Carbon Trading Wont Work!

Norvan.Vogt 5 July 2008 44

Carbon Trading is one of these things that economists love because it looks so clean and simple on the pages of a textbook. But in the real world it’s very hard to make it work like it should. If it’s not set up right, if it’s not policed right, then it can be worse than useless. The big companies get to pollute more AND charge us more, and the pollies get to tell us they’re fixing the greenhouse problem.

The government sets it up and polices it, big business buys carbon credits, and they both tell us they’re fixing the greenhouse problem but we’ll have to pay more for everything. Why should we trust them? I mean, we have got no way of knowing because we have to rely on the government to actually tell us how much CO2 has been reduced. The only “proof” we have that greenhouse emissions have been reduced is that everything gets more expensive! Carbon dioxide has no taste, no smell, you can’t see it and it’s mostly emitted a long way from where people live.

The problem with carbon trading is that it puts all the power and knowledge about how to reduce emissions into the hands of bureaucrats and big companies. They are asking us to trust them to reduce greenhouse gases, without giving us any proof back that they are actually doing it except increased prices. We know they can increase prices already for no reason, we don’t need another demonstration!

What I wasn’t to do is a community based solution for the ACT’s emissions, in which we give people real alternatives instead of just punishing them with higher prices for food and fuel. A scheme should give everyone direct ownership for reducing their emissions, by making it easy for them to make lifestyle decisions to produce less emissions. We keep getting told that this is a global problem for the whole of humanity; if that’s the case we need a scheme where we can all help, and not get screwed by businessmen. My  scheme would actually put responsibility for climate change into everyone’s hands, instead of just talking about it.

1.    Help to commercialise some of the great local technologies for low emission power generation, like the Lloyd Energy Systems solar storage system in Cooma, or the ANU “Big Dish” solar concentrator.
2.    Build a high quality public transport system for Canberra, that Canberrans will want to use  instead of their cars.
3.    Help businesses and homeowners to reduce emissions through technical support to change habits and fit energy efficient technologies.


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44 Responses to Carbon Trading Wont Work!
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Clown Killer Clown Killer 7:53 am 08 Jul 08

Somewhere in this is the idea that the developed economies lead the way by rapidly adopting realistic technologies that provide for energy needs with reduced emissions. These technologies are then sold into countries like China and India to let them leap-frog some of the poorer examples of energy production as their economy evolves.

I heard that in China they’re throwing up solar farms as quickly as they can get their hands on the pannels. In a country whose energy demands dictates that a new coal-fired power station opens every 11 days or do, they don’t really care where the power comes from and they’re basically building anything they can to get it.

zee zee 10:20 pm 07 Jul 08

You know what could cut emissions in Canberra overnight? If all the public servants driving to barton from tuggeranong and gunghalin 5 days a week, 90% of them with a single driver and no passengers in the car, started to carpool. No cost to the taxpayer. No additional infrastructure needed. (Less, actually).

> This was discussed a while back. If everyone was just going straight to work and straight home again then it would probably work but people might be dropping off their kids to school on the way to work and others might be going to the gym or other detour on the way home. Or what if the boss calls an urgent 4.30 business meeting that runs for over an hour and you arranged to meet Fred and George at 5pm?

Lotta whatifs there. But if 20% of solo commuters paired up it just 20% of the time, we’d cut 4% off the morning traffic and probably close to 4% off weekday car emissions. Maybe more, if everyone’s spending less time with their engines running stopped in traffic!

Plus, I bet most pubes doing ‘knowledge working’ kind of white collar jobs – writing policy, financial analysis, etc – could probably work at home one day a week. And I don’t mean Saturday! Maybe they trade their non-carbon use on such days under an ETS!

Mælinar Mælinar 9:02 pm 07 Jul 08

3 post nutbag 😛

Thumper Thumper 5:38 pm 07 Jul 08

On the bright side, this rain is fabulous 😉

Thumper Thumper 5:36 pm 07 Jul 08

However, I neglected to mention as an oversight, India are determined to press ahead with nuclear power, which may or may not be a saviour.

It certainly provides an interesting moral dilemma for greens given that a number of founding green movement memebers have called for nuclear.

Ah, it’s an interesting world is it not?

Thumper Thumper 5:31 pm 07 Jul 08

China has recently overtaken the United States as the world’s largest emitter, and, in an unmitigated future, willaccount for about 35 per cent of global emissions in 2030.

And India has stated that it is determined that its per capita greenhouse gas emissions will at no point exceed that of developed countries

Noting of course that they (India) don’t give a specific example of which country or countries but one could rightly assume that they mean someone like the US, and not for example, New Zealand.

And why should India not industrialise? Why should the western world condemn these people to a life of abject poverty due to a lack of technological advances and industries that we take for granted in this country.

Sadly, all the above means that, if global warming is artificially caused by humans, we are all basically farked.

But we’ll have a nice warm fuzzy feeling as China gets us to touch our toes 😉

Jonathon Reynolds Jonathon Reynolds 4:57 pm 07 Jul 08

Woody Mann-Caruso said :

“even relatively modest improvements in energy efficiency are likely to outweigh the adverse affordability of high carbon prices and associated increases in energy prices…”

I was specifically referring to petrol (and other forms of carbon based fuels – Diesel, LPG) used to power vehicles. Given that the average age of a vehicle in Australia is now running at around 10 years old… I seriously doubt that your average consumer will be seeing any energy efficiencies outweighing the adverse affordability anytime real soon.

Mælinar Mælinar 4:20 pm 07 Jul 08

aaaannnnddd we’ll all grow our own veggies again. Consumerism at its mightiest.

Woody Mann-Caruso Woody Mann-Caruso 3:41 pm 07 Jul 08

Sorry – that last sentence should read; “Affordability improves in even the high price outlook, and energy service affordability in the moderate price outlook tracks the base case result without energy efficiency in the early period.”

Woody Mann-Caruso Woody Mann-Caruso 3:39 pm 07 Jul 08

Bottom line – the consumer is directly paying for this exercise

Just like you pay for every other cost of production and supply for everything else you buy. Or do you think consumers should be able to keep on buying stuff that damages the planet and somebody else should pick up that part of the bill?

Wrong – I think you really need understand the basic economic concepts of elasticity

I have a pretty firm grasp on the concept – they expect you know that sort of thing when you work for a central agency – but thanks for the snark. Perhaps, rather than recalling your high school economics class and Googling for ‘inelastic’, you could spend your time reading the CSIRO’s report to the Climate Institute: Energy affordability, living standards and emissions trading. There’s whole chapter on the likely impact of emissions trading on general inflation. Here’s the relevant bit in a nutshell:

“Popular discussion assumes that an increase in the price of an essential commodity, such as energy, will flow through as a general increase in prices and inflation. This may not be the case, however…The impact of emissions trading on macroeconomic balance depends primarily on how potential permit revenues are used. If permits are auctioned and the money is used to reduce existing taxes, there would be no change in the net fiscal position, and little or no increase in inflation. Free allocation of permits, or equivalent cash payments, to prevent emission intensive exported goods suffering an unfair competitive disadvantage would also have little or no impact on inflation…This suggests that it is likely that the introduction of emissions trading can be managed so that it has only minor general inflationary impacts, and that the potential social or equity impacts of emissions trading will be largely determined by the impacts of energy prices on affordability and living standards, rather than general price rises or macroeconomic policy responses to inflation such as increases in interest rates.”

The report goes on to note that there is a risk to some low income households increased energy prices are passed through to consumers without any offsetting changes in relative prices. However, these effects are readily mitigated through other cushioning policies.

Yes, there will be a knee-jerk inflationary effect, largely due to people going ‘OMG INFLATION!1!’ as they are here. It will settle down soon enough. As the report notes, this is because “even relatively modest improvements in energy efficiency are likely to outweigh the adverse affordability of high carbon prices and associated increases in energy prices. Affordability improves in even the high price outlook, and energy service affordability in the moderate priccase result without energy efficiency in the early period.”

smokey4 smokey4 11:47 am 07 Jul 08

Does this address the problem of emmissions and offer a solution?
I think not. Getting people to use alternatives to petrol guzzling cars, diesel drinking industrial transport or putting solar panels on every suitable roof space and reducing the need for coal generation. It will not achieve any of this. The government needs to address the problem not create an artificial business opportunity.

jakez jakez 9:58 am 07 Jul 08

Just getting back to the issue of buses, it really isn’t the money that stops me from using them, it is time.

I want to use buses and I am looking at trying to start catching the bus from home (civic region) to work (Fyshwick), because of the expense of using the car.

The cost difference between busing and using my car is already stark and has been for a while but the thing that has kept me off buses for the last 2 years now is that they don’t suit my time requirements. If I can’t get to work on time on a bus then I can’t catch a bus. If it will take me an hour or more on a bus and only 20 minutes in the car then I won’t catch a bus.

If they can make public transport as fast (or close enough) as driving a car, then I’ll be happy to put down some money (on top of the money I already put in in taxes of course) to ride it.

Snahons_scv6_berlina Snahons_scv6_berlina 9:48 am 07 Jul 08

At the end of the day if we as a nation produce x amt of carbon emissions, then a trading scheme would still require a total sum of emissions to be less than x. Any business that doesn’t have enough credits to offset their fottprint is merely going to increase their price to the customer to fund the shortfall. So who wins…. hmmm government and not the environment.

VYBerlinaV8_the_one_they_all_copy VYBerlinaV8_the_one_they_all_copy 9:16 am 07 Jul 08

I think it’s very easy to talk about passing ‘environmental costs’ to consumers, but it’s worth remembering Australia has enjoyed a long period of financial prosperity (which may continue for a while, albeit slowed). During the tougher times, however, when people are struggling to put food on the table for their kids, environmental issues will be at about priority number 8965.

I note that many under 30 year olds support the environmental movement strongly, but I suspect that this is partly because they have no real memory or experience of tough economic times. Don’t get me wrong – the environment IS important, but we shouldn’t assume it will continue to have the same social priority that it does now. When we design measures to control pollution and/or carbon emissions, we need to bear this in mind.

Pragmtism is the key.

Mælinar Mælinar 8:45 am 07 Jul 08

Are we to be so paternalistic that we posture in a self important way to Chinese peasants and Indian farmers? – well yes, if we want them to copy us.

You are talking about nations that were around, living the way they were, for thousands of years quite happily, who are now striving for a quality of life ‘like us’. Therefore it stands that since they are trying to copy us, we should be showing them our better side.

Not hard maths.

Clown Killer Clown Killer 8:33 am 07 Jul 08

There seems to be a lot of confusion here between carbon offsets and trading in capped emissions permits. Once that’s sorted out it might be worth joining the debate.

In the meantime, whatever you do Norvan, don’t make an utter knob out of yourself like Bendon Nelson by demanding that petrol be quarantined.

Thumper Thumper 11:45 pm 06 Jul 08

Not surprisingly symbolism, such as the 2020 summit, ratifying the Kyoto Protocol, saying sorry, stopping whaling, pulling out of Iraq, and talking up carbon trading has given way to cold political realities. Those being soaring petrol prices, high inflation, unaffordable housing and a global financial chaos.

Moreso, it doesn’t matter who is to blame, the point is, it is the way it is. The country needs to cut emissions and yet it really won’t make one iota of difference given that Australia contributes less than 1% of the total emissions of the earth.

Will us, Australia, cutting emissions be seen as a lead to other countries such as china, India, pakistan? I very much doubt it.

So what is the answer? Are we to be so paternalistic that we posture in a self important way to Chinese peasants and Indian farmers?

I don’t know. However, I do know we have to use less resources, and likewise so does the rest of the world. However, it’s not going to happen. The less we use, the more developing nations will use.

And who could blame them? After all a cardboard house with a corrogated iron roof is not really a house is it?

Frankly I don’t think carbon trading is the way to go. Education without a near religious zeal would be a good start.

Felix the Cat Felix the Cat 10:38 pm 06 Jul 08

zee said :

You know what could cut emissions in Canberra overnight? If all the public servants driving to barton from tuggeranong and gunghalin 5 days a week, 90% of them with a single driver and no passengers in the car, started to carpool. No cost to the taxpayer. No additional infrastructure needed. (Less, actually).

This was discussed a while back. If everyone was just going straight to work and straight home again then it would probably work but people might be dropping off their kids to school on the way to work and others might be going to the gym or other detour on the way home. Or what if the boss calls an urgent 4.30 business meeting that runs for over an hour and you arranged to meet Fred and George at 5pm?

Jonathon Reynolds Jonathon Reynolds 10:34 pm 06 Jul 08

Woody Mann-Caruso said :

Unlikely. If goods and services are more expensive, people will buy fewer of them, and have less disposable income to buy similar things. Much like petrol prices or an interest rate rise, a carbon tax should have a limiting effect on inflation.

Wrong – I think you really need understand the basic economic concepts of elasticity:

Elasticity varies among products because some products may be more essential to the consumer. Products that are necessities are more insensitive to price changes because consumers would continue buying these products despite price increases. ( http://www.investopedia.com/university/economics/economics4.asp )

Petrol is inelastic.

toriness toriness 9:46 pm 06 Jul 08

WMC’s explanation of carbon trading is pretty straight forward. i can’t see how the rest of you aren’t getting it. regardless of the finer details, the emissions trading scheme will essentially make greenhouse gas intensive products and services more expensive – which acts as a financial disincentive for consumers and companies to continue purchasing these things in huge quantities ie less greenhouse gases emitted ie saving the planet. sadly the knowledge of environmental damage has proven to be insufficient in making most people change the way they purchase items and use energy – radical solutions are required (making individuals realise through impact to their hip pocket – user pays!!) to halt the rate of emissions.

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