The Spoonman
Emissions trading scheme
Posted by spoonman Friday 18 July, 2008 07:42 PM
Spoony tries to clear up all the odds and ends in the Governments new emissions trading scheme
The Rudd Government released its options paper on an emissions trading scheme this week, ultimately designed to reduce our greenhouse gas emissions.
The idea is for the government to issue a fixed number of Œcarbon permits¹ at a cost to the emitters. As businesses reduce their emissions through efficiencies or new technologies they can flog off the permits they no longer need via a permit trading market.
Gradually the number of permits issued each year will drop which is how we get the overall emissions reduction of 50-60% by 2050. That's the plan anyway.
The scheme will commence in July, 2010 and includes emissions from transport, heavy industry, coal, oil and gas.
Petrol has been included but there will be a cut in the fuel excise to keep the pump price relatively stable at least until 2013.
But obviously the price of things like electricity and gas will rise significantly and low income families and welfare recipients will compensated for the extra cost.
The agriculture sector has been left out of the scheme until 2015 and land clearing has not been included at all. But you can gain credits or permits by planting trees. Go figure. There is no incentive under this plan to stop the culling of our remaining forests.
It¹s worth pointing out that the only reason we have met our Kyoto target is through reduced land clearing.
We have not done much to improve efficiencies in other areas. In fact, usage of all forms of energy is rising every year, as do our emissions.
The scheme has been described as a softly-softly approach and as I read it, it is so softly-softly you wonder whether it will have much effect.
The paper suggests that if carbon is priced at $20 a tonne the cost of living will rise by a little less than 1% - a one-off rise.
But there are more than a few experts suggesting carbon should be more like $40 a tonne which would double that cost of living rise to 2%.
Astonishingly, the government will provide an undisclosed amount of financial assistance, either through free permits or up-front cash, to the coal-fired electricity generators. The amount of that help being thrown around at the moment is in the order of $5 billion.
If that is the case its pretty obvious we will be using coal-fired electricity for decades to come. Hardly a good outcome.
And as yet the so-called carbon capture and storage schemes are 'pie-in-the-sky' and even if they do work they will not capture much more than 30% of CO2 emissions from power stations. Hopeless.
The NSW government argued heavily for this 'compensation' for purely economic reasons. The state is trying to flog its electricity generation sector and was terrified the value of the assets would plummet under the scheme.
So it is business-as-usual over the environment for NSW.
And of course, Victoria and Queensland are set to build new coal-fired power stations. Business as usual.
The biggest missed opportunity was to deliberately inflate the cost coal-fired electricity which would have had the parallel effect of making investment in renewables far more attractive.
Economies of scale then kick in and things like solar and wind generation come down in cost.
It would also make nuclear generation a real economic and environmental option we are mad to ignore.
It just depends how fair dinkum we are.
The Coalition is saying the plan will punish the economy.
The Greens say it doesn't go far enough to reduce emissions.
Around 15 years ago 1500 of the world's most eminent scientists (half of whom were Nobel Laureates) urged the world to take rapid climate change seriously and start to take steps to reduce emissions.
They were ignored by all but the science community. Even the Greens didn't take them seriously, too busy hanging off US nuclear warships than worry about greenhouse gas emissions. Now they hang off power stations and coal loaders instead. Welcome to the real game, finally.
Subsequently the first serious climate modelling was released, along with a bunch of future scenarios. It wasn't pleasant reading.
In the decade since the first serious predictions were made virtually all of them have come to pass, albeit much earlier than was anticipated.
The worst case scenarios are now the real ones, and it's a no-brainer that the cost of doing nothing will be far greater than taking action now.
There is also more than enough evidence to suggest that whatever negative economic impacts there will be on current energy production sectors, there are ample opportunities to ramp-up economic growth as we shift to new sources and technologies. Swings and roundabouts.
Back in the early days of the industrial revolution blacksmiths were spewing because they lost their horse-shoeing business to the new-fangled car.
Imagine if the governments of the time gave buckets of money to keep horses on the road and the blacksmiths happy. We would say - with the benefit of hindsight - that it would be mad.
But that's what is happening with the oil and coal sectors right now.
We give them our taxpayer cash to keep the new guys out of the game, their profits up and shareholders happy. Crazy.
So here is the moral dilemma of our time....
How much are we prepared to pay to halt rapid, human-induced climate change?
And how much are we prepared to fob-off onto our kids and grandkids?
Because whatever we do to slow climate change now, it will have no effect for at least 30 years.
And the remedies will never be cheaper than they are now.
Over to you......
Comments
Wow! - Some powerful reading. That's some interesting stuff that people of my generation should be reading about. The link to this blog will be going all over Myspace, Bebo and Facebook with large headings for all my high school friends to read!
Posted by Andrew Friday 18 July, 2008 10:45 PM
Spoony,
The problem I see with an emmissions trading scheme is the inherent instability in the cost of carbon credits. Business see that as very high risk and will then expect a very high return.
I support pricing carbon into the ecomomy and the price seems dirt cheap to me however I consider taxing emmissions at a set rate to be a better way.
Sure, this will mean the total emmissions will fluctuate BUT the price will be stable and so carbon reduction measures become low risk projects demanding a lower return. Business will also be able to predict when carbon reduction measures become profitable which means projects aren't rushed and are more cost effective.
The tax take could also be used to assist those who can least afford it.
And finally - its simpler!
Posted by Ian Sunday 20 July, 2008 12:57 AM
Hey Spoonman,
I'm 15, and frankly, global warming, it scares the **** out of me. People talk and they talk and then they look like they're about to take action, and they procrastinate.
It really is a now or never issue, and Rudd, who was promising all that stuff (basically, effective means to get australia of it's fat but and into action)...Well I've just lost the remaining shred of my faith in Australian politics.
Climate change was always going to mean recession, at the very least. It's our own dang fault. If we'd acted sooner, we wouldn't be in so much of a mess.
I just want to say, can't we boost our economy massively by being the first country to really really get stuck into the fossil feuls to renewable energy conversion market?
I reckon there have gotta be tons of jobs out there, for people to do solar research, for engineers to set up and run renewable energy plants, for solar cars etc. etc. After all, we are one of the richest 1st world countries. Surely we could put a little more effort in. Why can't the government instead put it's money into helping us kids involved? The way it's going, it's gonna be our problem anyway.
And we could start selling the stuff we make to the rest of the world.
Our economy has so much more to gain by embracing this. And the longer we wait the poorer we're gonna get.
And if people are so worried about inflation then stop spending already! Stop buying brand new cars, that cost the environment so much in the production, and convenient food with all it's plastic packaging.
When you get down to it, I reckon it's just human greed all over again. Greed on virtually all levels.
But please, I'm just a ranting 15 year-rold teenager, so if there's a truckload of stuff that I'm ignorant of, (or 50 truckloads) help me out. (If I haven't made it clear enough already) I want to get involved.
Cheers
Posted by Jenny M Monday 21 July, 2008 09:24 PM
Hey, me again
If the government's attention is what we need, why not start a petition for changing the current schemes.
With the spoonman, we could get some serious publicity.
It's a typical teenager response, I know. But until I can get the rest of my "government funded" public education, what else can I do?
Answers anyone?
p.s. please don't burn me. Educate the ignorant, don't scare them off.
Posted by Jenny M Monday 21 July, 2008 09:28 PM
Hey Spoony,
what a great read this has been. It amazes me that until the most recent election climate change was something the average Australian didn't ever consider to be an issue.
Now since Kevin Rudd made it a political priority it has opened the eyes of many Australians to the reality of our future.
I'd argue though that Kevin Rudd being the man responsible for making this a real political issue in Australia isn't going about it the right way.
Unfortunately the polls show that his approvals are still high and many will just trust in what he's doing and believe it's going to work.
I think people like yourself and Dr Ziggy Switkowski need to make this heard in the more mainstream media.
We need to educate the public more vigorously on just how much of a serious issue climate change is and what better alternatives there are out there besides Kevin Rudd's bs Emissions trading scheme.
Nuclear is such a good alternative to coal and after listening to your interview with Dr Zigi it pretty much covered every objection I could think of to nuclear power.
The only problem I could see is trying to build one would cause a lot of objection from people living near the power station, which would prevent it to some degree from ever taking off as a real solution.
I just hope that the ugly future that you predict never occurs but we would be stupid to sit here and fool ourselves into believing that the future is a long long way to come!
Posted by George Hirezi Tuesday 22 July, 2008 11:36 PM
I agree with the Coalition in that it will hurt the economy but what really baffles me is something like this can occur without any public debate on anthropogenic global warming.
All of this is backed by theory - theory that is becoming quite weaker by the day.
There is no greenhouse signature or evidence to support significant anthropogenic warming.
Why do we never hear about the warming trend ending in 2001and that our current temp is the same as it was in 1980 (down 0.6C).
We don't hear about the urban heat island effect corrupting the land based readings. It seems that there is a really big hole being dug by the government.
Until now the global warming debate has merely been an academic matter of little interest.
Now that it matters, we should debate the causes of global warming.
If you were going to get major surgery, do you think that you might get a second opinion first?
We have only ever heard from a convoluted IPCC report. We constantly hear about about the so called "consensus", but the reality is quite the opposite.
I just hope that people are not myopic on the subject. I'm sure that any AGW supporter would want to call me a heretic for merely disagreeing with the theory. I hear it all the time. What's funny is that's usually the only rebuttal I get.
As Lord Keynes famously said, "When the facts change, I change my mind. What do you do, sir?"
Posted by Tom Wednesday 23 July, 2008 09:42 PM
I agree with Jenny. I'm also 15 and as I wrote above getting as many young people like us knowing about this issue is important. I've posted the link on all the major social networking points as well as discussed it with my friends and also given a copy of the blog to my teachers. We as the youth may have a shimmering hope to do something here
Andrew
Posted by Andrew Thursday 24 July, 2008 07:21 PM
It's nice to see some young people interested in the state of our planet. Most don't give a rats about what is happening around us. I know my own kids are hopeless even with the simple things like recycling.
I think one of our biggest problems is we have forgotten our roots and the simple things in life, we want things to happen too fast and to cram everything in within a short period of time. To help with lessoning emmisions we can start by planting our own vegi gardens and plant more native trees ( I am no greenie by any strech of the imagination or hippi but I do care about what is happening to our world).
We need to convince the goverment to stop oil companies and car manufacturers to stop buying out and putting a stop to new fuels for cars. Years ago someone came up with a way to run a car on water( we have never heard about it since) We should be encougaging this sort of progress.
We can go solar or wind generation at home.
There are ways that we can lesson our use of fossil fuels the governement needs to put money towards grants for developing these things instead of wasting it on self promotion and wasteful junket trips.
Jenny is right let us lead the world with new technology and sell it to the world, why can't Australia be the world leader ( strongest ecomony etc) instead of flogging it off to someone else(as is the case when someone here developes something great).
The way forward is through single people doing their bit, hopefuly more will get involved when they see the benifits to themselves, their area, counrty then the plant.
Posted by Nicole Friday 25 July, 2008 10:56 AM