Carbon Price

Oct 6, 2011

Australia’s carbon tax battle: where it fits into the global war

Michael Shellenberger and Ted Nordhaus write: As two Americans watching from the sidelines as Australia tears itself apart over a carbon tax, it is impossible

Michael Shellenberger and Ted Nordhaus write: As two Americans watching from the sidelines as Australia tears itself apart over a carbon tax, it is impossible not to be reminded of our own country’s self-destructive battle over cap and trade in 2009 and 2010. And little wonder why: the Left and Right partiesin Australia have adopted virtually wholesale the positions taken by Left and Right parties in America.

The Labor Party has borrowed from American Democrats the strategy of giving out money to win over consumers, powerful industries, and unions. The Liberal Party has borrowed from American Republicans the strategy of attacking climate scientists and mobilising a populist backlash.

Of course, the great difference is that while Democrats did not get their cap and trade law, it now seems that the Australian Labor-Green coalition will get its carbon tax. But Australia’s populist backlash against the legislation will, at minimum, slow its implementation and, at most, result in a change of government and its ultimate repeal.

Not that its rapid implementation would have any effect on emissions. The carbon tax will be far too small to make clean energy cost-competitive with coal. And the government has announced it will give back to consumers more than it collects through redistributive tax policies. As in Europe, Australia can meet its emissions targets only by purchasing dubious carbon offsets.

While the Liberal Party has, like the Republican Party, behaved badly and rejected good science in reaction to bad policy, the real blame for the inevitable policy failure lies with the green movement. In Europe, the US and Australia, environmental NGOs and the center-left generally has grossly oversold the impact of pricing carbon, the readiness of renewable energy, and the political sustainability of their schemes.

Though some greens try to fudge the numbers, no climate or energy analyst today can credibly claim that renewables are cheap enough to compete broadly with fossil fuels. Solar is three to five times more expensive than coal, and that’s not counting the high cost of storage and transmission. No nation — not Australia, not Germany, not China — will raise carbon prices significantly enough to make solar and wind competitive with coal, much less natural gas.

For this reason, every framework to mandate emissions reductions — whether Europe’s Emissions Trading Scheme (ETS), cap and trade, or Labor’s carbon tax — contains numerous loopholes designed to rebate or otherwise blunt higher energy costs to industry and consumers, greatly lowering the effective carbon price.

The right-wing everywhere blusters that efforts to price carbon will destroy the economy. This is nonsense. Everywhere the carbon prices have been too low to have any discernible impact. Australia’s carbon price would cost households less than $5 per week more in groceries. Many households will get back in assistance more than the carbon tax costs. If the plan applied to petrol, it would raise the cost per litre by a few cents. In any case, in recent years the price of most fossil fuels has already increased by much more than any proposed carbon tax, and we still see economic growth coupled with increasing use of those fuels.

Climate analyst Roger Pielke, Jr. calls this “the iron law of climate policy.” Governments might impose a carbon tax, but never high enough to actually send the “market signals” the Labor-Green alliance has come to believe it will. That would be political suicide.

Europe has convinced Labor and the Greens that it has reduced its emissions, but it can only make this claim because it arranged for Kyoto to count reductions beginning in 1990, not in 2000, when the treaty was implemented. This allowed Britain to count as part of its reductions its move to natural gas and Germany to count the closure of inefficient Eastern Bloc coal plants — both of which happened for reasons that had nothing to do with global warming.

To avoid the economic pinch, the carbon tax legislation will allow half of emissions reductions to come from offsets. But it is hard, after more than three years of investigative reporting and reports by independent auditors, to conclude that carbon offsetting is little more than an elaborate scam — some companies and landowners get paid for doing what they would have done anyway, and others game the system.

Advocates for the carbon tax defensively insist that, though Australia’s contribution to global emissions is, for all practical purposes, nil, it is important to join up with the international community.

But the international community is more divided than ever, with China, the world’s largest emitter and energy user, insisting that only rich countries should be required to reduce its emissions, so it supports extending the Kyoto protocol, which exempts China from making any reductions. Europe mostly sides with China on extending Kyoto, but Japan and Canada side with the United States on the need for any agreement to include China.

These differences will not be resolved in Durban, later this year. The idea that the United Nations will oversee shared economic sacrifice through higher energy prices — the idea that captivated greens in the developed world over the last decade — is dead.

While the carbon tax allows the Labor-Green coalition to show Australia’s cosmopolitan face to the world, the loopholes and carve-outs reveal the reality of Australia’s mining economy. Australia exports more emissions every year in the form of coal sent to Japan, China and elsewhere than it generates domestically. Given the importance of coal to the Australian economy, it’s little wonder that Labor will allow coal exports to double over the next 10 years.

But Labor need not worry that Europe will make note of its hypocrisy. The German environment minister famously boasted that the great thing about carbon offsets is that they allowed Germany to keep building coal plants. Over the last decade Germany has brought 11 gigawatts of coal-fired generation online, about six times the electricity it gets from its much-vaunted solar panels. Today, having shut down its nuclear plants in a reaction to Fukushima, Germany’s dependence on fossil fuels will only deepen.

There is a better way. Instead of trying to make fossil energy more expensive, Australia should work to make clean energy cheap. This can be done through a concerted R&D and innovation push funded by the government. A much smaller fee levied on coal production could generate $10 to $20 billion a year for Australia to spend on research labs, prizes, and procurement contracts with private firms, all aimed at getting the technological breakthroughs needed for renewables to be in a position where they can compete with fossil fuels. Such a strategy might also help Australia reduce its dependence on mining and start to engage in more advanced technology manufacturing and innovation.

The climate war between greens and skeptics will rage on, but there is no reason a reasonable bloc of centrist thinkers inside and outside of the Labor and Liberal parties cannot put forward a new, more pragmatic approach. Perhaps Australia can be the first to move the international focus away from unrealistic dreams and economic sacrifice and toward technological innovation and economic opportunity.

Shellenberger and Nordhaus are co-founders of the Breakthrough Institute, a leading environmental think tank in the United States. They are authors of Break Through: From the Death of Environmentalism to the Politics of Possibility, and will be appearing at the Adelaide Festival of Ideas, which runs Oct 7 – 9. Check out the full festival program here, most sessions are free.

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56 thoughts on “Australia’s carbon tax battle: where it fits into the global war

  1. Eponymous

    While those here spruik Gen 4 tech and how it will burn our waste, consider this:

    Note that these reactors will only re-use spent fuel rods. All the medium and low-level waste will continue to pile. As will the millions of tonnes of waste in the plant when it is decomissioned. And, as you can see in the article, the amount of even low-level waste is significant.

  2. PeeBee

    Senior, I take it you put a lot of credence in the Youtube clip you cited.

    As you are a skeptic, I assume you would have checked the material presented in the clip against the source. For instance, the first graph shows the medieval warm period being warmer than present and the heading indicates it is an IPCC graph.

    I checked and it isn’t in there. but this is what I get:

    Which is totally contradictory to what they would have you believe.

    You don’t think the people who created the clip are trying to lie to you are they?

  3. Rohan

    “…and from the producers of 7 Minute Abs comes How to Obliterate The Entire Body of AGW Theory in 1 Minute 51 Seconds”.

    I did enjoy the soothing music.

  4. Flower

    Shellenberger and Nordhaus speak with forked tongues and are incapable of distinguishing between need, greed and dirty deeds. Their persistent polemic against environmentalists is on the public record for all to see.

    Their R&D and BAU plug is a load of old cobblers.

  5. PeeBee


    Tell me how the skeptic in you can explain how the increase the concentration of CO2 in the atmosphere from 250 ppm to 380 ppm NOT have an effect on the heat retention of the earth? CO2 is a greenhouse gas and the higher the concentration the higher the greenhouse effect.

  6. Blaggers

    Chris Sanderson: Spot on.

  7. Chris Sanderson

    I’m over 75 years old, not a scientist and according to the research belong in the strongest climate denier group. However the advantage of being semi retired is that one has the time to read.

    Six or seven years ago I became aware that the number of what we now call ‘extreme weather events’ like cyclones, floods and droughts were appearing more frequently on the news and one day I saw a documentary about ‘Global Warming, which said that if we didn’t stop increasing the amount of CO2 in the atmosphere, we would eventually cease to have a planet that supported human life.

    So I started reading and watching more documentaries. My library now contains over 90 books and a further 80 documentaries on climate change and energy related subjects.

    And all of it boils down to the simple fact that we have to stop burning fossil fuels.

    Furthermore, that’s not too hard to do at the individual level. We are half way in to a very simple plan to achieve that as availability of money allows.

    We’ve installed 10kW of solar panels, which generates around 14-15,000kWh p.a. Of that we use two thirds to power our home and business.

    We bought a second Prius, which we will convert to plug-in (PHEV) and re-fuel from the remaining electricity we generate. That will give us 60Kms of electric only driving between charges, enough for average daily use.

    Once the next generation of battery technology becomes affordably available we will add them to disconnect us from the grid except for emergencies and sending it any unused clean electricity.

    We do other things to reduce our carbon footprint, which is now at the discretionary level and will reach close to the 2 tonnes of CO2 per capita, p.a. that the world needs to average to keep average global warming below 2ºC.

    Once you understand how simple it is for most people to work towards doing the right thing, it makes it hard to understand why anyone even listens to all the Minchin/Abbott scaremongering, which in any case is simply the fossil fuel industry’s energy funded campaign to slow down the rate of their industry’s eventual demise.

    I hope at some point, those elite and their political attack dogs will be taken to The Hague by their children’s generation and charged with ‘Crimes against Humanity’ on the basis they are knowingly putting their commercial interests ahead of the rest of the planet’s long term survival…../Chris

  8. Blaggers

    Try again…

    Eliminating Carbon is not the real point of this tax, is it? To me (and I would hope many others), It’s about raising the issue of pollution as a whole (just scrap the word Carbon and replace with Pollution) and making companies/people responsible and accountable for their waste, in effect having a closed loop system. It’s the very simple concept of leaving something in the same or better state than when you found it. Is this really such a bad idea? 

    As it stands, I do not like the planned tax. It panders too heavily to the industries/companies it is targeting. Again, we’re sold (and buy) the lines that:
    •these companies who post multi million (if not billion) dollar profits each quarter are going to hurt (so they’ll help the communities that help them by laying off their employees), 
    •they’ll pack up their bat and ball and go (i say don’t let the door hit your arse on the way out, and by the way, please hold the door open for the ten other companies who will jump at your missed opportunity and WILL play by our rules), 
    •that they’ll have to pass on cost to the consumer (WTF? Seriously? do i need to mention multi million dollar profits each quarter again. These heavy polluters need to suck it up and absorb the cost of their unsustainable practices without the buck passing. Yes means less profit for the short to medium term. And?)

    The arguments, as seen in the comments here, have been subverted to a right versus left campaign, carbon tax vs no carbon tax, when what the focus of the debate should be is how heavily we implement the tax and about the over compensated industry package (money better spent on R&D or building the future). Yes, at the moment alternate technologies are expensive, but then again, initial anything is expensive. Again I’ll reiterate, should we strive to leave this one and only planet in a better state than we found it? It is ridiculous that we are even arguing against this concept?

    “the difference between a statesman and a politician is: a politician Is only concerned about the next election, a statesman thinks of the next generation”(Churchill?) This is where we lie. Be bold, make a stand, utilize our nous or do nothing. This is THE major concern for all, the uncertainty with the NOpposition whose first order of business IF elected is the removal of the ETS. How visionary. We’ve already missed ten + vital years of R&D into renewables because of the blind eye turned on the concept of climate change by the Coalition led government at the turn of the century. Let’s not waste anymore time. Let’s not go backward by electing the no-position. Let’s build our future and be proud of our stance on this issue.  I want to be able to take my son in ten to fifteen years time to one of the new thermal solar plant in our solar/electric car. I’d hope that we’ve done enough to limit the increase in global temperatures so that we haven’t crossed that two degree threshold which will be heralded by extreme weather events (is it just me or are we already noticing this effect?). Crikey favorite Tamas Calderwood last week pointed out that temperature have risen 0.7 degrees in the past 150 years. We’re already a third of the way there. Just ponder that for a second.

  9. Fran Barlow

    Eponymous said:

    [Nuclear is not low cost abatement]

    Amongst the abatement options available, after energy efficiency and energy usage avoidance are fully exhausted, it is the lowest cost despatchable low emissions stationary power technology that is likely to be ready on the timelines that matter most. The UMPNER report you cited suggests that it could be competitive with coal and gas at a carbon price of between $15 and $40 tCo2e. HDR Geothermal might be competitive at about 1/3 more than that, though as the technology is still some way off, that’s unclear. Fully despatchable solar thermal without gas back up is unlikely to be competitive at under $100tCO2e. Much the same could be said of wind.

    It’s likely that GenIV plants will start becoming available in the mid-late 2020s and the refabrication of once-used nuclear fuel could reduce waste volumes after that considerably, and also radically shorten the time during which it needs sequestration.

    Really, when we are considering cost however, what we must do is first put a value on the integrity of the biosphere. In a sense, that is what we have tentatively begun to do by pricing carbon. Nuclear holds out the promise of radically improved air quality, declines in fuel extraction from the lithosphere with its associated footprint, reductions in ocean acidity as well as CO2 abatement. Per GWhe delivered, there’s a lot less concrete and steel and glass and copper in a nuclear plant than almost any renewable. The idea of cheap energy is a shell game designed to cover the misuse of the world’s biosphere by fossil fuel merchants and their coterie.

    [{UMPNER} found that we should keep selling unprocessed ore. That refining will not be economic in Australia.]

    Not exactly. It said:

    [Reprocessing of spent fuel in Australia seems unlikely to be commercially
    attractive, unless the value of recovered nuclear fuel increases significantly.]

    All that means is that if you are happy to keep digging up cheap uranium (rather than avoiding doing so by reprocessing once used fuel), then you will save on fuel cost. By contrast with fossil thermal plants the cost of nuclear fuel however is a very minor factor in the ultimate cost of the energy. Even if the fuel were 10 times as expensive as it is now, the implied cost impact on retail power would be virtually zero. Most of the cost of supplying nuclear power is debt service on capital, provision for decommissioning, waste management and so forth. While a commercial operator is always looking to cut costs, the idea of reprocessing so as to avoid generating future waste, reducing the need for ore extraction and cutting the CO2 intensity of the power is a good one. Reprocessing reduces the volume and ubiquity of potentially weaponisable material. Moreover, given that countries such as the US have a political problem with what to do with their growing inventories of radioactive waste, and companies like Westinghouse are paying significant sums to the government merely to meet their obligations in respect of the waste, it’s easy to imagine that they might well be talked into paying a reprocessor to take it off their hands. That would change the economics quite considerably. Once you take the “what do we do about the waste?” and “what about proliferation?” questions out of the calculus, nuclear power becomes a lot more saleable. Australia could develop a whole new high-tech industry, contribute to a safer world and get even lower cost low emissions technology.

    UMPNER was never going to say this because politically, this would have been cast as “Australia offering itself as a nuclear dumping ground”, but it is plausible. After all, whatever one thinks of nuclear power, the reality is that we have a large and growing mountain of hazmat both from power generation and weapons we’d like to decommission, that cannot be wished away. Someone is going to have to come up with a solution and Australia is probably better placed than most to do this job.

    UMPNER was quite conservative in its predictions. Even 25GW was enough in 2006 to frighten the horses. Leaving aside hydro, which is low emissions, we should be aiming to replace all of the fossil HC sources of stationary power by 2050 — having a 100% clean and sustainable grid. The bulk of our coal plants are already well the wrong side of 30 years and some are older than 40 — Hazelwood and Playford B for example. The youngest cohort is in QLD and by 2040 they will be more than 40 years old.

    I say we pick them off starting with the oldest and working backwards, and building to cover future energy growth. NSW and Victoria are now planning serious new coal capacity, which would be a disaster, because the operators are going to want 40 years at least to recover sunk cost.

  10. Eponymous

    Sorry for multiple posts, forgot to add this:

    My overall position is that the advantages for Australia of being fully renewable outwigh the advantages of nuclear. I advocate throwing everything we can at renewables until 2025 or so, by which time we should have an answer on whether they can work. I suspect yes. By this time Gen IV reactors should be demonstrated and found viable. At this point, and not before, we throw the switch and go for nuclear. It is an all or nothing option.

  11. Eponymous

    Fran – please read my post above on the UMPNER report, then read the report.

    Nuclear is not low cost abatement. That is a gigantic furphy. The UMPNER report was commissioned by Howard to determine what economic settings would be required to make nuclear viable and what are the opportunities for the industry in Australia.

    It found that we should keep selling unprocessed ore.

    That refining will not be economic in Australia.

    And for power generation we should wait and become late-adopters of Gen IV technology which has not been invented yet. in 2025 and with significant Govt support it could lower GROWTH in emissions by 30% or so, for a price which is not low cost, but about on par with wind. I can’t remember the details and am not of a mind to look them up. But just read the executive summary at least. Nuclear is by no means a silver bullet in Australia.

  12. kd

    [ That is fact, climate change to me has yet to be proven beyond doubt ]

    See this is where the humanities people get their knickers in a twist. Science almost never proves things beyond doubt. And even when there are scientific laws, there’s still wriggle room.

    This beyond doubt thing is a jurisprudence concept required in order to prevent the justice system from ruining innocent people’s lives. Epistimological standards in science are different. And if they didn’t work, modern civilisation wouldn’t work.

    In fact the jurisprudence term is beyond reasonable doubt. So it looks like you’re omitting that so that you can deny climate change due to your unreasonable doubts. Good work. I suggest that you go and grab your pay cheque from the Gina Reinhart now.

  13. Fran Barlow

    Archer asked:

    [ It’s simple, why would a company want to manufacture in Australia when it can do so elsewhere without a carbon tax {price}.]

    Because the carbon price is not the only consideration? Because the sunk cost losses of moving would be prohibitive? Because other kinds of country risk obtain? Because that country might introduce something equivalent? Because other compliant regimes might impose BTAs? Because the currency trade might cost orders of magnitude more? Becuase essential supplies might be harder to procure?

    [Is there something wrong with investing in Rio or Woodside or BHP, I have shares.]

    No. There’s something wrong with them using the biosphere as a free industrial sewer however.

    [climate change to me has yet to be proven beyond doubt.]

    Your doubts are moot both because you have no standing to doubt what you can’t comprehend and because in order to argue the case against action you need to be certain that anthropogenic climate change is not happening. Your son needs a world at least as salutary as the one you and I have enjoyed.

    [at the end of the day we still prove the theory by actual crash test observation.]

    All models are wrong, but some are useful … the ones we have are useful and I’ve no desire to see the biosphere “crash” so that I can be 100% (rather than 99.9%) certain that the science is right within the parameters proposed.

    [Sorry, that horse has bolted. America doesn’t give a damn, neither does China nor India. In fact most of Asia don’t care. ]

    That’s both wrong and would be ethically irrelevant even if it were true. One does the right thing not because everyone else is doing it, but because it is right. One then applies pressure to others to follow your lead. If they don’t, then you at least can howl with the wolves when things go awry. As it goes though, China and India are doing more than we are, bearing in mind their per capita emissions and their capacity to pay.

    [There won’t be a carbon tax under the government I lead]

    She kept that promise. There will be no carbon tax. There will be what she said she’d have — a “market based mechanism” “a CPRS”. Her polling went south for reasons that had nothing to do with carbon pricing and everything to do with the manner of her rise to power and the media messaging attendant thereupon.

  14. Archer

    I’m a skeptic because I don’t believe we’ve had such an impact in such a short time and there are always a lot of ifs, and, or buts, when it comes to implementing proposed “treatments”. Just read you’re third paragraph. This uncertainty and hoping then brings out the realist…..cost and jobs. As a designer / engineer I don’t spend money unless I know the solution works, in this instance Australia will be paying immense amounts of money and gambling with it’s prosperity without a guaranteed outcome. It’s simple, why would a company want to manufacture in Australia when it can do so elsewhere without a carbon tax.

    This will cost people. Both through goods and services, and it will hit their investments. Is there something wrong with investing in Rio or Woodside or BHP, I have shares. Is there something inherently evil about looking after my son’s future? How many average Australians have superannuation funds which have a portion of their portfolio invested in mining companies? He is mildly autistic, I know he will need investments and funds to see him through his adult life. That is fact, climate change to me has yet to be proven beyond doubt. Other than on computer models. And I’ve had a little bit of experience with computer models in my industry. But as good as they are, at the end of the day we still prove the theory by actual crash test observation.

    “That in practice imposes upon us all an obligation to leave the world’s biosphere no worse than when we found it.”
    Sorry, that horse has bolted. America doesn’t give a damn, neither does China nor India. In fact most of Asia don’t care. China is now sub-contracting manufacturing out to India because their labour is cheaper and their pollution laws are laxer. Eg. I award a tooling job to China they sub-contract to India, India makes tool, India ships to China, China ships to me, I produce parts, every one makes money, everyone pollutes. Even in the city of Yarra, the bastion of The Greens, I guarantee the constituants there would be reluctant to do without their luxuries if push came to shove.

    “Evasive.” Don’t think so. Let’s not get into the machinations, or the whispers of who meant what. Look at the outcome.
    “if the ALP got control of the senate in coalition with The Greens, to press forward on on a program similar in structure to the CPRS defeated in 2009. She said so openly before the election.” Yes she did and then as the Americans say “her poll figures went south like ducks in winter”. Then the tune changed one week before the election and I know you don’t like to hear this “There won’t be a carbon tax under the government I lead”
    Hey, I don’t blame the politician in her for doing the deal. It’s what they do.

    Short of a Labor pollie having a heart attack things aren’t going to change. But the polls look absolutely disaterous for Gillard and action on climate change.

    As for you Chris Anderson, fight your own battles please.

  15. Chris Sanderson

    Well articulated Fran………/Chris

  16. Fran Barlow

    Archer said:

    I’m not a denier,

    You are certainly a denier of the need to act to mitigate CO2e emissions. You summon the usual grabbag of populist talking points but nowhere do you propose any act that would reduce CO2e forcing.

    I’m a skeptic and a realist.

    Nothing in your text supports the use of those adjectives to describe your advocacy. Genuine skeptics know what they are arguing against, and the claims made against their objections. Blockheaded, angst-ridden, special pleading spivs treat every day as groundhog day in the culture wars, reduxing long debunked talking points, as you do here.

    Just to keep this post manageable, I’m going to take some of your cant at random.

    This scheme will not clean the air nor will it drop the temperature.

    As you’d know if you really were a skeptic, the proposal ispart of a global effort to stabilise atmospheric CO2 inventories at around 450ppmv by 2050. It is hoped that this will stabilise temperatures at 2degC above pre-industrial temperatures. It’s accepted that this might well fail, but getting global agreement on more radical measures will probably be harder to achieve — until it is too late. Dropping the temperature on our timeline was never contemplated. It will certainly clean the air though. If 450ppmv is achieved, toxic fossilHC-derived aerosols (like mercury for example) will have declined. There will be less acid rain. Your claim is flat out wrong.

    It will cost me a lot of money and increase my cost of living.

    Unlikely, but then, perhaps you’ve got major investments in polluting industry. If so, it’s not clear why anyone but your friends and family should care. Even they might consider whether they fancy their children growing up in a ruined world.

    The vast majority of people will scarcely notice these costs as EMTRs have been adjusted. Those who are too well off to get relief — like me — won’t be greatly affected. This category can of course can elect to adopt a less fossil-HC intensive lifestyle.

    People should not be socially engineered into using less electricity. They have a right to maintain a level of living they have worked so hard to achieve.

    Nonsense on stilts. There are no such rights. We humans have the right to do our damndest to live in dignity and in respectful community with our peers. We have an obligation, flowing from our own claims, to respect the claims of others to the same thing, even if they are geographically, culturally or temporally distant from us. That in practice imposes upon us all an obligation to leave the world’s biosphere no worse than when we found it. Of course, if one rejects all that, then the idea of “rights” attached to property or work or living standards is revealed as arrant nonsense, because one cannot demand of others what they may not demand of you.

    This tax {price} is here not because it’s going to save the planet, produce jobs or increase our technology base. It’s because Bob Brown has a political gun at Gillard’s head.

    Evasive. The Greens want Australia to play its part in global efforts to stabilise CO2e at 450ppmv or lower. That is also the declared position of the ALP, and was so prior to the 2010 election. Nobody was in any doubt about that, or that Gillard favoured putting a price on CO2. Abbott knew full well that she planned, if the ALP got control of the senate in coalition with The Greens, to press forward on on a program similar in structure to the CPRS defeated in 2009. She said so openly before the election. Tony Abbott warned everyone to assume it to be so. At the election, those supporting the parties of the government on first preference exceeded those supporting the LNP-coalition by about 500,000 votes. Polls also show that most people wanted action on climate change — which is why the LNP paid lip service to it. Every reputable economist holds that putting a price on CO2 emissions is the single best measure that could be adopted.

    You want to deny that? A matter for you. The fact is that your party is claiming to support action on climate change equal to that of the ruling regime, but its measures would impose far greater cost, if enacted. It’s likely that they are lying, but really, it is your side that lacks credibility here. You need to get them to stop saying they support action, given that their measures would be far worse for business than what the regime proposes, and that their disingenuous promises to overturn carbon pricing would harm business even more.

    In this country, we have elections every three years. In the interim, polls are not germane. They weren’t when Australia went into Afghanistan or Iraq, or when the government chose to stay there. Nobody from your side said: “gosh — what difference would Australia make” or “will this cost a bundle?” or “where’s the cost-benefit anlysis on invading?”. Howard promised “months not years”. Yet from your side — nothing.

    In 2013 people will be able to make a judgement on the efficacy of the regime’s programs. Until that time, your ignorant carping is moot.

  17. Archer

    I’m not a denier, I’m a skeptic and a realist. Our IT professional and teacher would have you think otherwise. Vast majority? I don’t think so, and when the man who is supposed to sell this proposal constantly gets his stories wrong (Flannery), what hope has Gillard got. Perhaps that’s why we don’t here from him very much, but I bet he’s still picking up his $180,000 per year pay check. Aren’t we supposed to be a dust bowl by now? Anyway moving on. I’m a designer, I’ve worked in manufacturing and industry for thirty years and here’s what I’m sure of.

    1/ This scheme will not clean the air nor will it drop the temperature. Well not for a thousand years and even then if we turn off every thing according to Flannery.

    2/ It will cost me a lot of money and increase my cost of living. Anyone who understands how manufacturing operates will know this.

    3/ You do not encourage innovation of green technology by redistributing wealth. Taxing the biggest employers and trainers of engineers, chemists, technicians and tradespeople in the country. And note I say employers, not polluters like those industrial and economic simpletons such as Bob Brown and Sarah Hansen Hyphen.

    4/ I’ve worked for two technology innovation companies which were subsidised by government. Both failed. Government should not involve itself in picking winners. That’s my tax money they’re gambling with.

    5/ People should not be socially engineered into using less electricity. They have a right to maintain a level of living they have worked so hard to achieve. Manufacturers of products will design and produce items which are more attractive to the consumer by demonstrating efficient energy consumption. It’s in the manufacturers best interests.

    6/ Green and renewable energy is a myth at present. It’s inefficient, costly, subsidised and doesn’t produce what’s necessary to maintain manufacturing and society. By all means research it, with private funds, but don’t make the switch from coal until a form of green energy can guarantee the equivalent output made by conventional means. You can’t operate a car plant on wind mills…….Then again there is nuclear. Problem is The Greens will cry earthquake even though we live smack bang in the middle of a tectonic plate, or tsunami! If located properly damned if I know from where. Even if we build a nuclear plant I think we may have to import experts to assist us.

    7/ The Greens carry on about Green jobs, show me the numbers. As Howes said “If one union job goes because of this carbon tax the AWU will not endorse it”. So he’s worried but he’s had his political cojonas cut off. Although he is asking for industry exemptions.

    8/ This will effect manufacturing, don’t fool yourself. if we were silly enough to go down the road of bidding to mass produce wind generators or wave power generators where do you think the money will go? Vestas is the largest manufacturer of wind generators in the world and they are Danish. Followed by Sinovel (Chinese) and then G.E. (American)
    Due you think we can out bid the Chinese? Personally, I think it would be a condition of what we used to call CKD, Completely Knocked Down. The parts arrive in crates and we screw them together. That ought to build a green job or two.

    9/ This tax is here not because it’s going to save the planet, produce jobs or increase our technology base. It’s because Bob Brown has a political gun at Gillards head.
    Remember what was said at the election “There will be no Carbon Tax under the government I lead”. Then a political deal was struck, angering the Liberal voters, the Labor voters who were told there would not be a tax, and the Labor voters who weren’t expecting the tax.

    As I said, vast majority, doubt it. Please check the polls, people are so angry the focus has now turned to wanting an early election.
    1/ Removing Gillard
    2/ Referendum on carbon tax

  18. Fran Barlow

    JohnfromPlanetEarth said:

    [Meanwhile in an historically unprecedented suppression of political expression, 4,500 Australians all opposed to this unnecessary and destructive tax on carbon dioxide have now been told that their submissions don’t count.]

    This may come as a shock to you but in every election in this country, the opinions of at least half the population are rendered moot, and usually more. That’s how our system works.

    Even those who vote for the winning tribe aren’t listened too in detail, especially if they are in blue ribbon seats. Until 2010, the 8% of the population who vote Green got a total of zero seats in the lower house, but now that they have more than 11%, they have … 1/150.

    So if 4500 delusional deniers or trolls are ignored by the vast majority, who know better, I’m untroubled.

  19. GocomSys

    Johnfromplanetmars posted October 9, 2011 at 5:16 pm

    Bad government, Big New Tax and so on. Where did I hear that before?
    You are popping up with your silly comments at the most unlikely spots. Give it up, mate.

  20. Johnfromplanetearth

    Meanwhile in an historically unprecedented suppression of political expression, 4,500 Australians all opposed to this unnecessary and destructive tax on carbon dioxide have now been told that their submissions don’t count. That their opinions don’t matter. That their thoughts are not allowed to be heard. This is the Gillard/Brown regime working towards the suppression of any thought that is not in agreement with their own. What benefit will this Tax give average Australians? Absolutely none what so ever. All lengthy in depth submissions opposing this Tax on Carbon Dioxide have been rejected and stripped from the record, once again allowing Gillard/Brown to silence everyday Australians who are opposed to this evil Tax.

  21. F James Handley

    Shellenberger & Nordhaus love to trot out their “iron law” which really just proves that effective climate policy won’t preserve the status quo of cheap fossil fuels.
    Effective climate policy has to unseat entrenched, cheap “incumbent” fossil fuels that wield enormous political power and look cheap only because we let them pollute the atmosphere like an open sewer, without paying anything for it. But a carbon tax would require fossil fuel burners to pay more of their true cost, allowing low- and zero-carbon energy to compete fairly. As economists from right (Greg Mankiw, Douglas Holtz-Eakin) to left (Rob Shapiro, Gilbert Metcalf) point out, a carbon tax with revenue used to cut other distortionary taxes especially on wages, would increase economic output and employment. Using carbon tax revenue for deficit reduction beats imposing notoriously regressive and burdensome Value Added Taxes, which offer no environmental benefits.

    Instead of a carbon tax, S & N advocate subsidies for R&D and development of green energy technology so it can compete against cheap fossil fuels, especially coal. In effect, they say “make green energy cheap” (with subsidies) instead of making dirty energy costly (with a tax). That sounds wonderful, until you grapple with the sheer scale of our addiction to fossil fuels. To undercut fossil fuels at scale, those subsidies for clean energy would need to be vast and never-ending because coal, tar sands and whatever other extreme fossil fuels come along will always be cheaper if they can dump CO2 for free.

    And S & N assume that somehow the government will have the wisdom to choose the right technologies and the right companies to develop and market them. Have we learned any lessons from Solyndra?

    We need a gradually-rising carbon tax. The Australian proposal got that part right. But adding offsets and turning it from a tax into a trading system are steps that pervert the incentives and muddy the clear price signals of an explicit and gradually-rising carbon tax.

    A carbon tax fits the framework of our trade agreements under WTO. Border tax adjustments (tariffs) would protect domestic energy-intensive industry from unfair competition by countries that haven’t enacted carbon taxes. Even more importantly, BTA’s would encourage other countries to enact their own carbon taxes to capture their share of a growing pool of revenue, leading the way to a rising global carbon price. Leadership by a large trading bloc by enacting gradually-rising carbon tax with BTA’s can do what the Kyoto protocol will never accomplish– start a worldwide trend of rising carbon prices that drive down emissions and spur clean energy.

    It’s time to stop pretending that shortcuts like cap/trade/offset which hide the price, or subsidies that avoid the price, will suffice. Clear, explicit prices matter. To fight the plague of global warming we need strong medicine. Say the “T” word loud and clear. We need a carbon tax.

  22. Chris Sanderson

    Before spitting the dummy with a negative article like this, it might be worth considering how you could contribute some creative ideas to help achieve a political breakthrough.

    Like how do we get rid of the pressure that the fossil fuel industry continues successfully exert on our politicians to sabotage all efforts to do what’s really necessary?……/Chris

  23. Dionisio Valero

    Dunno about that. Nordhaus and Schellenberger seem to be on to something. Their proposal for more money for research and less for subisides is being embraced by endorsed by American Democrats and Republicans. From the New York Times:

    “These proposals reflect the political reality that raising the cost of dirty energy is unpopular, especially when the economy is so weak. Finding the money to make clean energy cheaper, even when government budgets are tight, will probably be an easier sell.”

    Republican Senator Lamar Alexander is calling for something similar:

    “These proposals reflect the political reality that raising the cost of dirty energy is unpopular, especially when the economy is so weak. Finding the money to make clean energy cheaper, even when government budgets are tight, will probably be an easier sell.”

  24. Rohan

    It’s worth pointing out that Shellenberger and Nordhaus have been banging this drum for quite some time now.

    If they truly were on to something with their brand of new environmentalism, they would be able to point to some significant results by now. Instead, there’s precious little evidence indicating they’ve had any success or influence to differentiate them from the amorphous ‘environmental movement’ they denigrate.

  25. Dr_Tad

    JamesH, sorry if I’ve misread you, but I think you may have misread me too. At least I’ve heard of the Cambridge controversy, so allow me to continue… 🙂

    You have misunderstood Liz & my argument, which is about reforms within capitalism (and not its abolition, although in general we favour that). Capitalism and carbon stand in a contingent relationship that could, in theory, be severed without system change. But we argue that market models of the sort that carbon pricing advocates look to miss how sunk capital investment, distribution networks, political connections, etc., mean that calculated price signals miss how difficult it is to change individual (or sectoral) capitalist behaviour. In other words, even the most radical estimates of what price signal is needed underestimate how hard it is to create the shift.

    The acid rain example is used by us not to say that C&T will have no effect. The question is whether the effect is fast and large enough to make a difference to the problem at hand. It is also the fact that, as S&N have repeatedly pointed out, the alternatives to emitting SO2 were better developed and cheaper than is the case with renewables now. We are arguing how dangerous simple extrapolation is here.

    Secondly, we argue that price signals create a disincentive in some areas of the economy, but without positive encouragement of massive investment in alternatives (here we mean on a grand scale to even dent the problem, given the science of it, which almost certainly means the state) there is no guarantee that the investment will flow there just because it is rational for the economy as a whole to have a cheap power supply.

    Thirdly, we argue that pricing looks at the wrong end of the pipe, so to speak, trying to modulate demand to change patterns of production (supply). This is both too indirect and misses the simple fact that production always precedes consumption. But that is the common mistake of most bourgeois economics (including Keynesianism). That abatement in the CEF package also includes such massive international offsets should worry even the most loyal carbon price advocates.

    Fourthly, we don’t argue for more radical measures out of some misplaced ultimatism but because we think this is a political disaster for the cause of climate action in the here and now. The community anger at the carbon tax should at least give pause for thought. It seems to me that your strategy of reliance on convincing elites is the problem here, a utopian hope that small changes ceded by them now will win bigger changes in the future. There is no such iron historical law, and the rapid shift to the Right in elite circles since the GFC should warn against such an approach.

    Finally, also on the politics, we think the Greens have spent so long defending what we are sure will be a useless diversion from real “behaviour change” that it has distracted them from making a much better case about renewables. Sadly, too often they have tailed private renewables companies and downplayed the idea of direct state investment, instead talking about industry subsidies (which have always had a chequered history). If a carbon price was low down their list of demands then one could trumpet their commitment to renewables more, but since 2007 they have put market mechanisms front and centre.

    PS On your comments about “Maoist United Fronts” and attempts to link us to Abbott’s smoke and mirrors show: Ho-hum.

  26. Frank Campbell

    “Given the importance of coal to the Australian economy, it’s little wonder that Labor will allow coal exports to double over the next 10 years.”

    Our Yanks appear not to know that Gillard said (twice) a few weeks ago that “coal has a fantastic future”. The same Gillard pusing the idiotic carbon tax

    Australia is the new Saudi…a fossil fuel bonanza. Wasn’t that obvious to the Greens, the Plymough Brethren of the climate cult?

  27. Frank Campbell

    “carbon offsetting is little more than an elaborate scam — some companies and landowners get paid for doing what they would have done anyway, and others game the system.”

    Another statement of the obvious.

  28. Frank Campbell

    “In Europe, the US and Australia, environmental NGOs and the center-left generally has grossly oversold the impact of pricing carbon, the readiness of renewable energy, and the political sustainability of their schemes.”

    I’ve been saying this for two years on Crikey, and have been abused continually for doing so. How pathetically provincial of Crikey to defer to a pair of Yanks to legitimate this statement of the obvious…

  29. Fran Barlow

    Dionisio Valero said:

    [Nobel Prize-winner Brian Schmitt {Schmidt} seems to agree with Nordhaus and Schellenberger: “I hope we look at how we use the money we use in science and innovation to really hone in on where we can do great things internationally,” he said.]

    The remark doesn’t make that claim if you consider the context:

    [Professor Schmidt, a US-born Australian citizen who immigrated in 1994, said he believed Australia’s way of conducting science was a significant contributor to his achievement.

    But he said the government could always do better on scientific funding and urged for greater support for research.

    “I hope we look at how we use the money we use in science and innovation to really hone in on where we can do great things internationally,” he said.

    “There should be more stability of funding so that projects can continue for four or five years like the one I worked on.” {emphasis added}]

    He’s talking about state support for pure research.

    NB: The Australian verballed him, trying to position him against carbon proicing by first implying that he called it a tax (which he didn’t …)

    [‘Messy’ carbon tax debate diminishes science, says Nobel winner Schmidt … AUSTRALIA’S newest Nobel Prize winner Brian Schmidt says the carbon tax debate has diminished the standing of science in the community. {emphasis added}]

    What Schmidt actually said was:

    [“I think that (the carbon debate) has maybe in the short-term diminished in some people’s mind the standing of science,” Professor Schmidt, 44, said. “But in my mind it’s just part of the scientific debate.{emphasis added}]

    He then added:

    [We need to make sure we don’t mix policy and science directly. Science is science, the policy is policy. And I would really like the scientists to continue to debate what’s right and what’s wrong about everything. And I would really like the policy people to debate how to deal with what is coming in from the scientists.{emphasis added}]

    As usual, The Australian lies and verbals for the Murdochratic cause. Trust nothing you read there.

  30. Justin Wood

    @JamesH has said much of what I might have, but on the economic illiteracy point, I continue to be amazed at how many commentators who ought to know better fall for this fallacy. That is, the notion that if a price rise is compensated it is rendered useless.

    I mean really, pick up an economics textbook FFS. No, I don’t mean a neoliberal treatise on the wonders of market capitalism, just a regular old microeconomics observationally based explanation of the role of relative price changes. If thing A becomes more expensive than thing B, then on balance folks will buy relatively more of thing B and less of thing A. Even if both things got more expensive at the same time, and even if entire price increase is compensated. It’s happened time and again in the real world.

    On that basis alone this ill-informed diatribe fails any real test of reasoned argument.

    Actually, I’ll add some more. Quoting Pielke Jr as an unbiased observer of climate policy ought to ring quite a few alarm bells for a start.

    So, the carbon tax (which it isn’t, it’s a fixed-initial-price ETS) is slammed as ineffective without any examination of the changes it could induce over the longer term, yet a ‘pragmatic’ approach is to tax coal production. Alone. You can’t be serious! If the current legislative framework is compromised by excessive and usually unwarranted compensation and other price-signal-blunting largesse — which it assuredly is — then how precisely do N&S imagine the politics might work for explicitly singling out the coal industry? And even if such revenue was spent on renewables R&D (which it will be under the CEF in any case), that doesn’t necessarily do anything to arrest growth in fossil fuel combustion or other GHG sources. A progressively tightening ETS cap does, by definition. They also seem to be unaware of the evidence (IPCC, IEA) that price support mechanisms such as a RET or FIT are useful to assist renewables’ shift down their cost curves until under an ETS they match (and then exceed) cost parity with fossil fuels.

    Moreover, they go on to make some truly stupid claims about the cost differential between renewables and fossil fuels, without considering either the very real implicit subsidy of unpriced damage from GHG emissions, nor the enormous direct and indirect government subsidies to the fossil fuel sector.

    If this was an essay I was marking in energy/climate policy, they’d be damned lucky to pass.

    PS – much as I’m loathe to give anything approaching ‘credit’, I’d have thought Australia was actually somewhat out in front of the US when it came to factless debased posturing on climate policy legislation. We’ve been at it since before 2007 after all (the Howard era ETS reviews, etc.). Who’s borrowing from whom here?

  31. JamesH

    Fair point Dionosio, I overlooked the time over which the money was deployed; but the original writers still gave the impression there was no support at all, which is not true.

  32. Fran Barlow

    Dr_Tad said:

    Not only are the economic costs massive once true accounting of the relevant factors is done,

    We could argue the toss Tad — I hear this claimed, but when one probes, one sees special pleading on a grand scale. Would you support an independent energy commission to run the numbers? You wouldn’t have to commit to supporting the result or policy — but surely we ought to proceed on something more substantial than what exists now?

    not only is it a stupidly dangerous option,

    Simple question Tad … what is it about nuclear power that makes it intrinsically too risky? Are you claiming that even a society that could fairly be called socialist in character could not operate nuclear power plants with adequate safety?

    It seems to me that such as there are problems with nuclear power, they are problems of capitalist governance.

    but it’s a long-run diversion from driving massive investment that will make renewables more effective and efficient.

    This sounds like dissembling. How massive? How much more effective and efficient will these become? Will the solutions be scaleable? Will they be ubiquitously available? On what timelines will the solutions be fully implemented? With what human resources will they be conceived, designed and implemented?

    Nuclear power is a proven technology. Nuclear power operates commercially at scale, paying both taxes and charges for waste storage whereas renewables would, if charged require either massive direct or indirect subsidies or a massive end user price.

    Now personally, I’m not that much bothered at paying the renewable energy price, whatever it is, merely to avoid nuclear power, but I suspect that very few would agree. If people are forced to choose between massive renewable prices or subsidies and business as usual or nuclear power and their fears in the last are amplified, then business as usual will be the result. The current debate on carbon pricing makes that clear, which is one reason why the price is so trifling. That’s true not merely of Australia, but pretty much everywhere else. That would be a disaster.

  33. Dionisio Valero

    James H. writes, “Clean Energy Finance Corporation, the Australian Renewable Energy Agency, and the Clean Technology Innovation Program. These have a combined budget of ~$13.4 billion…”

    Uh, no. The carbon tax proposal would deliver just $944m through 2015, and a total of $10bi to deployment over five years. That’s $2bi per year deploying existing solar and wind systems that can’t compete with fossil energy.

  34. mattsui

    The repeated use of the term Tax, to describe the carbon pricing mechanism devalues the authors’ arguments sverely. They attack “the Green movement” for holding a specific attitude to carbon pullution reduction. This is akin to attacking “women” for the way they cook chicken. No one speaks on behalf of all environmentalists and many of us could agree with the push of this article.
    We know that market forces (in this case a price signal) are an unwieldy instrument for bringing about cultural change. But given the constant cries of “SOCIALISM” coming from vested interests, what else do we have?
    Reducing pollution is essential to our future. Those who acknowledge this fact can ethier use the market to bring about change or be accused of interfering with the market to further some hidden agenda. Catch 22 much?

  35. Fran Barlow

    Dionisio said re adoption of nuclear power:

    True true. But our Greens would never alllow it.

    That is certainly the very strong consensus in my party, but I’m quietly hopeful over time that the logic of low cost carbon abatement will prevail. My sense of the attachment of the left in general to “no-nukes” is that it largely reflects the intersection of populism, and the struggles around nuclear disarmament in Europe in the 1980s. In Europe, opposition to nuclear power (as distinct from nuclear weapons) was very much a fringe interest. The big issues were matters like Trident, Pershing, SS20s and the notorious “neutron bombs” which “destroyed people not property”. Reagan outlined a vision of scenes from Star Wars in which the Cold War became a shooting war with nukes. This pretty much united everyone of fairly liberal inclination against “nuclearisation”. When the disaster at Chernobyl occurred, the lines between nuclear weapons and nuclear power became entirely blurred since Chernobyl was conceived largely as a source of materiel for Warsaw Pact nuclear weapons.

    In the wake of the massive defeat of the ALP in 1975 and the back up defeat in 1977, the ALP needed a wedge issue against the right, and both opposition to nuclear weapons and uranium mining loomed. Uranium mining seemed quintessentially to be about “big business” and about “selling off the farm” and thus lent itself to a wedge against the right in much the way that do current arguments over coal seam gas and fracking. The anti-war and land rights movements provided a solid core of activists and appeals to economic nationalism, fears of “yellowcake in our suburbs”, issues of proliferation of nuclear weapons provided a heady mix and were always going to do much more harm to the right than the left. Uranium was an existential issue and being able to tar the right as implicated in existential disasters such as nuclear war, and radiation illness, were very potent. Of course, post-Chernobyl, rightwingers were unwilling to touch the issue with a proverbial barge pole. That is not something the ALP or The Greens will lightly toss aside. It’s why the LNP have declared that they will not support it until the ALP does. Abbott may be unprincipled, but his backers know better than to allow him to go there. Now with Fukushima, the issue is likely to be put back another decade at least, with all that this implies for CO2e emissions.

    What we really need is an independent energy commission — a kind of IPCC of energy policy — that could rigorously analyse and evaluate the claims and counter claims over various energy sources. The Greens, having endorsed so strongly evidence-based policy — as we should have — could scarcely resist such a proposal, and once the smoke had cleared, I suspect the prospects for industrial scale low emissions technology would be much better.

    The reality is that if the political will were there, we could, by 2030 or so, have replaced every existing coal and gas plant with a near zero emissions nuclear plant without touching any existing fossil fuel plant less than 35 years old, all of it built on existing power plant or hother heavy industrial sites near load. We would have avoided the construction of perhaps 20 GW of new fossil HC capacity and by then have something like 75% of our passenger vehicle miles done on the grid. We could have almost all long haul freight on rail and even local freight running substantially from the grid. We’d have a positve balance in oil imports. We’d have rebuilt considerable engineering capacity in the process and be in a position to assist in rolling out the technology in places like Indonesia and PNG cutting their emissions too.

    Yes, in practice, The Greens would need to radically alter their policy to make this plausible, but pre-Fukushima, I did get a sense that there was increasing willingness to at least have a dispassionate discussion on the matter. Sadly, we remain hostage to the mistakes of a corrupt pro-US government installed after the defeat in Japan, the dysfunctional USSR’s mistakes and of course, the imperialist war-obsessed Reagan regime of the 1980s.

    Australia doesn’t of course have to build its nuclear capacity around uranium mining. There’s already plenty enough radioactive hazmat to provide Australia with all the feedstock it needs to run Gen IV or thorium plants.

  36. Jackol

    This article doesn’t impress me.

    The only solution suggested is to provide significant resources to R&D.

    The argument ignores, as pointed out above, that the existing proposal actually does include a substantial R&D component. ie they are critiquing a complete program without honestly assessing all the measures in it.

    As a further example, where is the discussion of the RET? It’s obviously a measure outside of the carbon price, and will by itself provide a significantly transformative impact on our energy generation sector. And by doing that will also trigger (is also triggering) commercial R&D to reduce the cost of delivering the renewable energy target goals.

    The article uses examples of corruption/fraud that have been uncovered as to why international trading of carbon abatement certificates is a scam – given that there is scrutiny of these schemes, why is it unreasonable to think that improving the auditing of such schemes could not bring some integrity to international trading? The concept has simply been discarded as unworkable by the authors.

    The carbon price will start in Australia at the level that is politically possible now. It will make a modest difference now, and despite the dismissive tone of the authors it will actually alter some investment decisions. The focus of the carbon pricing mechanism has been on business rather than consumers; businesses are generally a lot more adept and rational about substituting supply chains and choosing lower cost materials/processes – a small carbon price will have a distinct effect on business choice that might not be noticeable at the consumer end. Regardless, the main point about starting at these levels is to get the system in place. Once people see that the system works and the world hasn’t ended, a more rational discussion can be had about how the system is working and what sort of genuine national targets we can aim for. Without starting down this path, all we’ve got is some wishful thinking that if we throw enough money at R&D we can solve all our problems.

    To sum up – the existing proposal in Australia is a composite of several measures, including the Renewable Energy Target, a carbon price, investment in R&D amongst other measures. The article focuses entirely on our entry level carbon price without considering other measures, and without looking at a longer term picture.

    A poor, narrowly focused effort on the part of the authors which does nothing to assist any real efforts at tackling climate change.

  37. JamesH

    Dr Tad, you’ve rather misread me. For one thing, my measure of economic illiteracy is whether someone has heard of the Cambridge Capital Controversy or not. And are you really suggesting that capitalist businesses are not motivated by the desire for profit, and will not change their behaviour if doing so is more profitable? If this is the case, I suspect Marx would laugh at you.

    You seem to be confusing macroeconomic issues about the systemic instability and unpredictability of capitalism as a whole with microeconomic issues of whether individual capitalists will consistently and predictably act in a profit-seeking manner. It’s that individual level behaviour that cap-and-trade acts upon. C&T was successful in cutting acid rain in the US. It may not, as you argue, have been as successful as was the german direct action plan; but could that plan have ever been enacted in the US, where the political centre is significantly to the right of germany? I doubt it. You work with what you have to hand; including trying to change what you have to hand, but to refuse to try to solve any problems until after the revolution is to let the perfect be the enemy of the good.

    To elaborate, your argument (to summarise and perhaps caricature) that capitalism is at fault and therefore we shouldn’t pursue actions to reduce carbon that have a reasonable chance of being adopted under a capitalist system in favour of fighting for radical change in the capitalist system reminds me of Microcosmographia Academica’s “Conservative Liberal Obstruction Argument One”, which I can’t resist quoting in full:

    “‘The present measure would block the way for a far more sweeping reform’. The reform in question ought always to be one which was favoured by a few extremists in 1881, and which by this time is quite impracticable and not even desired by any one. This argument may safely be combined with the Wedge argument: ‘If we grant this, it will be impossible to stop short’. It is a singular fact that all measures are always opposed on both these grounds. The apparent discrepancy is happily reconciled when it comes to voting.”

    It also smacks rather unpleasantly of Maoist United Front tactics. I don’t see any particular reason to believe that any existing socialist government or party (as opposed to a hypothetical perfect socialist movement) would be any better for the environment than any existing capitalist government or party. The Greens are not Socialist International; condemning their policies for not being those of Socialist International is very odd when that is not their raison d’etre.

    One further specific point: Your (and S&N’s) critique of the greens for not supporting direct state investment in better technologies seems to suffer from a number of blind spots called the Clean Energy Finance Corporation, the Australian Renewable Energy Agency, and the Clean Technology Innovation Program. These have a combined budget of ~$13.4 billion, well within the $10-$20 billion bracket given above, and its unlikely they would have anything like that amount (or even exist) if the Greens hadn’t pushed for them. As for the proposal to drop a carbon trading mechanism entirely and rely on state funding of promising technology instead, I believe the man supporting that policy at the moment is called Tony Abbott, and I don’t think he’s doing so out of a sincere belief that it’s the best way to cut carbon emissions. Call me crazy.

  38. Dr_Tad

    I agree with Eponymous on nuclear. Not only are the economic costs massive once true accounting of the relevant factors is done, not only is it a stupidly dangerous option, but it’s a long-run diversion from driving massive investment that will make renewables more effective and efficient.

  39. Steve Blume

    “Michael Shellenberger and Ted Nordhaus, co-founders of environmental think tank Breakthrough Institute”

    Curious description that ‘environmental think tank’. Perhaps one of their funding sources will tell us a little about their views: these include the Koch brothers and their various funding conduits. The Breakthrough Institute has collaborated with the American Enterprise Institute and others of similar ilk to push right-wing energy myths. Breakthrough is a pro-nuclear, anti-clean-energy-deployment think tank – and most definitely not the source of peer-reviewed scientific or economic advice. But that’s not their role and purpose of course – disinformation and confusion is.

  40. Eponymous

    “Nuclear is by a large margin the cheapest non FossilHC solution to the supply of despatchable energy.”

    True true. But our Greens would never alllow it.

    Not true at all. And even a passing familiarity with the UMPNER report would clearly demonstrate this.

    What I mean is you don’t know what you are talking about, and yet you think it is fact. The actual nuclear body in Australia have quantified their possible contribution to mitigating climate change in Australia in the next 30 years and it is insignificant and costly. Yet you both choose to disagree with them.

    Good on your chutzpah.

  41. Dionisio Valero

    Nobel Prize-winner Brian Schmitt seems to agree with Nordhaus and Schellenberger

    “I hope we look at how we use the money we use in science and innovation to really hone in on where we can do great things internationally,” he said.

  42. PeeBee

    Dionisio, does you cost benefit analysis include decommissioning? And how did you load up your costs with unpredicatable evensts such as Fukishma (including relocation, and lost productivity of the exclusion zone)?

  43. Coaltopia

    If we want action on climate change we must act locally and globally. This means rising carbon taxes domestically and on coals exports and shipping. Was Garnaut expressly told to ignore these lucrative exports?

    The first step in overcoming a coal addiction is to stop digging new mines. The complimentary step is a rising levy on all thermal exports as a percent of carbon captured at the destination. The proposed shipping levy is also critical when considering a large container ship emits the same GHGs as a medium-sized coal power station.

    Renewable R&D and investment is critical to lower energy and capital costs but they won’t solve the coal export problem.

  44. Dionisio Valero

    “Nuclear is by a large margin the cheapest non FossilHC solution to the supply of despatchable energy.”

    True true. But our Greens would never alllow it.

  45. Fran Barlow

    Stipulated: Australia has not proposed to introduce a carbon tax. That S & N use this term rather gives the game away — this is a concern troll for the LNP …

    Moving on …

    It is the case that no carbon price that is politically plausible could make those things traditionally regarded as “renewable” competitive with coal and oil. Just as one cannot compete with a business than can treat capital stock as income so too it would take unimaginable technological breakthroughs in “renewables” to make it possible for world energy to be derived 90% from these sources. While we are certainly better placed technologically than were humans in the middle ages — the last time the world ran on renewables, each of us has far less land and demands far more. Being able to dig up and draw down the accumulated treasure of 80 million years of fossil hydrocarbon production is a massive advantage over “on the fly” sources like solar and wind. Being able to dump your waste for free into the commons removes trhe equivalent of a massive ecodebt — it’s a kind of off balance sheet transaction that will punish our descendants soon enough.

    Carbon pricing, in practice can only warrant those measures that fall within or near the price threshhold, so if you set it at $30tCO2e then you get everything that fits into that price — energy efficiency, energy usage avoidance, les CO2 intensive transport and housing etc … Conceivably, at $50tCO2e you might get some biosequestration of CO2. Not to be sneezed at, but not adequate. Not even close.

    The actual costs required to mitigate effectively would probably be closer to $150tCO2e — a figure that is closer to the actual community cost. Those who doubt this can try a simple exercise. Imagine that instead of introducing an explicit price on CO2e the world’s governments required all emitters to adopt a full life cycle stewardship of waste policy. Emissions of CO2e at harvest, transport, refinement, distribution would have to be captured and sequestered permanently. The costs would not be less than $150tCO2e. Throw in settling the costs of fossilHC military occupation on end users of the products and the situation looks worse still. Throw in remediation of harvest sites, control of other non CO2e pollutants and it is worse still.

    While it is true that there are and will be scope for renewables to play a role in some economies with good hydro and geothermal — Iceland springs to mind — by and large the heavy lifting on a world scale on the timelines we need is almost certainly going to have to be done with nuclear power with other technologies built around delivering it. That is the reality of it. Nuclear is by a large margin the cheapest non FossilHC solution to the supply of despatchable energy.

  46. Dr_Tad

    Eponymous, Dionisio is correct I’m afraid. The issue of political “possibility” as you put it here is actually correctly translated as “what the political & economic elite will tolerate”. But what if what they’ll tolerate won’t fix the problem BUT will alienate working class support for climate action? This seems to me what has been happening in Australia. Sure there is a Left vote around the Greens willing to tolerate “sacrifice” but beyond that this issue has driven many former centre Left voters into the arms of Abbott. No mean feat!

    I don’t think “revolution” is a prerequisite of a serious response, but the sunk investment in a carbon-centric economy means that serious action will be deeply unpopular among the economic elite and the political class and bureaucrats that manage governance for them. In general, the sharpening of competition caused by the GFC and Great Recession has decreased the chances of even carbon pricing being introduced in a coordinated manner. So if the elites aren’t serious you have to look for a different agency.

    This is where S&N fall short. I prefer the UK Campaign Against Climate Change’s “One Million Climate Jobs Now!” initiative, which tries to win trade unions to a coherent action plan (and one that addresses rising unemployment in the crisis), is a much better alternative to look at. See here:

  47. Dionisio Valero

    The idea that JG’s carbon tax is more popular than public investment in advanced manufacturing and technology is ridiculous. It will almost certainly be repealed by the in-coming Liberal government — and then what will you be left with?

  48. Eponymous

    Tad, I broadly agree with all that, but disagree that they have articulated any sort of alternative solution. Certainly not a viable solution.

    I think this: ‘The idea that we need positive investment tied to massive jobs creation to win popular support for economic transformation may sound dreadfully old-fashioned when “market discipline” is the elite catchcry for everything, but it is the only way to build mass, popular support for serious (and not token) climate action.’

    sounds terrific! But, I don’t see how this is more politically viable? Surely we must acknowledge that while you and I think this is a good solution, it would absolutely never occur in Australia. Never. We don’t even seem likely to agree that restricting the ability of problem gamblers to lose their life savings. Getting people who don’t believe in AGW to support a massive Govt spend seems like pure fantasy.

    I guess that, summarising, I too would love to see massive investment by Govt in renewables rolling them out across the country. But our politics will never allow it. I see a price on carbon as probably the best we will achieve.

    Unless there is some sort of revolution in Australia where people suddenly stop looking out for themselves and consider the long view. I will not hold my breath waiting for this.

  49. Dr_Tad

    Eponymous, the passage you quote only seems hard to follow if you start with the idea that carbon pricing is the obvious way forward, rather than simply an extremely limited and potentially regressive measure that economic and political elites are willing to accept, under sufferance, to address the problem of climate change.

    This is fundamentally a political and not a scientific issue. The science tells us the scale of the problem and gives us targets for cutting emissions. Scientific technology allows us to make changes in how production is organised to effect such emissions cuts. But the rest is politics. Politics can allow the science to be spuriously challenged and much more importantly politics means that technology is not deployed for reasons external to its potential to help solve the problem.

    S&N are thus making three points that would be uncontroversial if the environment movement and the Left (forget about the recalcitrant Right here) hadn’t swallowed a whole slab of elite neoliberal ideology:

    First, that there is no evidence base and no factually-grounded theoretical reason to believe that pricing will achieve what its advocates claim for it.

    Second, that the lack of investment in renewables to date means they are not so well developed as would make their deployment as widespread and efficient as many would hope (despite technologically there being excellent grounds to believe they would work).

    Third, that the negative and regressive nature of price mechanisms means that not just powerful vested interests but ordinary people have reason to see them as an attack on their livelihoods. The carbon tax debate is being sold by the elites in a weird vacuum where (completely understandable) popular distrust of indirect taxation is not even grasped by pricing advocates.

    The idea that we need positive investment tied to massive jobs creation to win popular support for economic transformation may sound dreadfully old-fashioned when “market discipline” is the elite catchcry for everything, but it is the only way to build mass, popular support for serious (and not token) climate action.

  50. Dionisio Valero

    Sensible piece.

    The above comments are proof that greens actually do believe their own nonsense about solar and wind being as cheap as coal.

    Mates, a question: if solar is so cheap, then why do you need a carbon tax?

    Their proposal makes sense. We need an advanced manufacturing industry — see Dow CEO’s comments on this yesterday — and step up innovation. Fine to levy a small fee on coal to pay for this.

  51. Eponymous

    Agree James, I thought this was badly argued cant and with some serious errors of fact.

    I wonder why?

    I too thought this was odd:
    “…the real blame for the inevitable policy failure lies with the green movement. In Europe, the US and Australia, environmental NGOs and the center-left generally has grossly oversold the impact of pricing carbon, the readiness of renewable energy, and the political sustainability of their schemes.”

    So, they seem to be arguing that if the green movement had undersold the impact of the carbon price and implied that renewables won’t work, the scheme would have been better? This is a jump in logic beyond me. The political sustainability argument is also completely lost on me.

    I don’t really understand the point of this article at all. It is essentially a 1200 word story about climate politics. As my editors would say ‘all description, no analysis’. The final plea that spending more on R&D will solve everything is not surported in any way. The idea that renewables just need to be better is utter nonsense; the technology already exists. What’s left is to find a way to encourage the roll out and pay for it. More research might lead to deployed technology in 20 years. Better would be to make renewables competitive by costing all the externalities and rolling them out now.

    I’m calling concern troll.

  52. Dr_Tad

    It is depressing that when Shellenberger and Nordhaus (S&N) speak simple truths about how capitalist economies really work, as opposed to how they are imagined to work in neoclassical economics texts, they either get accused of crazy radicalism or (as JamesH suggests) of being stooges for the Right for not accepting the “market mechanisms” ideology that dominates the environment movement and the policies of the Australian Greens.

    It is telling that JamesH here criticises S&N for being “economically illiterate” because for him literacy clearly means accepting the orthodox economic ideologies of the neoliberal era. You know, the same ones that were so effective at preventing the GFC and Great Recession.

    There simply is no empirical evidence base for “pricing” approaches to tackle a problem of the scale and urgency that climate change bequeaths us, and lots of good evidence to suggest they will be useless or worse. But there are historical examples of rapid technological innovation (and efficiency) through massive state intervention and regulation, in the process transforming economies (most spectacularly in WWII).

    Elizabeth Humphrys and I have outlined this argument in more detail at The Drum and our blog. We are indebted to S&N for their part in shaping our thoughts on this.

    The one place I think S&N go wrong is in seeking a politically centrist audience as a lever to win sensible policies. With the scale of the current global economic crisis, that space no longer exists in elite circles, if it ever did. The bigger question is how we can mobilise mass movements to force governments into taking effective action.

    Sticking to “carbon pricing” is not just ineffective policy, but a positive impediment to building movements for serious climate action.

  53. kickin in the front seat

    >Instead of trying to make fossil energy more expensive,
    >Australia should work to make clean energy cheap.

    How long did they spend studying the carbon price plan ?

    >commercialisation and deployment of clean technologies through the commercially >oriented $10 billion Clean Energy Finance Corporation
    >research, development and commercialisation of renewable energy at an early stage >through the $3.2 billion Australian Renewable Energy Agency

  54. JamesH

    “the real blame for the inevitable policy failure lies with the green movement” – where is the evidence for this ridiculous hippy-punching? Did the greens argue for token carbon prices, or massive handouts to polluting industries? I must have missed the “Bob Brown wants more money for the coal industry” headlines.

    Arguments that compensation which is the same as costs will not change behaviour are economically illiterate. If you change your behaviour under those circumstances, you get to keep the compensation, and then you make a clear profit. This applies both to households and industries.

    “Though some greens try to fudge the numbers, no climate or energy analyst today can credibly claim that renewables are cheap enough to compete broadly with fossil fuels.”

    Bang goes an entire IPCC report on renewable energy then. Or were they the number-fudging greens?

    “Solar is three to five times more expensive than coal, and that’s not counting the high cost of storage and transmission.”

    Storage and transmission costs are also incurred by coal plants. And coal burning imposes air pollution externality costs of between 0.8 and 5.6 times the entire value of their industry, and that’s not counting its effects on climate change.

    I’m sick of pseudo-centrists sucking up to the right, and this is a shining example.

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