2013 election: What the major parties will do about climate change, clean energy and public transport.

As you go into vote this weekend you may want to consider how the various parties rate on issues important to Transition Town Kenmore (TTKD) such as action on climate change and increasing resilience in the face of resource depletion (a good example of this would be policies on active and public transport). While TTKD does not endorse any particular political party I've written a bit of a guide to the policies of the major parties.

With regards to climate change both the Climate Institute (CI) and the Australian Conservation Foundation (ACF) have climate policy scorecards, which are very quick to look at.

See the CI pollute-o-meter here.
See the ACF environmental scorecard here.


Summary of policies on Climate and Public Transport
Price on Carbon:
Both Labour and the Green support price on carbon pollution where major polluters pay for each ton of carbon they emit. Total emissions of pollution are capped and decrease each year. Most people are compensated for price rises that occur as a result of polluting companies paying a carbon price. Such market based mechanisms are generally agreed to be the cheapest and most effective means of cutting pollution. The Green aim for a much more ambitious cut to Australia's carbon emissions.

The Coalition plan to scrap the polluter pays carbon pricing scheme and instead use general taxpayer revenue to pay major polluters to "decrease" the amount of pollution they emit. I say "decrease" because it is not totally clear to me if a polluter actually has to decrease their emissions. It may well be fine for a polluter to accept money to increase their emission, but by a smaller amount than they originally expected too. Credible estimates suggest by 2020 Australia's emissions will increase under this scheme. This is for 2 reasons. Firstly not a lot of money (in the scheme of thing) is available for grants to polluters and secondly because while some polluters will decrease their emissions using the grants, other companies not involved in the scheme will increase their emissions.
The Coalition also plan to fund a "green army" to plant trees and look after local environments.  This is unlikely to have an significant impact on Australia's carbon emmissions but may help in local re-vegetation and improve health of creek catchments etc.

Climate Change Authority:
Labour and the Greens plan to keep the Climate Change Authority (CCA), an independent body set up to advise the government on addressing climate change. The Coalition plans to scrap the CCA.

Clean Energy Finance Corporation:
Labour and the Green plan to keep the Clean Energy Finance Corporation, which has $10 billion dollars to invest in clean energy and energy efficiency (ie: helping fund wind and solar farms, helping businesses to decrease their energy costs). The Coalition plans to scrap the Clean Energy Finance Corporation.

2020 renewable energy target:
All major parties support the renewable energy target. However The Coalition plan to review the target in 2014.

Public transport:
The Greens will probably support any worthwhile public transport scheme and also support an eventual Brisbane to Melbourne (via Sydney and Canberra) high speed rail line.
Labour support new rail lines in Brisbane (ie: cross river rail), Melbourne and elsewhere, generally through these project being recommended by Infrastructure Australia as projects of national significance.
The Coalition will stop all federal funding for commuter rail. Locally this means Cross River Rail will not go ahead as it is very unlikely the State Government can afford the cost on its own. Without cross river rail much of the rail network will hit capacity in 2016 and not be able to take extra passengers at peak times.

Is the carbon price reducing emissions?

Good article at The Conversation looking at the carbon price one year on. We know that in the last year electricity demand and emissions have fallen, but how much of this is due to the carbon price, the renewable energy target (RET) or other one off events?

As I have mentioned here a few times here and is explained in the article, the main impact of carbon pricing is to change long term investments decisions. Once built power plants are around for a long time, so once a coal plant is built you essentially lock in it's emissions for the next 30-50 years. Carbon pricing (along with the RET) are changing investment decisions and so planned new power plants in Australia are now dominated by gas and wind not coal. That this is already occurring as can be seen by the list of electricity projects underway or planned as of late last year. (Since then, it is worth noting, one of the two coal projects underway has been scrapped). This data also shows how over the last few years a much greater percentage of power plants being built are renewables.

So while it is hard to say exactly how much of the emissions reductions in the electricity sector in the past year are due to the carbon price, it already seems clear that over the long term it is driving us towards a low carbon future.

Queensland electricity prices to soar by 22%, who's to blame?

Many of you will have heard that electricity prices in QLD are skyrocketing by 22% this year. For the average household this is predicted to increase bills by $268 a year, while "the average electricity bill for a family of four will increase by $343 a year".

But why? 

If you listen to Campbell Newman or the energy minister Mark McArdle you might be forgiven for thinking that this increase was due to carbon pricing or renewable energy. With McArdle complaining that "Ninety-two thousand homes don't pay any power bills at all in Queensland" - well yes Mark, that's because they produce their own electricity. 

However with the help of this article and Queensland Competition Authority price determination I've made this little graph of where the price rises are coming from:

As you can see, less than 20% of price rises are due to carbon pricing or paying people for the solar power they produce. Much greater is the price rise due to the end of the Newman government's electricity tarrif freeze, which only lasted for 12 months. This policy might have sounded great during the last state election, but there's no free lunches in this world, and we are paying for it now.

"Other*" is the biggest category, breaking this down is hard, but it includes increased network prices (ie: the poles and wires), increases in the costs of generating power and then some mind-blowing stuff like electricity companies being allowed to increase prices because power demand has been dropping and they have been making less money than they want to.

So it seems that the government is very concerned about the 20% of the price rises due to polluters no longer being able to pollute for free and for actually having to pay households who are producing clean energy from their solar panels. Instead they seem rather unconcerned (or want to shift our attention from) what is actually causing 80% of the price rises. This is like the captain of the titanic blaming the water on drinks that were spilled when the ship hit the iceberg rather than the gaping hole in the ship.

From all this I draw two conclusions:

1. All that kerfuffle from certain politicians that the (basically one off) 9% rise in power prices from the carbon price was going to ruin us all was self serving nonsense. A year later we are facing over double that rise for different reasons and the idea this will ruin us all has been conveniently forgotten.

2. We as a community are going to have to start demanding explanations for what's causing 80% of our power prices rises and then demand useful ideas for what to do about it, or we'll continue to see politicians scapegoating renewable energy and a continuation of massive price rises.

Top tips to reduce your power bill and 'beat the carbon tax'

The 1st of July marks the introduction of the carbon price. The major effect of the carbon price on households will be through increases in energy bills as the cost of producing highly polluting energy increases. But carbon price or not, energy prices have been increasing rapidly over the last few years, mostly due to the cost of network upgrades. Given the rapidly increasing price of power, no matter what the pollies do, it makes sense to take action to decrease your energy usage to save money on your bills.

Here are 30 simple things you can do (from the ABC), plus a few suggestions from me and other commenters on the ABC website:

"Appliances

1. Turn off the beer fridge during the week or between parties.
2. Dry clothes on an airing rack or on the clothes line, rather than using a tumble dryer.
3. Clean the lint filter in washing machines, dryers, and heating and cooling equipment.
4. Use a rake instead of an electric leaf blower, or a broom instead of a vacuum on sealed floors.
5. Keep your fridge operating efficiently by keeping the door seals clean (replace them if they've deteriorated) and defrost the freezer if necessary.
6. Buy efficient whitegoods when the time comes to replace them. The Energy Rating website has a useful search tool that estimates running costs. For example, one 4-star family fridge costs $72 per year to run, paying 25 cents per kilowatt-hour for electricity, while a similar sized 1.5-star machine costs $135 per year to run.
7. If you have them, limit the use of heated towel rails to a couple of hours per day, instead of the full 24.

Cooking

8. Put lids on saucepans to reduce the heat that escapes.
9. Cut your vegies into smaller pieces so that they cook faster.
10. Boil the kettle with only as much water as you need. Heating water takes a lot of energy.
11. Where possible, use a microwave instead of a conventional oven.

Gadgets

12. Turn off the television and other entertainment devices manually, instead of leaving them on standby. Master/slave powerboards can make this easier (despite dodgy-sounding name): when you turn off the 'master' (usually the TV), the 'slave' devices are automatically turned off.
13. Battery chargers can use standby power even when not plugged into the device they charge. Turn them off at the wall. This includes mobile phone, power tool and battery rechargers.

Lighting

14. So you've swapped your old incandescent bulbs for more efficient lights? Now, it's time to replace energy-hungry halogen downlights. Mains voltage (GU10 base fitting) 50 Watt halogens can be replaced with 11-watt compact fluorescent 'micro' downlights. Low-voltage (MR16 base) 50-watt halogens can be replaced with 20 Watt infrared coated (IRC) halogens or three Watt LED downlights. Note that 'low voltage' does not mean 'low energy'.
15. Match your lighting levels to the needs of the activity you're doing. For example, you don't need every light on while watching TV.
16. Combined light, heat lamp and fan fittings for bathrooms are compact and useful, but each heat lamp typically uses a massive 275 watts. Don't flick on the heat switch when light is all you need.

Keeping warm

17. Dress for the season. Winter is the time for woollies, rather than wearing summer clothes and setting the heater thermostat to tropical.
18. Similarly, suit your bedding to the season and use extra blankets (including underlay) rather than electric blankets or running a heater overnight.
19. Don't scoff at a nana-rug to cover your knees while you're watching telly. Thousands of nanas can't be wrong.
20. Cover windows with thick, well-fitting curtains.
21. Put weatherstripping on external doors or use a door snake.
22. Target heating to the rooms or zones in use, not the entire house.
23. Set your thermostat to a reasonable temperature of 18 to 20ºC in winter. Each degree hotter can increase your energy bill by about 10 per cent.

Hot water

24. The shorter your shower, the less energy you spend heating up water. 25. Install a water-saving showerhead; it's an easy DIY job. Many water retailers have free showerhead replacement programs.
26. Consider insulated coverings for hot water systems and pipes.

Staying cool

27. When the weather heats up again, remember it is easier to prevent your house becoming hot than it is to cool an already hot house. Make sure your home has adequate exterior shade, such as awnings, blinds, sails, shade cloth, shade trees or verandas.
28. Install flyscreens to make it easier to ventilate your home.
29. For active cooling, fans use the least energy, followed by evaporative coolers (which suit dry climates). Air conditioners are the most expensive to run.
30. Fans work by moving air over your skin. If you're not in the room, the fan is doing nothing. Switch it off.

Stuff

Finally, remember that every product you see in the shops has needed energy, water and material resources to be produced and has a carbon cost. We can cut our eco-footprints, save money and avoid some of the carbon tax by simply buying and wasting less stuff."

So lots of common sense stuff there, thanks Auntie.


A few other thoughts:

1. Hot water is a massive part of energy bills, other ways to save money include:

• Turn down the temperature on your hot water cylinder, 65 dC works for us
• Better yet, get rid of your hot water cyclinder, having a big tank keeping hundreds of litres of water hot 24/7 is crazily inefficient.  Look into some sort of instantaneous heating system.
• Install solar hot water

2. Switch to an energy efficient pool pump. Old single speed pool pumps can use huge amounts of energy and cost over $500 a year to run. While the running costs of new 5 star and better rated pumps can be less than half that. Anecdotally a new pump can pay for itself in 2 years or less.  Even better, Energex is running a promotion for people in certain areas with extra incentives.

3. Install solar panels. If you live in QLD and have been thinking about going solar, you should get in before July 9th when the feed-in tarrif changes. You don't have to have the panels installed by then of course, contact a solar installer and they'll tell you what you need to do.

International Energy Agency: the door to 2°C is closing

These are the words from the 2011 World Energy Outlook recently released by the International Energy Agency (IEA). Although a conservative organization the IEA take climate change very seriously and included in their report detailed investigations of potential energy senario's and how they will affect climate change.

Here's their most salient conclusions (emphasis mine)

We cannot afford to delay further action to tackle climate change if the long-term target of limiting the global average temperature increase to 2°C, as analysed in the 450 Scenario, is to be achieved at reasonable cost. In the New Policies Scenario, the world is on a trajectory that results in a level of emissions consistent with a long-term average temperature increase of more than 3.5°C. Without these new policies, we are on an even more dangerous track, for a temperature increase of 6°C or more.

Four-fifths of the total energy-related CO2 emissions permissible by 2035 in the 450 Scenario are already “locked-in” by our existing capital stock (power plants, buildings, factories, etc.). If stringent new action is not forthcoming by 2017, the energy-related infrastructure then in place will generate all the CO2 emissions allowed in the 450 Scenario up to 2035, leaving no room for additional power plants, factories and other infrastructure unless they are zero-carbon, which would be extremely costly. Delaying action is a false economy: for every $1 of investment avoided in the power sector before 2020 an additional $4.3 would need to be spent after 2020 to compensate for the increased emissions.

For a more detail discussion see Skeptical Science, basically the IEA looked at 3 future scenario's:

Business as usual = 6°C warming
New Policies (governments meet all pledges made to date) = 3.5°C warming
450ppm (requires much greater action) = 50% chance of limiting warming to 2°C.

2°C warming is seen at the red line we don't want to cross, therefore it is clear much more world action is required.

Time is of the essence to take action to meet a 450 ppm target because existing polluting infrastructure (power plants, factories etc) is almost at the level that uses up all our "carbon budget". The implication of this is that unless action is taken now then worldwide by 2017 any new infrastructure will need to replace those already existing or be zero carbon, or we blow the budget. This is why some news stories have reported we have "5 years" to act on climate change before it is too late.

This is also why those who claim they support climate action, just not now, are misguided. Such a "strategy" is not only far more expensive in the long run, but runs the risk of beginning too late because the "locked in" polluting infrastructure is already great enough to cause dangerous climate change. The fact is a coal plant will operate/ pollute for 50 years, while new but inefficient buildings built today could be around for even longer.

The good news (from Australia's point of view) is that with the passage of the carbon price, we'll be getting started on action. One of the early effects (and perhaps one that is already being felt) will be that new power generation in Australia probably won't include coal plants and that more efficient buildings, factories and appliances will become the norm.

I'll leave the last word to the IEA:

“If we don’t change direction soon, we’ll end up where we’re heading”

Carbon price passes - Australia to (finally) act on climate change

With a vote of 36-32 the carbon price has passed the senate is now set to become law. This means that the price on carbon pollution (and the associated compensation to households and business) will begin next year. Australia will now (finally) join the growing list of countries taking meaningful action on climate change.

It is probably worth repeating why putting a price on carbon pollution is so important and why it (necessarily) forms the foundation of climate change action.
Currently it is free for companies to emit unlimited amounts of carbon dioxide and other greenhouse gasses into the atmosphere, but these emissions still have a cost, through the negative effects of climate change. It is just that currently we, (the taxpayers), have to foot this bill, effectively providing a subsidy for polluting industries. In such a situation why would companies spend money to reduce their pollution? A carbon price changes this by shifting the cost to the polluters, giving them an incentive to reduce pollution. By applying the carbon price across most (or all) of the economy we can let business find the cheapest ways to reduce pollution and grow new industries based on clean technology.
A carbon price is also different from the Coalitions so called "direct action" measures where the government would use taxpayers money to pay some businesses to reduce emissions. Because this policy doesn't apply across the economy, many businesses would still be increasing their levels of pollution and have no incentive to do otherwise, nor will there be a market mechanism to find the cheapest carbon reduction possibilities. This makes it debatable whether the Coalitions direct action policy would be able to reduce emissions at all, as a decrease in one area could be canceled out by increases elsewhere.

Although the carbon price is the foundation of the "Clean Energy Future Package" there are other important elements. As we noted previously the "Carbon Farming" aspect of the package has already passed into law. Still to pass into law is the formation of ARENA, which is a new independent agency that will integrate existing money and programs for renewable energy. The Coalition have stated they will support this so expect the law to pass early next year. Also still to be introduced into parliament is the independent Clean Energy Finance Corporation which will have $10 billion dollars in new funding for commercialization and deployment of clean energy and energy efficiency projects. Like the carbon price the Coalition opposes this money for clean energy and so we can expect a new fight over CEFC early next year. 

Carbon price package presentation from TTKD August meeting now available online

There were some requests for a copy of the talk given by Mike Clark on the Government's proposed clean energy future/ carbon price plan at our most recent meeting.

A pdf copy of the talk can now be found on Scribd and is embedded below. The pdf version is without some rather extensive notes contained in the power point to help explain each slide. The powerpoint is also available on Scribd.

Carbon Price Package

Nb: The presentation also contains some extra slides (30-34) not shown in the talk

TTKD August meeting: The Carbon Tax/ Clean Energy Future Package

- Confused about the carbon price package?
- Concerned about the cost?
- Keen on clean energy?
- Got questions?

You are not alone. Come along to the Transition Town Kenmore August meeting where we will dissect the Clean Energy Future package.

Mike Clark, our local policy enthusiast, will be presenting the details of the package, followed by Q&A and general discussion.

We hope to see you all there.

Thursday 18 August,
from 7.30pm
Kenmore Library Meeting Room

The government's carbon price mailout

I've just finished reading the Gillard governments' carbon price mailout which arrived yesterday.

It reinforces in my mind, how, by creating a comprehensive policy, they have also created quite a complex policy. Although the household compensation is only one aspect of the package it takes up the vast majority of the handout. (For anyone reading who wants to know how you and your family will be affected the best way to check is this online calculator). As far as I can tell everything in the mailout is more or less correct and I thought the section "How will a carbon price cut pollution?" was quite good with some pertinent points:

"Currently, releasing carbon pollution is free despite the fact that it is harming Australia's environment

A carbon price changes this. It puts a price on the carbon pollution that Australia's largest polluters produce. This creates a powerful incentive for businesses to cut their pollution, by investing in clean energy or finding more efficient ways of operating"

I think this is quite a good way to explain in a nutshell how and why a carbon price will be effective. It seems the govt has decided to back off talking about how carbon pricing will change consumer behaviour at the household level (although it will to some extent) and focus on where most of the action is, which is investment decisions by large companies, especially the large polluters.

The mailout does spend a bit of time talking about one aspect of the package that I like, which is the increase in the tax free threshold from $6000/year to over $18 000/year. I have seen some commentators criticize the package for including things like this, saying it makes it too complex and distracts from the main message. On the other hand, since the package needed to include household compensation anyway, why not utilise the chance to introduce a tax change recommended by the Henry review and which the economic boffins think is a good idea.

Conversely the mailout spends very little time talking about the $10 billion dollars for clean energy in the carbon package. $10 billion dollars is a serious chunk of change and should be a big shot in the arm to the industry. Hopefully this policy has got into the general consciousness of the public despite all the other parts of the package competing for airtime.

Lastly, it is always going to be somewhat controversial when a government carries out public education campaigns. I can understand why some would rather the government not spend any taxpayer money on such things. On the other hand, this is a large and complex policy with important implications for the country. A loud, well funded and often misleading campaign has and is being run against it. In such a case do people not deserve to be given the facts lest they form their opinions based on incorrect or misleading information? In this the mailout does ok but isn't perfect, while it is clear from reading it that not everyone is fully compensated, perhaps unsurprising there are no profiles on a family from the minority of Australian's (generally the wealthy) who won't be fully compensated. Guess that's PR for you.

10 things to know about the carbon price

We now know the details of the governments package to tackle climate change by pricing carbon pollution. My live blog about the carbon price was a bit messy. So I've cleaned it up a bit.

Here are the 10 important points:

1. A price on pollution of $23 a ton

2. Pollution cuts of at least 5% by 2020 and 80% by 2050

3. Scheme starts as a "tax" but moves to an emissions trading scheme in 2015

4. 500 biggest polluters will pay for their carbon pollution

5. Price rises will be modest - expected to raise average prices by 0.7%

6. Compensation for households will see most better or no worse off

7. Tackling climate change now is cheaper and easier than waiting or doing nothing

8. Over 10 billion dollars for renewable energy

9. Money for storing carbon in land, improving biodiversity, closing down the dirtiest coal plants and helping industry be more efficient.

10. Vulnerable industries who are trade exposed get generous assistance


For more detail on each point see this post.

Some journalistic takes on the carbon price

Couple of interesting pieces in the SMH today regarding the carbon price/tax


Ross Gittins: Give and take: this new tax is a piece of cake

Explaining how a carbon price can work even though people are being compensated.


Lenore Taylor: Facts assail Abbott's Chicken Little act

Fact checking Abbott's arguments against the carbon tax.

How will a carbon price effect me?

If you are wondering this question then you should head over the Governments new website Clean energy future.
In what must be a first for any government they have managed to produce a fairly attractive looking website, but more importantly it allows you to calculate you and your families' level of assistance and therefore how the carbon price will affect your family budget. You can do this here.

If you are interested in more technical details of exactly what income ranges end up better and worse off then Greg Jericho has the details.

Expert reaction to the carbon price - mostly positive

"This is a strong climate change policy package. It will allow Australia to do its fair share in an effective global effort to reduce the risks of climate change, and to do so at reasonable cost."
- Prof Ross Garnaut

The Conversation website has been rounding up expert reaction to the Govt's Carbon Pricing package, while Prof Ross Garnaut's full response is here.

Like Prof Garnaut, the majority of experts have reacted favorably to the scheme on the whole. There seems to be general agreement that this is a better scheme than the CPRS.
The method to provide much of the compensation by raising the income-free threshold to $18 000 has been widely praised as good policy in that it compensates people, simplifies the tax system and also means ~1 million people won't need to file a tax return.
Other experts like the renewables money, the formation of mostly-independent agencies to recommend future policy to government, the money for carbon sequesteration in the land etc.

For more, see the linked articles.

Update: Prof Frank Jotzo chimes in, again he's pretty positive about the package

Carbon price - live blog and first reactions (updated)

1. Carbon price to start at $23 a ton
- basically what Garnaut recommended. And rising at 2.5% a year above inflation. About $1.30 a year I think (assuming 3% inflation).
- Note that the original CPRS was going to start with a introductory price of $10 a ton but then was expected to move to around $20-25 once it got fully underway).

2. Aim for a cut of 5% by 2020 and 80% by 2050.
-The 2020 target is quite low but by switching to a emissions trading scheme where the government caps the amount of pollution this could certainly be ramped up. The 80% target by 2050 is in line with the science.

3. Switch from a tax to emissions trading scheme in 2015.
-Again this is what Garnaut recommended, fixing the price at the start of the scheme will provide some certainty for business as every gets used to paying for carbon.
- The ETS will have a price floor of $15 (ie: the price won't be able to drop below this and will provide some certainty for investors).

4. The carbon tax will be levied at the 500 biggest polluters.
-They will then have an incentive reduce their emissions to reduce their bill. This will have a big effect on investment decisions especially when deciding on new electricity generation.

5. Price rises are predicted to be modest - 0.7% over the whole economy in 2012/2013
- Because polluters will pay more, many will pass on these costs to their customers. However the rises won't actually be that large, much smaller than GST for example.
- ie: About 80c a week rises in food prices
- Price rises for the average household are estimates to be $9.90/week but compensation will be $10.10/week

6. Most people will get compensation and be no worse off
- Tax free threshold will be tripled to $18 000 a year
- Pensioners and self-funded retirees will receive compensation
- I like these tax cuts, basically we are going to tax something we don't like (pollution) and tax something we do like less (work).
-Lower income households are expected to be about 20% better off. I guess the idea here was to make sure there are no nasty surprises for those who can least afford it.

7. Treasury modeling show that the earlier you start tackling climate change the cheaper and easier it is. Jobs and economic growth will see little effect. Economic growth will only by 0.1% lower than it otherwise would have been.

8. There is funding for renewable energy and energy efficiency
- The renewable energy fund is worth over 10 billion dollars.
- This appear to have two parts, the Australian Renewable Energy Agency will manage both which consists of:
~10 billions dollars in new money. Similar to a "Green bank" in that it will provide funding for renewable energy projects.
~3.2 billion in existing money for funding of R&D through to deployment will be also be managed by the AREA
All together this will help to get renewable energy plants built. A big positive and certainly much better than what was in the CPRS.
- There will be money for industry to make themselves more energy efficient. This will help to modernise industry making them more competitive and also reduce their emissions.

9. Emissions intensive and trade exposed industry's will get 94.5% compensation. Which will decrease slowly at 1.3% a year. There is also extra money for some areas like the steel industry.

10. There is money for carbon farming (sequestering carbon in trees and the land) and also for retiring the dirtiest coal fired power plants by 2020.

11. Offsets - Offsets are going to be allowed, including international offsets.
- Until 2015 when the ETS phase starts only domestic offsets will be allowed (ie: carbon farming, free planting etc)
- After 2015, up to 50% of emissions reductions can come from overseas. (This is considerably less than in the CPRS). Expect moves to link our ETS with that in NZ and the EU, one place we may see international offsets is in NZ forestry. Offsets in developing countries will likely also be allowed but the rules will need to be strict to make sure these are real and verifiable.

Overall, this is probably about the best that could be achieved when you needed the Greens and Tony Windsor to agree and some parts are better than I expected. I give it a pass mark.

For more information see ABC news here.
There is also a lot of detail on the policy on the Govt website Clean Energy Future.

Malcolm in the middle

Former Liberal leader Malcolm Turnbull has created a bit of a storm this week after offering a straightforward critique of the Liberal parties' own climate change policy on ABC Lateline (transcript and video here).

Turnbull who has long publicly favored a market based scheme as opposed to the Liberal's "direct action" policy, is probably guilt of making that unforgivable mistake in politics, telling the truth, without any spin.

So what did Malcolm say?

Well, basically, he explained how the "direct action" policy works.
"Direct action" allows polluters to pollute and then the government uses taxpayers money to buy pollution offsets. While this can decrease "net" pollution, it doesn't create a low carbon economy and as business pollution levels continue to rise you need to buy more and more offsets to reduce your overall levels of pollution. In the long term with Oz needing to cut its carbon pollution emissions by 80% or more, these taxpayer funded offsets would become "very expensive".

Some quotes:

"But the way it works is that the taxpayer - the taxpayers' money would be used to buy carbon offsets from farmers, so that as industry pollutes, the Government would then spend taxpayers' dollars to buy carbon offsets to offset that pollution."

"if you want to have a long-term technique of cutting carbon emissions, you know, in a very substantial way to the levels that the scientists are telling us we need to do by mid-century to avoid dangerous climate change, then a direct action policy where the Government - where industry was able to freely pollute, if you like, and the Government was just spending more and more taxpayers' money to offset it, that would become a very expensive charge on the budget in the years ahead."

Turnbull is also in hot water with the Libs, but lauded by Labour, for saying that the "two virtues" of the Libs direct action policy "from the point of view of Mr Abbott and (shadow environment minister) Mr Hunt" are that a direct action policy is easy to stop if 1) climate change isn't real, or 2) if you decide acting on climate change is too hard. Considering the enormous weight of evidence that humans are causing climate change and it is a serious problem we need to deal with, my impression is that Turnbull is telling us the Libs either don't know the science, and/or don't take climate change policy seriously.


Why is all this important?

Probably because since both major parties are offering climate change policies it is important to view each critically. The Liberal's policy isn't efficient and in order to work could be very expensive on the taxpayer. Even more importantly because there would little/no incentive for polluters to cut their pollution, Australia would fail to move to a low carbon economy, a serious problem is the long run.



Update: Malcolm Turnbull has issued this defense/ explanation of his interview comments on his website. Basically he uses a lot more words to say the same thing and points out that what people took as him been critical was simply him accurately explaining the policy (though I think they are probably one and the same).

Carbon pricing silly season

Those trying to have a rational discussion about carbon pricing must feel like they are stuck in a never-ending silly season. Today's topic is the $40 a tonne magic number for a carbon price, with the headline in the usually fairly reliable Sydney Morning Herald screaming "Carbon price shock: now it's $40 tonne".

Except that it almost certainly isn't.

A report to be released on Wednesday will apparently show that a carbon price of $40 a tonne will be required for gas generation to compete with/replace black coal. This isn't really a surprise and I have been under the impression for some time that a carbon price of less than $30 a tonne will make brown coal uncompetitive, with a higher price of ~$40 a tonne for black coal. As far as I know can tell, this means even at a $25 dollar a tonne starting price, the dirtiest brown coal power stations (ie: Hazelwood) will need to start cleaning up their act, start running only as peaking plants instead of baseload, or look to close. A price on carbon will have the biggest effect on the most polluting plants first which is brown coal, (which generates 26% of Australia's electricity).

So what about black coal? Well (and this is where the SMH headline goes all wrong), just because a carbon price doesn't start high enough to make a polluting form of power uncompetitive, doesn't mean it won't over time. The carbon price will rise as time passes and will reach a point where it hits $40 in today's money at which time black coal will become uncompetitive (and plants will start to close etc).

But there is another effect we need to remember too and that is new power generation. Power plants are long term infrastructure and need to be profitable over many decades (or they won't be built). Even if the initial carbon price doesn't make black coal uncompetitive a clear signal will have been sent to the market about what power plants will be profitable in the long term with a rising carbon price. The effect, which may be starting to be felt already after several years of carbon price discussion, is the that the dirtiest forms of power generation (ie: coal) simply won't built anymore. Which will certainly help to clean up the electricity industry given the steady stream of new plants opened every year.


Ps: I should note that from an environmental POV, or if you only wanted renewable energy to be competitive, a carbon price of $40 (or higher) would make sense. What I'm trying to point out here is that carbon pricing works in both the short and long term and that the price doesn't need to start high to be effective.

PPS: the actual SMH article was pretty ok, mostly its issue was the silly headline. Although it's probably not as bad as The Australians' "Westpac chief Gail Kelly joins carbon tax revolt" when, as the article made clear, she said no such thing.

Garnaut recommends a starting carbon price of $20-30 a tonne

Earlier today the government's climate change advisor Prof Ross Garnaut released his carbon pricing proposal. It was part 6 of a series of updates he has been making to his 2008 climate change report. Garnaut's report is not government policy but it likely to be influential in deciding how to proceed in implementing a carbon price.

There is a good description of the main points here (though the headline is perhaps a little inaccurate), the report can be found here.

Here are some of the key points:

• It is in Australia's interest to play our part in limiting climate change by reducing our emissions and working to secure global agreements to reduce emissions.
• A market based mechanism is the cheapest way to reduce our emissions.
  
• The effect of carbon pricing on the economy will be "modest".
  
• Garnaut has endorsed the plan to start with a fixed price (the carbon tax) before moving to an emissions trading scheme (price set by the market ie: supply and demand).
  
• Starting with a fixed price provides more certainty and stability when the scheme starts, allowing everyone to get used to a world where carbon pollution has to be paid for. Emissions trading is favoured in the long term for its ability to direct money for reducing emissions to the cheapest means of doing so.
• The carbon price should start at $20 to $30 per tonne and rise every year before being set by supply and demand under an ETS.
• A large amount of assistance (free permits) to business that produce products for overseas markets is favoured, this will be phased out over time (Nb: this is similar to in the EU ETS)
• Garnaut recommends household assistance should be mainly via tax cuts focusing on low and middle income earners, with some more targeted assistance for low income earners.
  

Not everyone will agree with all of Garnauts' recommendations, but he does provide some details policy people can now start to debate. For the average person the big picture remains the same: Polluters start paying for pollution, people are compensated for price rises.

Jill Duggan: Lessons from the EU emissions trading scheme

Jill Duggan is an expert in carbon pricing, having been involved in the UK and European Union (EU) emissions trading schemes (ETS) as well as advising regional schemes in the USA. She has been visiting Australia and yesterday she gave a talk at UQ on the EU emissions trading scheme, how it's been going and lessons they have learned. There was plenty of jargon on offer but also some take home messages.

• The EU is on track to meet is carbon pollution reduction targets of a 20% cut from 1990 levels. (The cuts required of different countries vary and some like Germany have an individual targets of ~40%, which is pretty impressive).
• Before a carbon price was introduced, there was a lot of nervousness about the effects of carbon pricing on the EU economies. However as the scheme has been implemented and improved this was subsided and many now view the various EU climate change policies as positive measures to move the EU countries to a low carbon economy.

As the for the scheme itself Jill emphasized the importance of:

• Keeping the carbon pricing scheme simple and transparent
• Strong regulation of carbon pricing
  
• Not allowing too many overseas offsets (although these had initially seemed attractive because of the perceived low cost of emissions cuts, they don't help move your economy to a low carbon future and both business and government in the EU were seeking to limit their use)
• The effect of having a carbon pricing scheme and enforcing strict compliance with the emissions caps can cause a larger decrease in emissions than you would expect just from the carbon price alone. Ie: You can get more emission reductions than expected based solely on how much a ton of carbon costs the polluter.
• Carbon pricing is not a magic bullet, other complementary policies are very useful but carbon pricing underpins the multiple policies used to reduce emissions of greenhouse gasses. (Ie: Complementary policies are useful at a more local level to target specifically areas, an example of this is improved building standards in the UK to increase the current poor energy efficiency of buildings).
  

Purpose of a Carbon Tax

Many commentators seem to think the purpose of a carbon tax is to reduce consumption. This is only part of the story, as many uses of energy have inelastic demand, i.e., the amount you use is independent of price up to the point where you can’t afford it, and go out of business or have to make major changes in your lifestyle. The increasing price of oil and the consequential change in price of petrol is a case in point. Car usage hasn’t changed much. It can’t for those who do not have access to public transport and have no other option for commuting.

While some of the problem can be addressed by infrastructure changes (e.g. spending more on public transport rather than roads), those changes don’t rely heavily on a carbon tax.

The bigger purpose for a tax that is seldom mentioned (but is a key component of economic models) is narrowing the price gap between clean and dirty energy. That has the biggest effect on large-scale investments, such as new power stations, and it is hence critical that we put the scheme in place soon and have a realistic plan for ramping up the price.

In the meantime of course we should still address the other components of the problem including changes in infrastructure, mandatory renewable energy targets and promoting energy efficiency (where but in Brisbane do shopkeepers air condition the streets, I ask with tears in my voice).

Any alternative to a carbon tax or emissions trading scheme needs to fit in with the big picture. It must at very least include a mechanism for promoting clean energy over dirty energy.

Climate change cage match: Abbott debates Abbott

Some, (humour?) from Crikey: Climate change cage match: Abbott debates Abbott.

With all the focus on Julia Gillard's change of heart on how to price carbon it's worth seeing what Tony Abbott believes. Some excerpts:

As the Gillard government’s plan for a carbon prices sends Coalition stocks soaring, attention is increasingly focusing on what opposition leader Tony Abbott believes in about climate change and how to deal with it. Today in Crikey, Tony Abbott debates one of his most formidable opponents on the issue — Tony Abbott....

On climate change:

Tony Abbott:I am, as you know, hugely unconvinced by the so-called settled science on climate change. Atmospheric concentrations of carbon dioxide have significantly increased since the spread of industrialisation, but it seems that noticeable warming has only taken place between the 1970s and 1990s.

Tony Abbott: We have a clear policy on climate change. Climate change is real.

On how to reduce emissions:

Tony Abbott: I think that the science is far from settled but on the insurance principle you are prepared to take reasonable precautions against significant potential risks, and that’s I think why it makes sense to have an ETS (emissions trading scheme).

Tony Abbott: What we need is environmental direct action. We need action which is actually going to make a difference. What we don’t need is a whopping great new tax masquerading as a green measure.

Tony Abbott: ....Still, a new tax would be the intelligent skeptic’s way to deal with minimising emissions because it would be much easier than a property right to reduce or to abolish should the justification for it change.

I would also note this quote:

''If you want to put a price on carbon why not just do it with a simple tax? Why not ask motorists to pay more? Why not ask electricity consumers to pay more?''

Savvy?

Well i doubt it. Abbott's pronouncements on climate change leave it very difficult to know what he actually believes. Except perhaps that he has taken the Groucho Marx approach to any climate change policy advocated by Labour. This does seem rather unfortunate because in the UK for example the conservative PM Margaret Thatcher was one of the strongest early voices for action on climate change. A position the British Conservative party still embraces today.