Dear Members of Parliament and Senators
Why is the government insistent on implementing a CO2 price, given that it will not make any difference to the climate, or to sea levels, and most certainly will not “lead the world by example” (as has been so clearly demonstrated at the Copenhagen, Cancun and Durban conferences)?
If the government had been given sound, objective advice it would realise that there is no point in implementing a CO2 price unless the whole world participates. Renowned world leader in all matter to do with CO2 pricing, Yale economist Professor William Nordhaus, says in his 2008 book “A Question of Balance” [1], p19:
“We preliminarily estimate that a participation rate of 50 percent, as compared with 100 percent, will impose an abatement-cost penalty of 250 percent. Even with the participation of the top 15 countries and regions, consisting of three-quarters of world emissions, we estimate that the cost penalty is about 70 percent.”
Treasury estimates [2] suggest the Government’s CO2 pricing scheme will cost about $1,350 billion cumulative to 2050 (undiscounted), or $390 billion (discounted at 4.35% per annum, the rate used in the Nordhaus Yale-RICE model (2012) [3]). This cost may be an underestimate; for example, the compliance cost for CO2 measuring and monitoring apparently has not been estimated.
However, the benefit of the Government’s CO2 pricing will be virtually nil.
Why is the Australian Government so insistent on damaging our economy (and our wellbeing) for no environmental benefit?
Peter Lang
******
References:
1. William Nordhaus (2008) “A Question of Balance”, p19,
http://nordhaus.econ.yale.edu/Balance_2nd_proofs.pdf
2. Treasury (2011) “Strong Growth, Low Pollution – Modelling a Carbon Price”, [Chart 5:13]
http://archive.treasury.gov.au/carbonpricemodelling/content/chart_table_data/chapter5.asp
3. Nordhaus, Yale-RICE Model (as of March 20, 2012)
http://nordhaus.econ.yale.edu/RICEmodels.htm
Jennifer Marohasy BSc PhD is a critical thinker with expertise in the scientific method.
“If the government had been given sound, objective advice it would realise that there is no point in implementing a CO2 price”. I suspect that it’s ALL about power and money.
No amount of objective advice would keep most governments from taking advantage of a crisis. Even less a manufactured crisis, as the time to act is now, before the rubes catch on.
The co2 tax is a total fraud and con and will be the biggest ponzi scheme in Australian history.
If as stated above the cost is $1.3+ trillion by 2050 the money credited compared to the debit side of the ledger will spiral OZ down the plug hole and lose an enormous number of jobs and industry to our competitors overseas.
There will be zero change to the climate, temp, droughts, rainfall, SLR etc, etc and all this when even Gillard and her clueless govt don’t even care about increasing co2 emissions.
As anyone can observe they are promoting and encouraging as much new coal and gas production and exports as is feasable every year.
Martin Ferguson has even implored the Vic govt to turn the latrobe valley brown coal deposits into another Pilbara for export overseas. All of these exports produce more co2 emissions, but in OZ we must rely on super expensive, unreliable and useless wind and solar energy.
Wind and solar are part of this giant govt ponzi scheme because they collapse the moment you remove govt ( taxpayer) subsidies.
Also wind and solar can’t be used without fossil fuelled energy backup like gas or coal etc so the saving in co2 emissions is a fraud as well.
Aussies just have to pay higher and higher electricity prices for a zero return and little change in real co2 emissions.
So as a summary the govt says we must reduce our tiny co2 emissions but encourage much higher emissions from our cheap coal from the lucky importers like China, India, sth Korea, Japan and even Europe.
Remember we export 75% of our coal overseas and under this govt the percentage will increase in the future.
There is an interesting discussion underway on Judith Curry’s web site. “Copenhagen Consensus 2012” on the subject of pricing CO2. Richard Tol has been participating. Richard Tol has been involved for decades. He is a participant in Bjorn Lomborg’s “Copenhagen Consensus”. Tol is one of the pragamatic warmists. He has done excellent work on the damage cost of global warming. His research indicates that, based on the best information available (and it is all highly uncertain), global warming is on balance more good than bad up to about 2 C of warming – i.e. for most of this century based on IPCC projections of warming.
The debate on Judith Curry’s web site is interesting. The discussion with Richard Tol begins here:
http://judithcurry.com/2012/05/20/copenhagen-consensus-2012/#comment-201823
We could discuss the issue here on Jennifer’s web site too if there is interest.
As a teaser, I’ll post my most recent reply to Richard Tol below.
Richard Tol,
@ May 21, 2012 at 7:31 you said:
But, isn’t that just a theoretical position? Is it a correct policy when we consider the practicalities? For example:
1. It is assumes the world will act in unison to price CO2. That is not going to happen. According to Nordhaus (2008) “a Question on Balance”, p19, [1] there would be a 25% cost penalty if only half the emissions are included and a 70% cost impact if only 75% of the emissions are included. It is impractical to include even half initially. It is just not going to happen in practice or, at least, not for a long time.
2. As the article I quoted @ May 21, 2012 at 7:20 am says:
[2]
3. Let’s consider the situation of individual sovereign states deciding whether or not it is in the best interests of their citizens to implement a CO2 tax – especially given it is clear the world will not act in unison. It is clearly not in the interests of China, India or most of the poor and developing countries to implement a CO2 price. For them, their priority is to raise their people out of poverty first.
4. Consider Australia for example. There is no point Australia implementing a CO2 price until:
a. The world is committed to act in unison
b. We have removed the impediments to an efficient energy market in Australia. Australia’s ban on nuclear power and its enormous subsidies for renewable energy preclude low-cost alternatives for fossil fuels. Therefore, there is no practical substitute to fossil fuels available. So, the CO2 price cannot work as theory would suggest.
c. Even if Australia removed all the impediments to an efficient energy market, the developed world has imposed enormous impediments to low-cost nuclear. Regulatory ratcheting has increased the cost of electricity from nuclear by at least a factor of four (over a period of five decades). It would take decades to remove those impediments, even if the citizens of the developed world had a mind to do so (which they do not). Nuclear generated electricity in Australia would cost about four times as much as in South Korea, five times as much as existing coal generated electricity in Australia and twice as much as a new coal generation (and that is without Carbon Capture and Storage). These figures are rough, but illustrate that there is no way a CO2 price could act as the theory says it would.
References:
[1] “Why the decision to tackle climate change sin’t as simple as Al Gore says”
http://www.tnr.com/blog/critics/75757/why-the-decision-tackle-climate-change-isn%E2%80%99t-simple-al-gore-says?page=0,1
[2] William Nordhaus (2008) “A Question of Balance”, p19,
http://nordhaus.econ.yale.edu/Balance_2nd_proofs.pdf
Error in post above: 25% should read 250% in this sentence:
“there would be a 250% cost penalty if only half the emissions are included”
@Peter Lang
I’ve been following this Curry-website debate as well
So far, I cannot find any comment where Tol differentiates between “carbon pricing” and “C02 taxing”
The deliberate and sleazy blurring of these very different concepts makes me puke but I won’t attack Tol for this since that approach merely makes him leave the discussion (I’ve seen him do this on both CA and Bishop Hill)
Perhaps you can find a polite way to ask him for the difference from the viewpoint of economics
Ian,
Could you please clarify what you understand is the difference between “carbon pricing” and “C02 taxing”? I think of CO2 pricing as any method that increases the cost of CO2 emisisons – e.g. CO2 tax or ETS, and perhaps. Perhaps you are referring to the incorrect use of “carbon” to mean “CO2”.
@Peter
“…Perhaps you are referring to the incorrect use of “carbon” to mean “CO2″.”
One of the puke evasions
The other is even worse: a “market” mandated by Govt, backed by the powerful paraphenalia of the State, is not a market, merely an artificial (make-believe) construction inserted by brute force with no regard to actual worth
What is a tonne of C02 actually worth in an open market, unfettered by State coercion ?
I’m disappointed that you haven’t acknowledged this, but not surprised
ianl8888
IMHO, I think the answer to this question:
What is a tonne of C02 actually worth in an open market, unfettered by State coercion ?
Is….absolutely nothing.
But it may possibly now be less than nothing because we have already had State coercion.
If the Coalition wins the next election and if they honour the promise to unwind this tax….I’m pretty sure it’s gonna cost us a packet…..but as they have started to do in QLD….some sanity needs to be restored here.
Those are still big ‘ifs’….they’re entirely capable of snatching defeat out of the jaws of victory….
🙂
IanI888
I have just read you Denizen bio here: http://judithcurry.com/2010/11/12/the-denizens-of-climate-etc/#comment-11199
Interesting. We have a lot in common. e.g. “actually applying Earth Science [and engineering] to real problems”.
I was also involved in the CO2 stuff in the early 1990’s: Bob Hawke’s “Ecologically Sustainable Development”, renewable energy and many energy efficency programs through the Department of Primary Industries and Energy and the Energy Research and Development Organisation, ABARE and many others. The Government committed Australia to the “Toronto Targets” We committed to cut Australias CO2 emissions to 20% below 1988 levels by 2005.
http://www.dailytelegraph.com.au/money/carbon-pricing-is-way-over-the-odds/story-e6frezc0-1226363103866
Debbie, thank you for that link.
I don’t understand why Warwick McKibbin supports a $10/t CO2 tax.
Nordhaus says $8 per tonne would be optimum if:
1. the damage estimates of CO2 emissions are correct (they are highly uncertain)
2. the whole world acted in unison
3. the scheme was economically efficient (i.e. negligible compliance cost and negligible fraud, etc)
Richard Tol, who is one of the main world authorities on damage estimates, reckons the optimum CO2 tax would be about $1.80 per tone (that was in about 2000, so need inflate that figure for the past decade).
This article makes sense for me (it’s 2 pages):
http://www.tnr.com/blog/critics/75757/why-the-decision-tackle-climate-change-isn%E2%80%99t-simple-al-gore-says?page=0,0 . (Below are three paragraphs from near the end of page 2):