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Carbon tax policies on both sides ignore the truth: it’s not going to help

The government’s position on climate change is now that it will pump $10 billion into particular projects and exact a minor tax on certain forms of electricity generation. The Coalition’s position is that…

Big sources of carbon emissions that Australia could influence, aren’t being discussed. AAP

The government’s position on climate change is now that it will pump $10 billion into particular projects and exact a minor tax on certain forms of electricity generation.

The Coalition’s position is that it wants to take a set of direct actions worth about $3.2 billion.

You can see the A to Z of the roughly 40 initiatives the government is promising here, but let me cut to the chase and summarise it by saying there will lots of new bureaucrats charged with the impossible task of measuring many forms of emissions (good luck to the hapless ones who get agriculture or forestry!), some subsidies for people doing research on climate change, and some extra cash for those who in various ways adopt new technologies that involve fewer emissions (let’s call it the clean cow initiative).

The Coalition’s plan can most easily be described as planting a few trees and burying some coal.

The bigger picture on this is that both parties are using a pea shooter to take down an elephant.

Australia’s per capita carbon emissions are amongst the highest in the world, our economic growth is going hand in hand with more energy use (1.9% per year between 1997-98 and 2007-08), economic analyses on energy pricing show that the small carbon tax is very unlikely to be enough to make anything but coal-powered electricity generation the cheapest option, and even the promised 5% reduction in carbon emissions by 2020 (which most certainly won’t be reached unless someone cheats on the numbers) will make no noticeable difference to anything.

Hence while the government shoots a small pea and the Coalition argues even that pea is too large, there is no doubt that neither policy is going to do anything substantial about global warming.

It’s worse: most of the big sources of emissions that Australia could influence are not even discussed. If Australia wanted to make a serious dent in world carbon emissions it could seriously hinder the export of coal.

After all, Australia is the world’s biggest exporter of coal and the fig-leaf used by both the government and the opposition that Australia is not responsible for the coal burned somewhere else is of course just that: a fig-leaf.

The stuff is dug up here and if we wanted to stop digging it up, we could do so tomorrow, but of course that would really cost us something so no-one dares even breathe that possibility and prefers to pretend its not our problem. Similarly, another large source of emissions is the yearly back-burning we engage in to prevent large fires from wreaking havoc with our more leafy suburbs.

After the fires in Canberra and Melbourne, back-burning is common practice once more, but the amount of emissions that goes with that dwarf the anticipated reductions from carbon pricing.

Not to mention of course that many forms of emissions (such as from meat production) are so hard to measure that it is clear we are not even going to bother.

It gets worse again: on the world stage, international agreement on carbon pricing is dead in the water.

Copenhagen was its Waterloo and it seems highly unlikely that its going to be second-time lucky (and at the time of Copenhagen I publicly predicted the circus that occurred, i.e. world politicians forced to pretend they were going to do something but not actually doing anything).

So what climate outcome do the Australian political parties actually hope to achieve by inflicting an admittedly minor cost on itself?

The idea that the likes of China and India, who emit far less than we do per person, are going to see the error of their ways and seriously constrain their growing economies after watching us make this token sacrifice is simply ludicrous.

You can just imagine the debates in the New Delhi parliament where some audacious politician suggests they should carbon tax their poor population so as not to be out-done by the few cents thrown at the issue by the millionaires in Australia!

It is sheer cloud-cookoo land stuff to argue that Australia is “doing its bit” and this will be seen as a shining light by the rest of the world.

I predict that world leaders will say “well done” in public and in private will laugh out loud at those silly Australians and their desire to pretend they actually care.

You may think I am just being the cynical economist here, but I find myself in the good company of many academics within the green movement on this issue. Greens Senator Christine Milne for instance called the government’s target ‘pathetically weak’.

Of course their solution, which is that Australia should go back to the per capita energy usage it had in the 1900s is also purely symbolic because even a complete reversion to the middle ages won’t make much impression on the governments of the poor nations in this world (is the slum dweller in Chennai really going to give up his dreams of living in a house with air conditioning and a shiny car just because Australians have abandoned them?).

To see just how strange the basic reasoning is of those who believe that this token effort is going to do anything to change the trajectory the world is on, imagine the Americans reacting to the bombing of Pearl Harbour in 1941 by doubling the number of guns protecting just New York while arguing that this token increase in American military would stimulate the other countries with a stake in thwarting the Japanese advance to mobilise their whole economies in order to fight the Japanese. You’d be laughed out of town.

Yet that is exactly what you are being asked to believe that the rest of the world is going to end up doing in response to the policies of both the government and the Coalition.

Hence one should see the policies currently on the table for what they are: competing rain dances.

They are policies that lack a goal and that appeal to some mythical ‘example function’ for their effect.

It is, to borrow a phrase from my colleague John Quiggin, a great example of voodoo economics. How ironic that John is amongst the rain dancers himself.

Is there then nothing one can do? Should we resign ourselves to the inevitability of climate change and hope that the climate system will correct itself after we’ve run out of all the coal, gas, oil, brown coal, and other easy-to-dig-up fossil fuels of this world?

My honest answer to this the last 15 years has always been ‘yes’, but there is some desperate hope and some desperate action for those who feel they must.

The desperate hope is that we will get a technological breakthrough that would make one of the renewable energy sources cheaper than most fossil fuels.

Despite quite substantial investments in the last 50 years that hope has proven forlorn so far, but we should of course all hope for that outcome because it would mean we can keep the economic growth party going free of guilt (although we would then of course find something else to be worried about).

The desperate action would be to sit around the table with just a coalition of the willing and ask our best engineers if they have come up with anything to actively steer our climate to a desired target.

You don’t hear about this so often in Australia, but there are a lot of ideas being worked on elsewhere (particularly the UK), with probably the front runner some form of artificial smog that we can pump high in the atmosphere in order to reflect more sunlight in order to cool the earth.

The great advantage of such geo-engineering is that you don’t need a mythical world coalition to do it.

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18 Comments sorted by

  1. Cameron Murray

    logged in via Facebook

    I wouldn't have put it so bluntly, but to me that reads as an accurate summary. The problem with geoengineering is that some regions may benefit from global warming and want it to keep going so that they will be relatively advantaged. The Russians might like a warmer Siberia, and shipping and oil exploration in the North Sea might be of great benefit.

    I have held the position for some time that there are tangible local environmental problems that our domestic policy can actually deal with that are being ignored as we focus on climate change.

  2. David Stern

    Professor at Australian National University

    I think this article completely misinterprets what happened at Copenhagen and as a result then laughs at the government's efforts (pushed by the Greens of course) to meet Australia's obligations. Though no comprehensive agreement was reached at Copenhagen, following the conference most countries in the world made pledges of what they would do to address climate change. Most developed countries including Australia made pledges to make absolute cuts in emissions. Australia promised a 5-25% reduction…

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  3. Timothy Curtin

    Economic adviser

    David Stern's comment is somewhat misleading by not stressing enough that China's target is only one of reducing CO2 emissions intensity per $ of GDP and does NOT aim at reducing China's actual emissions by Australia's 27% from its 2020 BAU level. As he and Jotzo state in their referenced paper (pre-print, p.21) "In other words, half of the new generating capacity would have to be in the form of primary electricity rather than fossil fired electricity. The 40% emissions intensity reduction goal could only be achieved with the Scenario 3 growth rate if all new electricity generating capacity from 2005-2020 was primary electricity.
    This is of course, impossible [!!!] given existing developments from 2005 to 2010".

    So I do not think Stern has countered Paul Frijter's very sensible comments about the voodoo economics of the carbon pole tax dance.

  4. John Quiggin

    Professor, School of Economics at University of Queensland

    So, to be clear, you are proposing that Australia should unilaterally undertake geoengineering to stabilise the global climate (your argument makes no sense otherwise). Have you done any costing on this, or considered possible geopolitical repercussions?

    1. Douglas Cotton

      B.Sc.(Physics), B.A.(Econ), Dip.Bus.Admin

      In reply to John Quiggin

      John - you need to get together with the Physics Dept there. This whole farce of "greenhouse" effects is an affront to physics, and a destroyer of the economy. Please draw their attention to my site with which, being physicists, they would have to agree. (PS - I've done degrees in both Physics and Economics) The message needs to get out to the public. Email me privately from the address on my site - there are a few of us getting together and I'm prepared to put my money where my mouth is.

  5. David Stern

    Professor at Australian National University

    Tim - I said that China's target is in terms of emissions intensity. It would be a cut in emissions relative to BAU but, yes, an increase in emissions from 2005 or whatever baseline you like, which makes sense as it is still a relatively poor country. The goal is quite tough and may or may not be achieved. But the main thing is that Australia is not doing a totally isolated action for some quixotic reason. And it's not trying to lead and influence opinion. Though not at least trying to do what it said it wouldn't be a positive.

    1. Derek Bolton

      Retired s/w engineer

      In reply to David Stern

      Also, suppose Australia "merely" made the same commitment: 40-45% reduction in intensity by 2020, as compared with a 2005 baseline. That would be at least as tough as the 5% of total emissions (c/w 2000) target.

  6. Alex Jay


    Well said Paul, the Emporer is indeed naked and the scheming tailors are making their dash with the cash. I have some hope however that the possibility of a coal-displacing solar PV is not as remote as you think, and therefore we can avoid the system-instability risks of geo-engineering. With panel costs halving every decade, (and retail electricity rising even faster), my bold prediction is that nanotech manufacturing will bring grid parity in two decades or less for rooftop domestic solar PV, and for larger inudstrial installations shortly thereafter. I can see that Indian politician happily announcing a plan for a solar PV manufacturing plant making panels tht will retail at less than $1/watt, ie bringing 25+ years of electricity to the rural poor for just the cost-equivalent of girid power over 3-4 years.

  7. Derek Bolton

    Retired s/w engineer

    While I agree that the current plan is inadequate - to drive solar thermal by carbon price alone it would need to more like $200/t in the near term - the case is a little overstated in the article.
    A 5% reduction on 2000 levels is about a 20% reduction on current levels and over 30% on business-as-usual 2020. And 80% by 2050 is a worthy target.
    I don't get the significance of the back-burning. Forests regrow. There are three effects of a back-burning regime to consider: the average carbon content…

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  8. Mark Duffett

    logged in via Facebook

    "...desperate hope is that we will get a technological breakthrough..."

    There has been. Nothing desperate about it. It's called nuclear energy. First Generation III, then Generation IV, which eats the waste of earlier generation technology and can keep everyone supplied with electricity for millennia. Just do it.

    1. Paul Richards

      In reply to Mark Duffett

      There is no solution to the nuclear waste issue that is acceptable to the industry and environmentalists. Contrary science is weighted to the nuclear industries vested interest, and on close examination it is all just imagined futures. Futures devoid of any "Black Swan" events, such as the Fukushima Daiichi.

      " .... eats the waste of earlier generation technology"

      MOX fuel is touted as such a recycling system and contamination from that very recycling is now spreading into the worlds oceans. Becoming part of the global food chain by TEPCOs own admission.

    2. Mark Duffett

      logged in via Facebook

      In reply to Paul Richards

      Paul, of course any proposal is about 'imagined futures', by definition. Unless you've got access to a TARDIS, all futures are imagined. Your point?

      Your bald 'no there isn't' response shows that you haven't understood what I said. MOX fuel is not, in itself, 'such a recycling system' as I was referring to. The Fukushima example you cite is an example of very early Generation II technology. That's not what I was talking about.

      Oh, and the thousands of terabecquerels of radioactivity discharged into the atmosphere by coal smokestacks EVERY YEAR are part of the global food chain too, but never mind that.

    3. Paul Richards

      In reply to Mark Duffett

      Mark, the use of 'imagined futures' - meaning or point ;

      The nuclear industries value system is such that it uses cognitive bias to dismiss the future risks. Imagines - no future failure or "Black Swan" events.

      Just as most environmentalists - imagine - nothing but a totally irradiated planet from this nuclear path.

      I was following the lead of Professor Paul Frijters in this article.
      " ........both sides ignore the truth" above.
      Have I clarified my meaning?
      The future is very emotional…

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  9. Christopher Bergen

    logged in via email

    Great article. A realpolitic on the situation. We (generally) all agree on the climate warming however I do have concerns that the whole debate is nothing more than a colonial view of changing to suit us (westerners) so our lifestyle doesn't change. As to the carbon trading scheme... c'mon. This isn't going to stop carbon being produced and in some instance will allow free license to produce more. There must be other ways to tackle this issue without the tax stick. Obviously we all pay in the end but how we pay and how much it hurts as we pay should be important questions to be answered. ie interest free government guaranteed funded loans to pursue change. Education as a tool of change. Great article.

  10. Paul Richards

    Paul this needed saying, I hope awareness grows wider.

    1. Paul Richards

      In reply to Douglas Cotton

      The contributor to the above article in Forbes, is an author for The Heartland Institute.
      Both scientists who wrote the paper he quotes regularly contribute to The Heartland Institute.

      The Heartland Institute is a 'libertarian' American public policy 'think tank' or far right political organisation lobbying congress in opposition to any a GCC response.

      The Heartland Institute currently also lobby against tightening tobacco policy, amongst other typical 'think tank' interests. They are a business as usual or return to old value systems group.

      Would you feel comfortable with any information from these sources?
      Are they unbiased against global scientific consensus on climate change?

    2. Indulis Bernsteins

      logged in via Facebook

      In reply to Paul Richards

      Ah yes Dr Spencer's paper- the one which resulted in the editor of the journal resigning, because "a paper published in his journal by climatic scientists Roy Spencer and William Braswell had not been properly reviewed before publishing. ...a paper that was fundamentally flawed was allowed to be printed, damaging the integrity of the journal, and thus the only right thing for him to do was resign."?

      That paper? That "real truth"? That Dr Spencer? The one that resisted the facts that the UAH satellite…

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