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ETS: design flaws « Previous | |Next »
March 2, 2009

The Nicholson cartoon below expresses the great fear that is at the rhetorical core of the coal industry's resistance to an emissions trading scheme (ETS) The mining sector's everlasting hope that China's stimulus package will save us and everything will be alright, even though China is the largest trade surplus country in the world and it is trying to increase its trade surplus in spite of collapsing world demand,

Jobs jobs jobs is the way the coal industry spins their resistance, even though a 5 per cent target in emission reduction will do little for Australia's environment, and it is fixed until 2020. Nor can the Rudd Government easily adjust the target. The political and economic reality is otherwise to the cartoon:

NicholsonCoalindustry.jpg Nicholson

The reality is that the voluntary actions of citizens in putting solar panels on their houses to reduce their carbon footprint merely frees up capacity for big polluters to pollute more. Not only will there be no additional emissions reductions from our voluntary efforts--the cap is fixed--- but there will not even be a price inducement to encourage big polluters to pollute less.

As Richard Dennis states in The Australian:

However, in order to take advantage of every additional emissions reduction and allow every concerned citizen to make a direct contribution, the Government needs to convert its "cap and trade" scheme to a "cap and slice" scheme, whereby the number of pollution permits is reduced each year directly in line with the amount of pollution saved by voluntary action. This will ensure that the efforts of people such as Joe and the voluntary actions of all sectors of the Australian community are recognised and useful.

So the Rudd Government's emissions trading scheme (ETS) has a design flaw---it does not have a process inbuilt reduction that recognizes voluntary actions. The Rudd government does not have a good track record on encouraging solar panels for households.

We face two crises: a deep global financial crisis, caused by inadequate management of risk in the financial sector; and an even deeper climate crisis. This provides a window of opportunity to act on the financial crisis and to lay the foundations for a new wave of growth based on the technologies for a low-carbon economy.

However, the country seems to have gone into drift mode, waiting for the tidal waves of the American Depression to roll over the coastline, unsure of how to link the short term to the long term. There is a hesitancy to repudiate the crasser elements of the mining boom years (the miners are the economy) and an unwillingness to act on the promise to invest in green technologies and public transport. Though there is action on investing in affordable, energy efficient homes, it's a dazed and confused period.

| Posted by Gary Sauer-Thompson at 6:45 AM | | Comments (6)


Isn't it the task of the Senate to fix up the design flaws. That is why it is called the House of Review.

I thought the big fear was the fear of undisclosed debt in the financial institutions even though Australia's banking system is not in total disarray and in need of bailing out like those in the US and the UK. A It's all those CDO's--collateralised debt obligations-on the books of the US banks.

What the above pollies don't get is that the era of conventional process of economic growth -- based, as it was, on industrial expansion via revolving credit and a cheap energy resource -- is over. This is not a hiccup in economic growth ---a recession. It is an epochal contraction and transformation.

it's not just about the design flaws. The jobs, jobs, jobs rhetoric says that it is the wrong time to decide the design of an emissions trading scheme; and that we need to do everything possible to minimise the loss of jobs and companies.

In Obama’s chance to lead the green recovery in the Financial Times Joseph Stiglitz and Nicholas Stern say that:

The financial crisis originated from the housing market bubble and was preceded by the dotcom boom. We cannot replace these with yet another bubble. The investments necessary to convert our society to a low-carbon economy – investments that can change the way we live and work – would drive growth over the next two or three decades. They would ensure that growth, with accompanying improvements in standards of living, was sustainable. The path that we have been on is not.

We seemed to have lost sight of that insight in Australiaa.

There's a lot of economic ideology around from the free market advocates.

They say that government spending can’t lead the way to sustained recovery, because its stimulating effect will be offset by anticipated higher taxes and the need to finance the deficit.The self-correcting nature of markets will ultimately prevail. The recession will end in the second half of this year.