Carbon Economy


Carbon tax shifts to neutral

The removal of the carbon price floor yesterday is essentially placing the carbon tax on idle. The price floor notion was designed to prevent the kind of price collapses that have plagued the European carbon price market. By instead linking to that market, the Gillard government has ensured that the price for local credits will


Is gold-plating of electricity infrastructure an issue?

With today’s sudden media focus on the “gold plating” of electricity infrastructure driving excessive retail price rises, it seems the Federal Labor government has finally woken up and read its own carbon policy blueprint. From the Garnaut Review: There is a pressing need to revisit the state-owned distributors. There is an unfortunate confluence of incentives


Scrap the Renewable Energy Target

The AFR leads today with an examination of the current brouhaha surrounding the Renewable Energy Target and the carbon price. The positions of the political parties on this is a nice illustration of how our politics gets in the way of good economic policy. Apparently: Labor and the Coalition have signalled they are prepared to


Weekend Musing: Are Electric Cars really Green?

A guest post from reader and commenter “Pellicle” on the Electric Car. MacroBusiness welcomes interesting submissions on economic and related topics, subject to edit and less than 1500 words. Please use the “Contact” item on the menu above for your submissions. Lately it seems that with increasing frequency the idea of Electric cars comes up


Urban sprawl greenhouse myths

The Property Council of Australia (PCA) is one of those lobby groups with a blatant disregard of the facts and a history of political influence – the kind you love to hate.  For example, the PCA made a submission to the Queensland government outlining how planning laws that promote densification are likely to increase greenhouse gas emissions


IPA carbon fallacies

The IPA, predictably, continues its attack on the pricing of carbon with pieces this week in The Australian and the Australian Financial Review. However, much of the analysis is based on falsehoods that need to be pointed out. Firstly to Tim Wilson’s piece saying that “carbon trading will fail because property rights cannot exist for


Paying for Abbott’s wrecking ball

I should start by stating that the following is not intended as partisan political comment. I have consistently supported a carbon price policy regardless of the Party of the politician proposing it (eg Howard, Rudd, Turnbull and now Gillard). Much has been said of Gillard’s mandate, or more pointedly, lack of mandate to introduce a


Energy efficiency doesn’t work

The word efficiency carries a meaning immersed in all things positive – you never hear that being more efficient could possibly be detrimental. In fact, if you can bear the evangelical fervour, you may have read about achieving ‘Factor Four’ or ‘Factor Five’ gains in energy efficiency, as part of a ‘Natural Capital’ revolution comprising a ‘decoupling’ economic growth


The NSW budget’s carbon lie

In the wake of the NSW Budget, which justified increased royalties due to the supposed hit to its bottom line from the federal carbon tax, it is useful to examine the actual impact of carbon pricing on coal-fired generators. As a starting point, one needs to reflect that the methodology upon which compensation (in the


Invisible and harmless are not synonymous

There seems to be a lot of confusion around on this “carbon tax” and a lot of it seems to be due to the terminology that we’re using. I have been asked a few times “what is carbon pollution and how do you measure it”. I’ve also seen a variety of commentators pointing out (as


Ziggy’s nuclear meltdown

Nuclear doyen, Ziggy Switkowski, must be quite frustrated. Why doesn’t everyone get it? His beloved solution to climate change and energy security is not just a political hot (dare I say radioactive) potato, and the recently announced $10b Clean Energy Finance Corporation won’t be allocating a single dollar to funding it. His most recent piece on


Why Gillard has a mandate

At the risk of stirring up the howls of protests and calls for another election (if you don’t accept the outcome of the last one) or an early election (if you do), I thought I’d put forward a case for why I think the PM has a mandate to introduce the package she announced on


Renewable hotties

With the announcement of a Carbon Pricing policy by the Government recently, combined with the formation of ARENA, a $3.2 billion agency to consolidate renewable energy industry support and given that the purpose of MacroBusiness is to give you the bigger picture, here is a (non-exhaustive) list and short summaries of renewable energy companies that


Something for everyone

I’m glad we finally have a carbon price. My guess is that the roll out of the tax will be less contentious than currently appears. The leader of the opposition may want a referendum on the issue but in my view, but once it’s in place, the tax will give way to famous Australian pragmatism


Carbon Price Announcement

OK, so I was surprised on the upside and the starting price is $23/t. The Greens have indeed exerted their influence through the negotiation and what has emerged is a surprisingly strong package, which when implemented will perhaps be the most comprehensive carbon scheme in the world. You can see the influence of the Garnaut


The Economy and the Environment

I’ve wandered off the reservation again this morning and am strolling around Carbon E Coyote’s turf  but I hope he doesn’t mind too much because as we Australians await the Prime Minister’s “Carbon Tax” announcement tomorrow I thought it is worth a quick post and link that is related to this issue.  It is important to note  I


What will the starting carbon price be?

A month or so ago I suggested that there was “a deal to be done”. It sounds this week that it’s pretty close if not already done. A few people have asked me where I think the starting carbon price will be, so I thought I’d make a prediction. My money’s on a starting price


Merry-go-round confusion

Judging by comments on the net and the press and in general public discourse, it appears that there’s still confusion between the role of the carbon price signal and the role of the distribution of proceeds from revenue raised. The latter has derisorily been referred to as a great big merry-go-round. Here’s an example of


Gassy mines (and reports)

When we talk about methane emissions, we tend to think about farting (or burping, more accurately) cows. But another strong contributor to methane emissions (yes, odourless and colourless like CO2) are fugitive emissions from extraction of fossil fuels, particularly coal mines. Every tonne of methane released is the equivalent of 21 tonnes of CO2 released,


Leading the world

It’s interesting how within an hour or so of the release of the Productivity Commission Report yesterday that commentators were lining up on both sides of the debate to use it to justify their positions. I thought it would be useful to point out what the report doesn’t say and therefore the conclusions that can’t


PC Report endorses carbon pricing

The much anticipated Productivity Report into carbon pricing is out. The full executive suymmary is available here. I will provide full analysis tomorrow. In the mean time, The Australian  reports that: The report found Australia is currently spending between $44 and $99 per tonne on carbon abatement policies in the electricity generation sector. …“As a proportion


Carbon taxing equities

As a value investor and climate change agnostic, I have to admit I’ve been watching the carbon tax/ETS debate with a sort of detached interest.  Given the Federal government’s unparalleled skill at botching both policy PR and implementation, I had assumed that the ETS would go the way of FuelWatch, Pinkbats and Kevin Rudd’s stiff


I said nuclear, dammit!

It never ceases to amaze me how proponents of nuclear power can be against a carbon price, the very piece of policy required in this country to make it economic. At the moment, nuclear power remains significantly more expensive than fossil-fueled power, at around twice the cost. Yet Ziggy Switkowski, one of the country’s most


$30 billion fantasy

In response to the Garnaut Report, Terry McCrann today claims that the government will collect “$30billion” from the carbon tax if the price reaches $70. This is a scare campaign being run by much of the Murdoch press. McCrann’s reasons that: In theory, the price is then set by the market. But if we are to


A deal to be done?

The finalisation of BCA and AiG’s submissions to the policy process could be a turning point in the carbon debate. A $10/t CO2e carbon price is a fundamentally different position than opposition to a carbon price at any price.  $10/tCO2e, as advocated by the business groups, was the price of the first (fixed price) period


How much carbon in my milk?

How much do you think the price of a 2 litre bottle of milk will go up with the “great big new tax on everything”. 10c, 20c, 50c, a $1? As a product of ruminating cattle, emitting methane (a greenhouse with 25 times the global warming potential of carbon dioxide) each and every day, it’s


“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


What’s in a name?

John Howard didn’t have time to give it a name. His election commitment in 2007 was to introduce an emissions trading scheme, as was Rudd’s. Turnbull has quipped that if Howard won that election we would already have an ETS. As it turns out, Rudd got up and called it the Carbon Pollution Reduction Scheme,


New technologies need carbon pricing

“Just wait for new technologies” remains one of the most frequent catch cries of those opposed to carbon pricing. It was among the justifications for why Australian didn’t embark on carbon pricing in the early part of last decade, after being recommended by CoAG’s Independent Energy Review Panel back in 2002. However, the idea that


Floor price idea flawed

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