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If the ETS is scrapped, what then? « Previous | |Next »
December 2, 2009

Tony Judt, in his What Is Living and What Is Dead in Social Democracy? in the New York Review of Books defends social democracy in the context of the Libertarian critique that the best way to defend liberalism, the best defense of an open society and its attendant freedoms, is to keep government far away from economic life. This classic issue of the role of the state and economy is crucial in the context of global warming, mitigating greenhouse gas emissions and the commons.

Judt argues that if social democracy has a future, it will be as a social democracy of fear. By this he means:

Rather than seeking to restore a language of optimistic progress, we should begin by reacquainting ourselves with the recent past. The first task of radical dissenters today is to remind their audience of the achievements of the twentieth century, along with the likely consequences of our heedless rush to dismantle them.The left, to be quite blunt about it, has something to conserve. It is the right that has inherited the ambitious modernist urge to destroy and innovate in the name of a universal project. Social democrats, characteristically modest in style and ambition, need to speak more assertively of past gains. The rise of the social service state, the century-long construction of a public sector whose goods and services illustrate and promote our collective identity and common purposes, the institution of welfare as a matter of right and its provision as a social duty: these were no mean accomplishments.

This defense of past achievements of the welfare state does not really help us to address the new politics of climate change, given that global heating will have such a big effect on our economy and society--from its impact of the Murray-Darling Basin, or the Great Barrier Reef, or Australia's rainfall patterns.

The science says that if we keep to our present course then we bring about warming well beyond 2 degrees, perhaps 4 degrees or 6 degrees, or more. Since the market by itself, is not doing much to mitigate greenhouse gas emissions, so the necessity for action by the state to introduce an emissions trading stream. However, as James Risbey points out in New Matilda:

While the science of climate change is clear in pointing out the need for rapid action in order to avoid monumental climate change, the politics seem more designed to avoid responsibility than to avoid climate change...Australia has made virtually no progress in reducing carbon emissions from energy and transport to date. Most of the reductions have come about due to a reduction in the rate at which land is cleared....The Australian Government's argument is effectively that it is preferable to adapt to large climate change than to prevent it. Their argument is not usually stated in this form, but that is the inescapable consequence of their policy of postponing meaningful carbon reductions. On the one hand the Government calls for rapid action to prevent climate changes, while on the other hand it has crafted a policy that would guarantee that effective action is not taken

The Government policy of adaptation without effective mitigation is implicit in its actions (its GPRS) and not in its rhetoric.

Those who defend the classical liberal view that the state needs to be held at a safe distance --- ie., politicians should be barred from planning, manipulating, or directing the affairs of their fellow citizens--- appear to have a simple view on how to mitigate greenhouse gas emissions. The ETS should be scrapped.

This is the position of the IPA, for instance, and it basically boils down to a defence of the interests of Australia's energy intensive industry structure, coal based electricity generation industry, and coal and gas exports. An ETS endangers Australia's prosperity because it jeopardizes Australia's international competitiveness. This position is tied up with others: namely dissent from the global warming consensus, criticisms of the science around carbon dioxide pollution and its impact on global temperatures, and critiques of green political ideology.

If the ETS is scrapped, what then? How do we mitigate greenhouse gas emissions? Deferring action until 2020, as advocated by the IPA is a strategy of avoidance. The going nuclear call is at odds with not believing in climate change and opposition to state intervention and subsidy.

The key point here is the logic and legitimacy of market failure analysis, and its public-goods corollary. The notion of public goods is that they cannot be supplied by the market, and instead must be supplied by government and funded through its taxing power.

| Posted by Gary Sauer-Thompson at 7:52 AM | | Comments (14)


The Liberal Party has a big problem on addressing reform re greenhouse gas emission. And it is not just the angry wingnuts in the conservative base. It's a policy crunch.

Abbott, in his 1st press conference, has signed up to 5% reduction unconditionally by 2020. Bi partisan on targets etc, disagreement over mechanism. So what is the mechanism?

1. There cannot be an ETS because the Party has rejected an ETS.

2.there cannot be a carbon tax because the Coalition has dismissed the ETS as a giant carbon tax. So they cannot be for and against a tax at the same time.

3. going nuclear? That is big government subsidy, very expensive, with long leadtimes.

4.clean coal? It's still a pipe dream.

4.self-responsible voluntary action? What does that mean?

What will happen when other economies start trading in the carbon market? Do we just deal ourselves out of that?

We need some kind of ETS, just not the pointless one the senate just knocked on the head.

Margot O'Neill on why the Rudd Government's ETS deserves to die:

the proposed emissions trading scheme. It is supposed to install a market signal to drive investment and customers away from carbon polluting businesses.Some coal-fired power stations complained it meant they may have to shut down eventually. Well yes, that would be the point of such a scheme, wouldn't it?
Not according to the Federal Government, which has promised $7.3 billion over 10 years in compensation to encourage operators to build less carbon-polluting gas-fired power stations.
But they don't have to. They can still operate their existing stations and get the money without any requirements to reduce their emissions.

The Government has muted all the price signals of the emissions trading scheme so that it will have little or no impact on consumers and on our carbon emissions.

Tony Abbott has just made things even more difficult for the Liberal party on the ETS issue.

David Speers says that with none of the "consultation" Abbott promised a day ago, he has announced the opposition no longer supported any target to cut emissions beyond the bare minimum 5 percent. He said the Coalition no longer supported any price on carbon at all. And for good measure he floated the idea of debating nuclear power.

He has then backtracked to restating the Coalition's bi-partisan support for future emissions reduction targets of up to 25 per cent.

So how is he going to do that without pricing carbon for greenhouse gas emissions? The Coalition, which stands for the free market, has just dumped the market solution (an ETS) to mitigating greenhouse gas emissions.

It is now in favour of the big government solution--government regulation to change the way farmers work (biochar) the way buildings are built (more energy efficiency) the number of trees that are planted or the way we generate electricity at coal fired power stations (converting them to gas). Turnbull had previously canvased these options.

We do need a good ETS to drive a change in behaviour. A good one means one designed to make polluters pay for the cost of the transformation through either a well-designed emissions trading scheme with 100% auctioning of permits.

Maybe that is where the political process will go? maybe. I won't hold my breathe. The Rudd Government is pretty much about business-as-usual.

Energy efficiency for households, commercial offices and industrial sites is also a good way to reduce greenhouse gas emissions. However, it's not taken very seriously in Australia, is it. How would Abbott encourage us to do this? What incentives would he provide? Very little is my guess.

I cannot see the Nationals agreeing to tough regulation to imposing altered land management practices on the agricultural sector. The Nationals are still trying to roll back legislation prohibiting land clearing from the 1980s.

Regulations to stop land clearing are the only thing that has prevented Australia’s emissions from going well over its Kyoto target.

What the Nationals mean by voluntary action of course, is for taxpayers to pay farmers big time to alter their land management practices---changing tillage practices, increasing soil carbon, potentially creating biochar, regrowing bushland and much more.

Large subsidies is the only kind of public policy they know and understand.

Talking to my pensioner mother about this today and she pointed out that if she cut back on power use any further she'd be cooking over a pile of burning sticks in the backyard. She's already got power saving everything, ceiling insulation and anything else you can think of.

Her sister, by contrast, is quite well off and pays a couple of thousand a quarter for her power bill. She's not about to stop, either.

Any ETS will be experienced by these two extremes and everything in between. How do you make it fair?

one household (lower income) is subsidised for the increasing cost of electricity whilst the other (higher income) is not says the Rudd Government .

The Liberals are now talking about cost-free climate change action---direct action backed by government regulation and lots of government money. They've wandered into the land of magic pudding.

Don't you have to inflict a lot of pain to get a modest change in behaviour to reduce greenhouse gas emissions.

Regulating for changes to power generation will put up the cost of electricity, regulating to change farm practices will increase the cost of food and fibre.

All this goes contrary the Shergold Report to the Howard government. that was firmly of the view that the most effective way to manage risk is through market mechanism.

Abbott is going to raid the money for the stimulus package and national broadband network to pay for his direct action incentives. He see this investment as waste and it represents a good way to cut both government spending and debt. This is his tax-free way of reducing Australia's greenhouse emissions.Therein lies the hand of Minchin.

Wait a moment, though. Cutting into the stimulus package involves cutting into the unspend money allocated for rebates for roof insulation; thereby undercutting the talk about incentives for direct action for more energy efficient buildings. So much for their policy credibility.

Such policy inconsistencies don't really matter. The core of Abbott's campaign is going to be no to this, no that --a spoiler campaign based on opposing all that Labor does and says. That is John Hewson's argument in the AFR.

what is needed is a a green industrial revolution to make the shift to a low carbon economy. At the moment there is no clear strategy and little strategic thinking on how this will be funded.

I don't expect the answers about how to ensure the green industrial transition (solar power, electric cars, geothermal power, energy efficient buildings and reconfiguring the electricity grid etc) to come from the Coalition.

They are wandering around talking about the Earth appearing to be cooling, not warming, (despite Siberia melting) and that the leaked emails hacked from the University of East Anglia's Climate ('climategate') seemed to show leading scientists conspiring to rig the figures to support their theories.

your comment:

Cutting into the stimulus package involves cutting into the unspend money allocated for rebates for roof insulation; thereby undercutting the talk about incentives for direct action for more energy efficient buildings.

So much for the Liberals switching the focus from pollution regulation (an ETS) to technology investment.

I await the Abbot/Minchin announcement of a big investment fund to help low-carbon technologies develop.

Malcolm Turnbull continues to speak out on climate change on his blog:

First, let's get this straight. You cannot cut emissions without a cost. To replace dirty coal fired power stations with cleaner gas fired ones, or renewables like wind let alone nuclear power or even coal fired power with carbon capture and storage is all going to cost money.To get farmers to change the way they manage their land, or plant trees and vegetation all costs money.
Somebody has to pay.
So any suggestion that you can dramatically cut emissions without any cost is, to use a favourite term of Mr Abbott, "bullshit." Moreover he knows it.
The whole argument for an emissions trading scheme as opposed to cutting emissions via a carbon tax or simply by regulation is that it is cheaper - in other words, electricity prices will rise by less to achieve the same level of emission reductions.

He argues that Abbott and the people who put him in his job do not want to do anything about climate change.
The Liberal Party is currently led by people whose conviction on climate change is that it is "crap" and you don't need to do anything about it. Any policy that is announced will simply be a con, an environmental figleaf to cover a determination to do nothing.

Plain talking indeed. We need more of it

The SMH reports that Tony Abbott's list of carbon abatement measures was costed by Joe Hockey at $50 billion plus.

Abbott's response is that it won't cost that much because it will be a cut down policy! Some of the items on the list of carbon abatement measures (energy-efficient building techniques, the storage of carbon in the soil or vegetation through so-called bio-sequestration, the use of biochar, and better land management) will be excluded.

The emissions trading scheme is self-funding. It raises revenue by selling permits to emit carbon. The revenue was then to be spent compensating households and businesses for the cost.