Carbon Trading Wont Work!

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.

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.

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.

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?

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.

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.

This is a little like all those trees that Bob Hawke planted and have died from lack of water. Good try but!

I am waiting on management strategies to deal with lack of water, higher temperatures and increased fire activity across the whole of the nation. Planting trees to claim green house credits is one thing, actually getting trees to grow in low rainfall and not sucumb to a bushfire is another.

Carbon Trading is the process of turning the green house problem into a business.

WMC,

‘Effectively, the government takes from carbon producers on the one hand, and pays carbon reducers with the other’

The carbon producers increase their prices to recoup the government take, the consumer is compelled to pay the increase. The carbon reducers gain a financial benefit from the government. We’d be dreaming to believe this income would be passed on to consumers in lower prices – think of the shareholders.

Bottom line – the consumer is directly paying for this exercise, and the audit of apparent benefit is in industry/government hands. I reckon we’ll be screwed over royally. And I will believe we are doing something positive when the rest of the world reports in with their achievements.

So a business manufacturing product X…have to pay the gumbymint a certain amount of carbon tax…the cost of making those goods goes up and we have to pay the extra $$

Which is how it should be. Businesses already pass all costs of production and supply on to consumers, and then some. It’s how they make a profit. The difference is that nobody has ever seen f.cking over the planet as a ‘cost’ before. Want to buy goods that are environmentally wasteful? Pay more.

inflation is outta control

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.

the amount of carbon being produced hasn’t actually been reduced.

Yes, but the net amount in the atmosphere will be as other producers begin producing goods and services that reduce or absorb carbon – green power generation, wood lots etc. They will claim credits from the government. Effectively, the government takes from carbon producers on the one hand, and pays carbon reducers with the other.

This is where the free market kicks in. Producers A and B produce the same product. Producer A reduces their greenhouse emissions, allowing them to offer a lower price than B. B must follow suit, or somehow otherwise drastically improve their product, or be eliminated from the market. Producer C makes a product that is inherently greenhouse-intensive, and cannot reduce carbon generation. Producer C must buy credits. Consumers either pay through the nose for Producer C’s product, or do without.

If the ratios of inputs to credits are good enough, eventually it becomes more profitable to drastically reduce your carbon production and even invest in carbon reduction instead. In Germany, for example, some farmers find turning their land over to solar a more profitable way to do business than intensive factory farming of animals.

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).

Felix: There’s an essential difference between a straight “carbon tax” system, and a “cap and trade” emissions trading scheme. The latter actually lets us say “here is the limit on what we can emit”, and then lets emissions (like any other scarce resource) find their own price. The limit can be gradually adjusted downwards, too.

this is a perfect example of what is wrong with the CAP; an unwillingness to listen to reasoned advice in favour of hokey homestyle wisdom.

the ideas at the bottom aren’t stupid but are perhaps limited and would only be effective as part of a more wide ranging plan. For instance the public transport idea is alright, but i would think the reason more canberrans dont use the bus is more down to the convience of their cars rather then an unhappiness with the bus system. (just quietly, what programs will be cut in order to fund these ideas?)

if climate change is real then it folows that carbon emissions need to come down; the question then is how can this best be acheived?
tradable permits make sense as a way of doing this as they provide a definite limit on the amount of carbon produced; at a low loss of effeincy. they encourage innovation and depending on the nature of the markets the effected buisnesses feed into can lead to little change in the prices paid by consumers.

From your post norvan it is quite clear you dont have a particularly strong idea of how carbon trading will actually work, perhaps you should focus your research more on academic papers and expert opinion rather than wikipedia and the homespun ideas of the CAP’s collection of nimbys.

Matie, I am as sceptical about organised politics as I am about organised religion. They both lead to you having less money and being f#@ked over!

Care to give the colour of your party flag or must I speculate ?

Maelinar, I respectfully decline. After all, I aint campaigning for nothing.

Bigred – Norvan Vogt is his real name. I’ll take the impetus on this one and instruct that if you want to know WHat sort of name is “Norvan” anyway? (Sic) then its obligatory to give over your own if you are hiding behind a non-de-plume.

Tit for Tat and all that … stuff.

WHat sort of name is “Norvan” anyway?

Carbon trading is an attempt to put a ‘price’ on pollution.

All business is competitive, and no business will voluntarily take measures which will increase their costs: if they do, their competitors will slaughter them. (In addition, only a very small percentage of consumers are willing to actually PAY more for environmentally friendly products).

Experience has shown that emissions trading can be more successful than taxes or regulation in allowing producers to find the most efficient way of reducing their emissions (eg. Sulphur Dioxide in the US).

Norvan, I look forward to seeing you at a shopping centre near me soon. Hey, what is your position on light rail?

Norvan “maths is hard” Vogt’s a candidate for office, and not just a garden variety bloviator?

Nice one Norv, I’ll make sure to put you further down the preference list…

Putting aside the argument about a carbon emissions trading scheme for the moment (albeit with a brief hat-tip to Maelinar for his comment), I’m with Woody at comment 8 – candidature for the Community Alliance Party in the upcoming election (http://www.cap.org.au/candidates/molonglo/36-molonglo-candidates/55-norvan-vogt) should be declared in the post either upfront or at the end. Should be applied consistently otherwise it’ll just get more annoying the closer the election comes.

Bundybear said :

Am I the only one, or does anyone else think carbon trading is just a huge scam. Big business gets permission to pollute at will, just buy enough offsets, which big business sets the price for. Haven’t we just set up another form of currency, and done nothing at all to reduce pollution.

Exactly!

So a business manufacturing product X produces Y amount of “carbon” then they have to pay the gumbymint a certain amount of carbon tax (what’s the bet that GST is applied to this as well!) so the cost of making those goods goes up and we have to pay the extra $$ if we want to purchase said goods. Then the Reserve Bank big wigs have a meeting and decide that inflation is outta control because every business has put their prices up due to carbon tax and then interest rates rise and we are all forced to live in the back of our Prius'(Prii?). Meanwhile the planet is self destructing because the amount of carbon being produced hasn’t actually been reduced. Then the gumbymint will have to close some more schools because it’s too hot to breed and there are no kids, plus who can afford to send their kids to school anyway after paying extra for all their goods, not to mention the buses don’t go anywhere near the few schools that remain open so the kids can’t go anyway even if the parents could afford to send them.

Did you bother to pay for this thinly veiled political advertising?

If CO2 has brought us nice temperate winters like this one, then I say bring it on!

Am I the only one, or does anyone else think carbon trading is just a huge scam. Big business gets permission to pollute at will, just buy enough offsets, which big business sets the price for. Haven’t we just set up another form of currency, and done nothing at all to reduce pollution.

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. – Atmospheric CO2 is being monitored by more organisations than just the Government. Therefore any ‘evidence’ the Government presents, will face quite critical peer review.

Do your own Googling.

Since that takes the lynchpin out of the rest of your argument, I’ll pause there and let you reattempt that one.

Monetary policy 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 banks get to make more profit AND charge us more, and the pollies get to tell us they’re fixing the inflation problem.

The reserve bank sets it up and polices it, big banks buy credits, and they both tell us they’re fixing the inflation problem but we still 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 inflation has been reduced. The only “proof” we have that monetary supply has been reduced is that everything gets more expensive more slowly! Interest rates have no taste, no smell, you can’t see it and it’s mostly decided a long way from where people live.

You get my point. Blah blah, repeat ad nauseum for every complex policy issue. And OMGZ, we have to trust beauraucrats and big companies! Jesus, do you wet yourself everytime you drive over a bridge or go up in a tall building or ride in an aero-plane? Your life is on the line there and you’re in contraptions made by business and regulated by… OMGZ, bureaucrats!

“My scheme would actually put responsibility for climate change into everyone’s hands”

I have been trying to invent teh awesomest solar panel all week and so has everyone in my street, we all took time off work to do it. Jock next door knew it was something about silicon and chips but buggered if we can get this pile of sand to do much more than get hot in the sun and crapped in by the Joneses’ cats. No wait, I’ve got an idea… what if we banded together and formed a ‘government’ and paid some taxes and got them to get in some professionals to tackle this full-time for us? Seems to me we elected this mob to do just that eh?

Of Course it’s about tax, the more money the govt has the more boneheads they can afford to employ to think of more ways to tax us…………..

and that’s called progress!!!!!!!!!

Lovely to see some techie conspiracy theorising.

I think every one knows what you’ve written, its just a variation on the Authorities solution to everything – tax it! And as for bureaucrats trying to regulate Multinationals…ha ha yer having a larf mate. If we had a ballsy Gvmt prepared to invest in making new technology WORK then I’d applaud them but all they can do is tax us under some sexy name and it’s problem solved.