Comments on: Frontier Economics proposed modifications to the CPRS

By: Steven Earl Salmony

Steven Earl Salmony — Sun, 01 Nov 2009 22:30:26 +0000

I fear the people in possession of the awesome power that is being derived from the colossal scale and soon to become patently unsustainable growth of the global political economy are greed-mongering manipulators of democratic principles and practices who do not care about anything more than profits and accumulating material things. Their incorrigible idolatry of business-as-usual, wealth concentration, conspicuous consumption and unconscionable hoarding has reached so huge a scale and unsustainble a growth rate that the very future of the children is being put at risk. Perhaps necessary change toward the survival of offspring and sustainability, rather than the ruin of Earth as a fit place for human habitation, is in the offing.

By: John Davidson

John Davidson — Sat, 15 Aug 2009 05:27:10 +0000

Peter, the relative price of clean and dirty electricty is not what matters is they are separate markets. (Separate markets was the mechanism that John Howard used to encourage invstment in clean electricity without the need for dramatic increases in the price of electricity.) What counts is expected price and market for clean power. Changing the price of dirty electricity is just a clumsy way of changing the price that producers of clean power will get.

Pushing up the average price of electricity may provide an incentive to save power but the effect may be quite small. For example, tutning off the radiator on a cold night may save me 17 cent/hr but it is hardly big enough to change what I do. Don’t have the figures but I suspect that the same is true for the TV options. Cost of power will be trivial compaed with differences in the cost of the TV.

By: Peter Wood

Peter Wood — Mon, 10 Aug 2009 11:56:48 +0000

John, what matters when people decide to invest in clean electricity is the relative price compared to other forms of electricty. But emission reductions are not just about clean electricity, which is why it is best for any activity that increases emissions to face a carbon price.

If the impact of a carbon price is not reflected in the price of electricity, then there will be no incentive to reduce excessive electricity usage. I would have no incentive to buy a TV that uses a low amount of electricity compared to a big plasma TV that uses a huge amount of electricity. I may decide that it is cheaper to continue to use electric heaters rather than insulate my house.

This is not about punishing polluters, it is about transforming to a low emissions economy.

By: John Davidson

John Davidson — Mon, 10 Aug 2009 11:39:41 +0000

A decision to invest in clean electricity is based on the price and expected sales of clean electricty, not the price of dirty electricty. Putting a price on carbon is just a very clumsy way of pushing up the price of clean electricity. It is clumsy because it depends on jumping the average price of electricity high enough to justify investment in clean electricity. The average will only have to ramp up slowly if only clean electricty producers get the higher price and the price of dirty electricity stays unchanged. We are letting our visceral desire to punish polluters stop us from thinking clearly.