The Great Carbon Debate

The debate on the Carbon Tax is reaching fever pitch as the legislation gets closer to being unveiled in parliament. In fact the tone and pitch of the debate is such that all reason has been abandoned in favour of shrill accusations from both sides.

Seems like a good time for me to get my megaphone out!

WHY DO WE NEED A CARBON TAX ANYWAY?

The main reason is that CO2 levels in the atmosphere are rising and that we, the human race, are responsible. There is enough scientific evidence to prove this beyond doubt.

This means that our climate will be affected. Just how and when it will be affected is still a matter of debate. However it is safe to assume it will not be pretty. I personally do not not think we have seen any evidence of global warning yet. All the weather we have been experiencing lately – floods, cyclones, droughts and bushfires have all been seen before. We only have weather records in Australia for less than 200 years. This is a very short period to know what variations are NORMAL. We can only dread what may be possible when a real change starts to occur, such as weather events we have not seen before eg cyclones hitting Sydney or measurable sea level rises.

All environmental law in Australia contains basic principles which have been derived from UN agreements. One of these is called the “Precautionary Principle” which says that we should not wait until we have fully proven facts before taking action. For example if a native animal appears to be declining in population we should not wait until it is extinct before taking protective measures.

Taking action on CO2 emissions is a perfect example where we should be taking action based on this Precautionary Principle. I, for one, fervently hope that rising CO2 levels will have no impact on the Global Climate. But am I willing to bet the future lives of my grandchildren on this by doing nothing and hope for the best? Do I rely on being selfish and leading a comfortable existence and let future generations wear the consequences of my apathy.

For me the answer is NO!

HOW SHOULD A CARBON PRICE WORK?

Currently there is no cost for each of us to emit CO2. When we drive a car; turn on a light switch; ride in a train or switch on the air conditioner we are all emitting CO2 and currently the price of fuel; electricity or train fares do not include any component reflecting the fact that we have indirectly released CO2 into the atmosphere. We are all guilty of this. Very few of us voluntarily make painful changes to our CO2 emissions.

By putting a price( I prefer to call it a price rather than a tax) on CO2 emissions we will be able to detect the amount of CO2 we emit in the price of the things we consume. If we are rational we will change our consumption behaviour to reduce the cost. Just how each of us will react will vary enormously. Ultimately we will create a whole new market for goods and services that will reduce our CO2 emissions because they will be cheaper or more effective. Most of these have not been invented yet but you can be certain that they will be invented by the market.

Free market distribution of goods and services is the most efficient tool we have to respond to this issue. We need the stimulus of a price on CO2 to change our behaviour.

My criticism of the price or tax that is currently proposed is that the intention is to compensate the general consumer from the impact of the tax. This is nonsense as it will reduce the stimulus needed to change our behaviour.

In fact the fantasy being promoted by the government is that only the large emitters need to be taxed. The rest of us are OK the way we are! This is plain silly as the single largest source of CO2 emissions is the electricity generation industry. These are often government owned and they sell their product to us. One way for us to change CO2 emissions is to use less electricity. If electricity costs more we will use less. In fact this has been the trend over the past 3 years with an annual 2% drop in per capita electricity consumption. May be that roof insulation is actually working!

The fact that there will be no CO2 tax on petrol is lunacy. 30% of our CO2 emissions are generated by transport fuels. We need to see this in the price if fuel to change our behaviour. For example we should be driving smaller fuel efficient vehicles.

The most important message is that –

WE ARE THE POLLUTERS – NOT INDUSTRY.
IF WE DO NOT BUY THEIR PRODUCTS THEY STOP IMMEDIATELY.

IMPORTS AND EXPORTS

In principle the CO2 price should be applied identically to GST. No CO2 price applied on exports. All imports priced for the CO2 used to manufacture them. It is not clear to me how the government intends to deal with this however the debate seems to imply that export industries will be taxed. This again is silly as it simply encourages our overseas customers to buy from countries with no price on CO2. Australia loses income and the same amount of CO2 is produced globally.

THE QUALITY OF THE DEBATE.

The most disappointing feature of the Great Debate is the standard of the language that is being used.

Those who want to put a price on CO2 universally call CO2 emissions “pollution”.  They characterise the large emitters as polluters who are only interested in profits.

Those who do not call the CO2 price a “great big tax”.

The use of emotive language clouds the true nature of debate and hides what we need to do. This style of lanuage seeks to tap into the two base emotions that drive us – fear and greed.

CO2 EMISSIONS ARE A GLOBAL PROBLEM. WHY SHOULD WE GO IT ALONE?

This is key question to the debate. My view of this is that someone has to be first. Australians have had a long and proud history of being first with innovations such as reduction in trade barriers. We fought a long campaign to liberalise trade around the world. Ultimately we unilaterally reduced our import duties as an example to the rest of the world. Since then our access to world markets has improved as a direct result of our brave move.

In my opinion we should introduce a price on CO2 emissions because it is inevitable that this will occur globally. Doing something now has the least impact on our economy( according to Garnaut). We should be careful that it does in fact reduce CO2 emissions and not simply transfer them offshore. If we apply the CO2 price as we have done with the GST this will occur.

Some politicians are calling for the shutting down of industries such as coal mining. The same politicians want to impose a CO2 tax. You cannot have it both ways. You either put a price on CO2 emissions and let the market decide if an industry should survive OR make decisions about individual industries. My view is that we simply let the market rule.

Australia produces around 1.4% of the global CO2 output. If we waved a magic wand and stopped emitting any CO2 the impact on Global  CO2 emissions would only be 1.4% reduction – a negligible amount.

Some politicians make claims that we(Australia) need to reduce our CO2 emissions to save the Great Barrier Reef. Clearly this is nonsense. The whole planet needs to reduce CO2 emissions, not just us.

However, as individuals, Australians are the highest CO2 emitters in the world. If we expect other countries to do anything about CO2 emissions it makes sense that we set an example. We may not like it but whether we are first or last we will have to do something about CO2 emissions.

CO2 EMISSIONS ARE A GLOBAL ISSUE BUT WE MUST ACT NOW