Carbon Economy


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


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


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.


Sanity prevails on Hazelwood

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


Go slow on carbon? Check!

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


To beer fridge or not to beer fridge

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


The BlueScope blues

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.


Changing Behaviour

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


Picking winners

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


Let’s get real

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.


Picking losers

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”


The carbon tax bunyip (updated)

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