There’s a proposal doing the rounds in Canberra for a floor price on the price of CO2 permits, to apply once the emissions trading scheme moves from its fixed price period into a floating price period. The UK has just implemented such a scheme as a “top up” on the price of permits under the
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.
The Victorian Coalition government confirmed this week that it had terminated talks on the previous government’s proposals to shut down two units at the Hazelwood power station in the Latrobe Valley. The focus on Hazelwood is because it’s the most greenhouse emission intensive plant in the country. This is as result of its age (latest
I was at the Melbourne Mining Club lunch yesterday where BHP Billiton Chairman, Jac Nasser, delivered a thought-provoking speech which touched on carbon, among many other issues. A transcript of his speech is available here. His call for a “go slow” on carbon has resulted in front page headlines in The Australian and the Fin
Mark Latham posed a question in his Op Ed to the Australian Financial Review yesterday which bears thinking about. It was this: “How can the Greens support Labor’s policy of overcompensating consumers for the financial impact of a carbon tax, knowing that more money for carbon-hungry households means more emissions?” Maybe the Greens reckon the
Like ships passing through the night, the discussion on emission-intensive trade-exposed (EITE) industries seems to involve two separate conversations. One where those industries most affected (eg steel, aluminium, cement) talk about earnings impacts and job losses. And the other involving policy makers, equity analysts and NGOs questioning whether the impact would be quite so bad.
My comments in this column are not deliberately trying to be political. In fact, I am trying to be apolitical: I see carbon pricing as an economic issue. However, I realise that this issue is so divisive that it has become impossible to comment on carbon without being seen as making political comment. That is
The price elasticity of household electricity demand is quite low, around -0.1, meaning that a 20% increase in price leads to a 2% reduction in demand. The addition of a carbon price into the cost of electricity is unlikely to have much impact on consumption unless carbon prices were to be very high. You might
A few commentators to my Picking Losers blog earlier in the week quite rightly pointed out the potential for gas-fired CCGT plant to be a sensible baseload replacement for brown coal-fired power. I have looked at the numbers, and agree. Taking the cost of new gas CCGT at around $1million per MW, replacing 6GW of
There’s a notion going around that an Australian carbon tax will raise more tax in its first three months than the EU ETS has generated in six years. Mr Seamus French’s column in The Australian on Monday included this idea. No numbers have been put forward to justify this assertion, and it can’t go unchallenged.
For some time now, there has been bipartisan support for a 5% reduction in emissions from 2000 levels, and Australia has committed this abatement effort under the Cancun agreement. Although it may sound small, a 5% reduction actually represents a very substantial abatement effort. In absence of mitigation policy, emissions under a “business as usual”
Ross Garnaut yesterday released his last paper of the Review Update, focusing on the energy sector. I paraphrase his main points as follows: • Carbon pricing will result in switching away from high emission generation; • It is highly unlikely that the lights will go out when we price carbon; • Consumers can be compensated
In November 2010, over 250 investors representing US$15trillion funds under management globally called for “policies to unlock the vast potential of low-carbon markets and avoid economic devastation caused by climate change”. Prominent among these are targets for reducing greenhouse emissions and “strong and sustained price signals on carbon emissions”. This, and similar calls, have been
When Tony Windsor, MP, said that he would like to see the carbon debate in this country move beyond the words “tax” and the word “lie”, it really struck a chord with me. We seem to be stuck in this Groundhog Day style conversation where each issue is immediately translated into a one line pro