The Doha climate change fiasco means scrap all green taxes and subsidies

A piece of mine in the AFR this morning explored the costs of the carbon tax, according to the latest policy zig zag soon to be linked to the EU carbon price, and the renewable subsidies. 

If the carbon price stays low – likely with Europe in permanent recession – the renewable regulations will be even more costly.  The piece calls for scrapping the whole array of measures now that even the thickest of commentators must realise in the fog of the Doha failure that the world (other than the EU and Australia) has rejected the economic suicide of forcing renewables and de-industrialisation. 

That spells the end of the subsidy dependent renewable energy. 

A slightly modified version of the AFR piece is below. 

This year has seen thousands of pages in government reports addressing electricity supply policies.  In addition, electricity is at the eye of the carbon emission restraint storm which continues to blow notwithstanding the latest fiasco at Doha. 

 Having started the current century with deregulatory and privatisation measures that elevated the Australian industry to world leadership in low cost supply, the electricity sector is now reverting to its over-regulated condition prior to the Kennett and Keating reforms of the 1990s. 

 The new regulatory morass of controls together with taxes has increased wholesale electricity prices by 60 per cent.  Added to this are increases in network charges, many of them government-mandated, together with additional paperburden costs.   

 Though the carbon tax remains the highest profile measure, its cost-boosting effects may be reduced if the government links it to the European Union’s (EU) carbon price.  The EU price is likely to stay as depressed asEurope’s economy.  Over the longer term the carbon price impact will also be diminished by increased electricity generation from low carbon emitting gas which is becoming cheaper due to shale and coal seam technologies.  

Even so, unless repealed the carbon tax will continue to damage Australian industry and consumers.  But its effects will be eclipsed by those of other carbon restraining measures which are progressively throttling the industry with cost add-ons. 

Chief among these are the requirements to use expensive renewable energy to displace low cost coal.  The Commonwealth’s energy regulations nominally require 20 per cent of electricity to be sourced from non-commercial renewable sources, which are high cost and,  due to their uncontrollable and intermittent nature, poor quality.  In last month’s Energy White Paper the Commonwealth boasted that it had forced $9 billion of Australian investment in windmills.  Dubbed byLondon’s Lord Mayor Boris Johnson as “white satanic mills” foisted on Britain’s hills and dales, windmills cost three times as much as conventional sources to generate electricity.   

Even more expensive is the electricity sourced from roof-top photovoltaics, on which over $3 billion has already been squandered through subsidies.  Photovoltaics benefit from a Commonwealth subsidy that has been fivefold that of wind.  Although having been reduced, the price remains excessive and is paid up-front for the 15 years that the installations are deemed to produce electricity.   

In addition, households with rooftop photovoltaics are subsidised by state regulations.  These require energy retailers to buy back any energy generated and not used in the house itself.  Though also being reduced, that buy-back price remains over-generous.   

The extravagance of the photovoltaics subsidy regime was so successful that sales boomed forcing Canberra to split the 45,000 GWh 20 per cent renewable target into two: the small scale installations which were to be ramped up to 4,000 GWh by 2020; and the large scale facilities set at 41,000 GWh.   But the Clean Energy Regulator, which has previously under forecasted the photovoltaics take-up, now estimates that they and other small scale facilities will actually be running at 11,000 GWh by 2020.  This increases the 45,000 GWh target to 52,000 GWh. 

All these measures mean the renewable cost subsidy is likely to exceed $7 billion a year by 2020, probably twice the impost of the carbon tax.  At the same time, government-induced price increases have started to suppress demand, by forcing some of our most productive enterprises to reduce their outputs.  As some energy producers have noted, this brings an incidental effect of further increasing the renewable share beyond the 20 per cent envisaged by Parliament. 

Carbon taxes and requirements to use exotic renewables have undermined productivity and cost competitiveness inAustralia’s electricity industry. Australia has moved from having among the lowest cost electricity into having one of the most expensive.

None of this has nor can have any effect on global emissions of carbon.  Even if such emissions have the malevolent role activists and gullible politicians ascribe to them, the farcical conclusion of the Doha meeting surely hammers the final nail into the carbon suppression coffin.  Only the stagnating juggernaut that is the EU and Australia are imposing emission restraining costs.  It’s time for Australia to clean the entire slate and get our economy growing again. 

Interestingly, an article by George Goreham in the Washington Times shows how the renewable energy stocks have collapsed in price.  The world top thirty stocks are now worth only one tenth of what they were valued at the heart of the Al Gore inspired boom four years ago.  Australia’s major green stock, Pacific Hydro, is unlisted because it is owned outright by the union super funds.  If its value has collapsed in line with that of other green stocks there is a major loss to be booked somewhere and a major incentive to keep open the gravy train of subsidies on which it, like other green stocks, floats.

This entry was posted in Uncategorized. Bookmark the permalink.

16 Responses to The Doha climate change fiasco means scrap all green taxes and subsidies

  1. blogstrop

    And they reckon King George III was mad. The world is mad if this scam doesn’t bite the dust soon.

  2. Tel

    Carbon taxes and requirements to use exotic renewables have undermined productivity and cost competitiveness in Australia’s electricity industry. Australia has moved from having among the lowest cost electricity into having one of the most expensive.

    The renewables have added some cost, but MOST of the retail price of electricity is handling, middle men and markup, NOT the cost of generation. Check the AEMO historic prices, average generation is about 5 cents per kWh and you probably pay approx 5 times that.

  3. Token

    Remind me, with all this investment, has the worlds Co2 emissions increased or decreased?

    Oh well, seeing this approach is so successful, let’s throw more governement money at it.

  4. Alan Moran

    Tel
    Most of the cost of food is handling as well. For the market as a whole 45 per cent of cost is the electricity ex-generator; 50 per cent is networks and retailing. The proportion of network is much higher for households and other smaller users

  5. jupes

    Australia’s major green stock, Pacific Hydro, is unlisted because it is owned outright by the union super funds. If its value has collapsed in line with that of other green stocks there is a major loss to be booked somewhere and a major incentive to keep open the gravy train of subsidies on which it, like other green stocks, floats.

    This should be like a red rag to a bull for the Coalition.

  6. brc

    It warms my heart to see articles like this appearing in major newspapers. There is no comeback, no response, no rebuttal possible but “carboncarboncarbon” by brainwashed activists.

    The ipcc forecasts were, and remain wrong. The measures undertaken to mitigate carbon have failed. Grand international agreements are completely dead and unlikely to ever rise. Lots of people have lost, and will lose their shirts on the entire mess.

    Mark my words, there will come a time in the not-too-distant future where this will be an entire case study in hubris, groupthink and sheer stupidity and gullibility by those who have a doomsday belief in the end of the world.

  7. Rafe

    Latest warming update (a downgrade actually, but what the heck).

  8. brc

    This should be like a red rag to a bull for the Coalition.

    Ha, that’s a forlorn wish. Half of them still lumber under the delusion that climate change is an actual problem, and that state intervention is the way to economic growth. If you presented them with evidence that pacific hydro was in trouble, they’d probably say ‘let’s pass some regulations so we can save jobs’

    Very few coalition mps appear to me to have a grasp on the fact that smashing windows doesn’t create jobs.

  9. cohenite

    The renewables have added some cost, but MOST of the retail price of electricity is handling, middle men and markup, NOT the cost of generation.

    Eh?

    Renewables don’t produce usuable electricity; therefore every $ spent on a renewable is a direct add-on to the cost of electricity; how much has been spent on renewables? Well to start with over $4billion on the NSW FIT scheme; add the other states, and the billions on direct subsidisation of the wild and wacky wind and solar schemes, plus geothermal. tidal etc and you’ve got you’re price increase.

    Oh, and those fucking middle men are all the spivs selling the renewable crap!

  10. .

    Flannery involved in another stunt.

    Ah yes, and that odious bloody Charlie Pickering is there too. I suppose he’s going to look at us side on and stroke his chin on Kids News at 6.30 pm.

  11. cohenite

    Barnaby’s latest column:

    There are two very important things to help understand a person.

    One is their photo collection as people will always take photos of what’s important to them in their life and that is why politicians generally have photos of themselves, meeting other people.

    It’s quite simple: if a person has a photo of a horse they love horses; if they have photos of a dog, they love dogs; if they have photos of their family, they love their family; if they have photos of trees and mountains and wild freaky animals, they love the outdoors; and if they have photos of themselves, well, get ready to be tortured by a monotonous soliloquy.

    The other very important exposé into the darker cogs of an individual psyche is what they listen to. Mozart’s Elvira Madigan, Radiohead’s In Rainbows, current affairs or the audio version of Fifty Shades of Grey interspersed with gangsta rap. Let us say that it is a very rare surprise that the character has diverted widely from the content.

    However, on changing stations of the radio in the bathroom I was once more confronted by the next chapter of liberal politics being usurped by absurdity. Animals Australia and the RSPCA wanted to close down livestock selling centres. At the time I was in the shower getting ready to check cattle that I was about to sell.

    Why don’t we just close down the CBD and get everyone to operate off the internet because it will help us reduce our carbon footprint? Why don’t we shut down Parliament House and drain Lake Burley Griffin and ban lawn mowers?

    I hope people in our nation’s capital realise how morally draining it is for people in rural areas to be continually confronted by the philosophical warrior from the manic monkey café who rides in to shut another section of our life down without them having to pay the price, but we wear all the consequences.

    Let’s cut to the chase. If our nation has a massive debt our economy is peeling off. The shops are searching for clients, the vacancies are going up and just like your iPod in the car stacked with the best of Justin Timberlake, does not augur well for a good conversation in the car. Shutting down livestock selling centres otherwise known as cattle yards is a good sign that as a nation we are going to go broke.

    While listening to these people the emotion that bubbles up in me, is that they just don’t seem to get it. The euphemistic promise of alternate income streams just does not happen. They’ve shut down the timber industry, they’ve shut down the fishing industry and they’re always trying to shut down the mining industry. They’re trying to shut down the roo industry but after a lot of effort we are getting that one opened back up again.

    With a carbon tax they want to shut down the affordable use of electricity. They believe that every tree is sacred and frogs have as much right if not more than humans.
    If they’re not doing this, to show they have balance, they spend the rest of the time asking for the tax payers and private enterprise to work more of their week for an ever-increasing public social infrastructure.

    Yes, it’s important to get the National Disability Insurance Scheme through and that’s going to cost tens of billions of dollars.

    But we’ve also got to have climate change departments, we have absolute desire for totally subsidised schooling from preschool through to university, we want all our roads upgraded, we want a public hospital that is free and drugs to be funded by the Pharmaceutical Benefits Scheme, we demand our right to have our private guilt assuaged by the public picking up the tab for the millennium targets in aid and we still want to listen to a publicly paid broadcaster such as Radio National.

    So I pose the question to the well-meaning lady who wishes to shut down the Roma, Dubbo, Tamworth, Gunnedah, Dalby, Albury-Wodonga, Casino, Rockhampton, Gracemere and Wagga livestock selling centres: Do you ever ask yourself if you’re going to shut down these centres, how are we going to pay for anything? Can an economy actually work when no one actually produces anything?

    Far from everyone taking in everyone else’s washing, we just sit around philosophising about a world without washing.

    However we expect a direct credit into our bank account of a Friday from some omnipotent body to pay the mortgage.

    Stupidity is one thing, but the arrogant stupidity of the greens and their urban followers is another thing.

    They are the enemy.

  12. Bill

    Carbon prices are sure to stay low, so hundreds of people like Combet can make pious speechs without necesarilly facing electoral annihilation. That was always inevitable.

    It’s only a pity we are tied to the EU ETS price, not the Kyoto CER price. CER’s were last sighted trading about US$2, down roughly 95% over the past five years

  13. brc

    Great column cohenite.

    I really hope Barnaby runs for the lower house. People love to ridicule him, but he is a smart, sensible guy who has the ability to really infest, rent-free, the minds of millions of self-styled ‘progressives’.

    But when he talks, ordinary people listen. I think he and Joe Hockey are about the only ones who can effectively tell people ‘we have to stop spending money like it doesn’t matter’.

  14. Tel

    cohenite: Eh?

    I told you what to do, go to the AEMO website and check the average price of generation, compare it to what you pay at your door and calculate how much the middle-man is getting.

    It ain’t hard.

    Yes I know the big buyers get leverage so they can shunt costs down to the retail buyers, maybe a union of electricity consumers is in order. First step is to teach people exactly who is ripping them and how. You can blame some of this on the carbon tax, but not all by a long shot.

Comments are closed.