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Garnaut Review 2011 « Previous | |Next »
May 31, 2011

In his final report ---Garnaut Review 2011--- Ross Garnaut says that an historic choice confronts Australia in its goal to reduce greenhouse gas emissions. So what domestic policy response should we take? It's an important question because Australia's trajectory to 2020 is now for its emissions to grow to 24 per cent beyond 2000 levels.

Unfortunately, the political debate in Canberra has not been about this as it has been built around a populist scare campaign by vested business interests backed by the Coalition. Garnaut says that there are two basic approaches to achieving the required emissions reduction: a market-based approach, built around putting a price on carbon emissions; and a regulatory approach, or direct action.

In the market-based approach, carbon can be priced in two ways. Fixed-price schemes, or carbon taxes, set the price and the market decides how much it will reduce the quantity of emissions. Floating price schemes set the quantity of emissions and permits to emit are issued up to that amount. The permits are tradeable between businesses and so the market sets the price. There are various hybrid approaches that combine fixed prices for a period with floating later on, and floating prices at some price levels with a price floor or a price ceiling or both.In the alternative route, regulation or direct action, there are many ways that government can intervene to direct firms and households to go about their business and their lives.

Garnaut argues for a three-year fixed carbon price followed by a carbon trading scheme with a floating price. This is Australia's best path forward towards full and effective participation in the efforts by the world of nations to reduce the dangers of climate change without damaging Australian prosperity.

Garnaut adds that:

As soon as the parameters of the scheme are settled, business will focus on making money within the new rules, rather than on securing rules that make them money. That makes it essential that the rules really are settled. The governance arrangements proposed for the carbon pricing scheme are the key to establishing settled rules: the independent carbon bank to regulate the scheme; the independent climate committee to advise on targets and the transition to a floating price regime; and the independent agency to advise on assistance to trade-exposed industries

This governance advice takes the issue out of the hands of the politicians. That makes it more difficult for the lobbying from those in the old political culture, such as the brown-coal generators and trade exposed industries who demand ever bigger handouts and protection as Australia’s biggest emitters continue with their virulent scare-mongering; from the free riding mining industry and the Business Council of Australia that is deeply opposed to structural reform.

This is a political culture that is unwilling to adapt to a world of climate change. You can see this in the way the Gillard Government has made it clear that its preferred starting point is the compensation arrangements proposed to accompany the Carbon Pollution Reduction Scheme (CPRS).

As Richard Denniss from the Australia Institute points out the the final version of the CPRS also included generous compensation to:

 Emission intensive trade exposed industries (EITEs) who would receive up to 94.5 per cent of the pollution permits they required for free
 Coal-fired power stations with particularly high levels of emissions were to be eligible for the Electricity Sector Assistance Scheme (ESAS) which would have provided an estimated $7.3 billion worth of free permits to Australia's dirtiest coal-fired power stations
 Coal mines with particularly high levels of methane emissions were to be eligible for the Coal Sector Assistance Scheme (CSAS) worth $1.5 billion
 Medium and large manufacturing and mining firms were eligible for $1.1 billion through the Transitional Electricity Cost Assistance Program.

This was a low point in public policy making. It indicates that the corporations that have it over a barrel and it gave rise to a a sense of deep frustration with a state that it could not solve this political/economic/environmental problem.

| Posted by Gary Sauer-Thompson at 11:20 AM | | Comments (9)
Comments

Comments

If you listen to the radio shock jocks and Opposition politicians, you'll likely believe that Australians, already suffering runaway inflation, will be crippled by the additional price impact of a carbon tax.They will be ruined.

The Liberal Party proposes to reduce carbon while enabling emissions to continue - paying landowners to ‘sequester’ (store) carbon in their soils. They propose to achieve 60% of their carbon reduction target in this way.

It is not workable because of the scale of action required and the cost of verifying soil carbon. Most agricultural land would have to be planted to woody perennial crops and protected by carbon covenants to ensure they remain for perpetuity. This would destroy our grain production and grazing industries.

The aim is to kill clean energy politics.

The Australian's response to German Chancellor Angela Merkel's announcement that all the country's nuclear power plants will close by 2022 is this:

the Chancellor has allowed herself to be spooked by the Greens and irrational post-Fukushima hysteria is regrettable. Germany will be weakened as an industrial nation, pushing up power prices, making emissions goals more difficult to achieve and forcing reliance on coal and gas. Ms Merkel isn't the first leader strongarmed by fear of the Greens into permitting cynical political expediency to trump economic sense.

According to the Australian it is impossible for an industrial nation to power its economy with renewable energy.

"This is a political culture that is unwilling to adapt to a world of climate change."

Martin Lukacs in The Guardian says that the decline of easily accessible oil has set in motion not a shift to renewable energy but a frantic race for the filthiest, hardest-to-extract and most geographically remote fossil fuels.

The prize resource are the tar sands: a sludgy bitumen found in northern Alberta whose conversion to oil requires a uniquely destructive, energy-intensive and costly process.

To extract the vast deposit – trailing only Saudi Arabia's in reserves – the industry is stripmining a pristine Boreal forest the size of England, guzzling one of the planet's largest watersheds, poisoning downstream native communities, and emitting three times more carbon than conventional oil production. The planetary scars from the largest industrial project in history can already be seen from outer space.

This is dirty oil: --the side-effects are the huge tailings ponds full of toxic sludge. The tailings will still be there when the tar is gone.

Unsurpisingly, the oil companies and the Alberta state government are deeply opposed to the science of climate change. They sound just like the Big Miners in Australia.

What the Australian editorial ignores is that a warmed up world means less water in the rivers. That means less water to cool the nuclear power plants.

During the heatwaves in 2003 and 2006, the key French nuclear energy producer EDF was forced to stop some reactors due to a lack of water.

The Australian's hostility to the Greens means that it ignore what is happening in the energy world.

The days of cheap nuclear energy look to be over. Nuclear power needs a big helping hand from governments and taxpayers---lots of subsidies, incentives and loan guarantees.

We are rapidly reaching the point where big solar plants (not rooftop photovoltaics) cos the same to produce electricity as nuclear power. The costs of these plants are decreasing whilst those of nuclear power are increasing.

The Liberal Party's rhetoric is that they will save the ''working people'' from the ruin caused by the carbon tax.

Who is going to destroy the workers in manufacturing. Why it is liberal-left elites like Cate Blanchett who are a symbol of wealth and power mand can afford to put solar panels on the roofs of their houses. These elites are an enemy within who must be destroyed.

The attack is directed at Labor's core working class constituency--the battlers. Labor doesn't fight this rhetoric very well.

yeah Abbott is going after the vote of the industrial working class by scaring them about the end of manufacturing. The Australian Workers' Union talks the same language--protecting working class
jobs.

Paul Howes has jumped into bed with Tony Abbott.

The corporations have the state over a barrel and there is now a sense of deep frustration with a state that cannot solve political, economic or social problems.