Blind ETS Faith In The Market Or ‘Tax, Regulate, Build’?

How are you coping with the complexities of emissions trading? I found the following New Matilda discussion and the alternative suggested enlightening.

Writing about the Green Paper Drs Iain MacGill and Regina Betz – their academic qualifications are listed below – believe the government hasn’t demonstrated the political resolve necessary to design and implement an effective emissions trading scheme. Summing up they say:

“In the end, an ETS will succeed or fail depending on how it changes the decisions and behaviour of all of us — the public, industry and governments — towards reducing emissions. That will require wide social consensus and that, in turn, will critically depend on whether we believe our governments are ready, willing and able to take the challenging decisions required.

The risk with emissions trading is that it allows weak governance to parade as serious progress…for a while anyway. However, there is no escaping the physics — our climate system responds to physical greenhouse emissions, not rhetoric or sham policies. And the climate science suggests that avoiding dangerous global warming requires immediate action.

Perhaps the Government has an iron resolve hidden somewhere beneath the timid scheme design being proposed in the Green Paper. Perhaps it is the best that can be achieved at present given challenging economic times. We shall see in time. Unfortunately time is just what we don’t have. And, therefore, the Government’s failure to demonstrate leadership at this critical moment for the scheme’s development doesn’t just threaten progress on climate policy; it risks taking us backwards.

About Iain and Regina

Dr Iain MacGill is a Senior Lecturer in the School of Electrical Engineering and Telecommunications at the University of New South Wales , and Joint Director (Engineering) for the University’s Centre for Energy and Environmental Markets.

Dr Regina Betz is a Senior Lecturer in the School of Economics at UNSW and Joint Director (Australian School of Business) of CEEM. Her teaching and research interests are in environmental economics with a particular focus on emissions trading.

Some Of The Comments

1. From Ben Eltham Ian and Regina, thanks for your timely contribution to the debate. It’s a depressing analysis, but one that nearly every other expert in Australia seems to share with you…

2. From Phillip O’Neill – p.oneill@uws.edu.au Rather than tell you my reservations about an emission trading scheme (ETS), let me suggest an alternative. A warning, though, it’s in early draft form. I wrote it on the back of an envelope while sitting in a traffic jam. I’ve called my plan the TRB scheme: Tax, Regulate, Build. The TRB has attractions, I think.

ONE is that the TRB doesn’t have a blind faith in ‘the market’ like the ETS does.

SECOND, it addresses the need for public infrastructure. An ETS doesn’t.

THIRD, it can start straight away, be added to, be refined. It’s flexible. Fourth, it contains things that, to me, are desirable even without the need to address global warming.

My TRB scheme has eleven points. Some are easy, low hanging fruit, as they say.

1. Introduce a carbon tax instead of a permit scheme. Make the carbon polluter pay each time the product is made. Tax carbon imports. Use all the revenues to fund the public works program. Make the total annual carbon tax collection equal to the cost of the public works program. Show the public where the money’s going.
2. Build public transport, lots of it.
3. Concentrate all new employment in regional centres to make it easy for people to use public transport to get to work.
4. Regulate to make all new cars and trucks meet low emissions targets. Tax the old ones off the road.
5. Build efficient freight rail systems and demand the freight companies use them
6. Regulate to make all buildings, residential and commercial, new and old, comply with 6-star energy ratings.
7. Regulate to make all products infinitely recyclable. Tax waste out of existence.
8. Build motorways and arterial roads that do their job.

I have no idea how to do the next two. But proponents of an ETS have put these in the too hard basket as well, so I have an excuse for being vague.

9. Substantially reduce greenhouse gas emissions from our farms.
10. Shift rapidly out of coal-powered electricity generation.

My number 11. could well be the most important of all.

11. Export our excellent new technologies and best practices to third world nations to show how they too can achieve a high standard of living without cooking the planet.

3. From Denise I agree with all of the points made by O’Neill above and one suggestion for No 9. to help reduce emissions from farms, is to reduce the amount of meat we are eating. To stop all advertising of meat products might be a good start.

Raise the tax on 6 cylinder vehicles and reduce it on four cylinder vehicles, this would help keep petrol consumption down and hence reduce emissions. Most people and families don’t need anything bigger than a four cylinder vehicle. Build a government car that runs on natural gas.

Encourage far more solar hot water conversions (especially in Queensland) and any other forms of naturally generated domestic power system (like windpower) by offering generous rebates, with the excess ‘clean power’ going back into the grid.

And as for No.10 a rapid shift away from coal-powered electricity is unlikely unless we can build a lot more artificial hydro-electric plants that can recycle water flows through a series of gravity fed drops to generate power…Denise.

Interesting?