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solar energy + industry protection « Previous | |Next »
August 13, 2008

Finally Australia is stepping out of the dark shadows cast by the coal industry's doom and gloom spin run by the Greenhouse mafia, that opposes climate change, reducing greenhouse emissions and the shift to a low carbon economy. That 'no change' spin is designed to both delay an emissions trading scheme for as long as possible, and to use the situation to develop new forms of industry protection and industry subsidy/compensation to protect the older, coal-fired polluting forms of energy.

Spooner PC.jpg Spooner

Blue chip Australian companies are willing to fund a plan by engineering firm Worley Parsons to build a 25-megawatt solar power plant in Australia. They can see the obvious: the potential for solar power in Australia; that carbon will be priced in some form in the near future; the cost of solar power is reducing and will soon match wind power; that California is running hard on the building solar farms; and the Rudd Government's policy (MRET) to guarantee renewable energy at 20% of the Australia's power supply by 2020.

The plant will be built in 2011 and would be the first of 34 solar thermal power plants built across the country by 2020. So we have infrastructure innovation instead of industry resistance to change, lobbying and self-interested claims. The plant will be built in 2011 and would be the first of 34 solar thermal power plants built across the country by 2020. So we have infrastructure innovation instead of industry resistance to change, lobbying and self-interested claims.

Gary Banks, the Productivity Commission Chairman, warned about industry protection in his Colin Clark Memorial Lecture in Brisbane. The speech was mostly about the old forms of tariff protection for manufacturing and textiles,clothing and footware, the policy commitment to opening Australia’s markets over the past 20 years or so has yielded gains and the increased recognition of the central importance of innovation to industry productivity and competitiveness, which has led to a renewed focus on how government can support it. He draws attention to the new forms of protection:

Yet, as currently proposed, the ETS looks set to have its own substantial industry assistance component, with hotly debated exemptions and compensation for some industries or enterprises potentially amounting to several billion dollars. Further, some 20 per cent of the revenue from this de facto tax is to be set aside for the promotion of greenhouse-related R&D.Even by the high previous benchmark for industry support, this really is ‘real money’. Indeed, when account is taken of other policies relevant to management of
the environment, such as the large subsidies provided to water users, the implicit industry assistance stemming from such policies may, in the future, dominate other measures of business support.

As Banks points out what is good for a particular part of the economy or community need not be good for other parts — and in the case of industry assistance often isn’t. Consequently, the goal should not be to promote any particular industry or sector as an end in itself, which as This was what our old-style protectionist industry policy was about, which promoted manufacturing at considerable costs to our economy
and community. Banks adds:
The objective should be to enhance the performance of the Australian economy, so as to enable living standards and community well being to realise their potential, given the resources available to us and their alternative uses. What those industry policies that target particular industries, activities or groups need to demonstrate is how they can achieve this.

Market failure and spillover would be an example of ways to achieve this. Banks argued above that the implementation of an effective ETS would generate a market-based price for carbon emissions that should render many pre-existing emission-reduction schemes redundant. He says that stripped of this environmental rationale, schemes such as the MRET would simply become very costly industry support vehicles.

However, Banks acknowledges that:

the emerging price signals may not bring forth sufficient innovation in adaptive or low emissions technologies due to spillovers or other market failures, warranting supplementary measures ... Such measures would need to take account of the (extensive) existing support for R&D and be targeted at areas where market failures are likely to loom large — such as in basic or strategic research, rather than commercialisation of existing technologies or in picking green technology ‘winners’.

In my judgement shifting to a low carbon economy is a basic national strategy for Australia and a sound rationale for facilitating the takeup of renewable energy as opposed to giving free permits to coal fired power stations to continue to pollute.

| Posted by Gary Sauer-Thompson at 8:40 AM | | Comments (2)


Up here in Backwardsville we have something called the Solar Homes Program.

As I understand it the state govt is making a bulk purchase (lower unit price) and some kind of lottery process determines who gets one.

It is hard to take the states seriously on global warming isn't it. It's mostly feel good stuff whilst they party on coal.