Australian businesses are facing a significant new policy regime with the passing of the Federal Government’s controversial emissions trading legislative package through the House of Representatives.
As part of a raft of legislation, which passed on a vote of 74 to 72 this morning, a fixed carbon price of $23 a tonne will be imposed from July 1 next year.
In 2015, the package will convert to an emissions trading scheme with a floating price starting at a floor of $15.
But we should’t expect dramatic consequences – at least not immediately. Frank Jotzo, Director of the Centre for Climate Econmics and Policy explains why.
Today, the carbon tax package passed the House of Representatives. Does this finally mean certainty for business?
There remains the question of the commitment given by the Leader of the Opposition Tony Abbott to repeal the carbon pricing legislation. It remains to be seen how that pans out, but there are some big hurdles both politically and practically in repealing that legislation.
First of all it would, in all likelihood, require a double dissolution election, which is quite a lengthy process.
On the policy side of things, it would require finding the money to maintain the package’s income tax reductions, because in my view, rolling back these income tax cuts would be politically impossible.
It’s not an attractive proposition for a future government to lower the income tax threshold, for instance, so that money would need to be found elsewhere.
Businesses will now put their mind to working with the scheme, as opposed to attempting to design it in a way that suits them most.
Once they are working with it and reorienting some of their business practices in light of the price on carbon, and making investments on the basis of it, the incentive to remove it will have reduced drastically.
For many businesses, the last thing they will want is a reversal of policy and going back to the drawing board, when of course both major parties are committed to achieving emission reductions and it’s really only a question of what types of policies are used to do it.
So, on a practical level what should business be doing now?
Business will be factoring in higher costs for some of their inputs and pricing decisions and crucially, in their investment decisions.
Faced with an alternative of a more efficient boiler that is more expensive than a less efficient boiler, an industrial producer would be more likely to opt for the choice that carries less energy consumption or the option that involves less emissions.
We are already hearing anecdotal evidence from coal mines now it is clear that carbon pricing legislation is coming in, they have put their minds to how they can actually change their operations at the coalface as it were, rather than lobbying against the policy. The biggest effects will be in investment decisions in large industries and in electricity generation.
All of these changes are very gradual and many have already begun. Most businesses have already been factoring in the probability of a carbon price for some time, they just didn’t know what the probability actually was.
And they didn’t know until earlier this year what the carbon price would be. For them it’s really a matter of having a greater amount of certainty – there will actually be a price on carbon for the forseeable future and that will have a gradual effect in terms of current operational decisions and future investment decisions.
On July 1, 2012 nothing will happen that is perceptible to us in terms of how things operate. It’s just that a whole lot of financial and administrative operations are changing on that date.
But in terms of the actual changes in the economy, they have already started and will continue to gradually ramp up over many, many years.
Really, the whole policy is the likely first step on the long road to sensible and effective climate change policy.
Mark Harrigan
Dr
Thanks for this precis. In other words - they sky will not fall on our heads and it actually might lead to some useful changes.
Doug Cotton
IT Manager
Business would be wise to stay put until the next elections, even if it means running at a loss while paying the carbon tax for a few months.
This is an immoral bill passed at a time when it is well known that the majority of voters would not now support the Government - passed by a Government which probably would not have been elected if they had been honest about their intentions to bring in the tax - and passed at a time when sea surface temperatures and sea levels are starting to fall, and will probably do so for at least 15 years or more as explained at http://climate-change-theory.com
Mark Harrigan
Dr
More misinformation spread by Doug (I haven't the time or courage to publish my crackpot science theories) Cotton
Doug Cotton
IT Manager
This has nothing to do with my theories. It is plain fact published by NASA http://www.jpl.nasa.gov/news/news.cfm?release=2011-262
Now, of course, NASA tries to say this is just a "pothole" in the upward trend, but there has not been such a significant breakout below the trend before. Furthermore, prior to this, the rate of increase in sea levels has been decreasing each year. This is not surprising and is in keeping with the observed "flattening" of the SS temperature trend around 2001-2002…
Read moreMark Harrigan
Dr
The current drop has been explained NUMEROUS times as increased rainfall on land (recall all those floods). In FACT NASA explains it on the link you provide!! Read it and stop cherry picking.
"So where does all that extra water in Brazil and Australia come from? You guessed it--the ocean"
But of course Mr Cotton has a long history of misrepresenting science and cherry picking conclusions to suit his crackpot theories (on his link in his first post which have been shown to be utter rubbish but…
Read moreDoug Cotton
IT Manager
Quantitatively, NASA "reasons" simply don't stack up. The flood waters in Australia have mostly made their way to the oceans within days. Maybe there's a bit more in the dams, but that is literally a drop in the ocean. If you compare the size of Australia with that of the whole of the ocean surfaces it is obvious you would need inches of water all over Australia to compensate for the fall in sea level.
And you have said nothing about the sea surface temperatures.which are definitely not rising and are very unlikely to do so in the near future.
Obviously cooling sea surface temperatures have contributed to falls in sea levels. Go to NASA's site and compare the sea surface temperatures at the start of 2010 with those now.
Mark Harrigan
Dr
Doug - there's no convincing you even with data. Any other readers can go to the NASA site, look at the graphs and decide for themselves.
I certainly place no credibility in you who believes (on alternate days) that it's all due to the earth;s core temperature and (on the next day) well it isn't happening anyway.
Doug Cotton
IT Manager
I get the impression you quote figures without even looking at them. For a start you also "cherry-pick" by omitting any data from 2011 and of course 5 year moving averages will always lag a little.
Never-the-less, your figures show no increase in that moving average from 2007 to 2010 and obviously show a significant reduction in the rate of increase over the whole period, meaning that Trenberth's curved trend is indeed a much better fit than any linear trend. If you shorten the 5 years (which is cherry-picking in itself) and include 2011 (even if you wait till the end of the year) you are going to see what Trenberth plotted now with a distinct downward extrapolation. However you look at it, the projected curved trend is absolutely nothing like what the IPCC predicted last century.
Mark Harrigan
Dr
Perhaps it has escaped your attention but 2011 hasn't finished yet. Good grief. Clutching at straws Mr Cotton.
Mark Harrigan
Dr
Hmm first you say "sea surface temperatures ....are starting to fall" then you say they are "flattening" then you say "definitely not rising and are very unlikely to do so in the near future" (no evidence to support that) - then "a significant reduction in the rate of increase"?? Your logic, such as it is, is laughable.
The data speaks for itself.
Doug Cotton
IT Manager
I haven't change my beliefs: you just misinterpret such. But this discussion is not about my beliefs: it is about the facts. And the facts are that neither you nor anyone else has any valid grounds for assuming that temperatures (and sea levels) will continue to climb along a long term linear trend. This did not happen in the Roman WP or the Medieval WP - cooling followed each - naturally for whatever reason.
There is absolutely no valid proof that carbon dioxide is going to change all this, and I suggest the recent reductions in the rates of increase are a strong indication that long term trends may be at, close to or even past their maxima. Your own 5 year moving average figures have at least levelled out (2007 to 2010) so you have no grounds for assuming a new rise. And you still fail to quote any paper that actually does prove carbon dioxide caused all the warming late last century.
Mark Harrigan
Dr
So, is that a retraction of the statement that temperatures are falling?
Every single national science body of credibility accepts the reality of AGW - see here
http://royalsociety.org/climate-change-summary-of-science/
http://www.rsc.org/Chemsoc/ImportanceOfChemicalSciences/ClimateChange.asp
http://dels.nas.edu/Report/America-Climate-Choices/12781
http://www.agu.org/outreach/science policy/positions/climate change2008.shtml
http://www.aip.org/gov/policy12.html
For just some examples.
The fact that YOU cannot accept that truth is irrelevant
Doug Cotton
IT Manager
Not it is not a retraction of the claim that sea surface temperatures are now starting to decline. The gradient is reducing, going from positive to negative, but your 5 month moving average figures ending in 2010 did not quite get far enough to show the decline which is apparent with shorter term moving averages such as Trenberth appears to have used.
Not that it's news to me, but I really don't care how many national science bodies accept it, though I anticipate China will be among the first to reject it. There will be a lot of red faces sooner or later. Why don't you come back in a couple of years - say we make a date to check the data at the end of 2013.
Doug Cotton
IT Manager
1. Indeed the data does speak for itself as in Trenberth's trend which had a maximum in 2006 and started to decline thereafter: http://climate-change-theory.com/seasurface.jpg.
2. Knox and Douglass used the term "flattening" relating to 2001-2002, that being the first indication of a significant reduction in the gradient of the trend - see http://www.pas.rochester.edu/~douglass/papers/KD_InPress_final.pdf Note their conclusion ...
"A recently published estimate of Earth’s global warming trend…
Read morewilma western
logged in via email @bigpond.com
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