It appears that the CPRS is (for the moment at least) quite dead and no amount of CPR will revive it. The question then becomes what happens next?
Will the government have the guts to call a double dissolution election or start serious negotiations with the Greens? Will the existing legislation be reintroduced (presumably becoming a zombie) or will it be scrapped or completely reworked?
There are some almost encouraging signs that Copenhagen will not be a total flop, resulting from comments by the USA, China and India. In typical fashion the Chinese pledge to cut emissions per unit of GDP by 45% is more aggressive that the USA’s 17% cut on 2005 levels by 2020 (about 4% on 1990). Hopefully more will be forthcoming by all parties as the science requires developed nations to cut by at least 40% on 1990 levels by 2020 (assuming the rapidly developing nations make cuts in carbon intensity but not in total emissions).
These offers will probably force Australia to go beyond the 5% cut offered, and will hopefully allow the government to revise the scheme, which has now been so perverted that it is hard to find anyone outside industry and politics who supports it.
This unfortunately is exactly what has been predicted by those who are calling for a Fee and Dividend (or Fee and Rebate) scheme rather than Cap and Trade. By allowing market control we make ourselves very venerable to the sort of financial manipulation which recently almost bankrupted the western world. It encourages the finding and exploiting of loopholes.
Fee and Rebate has been violently attacked in the USA and elsewhere as a “new tax”, and the virulence of the attacks (mainly from commercial interests) seem to indicate that they are very worried about it. As far as I can see this is because it is conceptually the simplest and fairest option and the most difficult to pervert.
In its simplest form a tax is levied on carbon as close to the point of production or import as possible and all these revenues are returned to the population by means of a rebate. The price of fossil fuels goes up encouraging people and companies to look for alternatives. Calculations show that this does not discriminate against the disadvantaged as they (in general use less energy and would receive the same rebate).
Cap and Trade has two theoretical advantages, being that it fixes the problem at the lowest cost, and that it gives the best chance of meeting the goal. However both the inventors of Cap and Trade and the economist who developed most of the mathematical theory behind it agree that a tax is a better option when it comes to Climate change (see this post at BraveNewClimate).
Unfortunately even the Greens Safe Climate Bill discusses an emissions trading scheme rather than a tax, though hat least they are calling for realistic cuts, and do not intend to give away any permits. If we are stuck with an ETS what changes need to be made to make it effective?
Ross Gittins recent article in the SMH claims that the CPRS will be “unfair but effective”. I agree that it will be unfair, as it transfers money from your pocket to those of the companies involved, and hopes that they will give it back in lower electricity costs and the like. History in other countries shows that they choose to pocket it instead. However he also claims that giving the companies free permits for the first five years doesn’t make it less effective, because they can increase their profits by becoming more efficient and selling the permits they don’t use. I don’t share his touching faith in the efficiency of large corporations and suspect that while a few may put a bit of effort in this direction, most will take the money, claim their short term bonuses and run. Given that emissions need to peak in the next 5-6 years this is nothing short of disastrous.
James Hansen, who has fiercely criticised Cap and Trade, was recently asked “Is there any real chance of averting the climate crisis? He replied ‘Absolutely. It is possible – if we give politicians a cold, hard slap in the face. The fraudulence of the Copenhagen approach – “goals” for emission reductions, “offsets” that render ironclad goals almost meaningless, the ineffectual “cap-and-trade” mechanism – must be exposed. We must rebel against such politics as usual. Governments going to Copenhagen claim to have such goals for 2050, which they will achieve with the “cap-and-trade” mechanism. They are lying through their teeth. Instead, the United States signed an agreement with Canada for a pipeline to carry oil squeezed from tar sands. Australia is building port facilities for large increases in coal export. Coal-to-oil factories are being built. Coal-fired power plants are being constructed worldwide. Governments are stating emission goals that they know are lies – or, if we want to be generous, they do not understand the geophysics and are kidding themselves’.
A Guardian poll this year showed that almost nine out of 10 climate scientists thought the 2oC target would be missed, and some are saying it is almost impossible and 3-4 degrees is the best we can do.
Given the recent weather here in Australia and the heaviest ever rainfall in the UK and the news that the Antarctic ice cap is melting much quicker than previously believed none of this is encouraging. A small ray of happiness is occasioned by the Greens recent 4% lift in the polls, and we should give them all the help possible, by pushing twin ideas that
- Fee and Rebate is simpler, fairer and more effective than Cap and Trade.
- Free permits for industry are a tax on people and a gift to industry which will delay climate action.
You can use the Greens web site to send a short letter to many Australian newspapers, and you could email the PM and Penny Wong. Five minutes might help create a more effective solution.
