The carbon tax: markets won’t deliver necessary emission cuts

We’re banking on business as usual to solve our environmental problems, but we’re likely to be disappointed. Tony.../Flickr

Australia will introduce a carbon tax on Sunday at A$23 per tonne of carbon. In 2015, an emissions trading scheme (ETS) will replace the tax.

The aim is to cut Australian greenhouse gas (GHG) emissions by 5% below 2000 levels by 2020, and by a further 80% by 2050. Australia’s CO₂ emissions are among the world’s highest on a per capita basis.

The tax and later, the ETS, are meant to cut emissions by improving energy efficiency and encouraging the shift to non-carbon energy sources. Overall costs of reducing carbon emissions would be minimised by allowing trade in permits.

But, looking ahead, can the ETS and reliance on the market generally, deliver the huge reductions needed? I don’t believe they can. Excessive reliance on the market helped bring about our current predicament.

Energy efficiency - of household appliances, buildings, power stations, aircraft - has greatly improved in recent decades. But in a growth economy, global (and Australian) energy use and GHG emissions have also risen. National per capita differences in car ownership, air travel and electricity use vary 1000-fold in our unequal world. Any efficiency gains will inevitably be swamped by rising energy usage.

We like to believe that technology can solve the problems we face without the need for serious social change. But we’ve made no progress in reducing CO₂ emissions since the first IPCC report more than two decades ago.

Fossil fuels’ share in global electricity production is now much higher than it was in 1995. In Australia it rose from 90.5% in 1995 to 92.4% in 2011. We’re re-carbonising, not de-carbonising.

New energy sources won’t be enough: every method of generation has an environmental cost. david_pointing/Flickr

No energy systems are perfectly green. All—fossil fuels, nuclear, and the various renewable energy sources—cause serious [environmental problems](http://www.amazon.com/Rise-Fall-Carbon-Civilisation-Environmental/dp/1849964823/ref=sr_1_3?s=books&ie=UTF8&qid=1308005787&sr=1-3](http://www.amazon.com/Rise-Fall-Carbon-Civilisation-Environmental/dp/1849964823/ref=sr_1_3?s=books&ie=UTF8&qid=1308005787&sr=1-3).

Hydro’s negative environmental impacts are best-known simply because it’s the oldest and largest renewable electricity source. We now know that GHG emissions from hydro dams in the tropics - where most remaining hydro potential lies - can be substantial.

Wind power is already meeting significant citizen and environmental opposition worldwide. Yet it must be scaled up a 100-fold to help meet future business-as-usual energy demands. Solar energy will need a 1000-fold expansion. Further, ongoing climate and other environmental changes could reduce the future potential for most renewable energy sources.

Market economies are driven by the search for profits, not the search for ways of living sustainably. The risk is that many organisations will simply find ways of turning a profit from an ETS without necessarily reducing emissions. Experience with existing schemes provides plenty of examples of such behaviour.

In the words of one researcher: “Many firms have quickly learned to game the climate trading system and started emitting greenhouse gases just so they can make money offsetting them. Carbon markets have substantial transaction costs that transfer wealth to brokers and agents, and evaluators often lack the capacity to distinguish legitimate from illegitimate projects.”

Nor can we take the energy and carbon reductions achieved by some European countries as a precedent. For example, the UK has reduced its carbon emissions 30% below what they were in 1973.

But these reductions largely result from both a shift from coal to gas and displacement of energy-intensive manufacturing to Asia. They can’t be a template for the rest of us.

Over the past three decades, global energy use (and CO₂ emissions) have risen in lockstep with [global GDP](http://www.amazon.com/Rise-Fall-Carbon-Civilisation-Environmental/dp/1849964823/ref=sr_1_3?s=books&ie=UTF8&qid=1308005787&sr=1-3](http://www.amazon.com/Rise-Fall-Carbon-Civilisation-Environmental/dp/1849964823/ref=sr_1_3?s=books&ie=UTF8&qid=1308005787&sr=1-3). Sooner or later we’ll have to make a choice between sustainable living and economic growth–assuming that’s still an option.

Climate change isn’t our only worry. Our consumption behaviour is pushing all kinds of planetary boundaries. Sherwin Huang

Climate change is not our only worry. A prominent group of environmental scientists have listed nine “planetary boundaries” or limits that we must avoid for ecological sustainability. They argued that we have already crossed three of these limits, including safe levels of atmospheric CO₂, and are closing in on the others, with the sole exception of ozone-destroying CFCs.

What to do? In the years up to 2050, global climate change will likely have to share centre-stage with several other serious environmental/resource problems: biodiversity loss, water and food shortages, oil and phosphorus depletion. The more we rely on market-driven tech fixes, the more likely it is that the proposed solution to one problem will worsen one or more others.

Most of us would agree with the aim of meeting the human needs of all the world’s people in an ecologically sustainable manner. To achieve this, I think we need to turn our backs on global economic growth, so as to reduce the heavy and still-growing human impact on the biosphere.

Specifically, we Australians and others from wealthy countries will have to reduce our consumption to levels that could be sustainably adopted by all Earth’s people, as in the “shrink and share” proposal. It could very well mean a steep decline in cherished practices like air and even car travel, perhaps even serious shopping. But if it is the best way to maintain a planet we can still live on, surely it’s worth it?

Comments welcome below.