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carbon trading « Previous | |Next »
August 23, 2006

Jeffrey David over at Oikos argues that the debate about reducing greenhouse gas emissions in Australia has shifted from the initial duality of ethical arguments in favour of reducing emissions versus economic arguments that support doing nothing. David argues that what has emerged in the debate is that there are good national economic reasons for taking strong efforts to start reducing our emissions.

The discussion paper by the National National Emissions Trading Taskforce carries this debate forward. It says:

A carefully designed emissions trading scheme could help minimise the costs of reducing emissions. Emissions trading is widely regarded as being flexible and efficient for some sectors, potentially including the energy sector. It lets the market establish the best ways of tackling the problem, rather than relying on traditional ‘command and control’ regulation.

Whilst it's clear there's a persuasive business case for a carbon-trading industry---there's money to be made from global warming with companies trading their pollution rights---the Queensland Premier Peter Beattie was sceptical. Queensland would bear the brunt of any price rises in electricity costs as a result of carbon trading.

The discussion paper argues that preliminary modelling work undertaken to date indicates that the proposed design can achieve significant reductions in emissions while maintaining strong economic growth.

This modelling suggests that effects on Australian GDP and community welfare associated with reducing emissions through the scheme are small, and in line with ‘business as usual’ projections, although the specific regional and industry impacts vary with some jurisdictions being more affected than others. Without taking steps to avoid this outcome, any policy to reduce emissions could affect the competitiveness of Australia’s trade-exposed, energy-intensive industries. A long-term free allocation of permits is proposed to offset the impacts of the scheme on the energy costs faced by these firms. This would help to maintain Australia’s international competitiveness without diluting environmental integrity.

Rosslyn Beeby in the Canberra Times argues that this carbon trading system is about keeping costs down, not investing in tomorrow's clever zero-emissions technologies. She says that by itself it does not: the work of those who are trying to cut our dependence on fossil fuels by inventing smart solar technology that will suit Australia's climate and deliver remote rural towns and regions from the problem of unreliable or intermittent (or non-existent, in the case of many Aboriginal settlements) electricity supplies.

Carbon trading makes good business sense, but not quite so much environmental sense.

| Posted by Gary Sauer-Thompson at 9:58 AM | | Comments (0)