I have an article with Quadrant this morning which traces the rise of taxation of carbon over the past 20 years and the misinformation that has led to it.
Included in this misinformation is the notion that Australian carbon consumption is excessive – in fact once adjustments are made for exports and imports, Australians’ carbon dioxide emissions are no greater than those in other countries with comparable living standards.
There is also the false claim that we stand out by doing less than others to staunch emissions. Treasury Secretary Martin Parkinson claimed that countries producing 83% of global emissions had pledged to undertake climate-change action, adding that, “unless we all act, we all lose in the end.” Treasury estimated we need a carbon tax at $80 per tonne to meet the 2020 goals and Garnaut estimated we need $250 per tonne to meet our 2050 goals.
Leaving aside the question about the need for such action, the claim that we have pledges from 83% of emitters represents a severe salting of the sample. It includes India, where the “carbon tax” is a revenue-raising royalty of about $2 per tonne; Japan, where the carbon tax is $3.30 per tonne;Switzerland, with a $61 per tonne carbon tax that applies to just 5 per cent of electricity supply; Canada, which simply walked away from commitments when they became painful; and New Zealand, where mostelectricity is hydro/geothermal and where concessions mean the nominal $11-per-tonne carbon tax is actually only $2.
And in the US, though the Obama Administration is using regulatory measures to impede coal plants, the Senate voted 95-0 against climate-abatement action. Even California has a carbon price at only half the level of the repealed Australian measure.
That leaves the EU, where the carbon price is currently around $8 per tonne.
Australia’s savings from the repeal of carbon tax are partly offset by the Renewable Energy Target (RET). If this remains, its costs will rise because removal of the carbon tax means a lower electricity price and this will require an offsetting price increase for the renewable energy certificates that all electricity retailers must buy. The cost of the RET, according to Deloittes, is an impost on consumers of at least $29 billion.
There is, in addition, the subsidies to carbon-lite energy through the $2 billion a year “Clean Energy Finance Corporation” and direct budgetary spending favoured by Environment Minister Greg Hunt under the Commonwealth’s Direct Action program.
The repeal of the carbon tax still leaves much to do in removing the burden imposed on us as consumers and taxpayers, and in redressing the critical impact of regulatory-induced excessive energy costs that are plaguing business competitiveness.