The Coalition carbon pollution scheme was released a couple of days ago and has attracted a lot of media attention. Including the WSJ Asia (now with an annoying pay-wall on its op-ed page for the current day articles).
The political momentum behind cap and trade is melting away a whole lot faster than the Himalayan glaciers — so much so that Australia’s opposition leader has a big, new idea: Ditch the plan altogether and make the costs to taxpayers transparent.
… Mr. Abbott proposed Tuesday instead to set up a fund to pay companies that cut emissions and meet certain criteria, such as preserving jobs.
That’s still a plan for government to pick winners, as Prime Minister Kevin Rudd’s cap-and-trade plan would. But Mr. Abbott’s proposal has the distinct advantage of limiting and defining the cost to the taxpayer. That’s impossible to do under cap and trade, in which emitting companies buy carbon credits at fluctuating prices and then pass that cost onto consumers.
I think the Coalition plan is as much a political policy as it is an economic policy.
As an economic policy it is very much targeting the low-hanging fruit. To the extent that firms can undertake easy action to reduce their current carbon pollution but simply couldn’t be bothered doing so (for whatever reason good or bad) the government have now put a pot of money on the table to provide some incentive. How much low hanging fruit is there? I don’t know. Is there 5 percent worth – perhaps.
The important point is that this is not a scaleable policy. It could work for a small reduction in carbon pollution but I think it would stuggle to compete against alternative policies for a large carbon cap.
That is where the leaked memo to Penny Wong the Department of Climate Change (HT. LP) is a bit disingenious – the memo talks about abatement in 2020, not in the near future. The Coalition policy is very political in that respect; it is a do something now, do something small, do something transparent policy. In some sense it could even be described as being timely, temporary, and targeted. I can’t imagine this policy in this format continuing to 2020.
This a policy that can be easily modified if and when the global community decide on a common carbon scheme. By contrast the CPRS does not have that advantage. To the extent that a global scheme was inconsistent with the Australian scheme and the government chose to harmonise with the international scheme then existing, and newly created, property rights to carbon pollution would have to be extinguished and compensated. The CPRS could be a very expensive policy mistake if Australia got too far ahead of global sentiment.
The incidence of the Coalition policy is quite clearly on taxpayers while the CPRS incidence falls on those high-income households not being (over) compensated for the policy. In other words, much the same people.
All up it looks to me that rather than having financial markets trading obscure derivative instruments that nobody really understands (and we know where that ends up) the Coalition policy creates a government clearing house. I haven’t quite worked out in my own mind whether the administration costs, measurement costs and auditing costs (transaction costs in general) of running the two schemes would be very different. My instinct is that they will be much the same under each scheme.
The only real merit in the coalition policy is that it won’t be as readily institutuonalised as an ETS.
I still think the best response is a modest revenue neutral carbon tax on electricity production and transport that replaces the existing fuel tax and lowers income tax. Ideally this would be coupled with an end to nuclear prohibition.
TerjeP (say Tay-a)
5 Feb 10 at 9:10 am
Sinclair, have you said anything before about the Greens proposed compromise for a set carbon price introduction?
steve from brisbane
5 Feb 10 at 9:47 am
Sinkers your third last paragraph is merely an assertion. Why is the CPRS so hard to change?
Why wouldn’t we benefit for an early mover advantage?
Butterfield, Bloomfield & Bishop
5 Feb 10 at 9:53 am
Terje – yes.
Steve – not Green policy specifically. But I do recall a comment perhaps that this undermines the whole idea of a market price that the ETS would establish.
Homer – the CPRS deliberately creates property rights to emit carbon which would have to be bought out under the constitution. It all depends on how different an international scheme would be.
Sinclair Davidson
5 Feb 10 at 10:02 am
it all depends, yes.
It could well be the best plan is from the Greens.
What is the world coming to!
Butterfield, Bloomfield & Bishop
5 Feb 10 at 10:11 am
Sinclair – is that yes to my first paragraph, yes to my second paragraph or yes to both?
TerjeP (say Tay-a)
5 Feb 10 at 10:35 am
Both.
Sinclair Davidson
5 Feb 10 at 11:13 am
Both policies will do absolutely nothing about the temperature of the planet. They are both political strategies, though Rudd’s doubles as a religious policy. The Greens’ “policy” will also do absolutely nothing about the temperature of the planet.
Nothing.
C.L.
5 Feb 10 at 12:16 pm
A carbon tax would be so much more honest.
It’s a travesty that so few politicians who claim that this issue is so important will propose one. You’d almost think they had serous doubt too.
Pedro X
5 Feb 10 at 12:47 pm
CL, your resolution to this prisoner’s dilemma type situation the world finds itself in is presumably for all prisoners to grab the guards pistols and engage in a shoot out in which no one survives.
steve from brisbane
5 Feb 10 at 1:12 pm
CL, your resolution to this prisoner’s dilemma type situation the world finds itself in is presumably for all prisoners to grab the guards pistols and engage in a shoot out in which no one survives.
The dilemma is purely the figment of some very excitable imaginations. I have a more personal dilemma, what can I have for lunch?
dover_beach
5 Feb 10 at 1:34 pm
“CL, your resolution to this prisoner’s dilemma type situation the world finds itself in is presumably for all prisoners to grab the guards pistols and engage in a shoot out in which no one survives.”
With what, a 2 degree, 57 cm sea level rise?
Semi Regular Libertarian
5 Feb 10 at 1:37 pm
Oh nos, we’re being held prisoner by the warmy monster!
C.L.
5 Feb 10 at 1:41 pm
Steve is currently barracading his bed with pillows and blankets.
Infidel Tiger
5 Feb 10 at 1:47 pm
OK, the shoot out does not necessarily have to end in death; it could just be that everyone is left maimed and bleeding.
steve from brisbane
5 Feb 10 at 1:49 pm
With what, a 2 degree, 57 cm sea level rise?
Semi Regular Libertarian
5 Feb 10 at 1:51 pm
The point of the analogy was more of a comment on the attitude that it is better that no one ever take a first step to a possible better outcome, instead we all go down together.
steve from brisbane
5 Feb 10 at 1:51 pm
SRL: so says you.
steve from brisbane
5 Feb 10 at 1:52 pm
steve: So says the IPCC!
Semi Regular Libertarian
5 Feb 10 at 1:53 pm
I strongly suspect, by the way, that it would be better for Rudd to cut a deal with the Greens that gives us a set low carbon price but sets up the framework for having a proper ETS going later if/when enough other nations do. And if he is going to do that, he would be better doing it fast, so some of the fear of a “new tax” scare campaign can dwindle before an election that could then be safely left as long as possible.
But my real preference would actually be for a simple carbon tax for money to research and deploy clean energy.
steve from brisbane
5 Feb 10 at 1:56 pm
That Prisoner’s Dilemma angle was nice, Steve, but unfortunately it’s about 3 months too late. The AGW moevement is dead.
Still, it’s too good to waste, that one. Save it for the next doomsday scare that requires world government. I look forward to hearing ten years from now how we face a “prisoner’s dilemma” due to the threat of asteroids.
daddy dave
5 Feb 10 at 1:57 pm
Oh how far the “settled science” of AGW has fallen. It has now morphed into anthropomorphic global warming. Warmy is now the rifle-toting Byron Hadley of catastrophes.
C.L.
5 Feb 10 at 1:58 pm
daddy dave: deflecting an asteroid is hardly going to require world government. Been listening to Monckton, have we?
steve from brisbane
5 Feb 10 at 2:00 pm
A deal with the Greens now, as the whole mess continues to unravel, will only signal his desperation to the Australian electorate.
dover_beach
5 Feb 10 at 2:02 pm
“deflecting an asteroid is hardly going to require world government”
No, just the science and military establishment of the hegemony.
Semi Regular Libertarian
5 Feb 10 at 2:02 pm
okay, just save it for a run-of-the-mill apocalyptic scare.
daddy dave
5 Feb 10 at 2:04 pm
DD, have you noticed this:
http://www.telegraph.co.uk/earth/environment/climatechange/7157590/India-forms-new-climate-change-body.html
dover_beach
5 Feb 10 at 2:06 pm
“I strongly suspect, by the way, that it would be better for Rudd to cut a deal with the Greens that gives us a set low carbon price but sets up the framework for having a proper ETS going later if/when enough other nations do.”
No you are wrong. There is no worry about carbon mitigators screwing people for a level playing field because the trade restriction will hurt them more than it would hurt us. They have to cop that on top of a carbon mitigation scheme. This idea of “carbon mitigators acting as a trading bloc” is based on poor grounding in trade economics. Sure they can do it, but everyone will be worse off, them more so and on top off the mitigation.
Semi Regular Libertarian
5 Feb 10 at 2:08 pm
that could get interesting, db, especially if they produce findings that are divergent from the current IPCC view. From the article:
“There is a fine line between climate science and climate evangelism. I am for climate science.”
daddy dave
5 Feb 10 at 2:08 pm
Steve: You might even get a surprising amount of agreement from skeptics (like me).
The level would presumably be a major point of contention but still, it’d be a start and better than the CPRS that is on the table.
Is it really productive to talk about Monckton, it’s like bringing up Monboit and his quote: ‘flying across the Atlantic is as unacceptable, in terms of its impact on human well-being, as child abuse’.
Then we could have a debate about how many flights each of us have taken in the last few years and work out the equivalent in fiddle kiddies.
There are wing nuts on both sides.
Pedro X
5 Feb 10 at 2:08 pm
Pedro: yeah but it was DD who brought up world government first. How can I think of anyone other than Monckton when that’s mentioned? I didn’t propose getting back onto him as a topic, though.
steve from brisbane
5 Feb 10 at 2:19 pm
No Australian “plan” or “scheme” will make any difference to the temperature. Anyone arguing for such plans and schemes is a religious wacko.
C.L.
5 Feb 10 at 2:22 pm
steve – world Government is relevant as mitigation just won’t work without. Of course there will be no world Government. Hence worrying about being an early adapter or anything else but a no regrets policy is folly.
Semi Regular Libertarian
5 Feb 10 at 2:25 pm
Will someone attack Pedro for agreeing with me, then? Why should I take all the flak?
steve from brisbane
5 Feb 10 at 2:31 pm
Pedro: yeah but it was DD who brought up world government first.
.
as a joke. I erred. My joke should have been more thoroughly copy-edited before posting it.
daddy dave
5 Feb 10 at 2:35 pm
Hey, look at that jump in January temperature noted at Bolt’s. As people have been saying, looks like 2010 could well break the 1998 record.
Let the excuse making begin. (It’s already started in comments at Bolt’s)
steve from brisbane
5 Feb 10 at 3:13 pm
I wish that for the sake of accuracy Professor Davidson – and other regulars who aspire to the libertarian ideal – would stop referring to CO2 as “carbon pollution”. This grossly inaccurate term has been coined by the Rudd government in order to mislead the public into equating an odourless substance essential to all life on this planet with black soot-type pollution.
On the same note, there are no “carbon polluters” – the correct term is “CO2 emitters”.
Regardless of the dodgy science behind the massive scam that is AGW, this is a totally separate issue and it is disappointing to see this particular Ruddphrase so thoughtlessly parroted here.
JB
John Bayley
5 Feb 10 at 3:21 pm
John:
Steve, the bogan from Brisbane, is not a libertarian and neither is Rogette, who was once a man, but fell in love with a doctor and married him, had a sex change, breast implants and is now a well ensconced leftie.
Don’t confuse everyone with these two reprobates or others of a similar ilk.
JC
5 Feb 10 at 3:27 pm
Steve believes the planet is doomed because January was warm.
Infidel Tiger
5 Feb 10 at 3:29 pm
I’m not in the least worried, Steve from B. Its an anomalous result. Ocean heat content continues to trend down:
http://wattsupwiththat.com/2010/01/31/nodc-revises-ocean-heat-content-data/
dover_beach
5 Feb 10 at 3:31 pm
Will someone attack Pedro for agreeing with me, then?
No, because Pedro is a good guy and always has been.
Why should I take all the flak
Primarily because you deserve it.
JC
5 Feb 10 at 3:34 pm
JC, yeah thanks for the bogan snark too, JC. I refrain from name calling of other commenters (well, “dill” is about the worst I can think of) but you must be having one of your “down” days or something. I’ve never seen anyone who can snap quicker between hot and cold on the issue of AGW like you can.
steve from brisbane
5 Feb 10 at 3:47 pm
JC, John is taking exception to Sinclair’s OP above, in which he uses the phrase “carbon pollution” when discussing the proposed policies of the government and opposition. John believes “carbon pollution” is Ruddspeak that is being thoughtlessly parrotted. I can see the point I guess; in that the phrase assumes that C02 is pollution. But on the other hand, you talk in the language of the day.
daddy dave
5 Feb 10 at 3:50 pm