Carbon taxes: many losers, some winners

In a Wall Street Journal opinion piece, Bjorn Lomborg drew attention to the inconsistency of the global warming costs and benefit estimates made by newly minted Nobel Prize recipient William Nordhaus, and the alarmist IPCC climate review issued out of Inchon.  Lomborg, is a believer in the global warming myth but tends to think the money spent alleviating it is better spent elsewhere (his socialist background does not allow him to include an option of leaving the money with its owners!)

A New York Times article put the level of a carbon tax necessary to curtail emissions in line with an estimate of their social costs at somewhere between $135 and $5000 per tonne; the former would mean a twofold increase in Australian wholesale prices and the latter a thirteen fold increase.

Actually, though Nordhaus was a pioneer in marrying an emission reduction regime to economics, he uncritically accepted all the costs said to emanate from global warming – crop reductions, hurricanes, desertification of eastern Australia, increases in disease, lost infrastructure.  Having done so, he set about estimating the level of global tax which would redirect spending and investment to take into account of these “externalities”.

It is worth noting that the level of loss he estimated from an increase in temperatures of 3°C, even with the outrageous exaggerations that were, and remain, part and parcel of the IPCC ideology, was just 2.5 per cent of world GDP – about one year’s growth rate!.  So, the greatest moral issue of our time, the begetter and destroyer of political regimes and the policy bedrock undermining the Australian economy would, if resolved, even with all the exaggerated costs assessed by the alarmists, allow the saving of just one year’s growth!

Aside from the Nordhaus calculations, Tol (who was largely responsible for the economic chapters of the IPCC 2013 report) could only find two other peer reviewed studies of the costs (he dismissed the blatant propaganda exercises of Stern and Garnaut).  One of these, Boselo, Eboli and Pierfederici put the cost of warming by 1.9°C at 0.5 per cent of global GDP and the other by Rosen and van der Mensbrugghe put the cost of warming of 2.3°C at 1.8 per cent of GDP and a warming of 4.9°C at 4.6 per cent of GDP.

To achieve a 2.5°C maximum temperature increase, on recent Nordhaus estimates would require a tax in 2015 at $184 (US 2010 dollars) rising to $351 by 2030.  This, unrealistically assumes that the tax will be uniformly and immediately applied across all countries.  And that those countries that are natural carbon sinks, like Australia, Russia and Canada don’t lay claims for their services from the rest of the world!

Even so, it is worth looking at what the Nordhaus tax would be required for Australia.

A tax at US184 per tonne in 2010 dollars equates to a tax today of about $A290 per tonne.  Applied to the 560 million tonnes of Australian emissions, such a tax would be raising $160 billion this year.  That’s about 13 per cent of GDP.

The alternative to the carbon tax has been the regulatory taxes and subsidies, chief among which have been those on renewable energy.  Whatever pain these might have caused they have brought great comfort to some firms, as is illustrated in profit growths below

Revenues were little changed.

The latest accounts show that Ms Tanna the CEO of energyAustralia, who claimed the firms “were not bandits”, was amply rewarded with annualised income of $A8.86 million for the current year, more than that of her Hong Kong based boss and three times that of the CEO’s of the Hong Kong, Chinese and Indian subsidiaries.

Every cloud ….

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21 Responses to Carbon taxes: many losers, some winners

  1. Rafe Champion

    CO2 is beneficial given the sub-optimal level in the air at present so it is wrong to assign a cost,. The costs assigned are fraudulent, the warming effect is probably beneficial apart from the fertilizer effect and if anything it should be charged as a credit to emitters rather than a debit. Not that I suggest that seriously because it would still call for the deadweight cost of accounting not to mention the complications of the process and the way that the government would get it wrong.

  2. RobK

    The insidious web is truely disgusting.
    Just saw Alex Turnbull on TV. He epitomizes the grafters. So many pollies and CEOs really arent worthy of their remuneration. A fine way for me to round off a long day baling hay….i feel better now.

  3. Nob

    My Climate prediction:
    Nobody will do anything like what the IPCC is demanding, except Australia.

    In a few years, the IPCC, or whatever they morph into, will be back with another deadline set comfortably in the future.

    Nobody will do anything like what the IPCC, or whatever they morph into, will demand, except Australia.

  4. Where are all the one percenters protesting this capitalism?

  5. Tom

    Nobody will do anything like what the IPCC, or whatever they morph into, will demand, except Australia.

    Australia (largely through the 80% of its news media that has abandoned ethics) has done more than any other country to destroy the foundations of science. Credulity rules. You can now make a good living as a government scientist by just making shit up and being adored for it by the Green-voting fringe.

    The only people making money out of Australia’s moribund, government-heavy economy are a) subsidy miners like AGL; b) property owners riding the immigration Ponzi.

    Dumbest, laziest country on earth (now ratcheting up government debt by $100 billion p.a. — even faster when the Liars take over: $1 trillion gross government debt here we come!).

  6. Bruce of Newcastle

    It was interesting that even AGL, which Alan notes made a stonking great profit last financial year, is starting to be concerned about ruinables affecting the grid:

    Both AGL, Origin warn renewables threaten grid, create chaos, drive off baseload, cause higher cost (10 Oct)

    It must be getting pretty bad for them to admit this, since AGL has been a champion of renewables for very good reason: they can reap enormous profits from the gas used for the load levelling gas turbines needed to cope with the huge renewables intermittency problem.

    Of course AGL could always announce they will extend the life of their Liddell coal-fired power station beyond 2022 when they intend to close it. That would help a lot to keep the grid from falling over and gas prices from skyrocketing. Yet despite their sudden new-found concern about grid stability they’ve strongly resisted pressure from Canberra to keep it open.

    Meanwhile the news items about poor people having trouble paying electricity bills are proliferating.

    Rising power bills, bad customer service prompt rise in complaints about electricity providers (6 Oct)

    And who were the most complained about companies? Why, oddly enough they were AGL and Origin!

  7. Mark A

    Bruce of Newcastle
    #2837127, posted on October 12, 2018 at 6:42 am

    Meanwhile the news items about poor people having trouble paying electricity bills are proliferating.

    No doubt about it Bruce, happen to know of a working lady who can’t pay her electricity bill. All electric unit.
    Rent, medicals and other costs and she just can’t manage. (over $450, its a lot when you are on $600 and paying $1350 rent) She told them to disconnect her unit but they were reluctant at first, some sort of rules regarding disconnection.
    Our daughter is friends with her daugther.

    I never though possible it could happen in Australia for someone with a job. Only a few years back I was boasting to my overseas colleagues about the long term cheap energy security of OZ, how wrong was I?

    Yup its AGL

  8. Mark M

    Don’t despair.

    You can always move to PNG when they close the last one in Oz …

    Coal-fired power a relief for Lae City: Rosso

    THE memorandum of agreement to build a coal-fired power plant in Lae signals an important first step in addressing the energy needs of “long-suffering consumers” of the city.

  9. mareeS

    We are just back in temperate NSW after a month in the Top End over winter. What’s the bother about warmer temperatures, it was nice not to be freezing like we are back here in the Hunter, still in winter woollies.

  10. Herodotus

    The MSM will do their job and expose da big scam any day now, surely.

  11. Entropy

    It was interesting that even AGL, which Alan notes made a stonking great profit last financial year, is starting to be concerned about ruinables affecting the grid:

    I am sure they expect someone else to pay for it Bruce. That’s wh they are bleating. At what point does this chronic crony corporatism morph into true fascism?

  12. mareeS

    Even the cats won’t go outside at present. It is really cold.

  13. eam

    Thanks mareeS, I’m heading your way on Wednesday from Melbourne.

    I grew up in Newcastle and time to break out the bathers was always in August school holidays. We had a weekender up calli’s way.

    Now back to AGL…When it first announced it was ‘investing’ in windmills, I decided to take my energy dollars to a company which actually used hydro.

    When asked why I was leaving, I said it was because AGL had jumped on the climate change scam. “Please make a note of that”.

  14. Biota

    Don’t worry MareeS, we have been assured that despite the rain and cold we are still in for a hotter dryer than ever summer; models say so.

  15. Bushkid

    If the CEO alone is making $A8.86 million, then they’re ripping way too much of consumers.

    I’m definitely no socialist, nor clamouring for “equalidy”. I know managers have the responsibility of making the whole shebang function profitably, generating decent return for shareholders, employing people etc as well as providing whatever consumer goods they do.

    But $A8.86 million when customers are struggling to pay for the commodity, and essential commodity in todays world, the cost of which has to be incorporated into every good or service being traded, then something is a little out of kilter.

  16. Bushkid

    It was interesting that even AGL, which Alan notes made a stonking great profit last financial year, is starting to be concerned about ruinables affecting the grid:

    Wasn’t it only in the last week or so that all this concern about instability in the grid was being raised (by AGL and others in the ruinables industry), and the “solution” (being put forward by AGL I think) was for more government regulation tinkering to ensure that baseload generators were financially supported (by our tax dollars of course) to ensure they could “afford” to continue to provide said coal-fired/fossil-fuel electrickery generation?

    In light of that proposal, the refusal of AGL to sell Liddel No 1 (or whichever it was they got for $0) suddenly made eminent good sense. Imagine that!

  17. LGS

    The MSM will do their job and expose da big scam any day now, surely.

    And pigs might fly!

  18. Dr Fred Lenin

    When there was very little electricity generation many years ago state governments formed electricity commissions to build power stations and distribute power state wide, in most cases . Now there is less power generated its time to repeat that action and get Australia moving again .
    As far as the rent seekers and their corrupt political mates are concerned ,they have committed High Treason and must be punished . Guillotines are cheap to build and very efficient and extremely lethal , one should be set up in front of every Parliament House so the guilty don’t have far to travel to pay their debt to society ,the rent seeking fellow criminals should be bussed to join their criminal mates , fire trucks at each venue to clean the mess at the end of each working day .

  19. cohenite

    A summary of Nordhaus’s 2007 study on the costs and benefits of globall warming (if you believe in it):

    In a landmark study that should shift the terms of the debate over what to do about global warming forever, Yale economist William Nordhaus has found that the favored programs of Al Gore and Sir Nicholas Stern would cost the world more than unmitigated global warming. He found that global warming under a business as usual case would inflict damage on the world amounting to $22 trillion. Sir Nicholas Stern’s proposed course of action would reduce that damage to $9 trillion, but at a cost of $27 trillion, for a total cost to the world of $36 trillion, $14 trillion more than unmitigated global warming. Al Gore’s package of measures would reduce global warming costs to $10 trillion at a cost of $34 trillion, for a total cost of $44 trillion, twice the total cost of global warming. A variety of measures aimed at keeping global warming below 1.5 degrees Celsius would have similar benefits and costs to the Stern proposal. Nordhaus proposes a modest carbon tax as the best way to tackle global warming, providing the most benefit at the least cost, but does not fully analyze a resiliency/adaptation approach such as that advanced by Prof Julian Morris and others, including CEI. Nordhaus’ study should demonstrate that the policies proposed by alarmists are so harmful to the world that they should no longer be seriously considered by policy makers. Instead, the debate should switch to which of the policies suggested by Nordhaus or Morris would be the best way forward.

    In his Book, Cool It, Lomborg at figure 11 says the costs of keeping temperature at 1.5C increase (as if humans could do this) would cost $ 84 trillion for $11 trillion benefits whereas doing nothing would see $2trillion in benefits and only $1 trillion in costs.

    All of this bullshit is predicated on the bullshit notion that CO2, but only human CO2, is the cause of climate change.

  20. Raising the cost of managing fuels, a carbon tax would tend to grow the cost of producing goods and services especially things, such as electricity or transportation, that involve relatively large amounts of CO2 emissions.

  21. Alan Moran

    EnergyAustralia’s Tanna:
    Demonisation of big business by Canberra must stop: “Running an energy company is not the easiest job around” but it is a lucrative job when regulations force up prices and this works wonders for the KPIs on which CEO remuneration is based. So let’s have more of these and pretend we are proposing them because we want to save the world and the politicians are blind to the dangers!

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