end of posts by the estimable MacroBlogger “The Prince” – would be apropos:

      “Disclosure: The author is a Director of a private investment company (Empire Investing Pty Ltd), which has no interest in any business mentioned in this article. The article is not to be taken as investment advice and the views expressed are opinions only. Readers should seek advice from someone who claims to be qualified before considering allocating capital in any investment.”

  6. CEC lectures in carbon trading at Macquarie University. Will you guys cut the crap about him being a vested interest.

    Deep T. is a banker and you don’t critique him in this way. I work in media and you don’t call me a vested interest for startiung this site. Unconventional Economist works at an investment bank and you don’t accuse him of it either.

    On your definition eveyone is avested interest.

    CC has spent quite some time exposing real vested interests for you. That is BlueScope Steel and their rubbish about carbon being their problme when it clearly the dollar etc, etc.

    It’s really unfortunate that you are so busy attacking anyone that beleives in global warming that you allow yourself to screwed by the real vested interests.

    • Well if we’re talking about unfair pricing of resources, lets look at water. They only put a price on it so that they could chanel funds into corrupt, Water Corporations, who throw it all away on their big pipes, their horrible pump stations and those pointless dams. Those bastards have stopped me from watering my lawn 24/7!

      And then there is electricity. In fact, who could believe they could put ANY price on electricity? Its my god given right to have AS MUCH AS I DAMN WELL WANT and these thieving engineers and bureaucrats just want to take it all away from me! So what if they want to build their wind farms, or gas stations, or geothermal, or solar thermal. If I can’t run my 3kW air conditioner to live in perpetual 18C then SOMETHING MUST BE WRONG!

      And they want to tell me my big, powerful 15L/100km Australian built piece of shit is too expensive to run. First it was those thieving arabs and spectators, now the government wants a turn!

      And all they’ll do is take my money and invest in horrendously efficient trains, or light rail… their treachery makes my blood boil! How dare they even contemplate the energy/climate challenge we face!

      It would be so much easier to buy 20 millions buckets of sand

      • “Well if we’re talking about unfair pricing of resources..”

        Interesting.

        So CO2 is a “resource” now?

        And here I was all convinced by the plethora of “experts” that it is an evil “pollutant”.

        If it is really a “resource” … well, then how about all those rent-seeking parasites start paying ME to breathe it out.

        I’m adding to the resource base of the planet with every breath.

        Where’s *my* moolah, Flannery?

        /sarc off

    • Its a tricky one isnt?

      Putting a price on something means its now worth something -the very fundamental of markets – but it does also mean it is open to excessive securitisation and incorrect regulation.

      Residential property stands out here as an example of concern.

      The bank converts your consumption item – your house – into an asset – a mortgage. Now if its treated or “regulated” properly, as a depreciating asset against an imputed rent, then it will be valued as such.

      But if that mortgage can be securitised, then those who are “creating” that asset will come up with any notion to inflate the size of that asset.

      This is my problem with letting unregulated financial markets securitise a carbon permit.

      These are just my uneducated thoughts…

      The actual process of putting a price on carbon (apart from the scientific validity thereof – which I’m not qualified to speak on) makes economic sense, just like putting a price on the radio spectrum, water, and natural resources.

      In effect, a price on carbon dioxide is a “rent” on the atmosphere – which is owned collectively by the commonwealth (according to first principles) not by any individual or corporation.

      Now do you need a market mechanism to regulate the margin price of that permit? Probably – although starting it off like a nascent government bond market (whereby initial prices are set by the government alone) makes a bit of sense.

      Do you need a securitisation market to take advantage of these prices (beyond perhaps a robust options/future market)? Not really. This is where the rightful concerns of people has some validity.

      However, the real problems behind it, the way I see it – something Coyote HAS pointed out – is the gaming of this system by the big polluters. A secondary problem is how this is further de-regulated (or fettered) by government by handing out rebates to households – who also pollute.

      You see if you allow the polluters small and large to de-regulate and fetter the carbon pricing process, as the banks have been allowed by using high LVR’s, shoddy price to income serviceability etc, to inflate the price of their assets (the mortgages), then you have no market at all, and no faith in the system.

      And hence no real justifiable outcome: which is we need to create as much energy and power as possible to grow our prosperity. Higher electricity generation equals higher prosperity.

      Disclosure: these are the thoughts of a confirmed tea leaf reader who provides no additional economic productivity or worth to society and has no environmental science credentials or idea about global warming/climate change. h/t David

      • Great post Prince.

        However…

        “the real problems behind it, the way I see it – something Coyote HAS pointed out – is the gaming of this system by the big polluters.”

        Sorry. No cigar.

        To adopt this line is to place the cart before the horse.

        There is no problem at all of “gaming” of a system by “big polluters”, if said system is not created in the first place.

      • “..has no environmental science credentials or idea about global warming/climate change.”

        All the more reason *not* to blindly accept the claims of “experts” who (claim they) do.

        Nobel prize-winning physicist Richard Feynman’s wisdom comes to mind:

        “Science is the belief in the ignorance of experts”.

    • H&H,

      “CEC lectures in carbon trading at Macquarie University.”

      Nothing else to add?

      With deepest respect H&H, this is a misleading and deceptive comment.

      By omission.

      From MacroBusiness’ “About” page –

      “..Julian’s background is in the energy industry, having worked as an energy trader – and then later in carbon trading and carbon policy – for major Australian corporates.

      He is *currently an investment manager for a specialist venture capital fund* and he *also* lectures in carbon finance in a post-graduate finance course.

      The views Julian expresses at this site are his own and not those of his employers.”

      What kind of “venture capital fund” is CC an “investment manager” at?

      Cleantech Ventures –

      http://www.cleantechventures.com.au/the-team/julian-turecek-investment-manager/

      We respect your intellectual honesty, H&H.

      Please do your readers the courtesy of the same.

      • David, I would think that CEC could declare his vested interests if he was giving financial advice or seem like it (as the traders here talk about specific stocks), not talking about how in theory a carbon price would work which is the thrust of his articles.

        You yourself pointed out this website has declared his interests, albeit not in name, but that’s a general privacy thing.

        You may not like the idea of a carbon price or that the human race could be doing something bad to the environment, but I don’t see anything wrong with what CEC is doing.

    • My issue with CEC and all these fatcats wannabe is they are advocating financialisation of Co2, they do not give a crap of warming.

      carbon tax is not going to help us in any material way to reduce our carbon footprint especially if the target is a 5% from 2000 emission considering our 2% per annum population growth.it s just BS and smoke screen.

      we do not have a carbon problem we have an energy problem and there is no positive way to reduce effectively our carbon footprint (and hoping to reduce the global warming by few hours/days) than moving to a low carbon economy.A low carbon economy imposes a massive investment in green energy to get an acceptable energy output.A low carbon economy would solve most of our dutch disease issues with none offshorable jobs/high tech jobs/reseach, increase in productivity.

      filling fatcats wallets with useless friction/financialization/red tape is not going to do the general population any good.Of course fat cats are not working for the public good.

    • “CEC lectures in carbon trading at Macquarie University. Will you guys cut the crap about him being a vested interest.”

      Err…how is this not a vested interest?

      He has a direct incentive to keep the myth of AGW alive and push the carbon trading scam.

      “I work in media and you don’t call me a vested interest for startiung this site.”

      A vested interest in more media? Apples and oranges anyone?

      “Unconventional Economist works at an investment bank and you don’t accuse him of it either.”

      I would if the bank he worked in had a vested interest in lower home prices.

      “It’s really unfortunate that you are so busy attacking anyone that beleives in global warming that you allow yourself to screwed by the real vested interests.”

      Because it has nothing to do with the fact that catastrophic global warming has no basis whatsoever in reality? I see miners and energy producers as protecting their own interests against a government that is attempting to interfere in a free market. For no net benefit whatsoever.

      Then again, I have a ‘vested interest’ in paying less taxes, having more freedom and not being ruled by an all powerful government who decides to ‘price’ a gas that I exhale. So I guess my opinion means nothing.

      • The real vested interest here is the multi-trillion dollar global fossil fuels industry.

        Come on guys, if there was any truth to the idea that AGW was a hoax or a conspiracy by climate scientists, don’t ya think one of them would have broken ranks by now? Can you imagine the riches that would flow to a respected mainstream climate scientist who exposed the “hoax”?

        You guys see yourselves as contrarians, as natural skeptics, but the reality is you’re lining up to defend the biggest, baddest industry on planet Earth.

        Think about it, why on Earth would climate scientists invent a theory that’s massively inconvenient for everyone, incredibly expensive to remedy, and unbelievably difficult to sell politically. Are they gluttons for punishment?

        It would make far more sense to invent another problem like the ozone hole that was relatively inexpensive to fix, and didn’t require a fundamental shift in the way our civilisation uses energy.

        I would rephrase H&H’s comment like this:

        It’s really unfortunate that you are so busy attacking anyone that believes in global warming that you allow yourself to used by the real vested interests.

        You are being used.

        • Lorax,

          Seriously, I do not disagree with you one iota on the basic premise that the fossil fuel industry is a danger to society.

          But most definitely *not* for the reason so loudly touted by rent-seekers, parasites and others financially and intellectually committed to the Cause – (ie) the alleged peril of GHG “emissions”, and of CO2 in particular.

          I have *never* argued that AGW is a hoax or conspiracy of climate scientists. The problem on that specific point – as I see it personally – is far more complex and nuanced than simply labelling it a “conspiracy”. Or denying that there is a conspiracy.

          > Think about it, why on Earth would climate scientists invent a theory that’s massively inconvenient for everyone, incredibly expensive to remedy, and *unbelievably difficult to sell politically. Are they gluttons for punishment?*

          Mate, it was not so very long ago that the idea was FAR from being “unbelievably difficult to sell politically”. Every man and his dog were on board in the days of Al Gore “Inconvenient Truth” infotainment fever. Remember the opinion polls?!

          Funny thing about that GFC. And the “weather” turning f-ing cold the world over. An empty wallet and brass monkey weather has a funny way of bringing on a reality check.

          As has the ongoing furores over … shall we say, questionable … application of the scientific method, and the reporting of same.

          I’m not suggesting that proves anything. Just sayin’ … the reality is, the world’s BS antennae started twitching rapidly over the past few years.

          I wonder if it ever occurred to some people that both the fossil fuel titans, *and* bankster monoliths such as GS and their myriad government-employed alumni who have been bankrolling the push for global CO2 derivatives trading, might just be connected … ?

          Nothing like playing for both sides to guarantee you remain a winner, come what may.

          Doubtless we’ll all continue this debate in future 😉 Just wanted to point out that I’m no blind fan of the fossil fuel titans either.

      • Matt, I don’t think anyone thinks your opinion means nothing, although at this point in time, I’m not sure I can understand how the level of freedom in this country is so bad you feel like you need more.

        I do however believe that AGW has basis in reality. It’s in any fundamental thermodynamics and heat exchange book (read the chapters on radiation) that you can pick up in a university library.

        I respect you don’t believe in that. However, looking at it from another point of view, surely you can understand that we are using up a finite source of fuel – in this case oil, coal etc – and that we still don’t have any real means of replacing it.

        If this carbon price you’re against can delay the use of the last iota of this fuel, then isn’t this a good idea?

        By the way, fuel, electricity etc will only get more expensive in the long run as it is, whether you like it or not. Global demand is going to increase with China, India and other developing nations all wanting their fair share.

  7. I can’t see another tax on suffering consumers working. Although CO2 is a real problem it is now already too late to solve for humanity.

    We could reduce the problem by installing solar water heaters on all houses which don’t have them and then charging consumers for their cost gradually, via their electricity bills. Result is enormous CO2 reduction as less coal fired generation is used.

    The same can be done with water tanks and solar panels for power generation.

    Sequestration and desalination actually use more coal and water than they produce.

    • Care to explain to us all how a trace gas that makes up 380 part per MILLION (0.039%) in the atmosphere, that plants use to breath and subsequently convert to oxygen, that isn’t even deadly at levels found higher than any time in the history of the planet, is a problem?

      Why not simply adapt to the effects (if there are any). Humans survived the last ice-age living in huts and using stone tools. I’m sure we can handle a planet that’s a little warmer don’t you?

      • Carbon E Coyote

        Sure.
        Firstly, I agree that CO2 is not a “pollutant” in the sense of a toxic or deadly compound. In a previous life, I argued strongly against using the word “pollution” as I think it’s more accurate to call it “emissions”. But that’s missing the point.
        The problem with the level of anthropogenic emissions is that historically CO2 concentration over the last 400,000 years has ranged between 180ppm and 300ppm, but within the period of the industrial revolution have shot up relatively quickly, and are now around 390ppm. See p10 of this report: http://www.science.org.au/reports/climatechange2010.pdf
        I’m not a climate scientist, but as I understand it, what the science says is that the problem is that the planet was until recently in balance, with the amount of CO2 being emitted also being absorbed (into forests and the ocean). But with our additional emissions we are emitting more than the earth’s ability to absorb, which is why temperature is going up and why the ocean is increasing in pH and heat (see p7).
        The answer to your second question, as established in the Stern and Garnaut reports, is that it’s cheaper in the long term to mitigate rather than just adapt.

        • I might also add that in the past history of this planet, CO2 was in much higher concentrations (1440ppm) and above.

          However, the Sun itself has gotten brighter over time and will continue to do so.

          The higher levels of CO2 in the past helped to sustain a warm enough environment for life on Earth…and still does. But we need less of it now.

          • Of course life can survive in many different climates, the question is, can life as we know it survive in a climate with CO2 at 1440ppm?

            The second point is that previous rapid transitions in temperature have resulted in mass extinctions. These were brought on by rapid increases in methane concentration ( a greenhouse gas 20 times more effective than CO2).

            The mass extinctions are shown by a complete change in the fossil record at the time that methane spikes were recorded.

            So at what point does Siberias permafrost (methane) defrost? And would we survive this transition?

        • I think of the problem of excessive C02 emissions in the same way I think of the problem of fixed nitrogen and phosphates entering our waterways in excessive volumes. its not about poisons but about understanding that too much of a good thing can be harmful to life.
          Sure C02 is beneficial in the right concentrations and is essential to life as it’s the raw material that plants modify via photosynthesis into fixed carbon. But just as fixed nitrogen and phosphates are essential for plant growth….if too much of them enter our waterways we have a process called eutrophication which has a lot of bad effects, and these are widely accepted now, although when we first legislated to control the release of these compounds into waterways there were many objections, ranging from no need, to excessive cost to consumer and industry. The release of excessive C02 into the atmosphere also has negative consequences….one of which is warming….another is changing the pH of the oceans.

        • “In a previous life, I argued strongly against using the word “pollution” as I think it’s more accurate to call it “emissions”. But that’s missing the point.”

          No, it is *not* missing the point at all, CC.

          It goes to the very *heart* of the point.

          When our self-imposed intellectual “betters” .. our “experts” and “leaders” … are seen to be resorting to such *blatant deceit* in their presentation, it speaks volumes for the credibility (read “trustworthiness”) of those touting the theory as justification for paradigm shift.

          The list of similar blatant deceits is near endless … “Global warming” becomes “climate change” when the solar cycle quietens and we all start waking up coz we’re freezing out t!ts off … “carbon” rather than “carbon dioxide” … black balloons coming out of air conditioners when CO2 is clearly (literally) a colourless odourless gas … need I go on?

          In a world of ever-increasing gross con-artistry, if just *once* you see that someone is not being 100% truthful and upfront with you, then basic commonsense (survival instinct) dictates that their motives MUST be questioned.

          *Especially* in every instance where money is involved.

          • “Global warming” became “climate change” thanks to a George W Bush adviser, and it would be precisely for the reason you outline.

            “Climate change” seems far less sinister, and has been far more effecitve. Thanks to that name change it removed 2005 and 2010 as the hottest years on record. Hurrah!

    • Why would the seas rise around my children’s knees?

      You seem to be scaremongering from the playbook of debunked AGW myths.

      The IPCC has pretty much stopped warning about sea levels rising and scaring the bejeezus out of the likes of Bangladesh since 2008, because the science points to this not being a problem at all.

      The two main articles of point for ‘rising sea levels’ have been related to thermal expansion of water. However water is unique in that it actually decreases volume from solid to liquid form, you know that with ice right?

      Secondaly, the fraction of seaborne glaciation that would contribute to increased water, would pretty much result in increased land glaciation. Much of the polar ice is in areas of – 60 to -6 degrees. Solid Water precipitation (snow, ice) has a tendency to form closer to zero, and less likely to form well below zero when fronted by water. That is why the Peary Land in Greenland, on the northern coat has much lower ice concentrations that the warm(er) areas of Greenland.

      It may seem counter intuitive, but the real science points to this, not the garbled pseudo-science that is AGW theory.

      Another element is that tectonics is the most important factor in sea levels, and this is largely an unknown, and well beyond human control, though some did attribute the Christchurh earthquake was a result of the levels of carbon in the atmosphere.

      Anthropogenic tectonic plate shift perhaps?

    • “..as the seas rise around children’s knees”

      Seriously, you actually *believe* that claim, H&H?

      You’ve got rent-seeking dinosaur “scientists” like Flannery leading the charge, publicly fear-mongering for *years* that (eg) there’ll be no drinking water in (eg) Perth / Brisbane etc by … 3 years ago.

      For your own credibility .. or peace of mind, if nothing else … pleeeease do some basic AGW research.

      Even just on the veritable *mountain* of false prophecies, made by the leading prophets (profits) of global warming doom.

      Might help you sleep better 😉

  8. They won’t rise around your childrens knees. If they inhabited one of the 16 giant cities at sea level, by the end of the century the water could be quite literally over their heads!

    Rusty you point out quite rightly that ice takes up more volume than water. But warmer water does take up a greater volume than cooler water.

    I don’t think this is the main concern when talking of higher sea levels. In the last interglacial period (around 120,000 years ago), when surface temperatures were slightly higher than today, sea levels were 4 to 6m higher.

    This is thought to have been caused by the melting of ice on land, such as in Greenland and Antartica.

    • “…by the end of the century the water *could* be…”

      Could.

      May.

      Might.

      AGW – A weasel word festival, par excellence.

  9. David would you care to list the cities in Australia that have now installed desalination plants?

    I’ll give you a hand.

    We have Tugun (on the Goldcoast)
    Wonthaggi (Melbourne)
    Kurnell (Sydney)
    Kwinana (Perth)
    Southern Seawater (also Perth)

    So as we continue to grow (exponentially increase) our population, has the natural supply of water kept up?

    How about our farmers, do you think they will keep up, or should we just pump desalinated water inland? Maybe they will find it easier as Australia gets hotter and drier. I mean if I was growing anything I would personally prefer a third less water, wouldn’t you?

    • Are you serious?!

      Pointing to the existence of desal plants is a blatant red herring.

      It proves nothing vis-a-vis the actual issue. Which is whether or not there is more or less rainfall/water. And IF so, whether it can be proven that man-generated CO2 has anything to do with it.

      Take a look at the actual water storage data. Here’s one “official” source for starters –

      http://water.bom.gov.au/waterstorage/awris/index.html

      The building of desal plants has been and is a monumental … criminal … waste of public money.

      Just because fools with hands on the public purse have been suckered in by the dire predictions of “drinking water” doom (ie, Flim FLam Flannery), and gone out and built desal plants, does not change the reality.

      The drought has broken. There’s plenty of water.

      The NATURAL cycle of life continues.

      Same as it ever was.

      Try harder next time.

    • ok

      I will concede that the desal plants on the east coast were a waste of money. The low hanging fruit of water recycling and water tanks would have been a better solution.

      However according to the bom water storage in Perth is at just 17%, a decrease from 30% of last year. That doesn’t look good.

      Tim Flannery doesn’t just campaign on global warming. For years he has been part of ‘Sustainable Population Australia’, a group concerned with the growing (=exponentially increasing) population of Australia.

      And his concerns remain extremely valid, because as you know, their are natural cycles in Australia that range from extreme wet (La Nina) to extreme dry (El Nino). So after this period of La Nina we can expect another period of El Nino.

      Now Australia’s population growth has been running at around 1.6% over the last 30 years. That means it will double every ln2/0.016 = 43 years. And our need for water and food will correspondingly double over the next 43 years. And quadruple in the next 86 years.

      Clearly it becomes increasingly difficult (or impossible) to support our water needs if the population is let to exponentially increase, especially in periods of El Nino.

      Regardless of your understanding of global warming, the problems presented by an exponentially increasing (growing) population in Australia need to be recognised by everybody.

      • Excellent. There’s plenty here we agree on, Dave.

        I too am concerned about population sustainability et al. But perhaps for slightly different reasons than yourself?

        Take water. The #1 essential resource for human life.

        We are “a land of drought and flooding rains”. Perfectly typified again in recent months, after a very long drought.

        The simple, practical, cheap, commonsense solution that the human race has employed for millennia wrt potential water scarcity, is …. ?

        Dams.

        So, why don’t we have more dams in our land of drought and flooding rains, where they make even more commonsense than in countries with lesser extremes of climate?

        Because bat-sh!t crazy, human-loathing totalitarian wet-dreamers – bankrolled (as always) by far shadier nutbags who want a new artificial commodity to pump-n-dump to infinity – have insisted that (eg) some obscure frog or fish or other creature that the vast, vast majority of humans have never heard of or give a flying f- about … must come first.

        In other words, let’s *deliberately* risk killing human beings by thirst, rather than flood the “last remaining habitat” (allegedly) of The Lesser Pimpled Sphincterfish.

        Let’s conveniently ignore our own belief system that proclaims billions of different species have come and gone for millions of years, and that this is all perfectly Natural.

        Now, I have no problem at all with a “rich country” like ours first looking to the viability of alternate solutions like rain water tanks. In fact, I’m a huge advocate for that. But the totalitarians only pay lip service to this eminently sensible idea. Why? Because that might allow the population to achieve total Water Independence. Free water from the sky.

        When you have the power to turn off the taps, you have total control.

        Moreover .. as always .. it’s about The Money. Think about it.

        We see the same sick demented mindset perpetrated in other forms. Such as restrictions on burning off ground fuels. Our indigenous fellow Aussies have 60,000 years of knowledge to the effect that *deliberately* doing this, in this country with this climate and our unique vegetation, is *necessary*. But what do we do instead, thanks to rules directly stemming from the “green” meme?

        Burn several hundred human beings to death in Victoria. And countless beautiful wildlife.

        Moving on, what about the #2 essential resource for human life.

        Food.

        This rant is long enough, so I won’t go into all the psychopathic “green” policies that have negatively impacted on our basic ability to produce food. Suffice to say, by way of one example, growing food requires water. And thus, DAMS are – with present technology – the only practical, realistically cost-effective solution in our Oz climate. I give you the now-redundant desal “investments” by contrast, in proof-of-point.

        Any real environmentalist – (ie) *not* the human-loathing totalitarian psycho variant – should be far more concerned about practical, *honest* environmentalism. Where human life – sustainable human life – come first.

        Wrt Flannery .. he has *zero* credibility with anyone who has tracked his plethora of false prophecies over the years. It is disgusting that $750K of taxpayers money is going into his pocket, to preach utter BS to everyone. Have you heard the complete and utter off-this-planet guff he’s been going on with lately? Sheesh.

        Finally, actions speak louder than words. I have never met a green cargo-cult member yet who actually lives like they *really* believe the apocalypse is nigh. On the contrary, despite my calling total BS on the CO2 “pollution” scam, I personally live far more sustainably, and even “emit” far less CO2, than any “greenie” I’ve ever met.

        • Case in point –

          “Frogs first, people second, says Barnaby Joyce”

          CANBERRA 18 May 2011: The CEO of the Murray-Darling Basin Authority, Rob Freeman, confirmed today that economic, social and environmental factors are not given equal treatment under the Water Act in evidence given to the Legal and Constitutional Affairs Committee today.”

          “SENATOR JOYCE: What happens if there was a town, let’s say there was an environmental asset, I don’t know let’s call it a swamp and in the swamp there is a precious frog and just before the swamp with the precious frog is a town that has a rice mill. You say well the water that has to go to that swamp is 10 GL but that’s the amount of water unfortunately that we need for the rice mill. So now we have got a choice between the rice mill or the Ramsar convention area with the frogs. Who is going to win, the rice mill or the frogs?

          (Barrister Josephine) MS KELLY: Under the Act, the frogs.”

          http://www.international.to/index.php?option=com_content&view=article&id=1013:frogs-first-people-second-says-barnaby-joyce&catid=36:news&Itemid=74

          ‘Nuff said.

      • FWIW, I know a thing or two about living on tank water. I have done so for the bulk of my life.

        Very familiar with rationing water since childhood. In times of drought, that can often mean 30sec showers, freezing cold showers even in winter so as to avoid wasting the water in the lines while waiting for hot to come through, etc.

        A little bit of ascetism now and then never hurt anyone. Good for the soul, and body too so I’m told.

        I’m yet to meet the green-meme sucker who even comes close to the above.

  10. drought has not broken here in the West…and there’s not plenty of water unfortunately.
    I suspect a lot of Perth people are reasonably comfortable with the idea we have the desal plants now. Maybe we will get an average rainfall this winter….maybe not.
    Just a question for you…in a NATURAL cycle of drought and flooding rains….are you in favour of subsidising farmers during the droughts?

    • No mate. Not *unless* it is absolutely necessary in order to provide sufficient basic foodstuffs to keep everyone alive.

      I’m in favour of dams.

  11. Fark taxes, how about special butt plugs to catch farts? I bet the pollies will love the idea.

    • Tax on breathing is far better. If you’re a totalitarian psycho.

      There’s a very good reason why the joke about how politicians would tax the air we breathe if they could has been around for so long.

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