The Carbon Pollution Reduction Scheme White Paper has been released. Australia’s Prime Minister Kevin Rudd has announced an emissions reduction target of 5-15% in 2020 compared to 2000 levels.
The target of 5-15% by 2020 sends a signal to the rest of the world that Australia is not willing to play its part in an international agreement that stabilises at 450 ppm or less. It does not even signal that Australia is willing to stabilise at 500 ppm or less. It obstructs a good agreement on climate change. This means that it says that we don’t care about the Great Barrier Reef, we will not make a serious attempt to stop it from being destroyed or seriously degraded. Curiously, Kevin Rudd states that 450 ppm should remain a core part of international negotiations.
Rudd and the White Paper have argued that a 5% reduction would imply greater per-capita reductions than the EU’s 20% reduction by 2020 because of Australia’s greater projected population growth. This argument is irrelevant because Australia’s per-capita emissions are much higher than the EU’s. Any international agreement that does not have high per-capita emitters reducing emissions more than low per-capita emitters would never be accepted by the developing countries in the world. Rudd’s approach makes promising per-capita approaches to climate change, such as contraction and convergence, more difficult to achieve.
In short, there are four problems with the targets that Rudd has chosen:
- They are too weak to correspond to the stabilisation targets that we need to avoid dangerous climate change. They effectively rule out Australian cooperation with global stabilisation targets that add up to 500 ppm or less.
- They are based on a model where low per-capita emitters and developing countries bear a disproportionate amount of the burden of emissions reductions. They do not take into account Australia’s high per-capita emissions and are therefore inequitable.
- This means that developing countries have less incentive to participate in a global agreement, making the mitigation task harder.
- There is considerable evidence that Australia can afford much more mitigation — the expected cost of climate change will be greater than the expected cost of mitigation.
Now for some comments on specific aspects of the White Paper.
Assistance measures: Much money is being squandered on assistance to emissions intensive industries. The coverage of assistance to “emissions intensive trade exposed” industries has been expanded to include industries that made the most noise, such as liquefied natural gas. Rentseekers have been rewarded. There will also be $3.9 billion dollars (assuming a $25 carbon price) in free permits handed out to coal-fired electricity generators. This is money that could have been invested in low emission technologies, reducing emissions from deforestation or forest degradation, or assistance to low income households. Instead it does nothing more than line the pockets of shareholders.
The large amounts of assistance to polluting industries have meant that there much less funding available for compensating households. The distribution of assistance to households is strange, households with incomes of less than $20,000 are given less assistance than households with incomes between $20,000 and $120,000. Newstart recipients will recieve $14.20 more per fortnight; people on the minimum wage will recieve $14.95 more per fortnight. No money has yet been allocated to help households increase their energy efficiency.
Low price cap on permits: There will be a price cap on permits, so the emissions cap can be exceeded by firms buying more permits at a price of the level of the cap. According to the White Paper:
- The scheme will have a transitional price cap for the period 2010–11 to 2014–15.
- The level of the price cap will be set at $40 commencing in 2010-11.
- The level of the price cap will rise in real terms by 5% per year.
This price cap is less than recent estimates of the social cost of carbon from economists such as Richard Tol [Richard Tol disagrees, see comments]. It is much less than what Nicholas Stern has suggested is likely to be the social cost of carbon. Having a price cap does not make sense if it is less than the social cost of carbon.
No price floor: I have discussed why an emissions trading scheme needs a price floor here. Dr Richard Denniss, from the Australia Institute has recently pointed out a problem with purely cap-and-trade schemes, that in my opinion could be addressed by a price floor, if it was high enough. With cap-and-trade schemes, if a household decided that due to concerns about global warming, it wanted to reduce its electricity consumption, that will not necessarily reduce global warming. What it will mean is that the electricity generator would not sell as much electricity, would not need to buy as many permits, and another firm could buy the permits more cheaply. The total amount of permits will be the same. This is more of a problem when the cap is too weak.
A price floor, it it was high enough, would mean that the scheme would function more like a carbon tax, but still with an absolute cap on emissions. A price floor could be introduced by there being a reserve price when permits are auctioned, or by firms paying an extra fee when they exercise their permits.
Forestry: The White Paper proposes to cover reforestation, on a voluntary basis, and not cover deforestation. Forest entities will not be required to surrender more permits than have been issued for an individual forest stand. Only activities that are covered by the Kyoto Protocol will be included. Judith Ajani and I have shown that at carbon prices of significantly less than $20 per tonne, there will be more revenue from using plantation forests as carbon sinks that as sources of wood. Because native forest logging does not attract a carbon price, and is not properly regulated, there will be an increase in native forest logging. This is likely to lead to carbon leakage from the plantation forest sector to the native forests logging sector, and a net increase in emissions. We made some submissions to the Carbon Pollution Reduction Scheme green paper here and here.
Update: The Australian Governments’ climate change advisor, Ross Garnaut, has written an article criticising the White Paper for its conditional targets not being higher enough, the inclusion of a price cap, and the transfer of wealth to emissions intensive rent-seeking industries. This article was published in the Fairfax press, and at East Asia Forum (under the title oiling the squeaks)..
December 15, 2008 at 6:16 pm
5% decrease from 2000 = 13% increase from 1990.
December 15, 2008 at 7:14 pm
naught101, your figures make sense for emissions excluding land use, land use change and forestry (LULUCF). I believe that the trajectory mentioned in the White Paper includes LULUCF. When you include LULUCF, total 2000 emissions for Australia are very similar to total 1990 emissions. But whether LULUCF figures can be trusted for Australia is another matter — I treat them with extreme caution.
December 16, 2008 at 4:52 pm
Yes, that’s due to the “Australia clause” in the Kyoto Agreement, which uses 1990 as a baseline for LULUCF, and fails to mention that Australia’s deforestation in 1990 was MASSIVE.
http://www.sciencealert.com.au/opinions/20071303-14133.html
December 19, 2008 at 1:38 am
The price cap is in fact higher than my estimates, at least for a reasonable discount rate.
December 19, 2008 at 6:30 am
Perhaps hubris, corruption and greed have unexpectedly resulted in the colossal collapse of the global economy.
In a world in which too many politicians are posers; too many economists are deluded; too many business powerbrokers with great wealth are con artists, gamblers and cheats; and many too many absurdly enriched minions/’talking heads’ in the mainstream media parrot whatsoever serves political convenience and economic expediency, Jim Hansen’s truth about global climate change is buried amid cascading disinformational and anti-informational garbage derived from a `tool box’ of pernicious rhetorical devices.
Do you think we have reached a point when we can say, however tentatively, that the global manmade economic colossus {a veritable and proverbial, modern Tower of Babel in all its glory} could crash before the overproduction, over-consumption and overpopulation activities of the human species worldwide collapse the frangible biological systems and finite physical resources of the planetary home God has blessed us to inhabit and not to ravage, I suppose?
Steven Earl Salmony
AWAREness Campaign on the Human Population,
established 2001
http://sustainabilityscience.org/content.html?contentid=1176
December 24, 2008 at 7:35 am
Does anyone have the feeling that our communication, here now and elsewhere in other moments, appears to be convoluted and confused because many too many of us do not yet recognize that the family of humanity literally lives within a modern version of an ancient edifice, the Tower of Babel? The new leviathan-like, distinctly human construction is not made of stone, but instead built out as a “house of cards”. This colossal, artificially designed structure is noticeably pyramidal in shape, organized as a patently unsustainable pyramid scheme, and named the global political economy.
For the people who are the primary beneficiaries of such a scheme, the global economy is effectively an object of idolatry. Nothing else really matters to them. These people are the self-proclaimed Masters of the Universe among us. They could not care less about the natural world, life as we know it for the children and future generations, the integrity of Earth. You can readily recognize the idolaters as the leading, self-righteous elders of my “Not So GREAT GREED GRAB Generation”. Endlessly consuming and hoarding resources as well as power-mongering are regarded as religious rituals.
Any thoughts?
Steven Earl Salmony
AWAREness Campaign on The Human Population,
established 2001
http://sustainabilityscience.org/content.html?contentid=1176
January 1, 2009 at 5:53 am
Why not lay blame for the current economic catastrophe where it belongs: at the feet of the economic powerbrokers who organize and manage a colossal pyramid scheme, a modern representation of the ancient Tower of Babel? Is the denial of anthropogenic global warming and the human-driven destabilization of Earth’s climate not primarily for the purpose of preserving the selfish material interests of a few wealthy and powerful people, and their minions?
Let’s look a bit more closely at the scandulous ‘business’ of Bernie Madoff, confidence games, Ponzi schemes and other financial vehicles for funneling, accumulating and concentrating billions of dollars in unearned wealth into the hands of a tiny minority of people who comprise the top of the global economy.
There are many minions of the wealthy and their bought-and-paid-for politicians who “spread the word” of these schemes. Con men operate pyramid schemes. They assure “plausible deniability” and “legal cover” for all that is said and done.
Only a telling of the truth about what they are doing is forbidden. That is the one and only thing that is verboten. Do not break their vow of silence by telling what is true about the perpetration of the schemes {ie, the only games in town, so they say}, because the “houses of cards” out of which a modern Tower of Babel is constructed immediately is exposed as fraudulent and patently unsustainable. These pyramidal constructions can withstand any force except that which is presented by speaking out loudly and clearly about what is happening in these enterprises. As soon as light of what is true was shed on Bernie’s scheme, the house of cards he had constructed fell.
Bernard Madoff may be the first of my “Not So GREAT GREED GRAB Generation’s” kingpins to find that his “house of cards” has collapsed; but I dare say, Bernie will not be the last. There are other kingpins and many too many minions ready, willing and able to play along in what looks like the greatest self-enrichment scam in human history.
Why not say that greed is not good and mean it? Why not assign value to personal honesty, accountability and transparency?
Steven Earl Salmony
AWAREness Campaign on The Human Population,
established 2001
http://sustainabilityscience.org/content.html?contentid=1176