Australia’s carbon tax – an expensive sop to the Greens?

Guest essay by Phillip Hutchings

The main political news down-under this weekend is that Australia’s flawed Carbon Tax is going to morph into an emissions trading scheme in 2014, one year ahead of schedule. That’s not surprising, as data is emerging from the one year old Carbon Tax scheme which makes it look more and more like a complex façade.

We put a price on carbon” – the boast from Australia’s Gillard Labor Government ever since 2011. It was a promise to the small Green party with whom Labor formed a minority Government.

Yeah, sure – but how could that be done without destroying Australia’s open economy in the absence of similar action from our trading partners? This was the puzzle facing me as I set to picking apart Australia’s Carbon Tax. It’s been in operation for its first 12 months and we are starting to see the first hard data published.

Yes, the data comes with obfuscation, so I had to dig deep. And what I found poses some intriguing questions.

The reality around Australia’s Carbon Tax seems, well, to be quite different to what the Government had promoted. On the evidence to date, it is narrow in its scope and soft in its application. In other words, it let the Government have its cake and eat it – promoting the slogan of “a price on carbon” while avoiding any need for hard and expensive action.

Take for example, the Government’s claims back in April 2012 about those ‘500 biggest polluters’ who would pay? Well, last month, that had shrunk to ‘around 370’ companies. And yes, the names of approximately 370 companies were listed in a database of liable companies last month. But when you merge all the related companies in that list, the group comes down to only 185 discrete affected companies who have actually paid some carbon tax.

Moreover, many of the industrial companies on the list have been handed free Carbon Units under the so-called ‘Jobs and Competitiveness Program’. And thanks to those free units, it looks like industrial companies overall will pay negligible Carbon Tax.

Today, we’ll look at these non-electricity sectors, responsible in total for about two-third of Australia’s greenhouse gas emissions.

What we will learn is that these sources are either ignored altogether, or taxed so lightly that the financial imperative to make any change is pretty marginal. It’s no wonder more companies weren’t squealing about the impact of the Carbon Tax.

We’ll see that one of our biggest cement companies talks about moving production offshore to mitigate its Carbon Tax cost – surely a rational response, but bad for Australia and hardly likely to reduce global emissions.

And that our biggest steelmaker is so well cosseted by ‘industry assistance programs’ that it expects no liability from the Carbon Tax.

Yes, emissions have fallen from the electricity sector, but the evidence suggests that was due to factors other than the Carbon Tax.

So what we have is a complex system imposing a large administrative burden for no real change in industrial behaviour.

Then, in the next paper in this series, we’ll have a look at why virtually all of the Australia’s Carbon Tax is being paid for by just fifteen of our large electricity generating companies.

And in doing so, set the scene for a more fundamental look at why this policy is more spin than substance.

The Carbon Tax only affects the electricity generators and around 160 other companies

The ostensible aim of Australia’s Carbon Tax was to encourage companies to reduce CO2 emissions. And the real aim? – prove a sop to the handful of Green members of Parliament who rely on the global warming theorists for votes.

We know the amount of greenhouse gases which Australia produces each year, and where it comes from. It is approximately 550 Mt/yr of CO2 equivalent. We know that because we have a small army of bureaucrats publishing our Greenhouse Accounts each quarter.

So, how did the Government go about framing a tax which would be politically acceptable?

Well, let’s have a look at one extreme – if Government really wanted to attack CO2 across the entire country, it would set up a Carbon Tax was all embracing. So if it covered every single tonne of greenhouse gas, it would raise $12.7 billion annually (550 Mt x $23/t). Simple, right?

Except our Government knew that would not fly politically – it would be administratively too difficult and alienate the voters with its wide reach. So, the Government decided to make three critical exemptions.

Firstly, it decided that road transport and agriculture will not covered by the carbon tax. Politically, that made sense. After all, the car owners and farmers are vocal voters.

It’s pretty easy to see the effect that these first two exemptions had. The table below shows the sources of our greenhouse gas emissions

 
Australia’s Greenhouse Gas Emissions Mt CO2-e in the year to Dec 2012
Sectors covered by the Carbon Tax   Sub-total
Electricity generation 191 191
     
Non-Electricity Industrial Sectors    
Stationary energy 94  
Fugitive emissions 42  
Industrial processes 32  
Waste 13 181
     
Sectors excluded from the carbon tax    
Transport 92  
Agriculture 88 180
     
Total   552
Source: December 2012 issue of Australian National Greenhouse Accounts

Those political exemptions meant that the addressable market for Australia’s Carbon Tax had shrunk by one third to only 370 Mt/yr of CO2.

And, then anxious that the Carbon Tax would only capture the ‘big polluters’, the Government said the Carbon Tax would only apply to larger facilities – those with more than 25,000 t/yr of CO2 emissions.

Now the effect of that one is a bit harder to figure out. But intuitively, it’s not hard to see that Australian industry comprises a small number of large industrial companies, and lots of small ones. Politically, that one is no-brainer. I mean, why upset every hospital or food processing factory that uses natural gas, but emits a relatively small amount of carbon dioxide?

Now fortunately for us, the bigger companies that do get caught in the Carbon Tax net are easily identifiable. You see, the Government has set up a Clean Energy Regulator to ride herd on the Carbon Tax. And each year, that body has to publish the so-called Liable Entities Public Information Database (LEPID)[i] – the list of companies which emit enough CO2 to have to pay the Carbon Tax.

And joy of joy, this was published only two weeks ago in a lovely Excel spreadsheet. A little bit of analysis on this data is revealing. Once you identify all the related companies (for example, there are 13 AGL and seven Origin Energy subsidiary companies on the list), you can work out that there are only about 185 discrete companies in all of Australia that so far have paid any Carbon Tax.

There are 25 discrete electricity generators included in the LEPID list. Approximately fifteen of those are large electricity generators – a who’s-who of the electricity supply industry. There is another ten or so smaller generators as well, but their contribution is relatively low. In my assessment, it is these fifteen big players who are actually paying the vast bulk of the Carbon Tax.

Let’s leave the electricity generation sector alone for a bit. There’s plenty of interesting issues there to uncover, but that is for another day.

That leaves just approximately 160 other industrial companies. These are the ones who have an individual facility with more than 25,000 t/yr of CO2, and who are not in the electricity generation, transport or agriculture sector.

Now – remember what our Government said in 2012?

Around 500 of the biggest polluters in Australia will pay for the pollution they emit, under a carbon pricing mechanism” Source: ‘An overview of the Clean Energy Legislative Package’, April 2012

Well, it isn’t the 500 biggest polluters – it is just around the electricity generators and 160 other companies.

But how much financial incentive does the Carbon Tax provide?

Good question – and what is even more interesting is that this LEPID database shows the number of Carbon Units each company has had to pay in 2012-13. Each Carbon Unit represents 1 tonne of CO2 emissions and cost $23 in the 2012-13 year.

And here is where it gets intriguing….

Now, a company only has to pay 75% of its Carbon Tax obligation before the end of the financial year. The remaining 25% has to be paid by February of the following year.

Let’s look at the 160 companies in the non-electricity industrial sectors – these are larger industrial companies in activities such as steel, cement, newsprint and alumina.

Our national Greenhouse Gas Accounts show that this sector in total emits 181 Mt of CO2 per year. But the Carbon Tax doesn’t apply to smaller facilities under 25,000 t CO2 per year. We don’t have enough data to work out how much the 181 Mt/yr emissions would shrink by excluding the smaller facilities.

But looking at the LEPID database, we can see that this group of industrial companies lodged 77 million Carbon Units in June 2013 for their 75% down payment. So their total obligation would be 103 million Carbon Units for the 2012-13 year. 103 compared with 181 – that is 57% and perhaps a reasonable reconciliation when smaller facilities are excluded.

That and the numbers below are my interpretation of the LEPID information, and I’m very happy to be corrected if my reading is wrong.

That tax would cost $2.4 billion per year and rising, a powerful incentive for these companies to reduce emissions, you’d think.

$2.4 billion/year free Carbon Units to Australian non-electricity companies

But…… hang on, there’s a rub.

You see, the Government knew that a real $23/t Carbon Tax would destroy the competitiveness of our industries. So it is running the so-called ‘Industry Assistance’ programs. These have the effect of significantly reducing the financial incentives to reduce emissions.

The ‘Jobs and Competitiveness Program’ is targeted at the non-electricity sector. This is meant for the ‘emissions-intensive trade-exposed’ activities – that is, companies who emit a lot of CO2 and are exposed to imports or who trade internationally. There’s a list of 48 trade-exposed activities. It includes business such as steel making, alumina refining, cement making and so on.

And depending on whether you are ‘highly’ or ‘moderately’ emissions intensive, you get 94.5% or 66% of ‘average industry carbon costs’ supplied as free units. In other words, you pay only 5.5% or 34% of the face value of the $23/t Carbon Tax. The recipients of the free units are public too[ii].

Well-known companies which received significant allocations of free units include Rio Tinto (aluminium), BlueScope (steel), Woodside (LNG), Caltex (petrol refining), BHP (nickel, copper and alumina).

A good example would be Adelaide Brighton, the second largest cement supplier in Australia. Making cement is significant producer of carbon dioxide. This occurs when the limestone raw material is heated to produce lime, liberating carbon dioxide. Adelaide Brighton lodged 2.1 million Carbon Units last month, indicating an annual obligation of 2.7 million units. But it has been awarded 2.2 million free Carbon Units under the ‘Jobs and Competitiveness Program’. That would suggest it has to buy 0.5 million Carbon Units at a cost of $12 million before tax.

Adelaide Brighton has said that its Carbon Tax mitigation program includes additional imports and reducing reliance on domestic manufacture. A surely logical response, but how does that reduce global emissions?

Overall in 2012-13 under the ‘Jobs and Competitiveness Program’, there were 104 million free Carbon Units issued to 123 applicants in the non-electricity sector. That is just almost $2.4 billion worth!

And let’s just look at that – remember our list of 160 non-electricity generating companies who had to lodge Carbon Units from above? Well, they had a total obligation of 103 million carbon units – and they are getting slightly more than that (104 million) for free!

So those 160-odd companies appear to face a collective Carbon Tax bill of zero. Yes, no doubt some individual companies face a carbon cost, but overall, the cost seems to be neutered by the Government programs.

Our largest steelmaker does not expect a net cost from the Carbon Tax

Under the Clean Energy Future package, there are several other programs to soften the Carbon Tax. A good example is the Steel Transformation Plan package.

It is a $300 million package for our two steelmakers. Already payments of $164 million have been made, $100 M to BlueScope and $64 M to OneSteel.

Now, what actually is the Carbon Tax obligation of these two companies? The LEPID database indicated a 2102-13 liability for BlueScope of 6.3 million Carbon Units. Yet, it has been granted 7.5 million free Carbon Units for 2012-13 under the ‘Jobs and Competitiveness Program’. If the LEPID information is correct, BlueScope is in front by 1.2 million units!

Similarly, OneSteel appears to have been awarded 2.9 million free units against an apparent obligation of 2.5 million units.

On the face of it, the ‘Jobs and Competitiveness Program’ together with the cash grants under the Steel Transformation Plan seems to providing a windfall gain for our two steelmakers.

What are the companies themselves saying about the Carbon Tax? Well, you have to sift through BlueScope and OneSteel’s financial reporting fairly carefully to find any mention of either the Carbon Tax or the Steel Transformation Plan.

BlueScope at least said this in February 2013 “When funds from the Steel Transformation Plan are taken into account, the Company does not expect to face a net carbon liability over the period”.

What? – Why have the Carbon Tax regime if there is no financial incentive?

Now, don’t get me wrong. The global steel industry is having a very tough time, too much capacity and soft prices. Our steelmakers operate against global competition, and the last thing they need is an impost (carbon tax or any other) which competitors do not bear.

Yes, the airlines get caught up, but not with a Carbon Tax

Our airlines, when they operate domestically, do not pay a Carbon Tax on emissions – no, it is a much blunter instrument. That is just another 6 cents per litre in excise duty added to aviation fuel. To put that into context, the extra excise has added less than 1% to Qantas’ costs. And Qantas has added a surcharge to ticket prices to recover it.

Yes, Qantas and Virgin are progressively upgrading their fleets with more modern aircraft that are more fuel efficient – like every other airline. The real question is whether the extra cost of domestic fuel is a factor in that decision making.

In reality, is this just an expensive political stunt?

So, if my interpretation of the LEPID data along with the free Carbon Units information is correct, it’s hard to see many non-electricity industrial sectors that actually have any financial incentive to change under the Carbon Tax.

Moreover, this weekend’s news tells us that from 2014, the pricing of Carbon Units is set to fall substantially. That is when the scheme will probably transition to ‘flexible pricing’ and effectively become an Emissions Trading Scheme. Australian firms will be able to use European allowances for some of their obligation. European Union Emissions Trading permits are now trading at EUR 4.30 per tonne, or approximately $6 per tonne.

So companies within Australia’s Carbon Tax net face $23/t-plus prices for only one year and then a significant reduction.

Added to that, we have a Coalition political opposition which has consistently pledged to scrap the carbon tax if elected.

Faced with that outlook, there is far from an adequate incentive to make the long term commitment in the necessary equipment to reduce greenhouse gas emissions at an industrial factory or plant in Australia.

In other words, we have the worst of all worlds – a complex and ineffective policy imposed by a minority political party.


[i] http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/Liable-Entities-Public-Information-Database/Pages/default.aspx

[ii] http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/Industry-Assistance/jobs-and-competitiveness-program/free-carbon-units/Pages/default.aspx

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58 thoughts on “Australia’s carbon tax – an expensive sop to the Greens?

  1. There is information to be had in this essay but with the 20 or so ‘let’s look..’ ‘but wait…’ ‘hang on…’ made me feel like I was reading the script to an infomercial!

  2. and being the world’s biggest coal exporter is just one of the many punchlines in this economic parody.

  3. Labor needed a coalition government with the Greens to govern. Greens wanted a carbon tax as the price for their forming such a coalition. Labor had a dilemma: Do they go with ethics and not impose a carbon tax as they had promised or do they go with thirst for power and go back on their promise? The rest is history.

  4. Shows how stupid the Greenies are if they took the Carbon Tax as a workable solution to CO2. But then we knew that as they think that AGW is a real problem.

  5. In my assessment, it is these fifteen big players who are actually paying the vast bulk of the Carbon Tax.

    I read this and cringe. It is wrong. The unsubsidized consumers of electricity pay every dollar of this tax.

  6. It isn’t about CO2, it is about the money. In order to reduce CO2 emissions, people pour money into the businesses owned by Green party supporters. It is a mechanism for providing cash payoff for people who donate to their party.

  7. It was a promise to the small Green party with whom Labor formed a minority Government.

    It’s like selling the soul to the devil! The leftists are really desperate when not in political control …

  8. This demonstrates one of the interesting side effects of implementing climate solutions to the obvious non-problem of so called global warming.

    This side effect is booming bureaucracies of the pointless expensive kind.

    So the greenies were duped by the iniquitous Labour Party, so no surprise here.

    The net effect is a new bloated bureaucracy and a drying up of investment in industry, the typical outcome of the Labour Party’s principal political policy of government by trendy whim.

  9. dp says:
    July 14, 2013 at 12:42 pm

    In my assessment, it is these fifteen big players who are actually paying the vast bulk of the Carbon Tax.

    I read this and cringe. It is wrong. The unsubsidized consumers of electricity pay every dollar of this tax.

    *

    I’ve with you, dp.

    Labor and Gang-Green might think they’ve dodged objection, but every individual is paying higher prices in electricity charges, which is also hitting small businesses very hard. There is objection, too, for being gagged with the threat of a $1 million+ fine for small businesses which put up their prices and say why! Ultimately, the cost is filtered down to the customer, as it must, or the business goes under – and they frequently go under anyway. More small businesses are going to the wall over this, and there are fewer start-ups.

    The citizens are being hit twice, once in the home for their electricity, and again in the streets on just about everything they buy because every single shop out there runs on electricity.

    Can’t wait for the election.

  10. Setting a price on any commodity, ensures corruption.
    It is not a market, it is a racket.
    Which is not say, fortunes can’t be built upon it.

  11. Well let me try to summarise:
    It does not address the “problem”, it has the only effect to increase tax.

    The tax increase is on “a couple of big players” – which in reality will be paid by each and every small and big electricity consumers, big electricity consumers give it evidently further packaged into the bill of their product. So in reality the only ones who feel the tax are the small consumers as they cannot give it further.

    The politics has a bargaining chip – can do a favour to the industry by giving credits or not giving it. Of course only the ones who deserve it will get it on strictly objective criteria.
    In addition there is more room for even more bureaucrats who will do more “very important” work to count and double count the pollutant carbon emissions, summarise and give reports, track down “carbon pollution”, etc etc.
    (Each time when I hear the word carbon pollution I have to think that we are carbon based life forms… but I digress)

    The new religion worshippers are happy as in their mind the sinners are being punished.

    The mandarins in power have more money to spend on the new mandarins.

    Did I miss anything? Everybody is happy, what’s not to like?

  12. But it’s not just a political stunt since to avoid getting mauled in this Sustainability economy any of these large businesses that were not already a political player had to become one. And then they add their voice to other Statist initiatives like what education reform is really doing. Then when parents or taxpayers try to object they hear “business needs” or “according to x these 21st century skills…”

    There was a 2012 report in the US called Research Universities and the Future of America that laid out specifically the economic vision of an alliance of government at all levels, research universities and Big Business acting in partnership. I happen to know from my tiptoeing through the footnotes that that particular partnership template is a global vision for the post Cold War economy. And the carbon tax and special favors, like waivers under Obamacare, just keep the favored acting favorably.

    US, UK, or Australia.

  13. This demonstrates that politicians involved were somewhat intelligent:

    While pandering to the votes of the CAGW movement by nominally undertaking a carbon tax, prevent the massive economic downturn really doing what they want would cause (which could backfire for other votes indirectly) by putting in loads of more subtle effective loopholes.

    However, if not for that incoming global cooling (as fitting real climate history in http://s9.postimg.org/3whiqcrov/climate.gif , enlarging on click) will probably be enough to torpedo the movement (until the hydra grows another head and switches to another scare), the standard frog in boiling water tactic would apply. Most taxes and fees of almost any type were once small when first implemented, but, after the precedent was set, grew more and more over time. What can’t be done suddenly can, unfortunately, be done gradually. Anti-industry and anti-growth ideologies & indoctrination overall increase decade by decade, meaning what can’t politically be done now could be doable in a future decade (except it may be a different excuse than CAGW then).

  14. Since electricity generation is a big industry of CO2 emissions, and since during lower-demand nighttime is when a higher percentage of electricity is from coal (most CO2 per kWh), I am strongly in favor of pushing for non-incandescent light bulbs, and home electronics not pulling a watt or a few when they are off.

    Not that I see CO2-caused global warming as being as big a problem as claimed by most advocates of its existence. I see mainly other benefits.

    For one, lower electricity bills. And I have seen people who are not very smart about that, including low-income homeowners. There is such a thing, and I have seen refrigerators rated to cost $20 per year to run more than others costing only $40 more to purchase – and they sell. (Perhaps highly to landlords? Ones who own stock in electricity generation companies?)

    Despite idling of electronic appliances and lighting being on average a fairly small minority of electricity consumption, I see the minority getting more important in areas without cheap hydropower. Such as in and near NYC, Philadelphia and Chicago. And certainly *at least* in and near Philadelphia, there are lots of homeowners struggling to keep their homes.

    A second benefit is something I see as greater. Taking electricity power plants off the construction schedule reduces cost of generating what I see as being mostly wasted by failure to use inexpensive available technology to reduce energy consumption. It appears to me that a significant part of the cost of building a power plant is spent on lawyers, paper-pushers and court fees – towards activities that do not create wealth.

    Overall – I say, power-strip or unplug whatever of your home electronics you can when you are not using them. And use non-incandescent light bulbs where you can. And I favor mild regulations for high energy efficiency of refrigerators, home electronics, and “wall warts”. Taking a couple coal-fired power plants means bigtime multi-megabucks less legal fees that electricity consumers will have to pay.

  15. Donald L. Klipstein says:
    July 14, 2013 at 1:51 pm
    Since electricity generation is a big industry of CO2 emissions, and since during lower-demand nighttime is when a higher percentage of electricity is from coal (most CO2 per kWh), I am strongly in favor of pushing for non-incandescent light bulbs, and home electronics not pulling a watt or a few when they are off.

    Donald, incandescent bulbs do consume more electricity, however they pollute much less then energy savings bulbs (CFLs), their light is better.
    I was long ago waiting for compatible led lamps to finally come, unfortunately the development has been delayed due to the legislation which forced the replacement of the incandescent bulbs and so the industry was able to cash on all those replacement bulbs:

    http://thepointman.wordpress.com/2012/04/21/theres-a-killer-in-your-house-2/

    I cannot imagine why else the delay to led development happened, as the technology exists since a couple of decades.

  16. Abbott says he’s going to abolish it anyway…

    Cast-iron promise.

    Promise.

    Cross my heart.

    Cheque’s in the post

  17. “A good example would be Adelaide Brighton, the second largest cement supplier in Australia. Making cement is significant producer of carbon dioxide. This occurs when the limestone raw material is heated to produce lime, liberating carbon dioxide.”

    Trouble is, liberated CO2 is eventually re-absorbed by calcium hydroxide in concrete, turning it back into calcium carbonate (limestone). It may take several decades this process to reach saturation, still, that part of emissions is only temporary. That leaves us with emissions from fuel to heat limestone during production, way less, that is.

  18. Commenting on “Waste 13 Mt CO2-e”:
    Ok, it may be the smallest category in the non-generating liability section, but it is another area where everyone gets to pay one way or another (or dumps the stuff illegally).
    My local Council is listed, but no figures appear in the LEPID table regarding level of emissions or freebie credits granted. Why are we not surprised …
    I have done my bit, and already alerted the Council to research indicating that dump emissions, like cattle burping/farting, may very well be significantly over-estimated and/or based on faulty logic.

  19. use non-incandescent light bulbs where you can.

    A couple of days ago a review of an LED lightbulb was posted on the Cool Tools website. (It’s an unofficial successor to the Whole Earth Catalog; it’s overseen by Kevin Kelly, one of WEC’s onetime editors.) It’s available from Amazon. The link is below. Here’s the review:

    I have used the Cree LED warm bulbs for a month and they are an excellent replacement for a 60 Watt incandescent bulb. The light is better than CFLs I have used. This new 800 lumen light has a color temperature of 2700K, on 9.5 watts. It has the shape and general look of a incandescent bulb and is a screw-in replacement. Its rated life is 25,000 hours and comes with a 10 year warranty. At $13 from Home Depot, I see this as a game changer and a CFL killer. They work with dimmer switches.
    — Louis Nettels

    http://kk.org/cooltools/archives/12341?utm_source=Cool+Tools+Weekly+Newsletter&utm_medium=email&utm_campaign=3f5314c23a-RSS_EMAIL_CAMPAIGN&utm_term=0_bb73681436-3f5314c23a-36215545

  20. The finance houses make money off cap and trade, not the “carbon” [CO2] tax. There was some aversion from “greens” to cap and trade, and they logically prefer a carbon tax. They “think/thought the carbon tax works. The cap and trader lobbyists (Baker McK, etc.) therefore concocted a system where the greens think they are getting a tax, but really Goldman Sachs, et al. win…just a few years down the road. The carbon “tax” was merely a trick directed at Greens and ernest believers in the tax.

    Any analysis of the “why” the Aussie bill was written this way without resort to who profits most from cap and trade and what lobbyists wrote it is really, frankly, nearly a waste of time. Follow the Money, not the tinsel.

  21. crosspatch says:
    July 14, 2013 at 12:43 pm

    It isn’t about CO2, it is about the money. In order to reduce CO2 emissions, people pour money into the businesses owned by Green party supporters. It is a mechanism for providing cash payoff for people who donate to their party.
    >>>>>>>>>>>>>>>>>>>>>>>
    BINGO!
    And it is a way to provide a government job for Uncle Harry’s unemployable whacked-out greenie nephew twice removed (who HE doesn’t want to be saddle with as an employee) Harry of course was so very generous with campaign funding.

    A very complicated back-scratching exercise paid for by the Sheeple tax payer.

    The other half to watch for is the growth of regulation. THIS iteration did not really hurt so there is not much screaming, or not as much among the greens as there would be if it actually hit their wallets or among the corporations, however once in place bureaucracy metastasizes in to a greedy nasty self-perpetuating parasite like the USA’s EPA.

  22. “The carbon “tax” was merely a trick directed at Greens and ernest believers in the tax in parliament to vote for the bill establishing cap and trade.”

  23. Henry Clark says (July 14, 2013 at 1:51 pm): “Most taxes and fees of almost any type were once small when first implemented, but, after the precedent was set, grew more and more over time. What can’t be done suddenly can, unfortunately, be done gradually.”

    Worth repeating.

  24. I hate shell games… Seems the government is always the one placing the pea and my money is always lost to them.. Time to take a hammer to the dam shells..

    The frog in the pot that his slowly brought to boiling will die eventually..

  25. What we have found that actually works to reduce CO2 emissions is shale gas (with some economic slow-down thrown in).

    All these Carbon taxes and cap/trade schemes are smoke and mirrors. They make the Greens feel good and line the election coffers of green politicians and make the economy inefficient but do not achieve anything else.

  26. Money, it’s a gas
    Grab that cash with both hands
    And make a stash.

    New car, caviar, four star daydream
    Think I’ll buy me a football team

    I’m in the hi-fidelity
    First class travellin set
    I think I need a Lear jet

    Pink Floyd’s instruction manual for the ALP party and the IPPC Green fraudsters!

  27. The Australian Carbon Tax thing was not about energy or CO2, it was about power – political power. It kept the opposition out of government, and it didn’t really make much differenece except a small increase in domestic electricity biills. It wasn’t too hard to see that it was nothing much but a ploy to satisfy and shut up the pesky Greens. I can only hope that the latest changes will not do much but have a small effect on our electricity bills. Anything to make the alarmists stop their screaming about a denger that’s pure humbug.

  28. Moreover, this weekend’s news tells us that from 2014, the pricing of Carbon Units is set to fall substantially. That is when the scheme will probably transition to ‘flexible pricing’ and effectively become an Emissions Trading Scheme. Australian firms will be able to use European allowances for some of their obligation. European Union Emissions Trading permits are now trading at EUR 4.30 per tonne, or approximately $6 per tonne

    Does this mean that Aussie businesses will be purchasing Credits from the EU and hence paying “taxes” overseas? Nice way to help the economy

    Andi

  29. I realise that there were space constraints on this piece, but the massive increases in electricity prices (which have been very damaging to the government) were due to a suite of policies including renewable energy mandates and a crappy regulatory mechanism for pricing (also approved by the Feds). Then there were compliance costs for recording and reporting CO2 emissions, which went across a much larger group than the final 375.

    Look forward to reading your subsequent work on untangling this complicated debacle.

  30. I guess for an Aussie these days this is an angry skeptical article. The main issue seems to be that major CO2 emitters won’t have to pay. Sheesh, the socialists have scored a touchdown here by directing criticism on who has to pay. The fundamental: “Why does anyone have to pay?” I guess is too deep a protest to a population that has acquiesced over the years to socialist charms. There is no right wing really in Oz or especially Europe (or really any place outside North America). I fear, the US is even succumbing by a process of a thousand cuts. Earlier generations in both Oz and USA would have taken up the torches and pitchforks (imagery by rgbatduke re GCMs) long before now. Woe are we all.

  31. Donald L. Klipstein [July 14, 2013 at 1:51 pm] says:

    I am strongly in favor of pushing for non-incandescent light bulbs, and home electronics not pulling a watt or a few when they are off.

    [...]

    And use non-incandescent light bulbs where you can.

    @Donald … In your comment I would change it to using incandescent bulbs in the right place instead of use non-incandescent light bulbs where you can.. And here’s why ( NOTE: this rant is obviously not meant to you personally, but the Greenies who are destroying Science, Logic and Reason everywhere. Prohibition of Incandescents is now my number one personal pet peeve. ) …

    Regulation or Prohibition of Incandescent Bulbs? … Illogical, un-Scientific, Emotional, and Authoritarian. These are words that come to mind. It demonstrates Exhibit-A evidence of the core problem in Science today because such thinking lacks nuance.

    If you simply look at an Edison bulb as a heat *and* light generator it will make sense to rethink this. Sure an incandescent converts some electrical energy into “X” amount of light and “Y” amount of heat, in CFLs there’s a little more “X” and less “Y”, and with LEDs even more. But that is merely a statement of function and tells a logical person that each is a tool that does a slightly different job. If you have a toolbox you don’t go and throw out other tools because you think you have stumbled on some newfangled ubertool that replaces the others. You still must select the right tool for a given job.

    Up here in upstate NY we get long winters spanning Oct-Mar and oftentimes Sep-Apr. The furnace runs 7-8 months a year and you make sure windows are closed to not waste any heat, which is completely opposite to those areas that keep them open for an inverse period of time. Shall we ban or reduce the number of windows or legislate their use? Of course not, however a financial case could certainly be made in colder climates. In equatorial regions and blazing deserts there is a different product set found on the shelves than in freezing high latitudes. Space heaters, antifreeze, ice-scrapers, snow shovels are in high demand in one area while sunblock, bikinis, coolers, and rattlesnake anti-venom are favored in others. Needless to say, one size cannot fit all.

    There is nothing to stop the perfectly logical approach of using incandescents in places where heat is required, and LEDs or other types in places where heat is wasted, like in the ceiling and outdoors ( well unless you are a small animal or bug who definitely appreciate it ). In everyday life, we humans already do this “using the right tool …” all the time by digging out the shovels, snowblower and rock salt before the long winter, and the garden hoses, bikinis and beer coolers for summer. The problem occurs when non-thinking do-gooders come along decide for everybody that their pet project is an efficient one-size-fits-all magical solution. It is NOT! Am I angry about this? You bet. Just try to find 100 Watt bulbs now, you cannot. The idiots in Washington listened to the idiots in “Science” and the brain-dead Media and removed them as sure as earlier idiots removed alcohol.

    For over one half a year up here using a 100 Watt incandescent in a lamp on a table we get almost 100% efficiency. Yes I said 100% ( disregarding the trace amount of heat lost to resistance in the wires feeding the bulb and some lost to heatsink from the socket ). Almost every single unit of light and heat is put to use in this situation, especially the heat because it becomes a quasi-space heater located precisely where the humans are, unlike the vast ductwork piping oil generated heat all around at lower efficiency, losing it in unexposed ducts and empty rooms. So guess what happens when you change out that incandescent into an almost no-heat LED bulb? Anyone? Bueller? Yes, you nudge up the thermostat because it now feels colder and is colder because that room had a major source of local heat removed. Don’t skip over this part, it is important. Nudge up the thermostat and more oil is burned, more heat is blown into the ducts, warming NOT just that small local space where a light bulb was but the ENTIRE house including places your are not inhabiting and cannot inhabit. Science and logic is all about making the correct decision in a circumstance, emotion and group-think and cronyism lead to the exact opposite.

    Light-bulbs have often been used to signify an “idea”, as in a light-bulb drawn over a face or head. A new use of the light-bulb icon could be as an IQ test, or better yet a logic exam. It is fast becoming a differentiator separating the shallow thinkers and emotional activists from the rest of the pack – those that think. Anyone that truly believes they have discovered some magic bullet to “solve” this or that has only managed to address a problem in one type of climate and will cause new problems in another. Such people have no business anywhere near Science because they have demonstrated the ability to discard significant variables.

    Every single person behind the Edison ban should be ridiculed and run out of town, especially the ones in “Science” who should be waterboarded for crimes against thinking and reason. I can’t think of any more clear-cut demonstration of Logic vs Irrationality.

  32. Non-Australians may not be aware the Labor Party is run by big labour unions. An important motivation for the Labor Party was the Carbon Tax allowed it to funnel even more money towards unionised industries. Increasing, the already large subsides they, and their unionised workers, enjoy. And, of course, as already mentioned, the Greens got their croney socialism, and more money funneled back to them.

  33. Nice analysis by Phillip Hutchings.

    Although I thought it was clear to all from the very start that this was nothing but a pure political ploy.

  34. I am sure that Australia’s carbon tax will solve all of the worlds climate problems so the rest of the world no longer has to worry about it. The IPCC and all other climate related research efforts world wide no longer have to be funded. Thank you Australia.

  35. A taste of what Is planned for America ? Julia Gillard and President Obama had quite a chat about the Australian Political experience in bringing in and sustaining a Carbon Tax and dealing with Green enviro. lobby groups and retaining power, during his last visit here.

    Then when he returned to the USA, check out his outlines for the future in his speeches. So stand by for much of the same unless you tell him resoundingly that truth is better than misinformation and sleight of hand.

    I hope their is sufficient people like Mr Hutchings whose work and voice can be expanded and taken up by the almost docile head-in-the-sand daily media. Where are the investigative reporters tearing the spin apart rather than nodding to the tune set by politicians? Or are the all now in on the game – follow the money!

    And well said Blade, (at 6.09pm) Who would have even dreamed of paying US $13 a globe to replace one that lasts half a lifetime and does the job for 40 cents!!

  36. Our ex-PM Gillard went so far as to confirm that the ‘Carbon (dioxide) Tax that she foisted onto the nation was done, in part, so that the Banks could get their share on the way through … I kid you not. Wish I could find the video of this interview.

  37. KenB says:
    July 14, 2013 at 7:44 pm

    PS sorry for the misspells Their for There and y left of they!!

    And “is” where you should have “are” ;)

  38. “crosspatch says:

    July 14, 2013 at 12:32 pm”

    In Australia, a Green vote is a vote for the ALP. The Greens were always going to support the ALP. The ALP/Green votes were not enough to form a government, so 3 independent MP’s dumped on their electorates, who would never vote ALP, Green or LNP, caved in a provided support to the ALP. I see something similar happening this year. BTW, the “price on carbon” rose by 5% from 1st July this year to AU$24.15/tonne CO2.

  39. Tony Abbott has changed strategy…

    ‘A reporter inquired whether this made carbon markets just the same as financial markets. Abbott repeated his definition: “Let’s think about it. It’s a market in the non-delivery of an invisible substance to no one.”

    Murphy in the Oz Guardian

  40. Donald L. Klipstein says: @ July 14, 2013 at 1:51 pm

    ….A second benefit is something I see as greater. Taking electricity power plants off the construction schedule reduces cost of generating what I see as being mostly wasted by failure to use inexpensive available technology…..
    >>>>>>>>>>>>>>>>>>>>
    You forgot the best benefit. The killing off of old people on the government dole via hypothermia and other temperature related causes of death. Or is you goal just to make everyone obedient slaves of the government?

  41. “el gordo says:

    July 15, 2013 at 3:18 am”

    Remember Abbott is a politician and will say anything to secure power. In saying that, my view is Abbott will win this election, whenever Rudd (Erless) re-sets the date set by the former PM, Gillard. I feel Turnbull will then challenge Abbott in a leadership ballot and he will make the ALP/Green price on carbon morph in to an EU/NZ linked ETS. Turnbull, an ex-banker, can see there is lots of money to be made, literally, out of thin air.

    What Obama is proposing sounds exactly like what Gillard implemented July last year.

  42. Streetcred says: @ July 14, 2013 at 8:37 pm

    Our ex-PM Gillard went so far as to confirm that the ‘Carbon (dioxide) Tax that she foisted onto the nation was done, in part, so that the Banks could get their share…
    >>>>>>>>>>>>>>>>
    Jo Nova had this thread, Did Julia really say that? She’s here to help bankers “get their share”?:

    Her speech to the Australian Business Council yesterday:

    ‘And the “other Presidential contest”, the Chinese leadership transition is taking place today. In 2015, China should take its pilot emissions trading scheme national.

    In total around sixty per cent of the world’s GDP is either subject to a carbon price today, or has one legislated or planned for implementation in the two or three years ahead.

    International carbon markets will cover billions of consumers this decade. Ask the bankers at your table whether they want Australia to clip that ticket. We’re going to help them get their share.

    So that’s the work of coming years, that’s what preoccupies my thoughts as I think through the agenda for this country.

  43. Gillard, the ALP, The Greens and the Independents were installed to do exactly what they have done, install some form of a price on carbon. In interviews where Gillard is asked to explain the mechanism she fails and states the price on carbon is, effectively, a tax, all while laughing her head off! Bob Brown, the former Greens leader, set the trend in resignations about 18 months ago. Gillard, once ousted by Rudd (Erless), plus many other ALP MP’s won’t stand at this election (Funny! Like they think they will win their seats?). Two of the three independents who were instruMENTAL in forcing this fiasco upon Australians have also resigned and won’t stand either. They get out with all their taxpayer funded benefits intact NOW, they don’t have to wait until they are 65, and having resigned won’t have to withstand the indignation of being fired by their electorates.

  44. What is it with Australians? They are going nuts with this carbon taxation, while they are sitting atop what could be the largest oil deposit on earth at Coober Pedy. Not only will this oil deposit move the ‘Peak Oil’ scare ahead a couple of decades, it is also not blood oil from the middle east and it doesn’t need a Keystone XL pipeline either. They can ship it 1000’s of km by supertanker to the USA, while Alberta’s oil sits in the ground next door. Astonishing.

    Australians can tax their oil all they want if it will help assuages their guilt. But there is no getting around the fact that Australia will be exporting fossil fuels to the world for decades to come.

  45. Patrick says: July 15, 2013 at 3:39 am

    “……there is lots of money to be made, literally, out of thin air….”

    Gail Combs says: July 15, 2013 at 3:45 am via Streetcred says: @ July 14, 2013 at 8:37 pm…. via Jo Nova …. re; what Julia said:

    “…. We’re going to help them (Australia’s bankers) get their share….”

    Now, this is truly the name of the game … and all that created money ends up in the pockets of big multinational business.

    There are now some 150 multi-national companies, which account for nearly half the total capitalisation of all firms.

    Three quarters of these belong to the financial sector.

    This group of transnational corporations, which are strongly interlinked, poses a “too big (or too connected) to fail” problem (i.e. a situation in which the failure of any of these companies might have a systemic impact on the world economy). While many other aspects of recent developments are also responsible for the shift in the control of the economy to the financial sector, the acceptance of high levels of leverage was certainly a major component in the development of hedge funds, for example.

    http://www.paecon.net/PAEReview/issue64/HelbingKirman64.pdf

  46. AndiC says:
    July 14, 2013 at 4:47 pm
    Does this mean that Aussie businesses will be purchasing Credits from the EU and hence paying “taxes” overseas? Nice way to help the economy
    ============
    The bulk of the EU Credits are from China. You will be paying your taxes to the Chinese.

    Don’t expect any real reduction in CO2. The Chinese are masters at gaming the system. Their CO2 reduction is on paper only, credits for not building more high pollution coal power plant and instead building efficient low pollution coal power plants.

  47. Yep, it does not really matter to a community if some individual is ripping money out of everyone’s pocket, be it via corruption, excess profits, gambling schemes, taxes etc, as long as that money remains in the area and is spent in that community! Eventually it all goes round again: eg, the corrupt official buys a new car, the profitable businessman builds a new house, the gambling kingpin eats out a lot more, and in the end the money is redistributed.

    But, if it all goes offshore, only the rich benefit.

  48. ferd berple says: July 15, 2013 at 6:59 am

    “…The Chinese are masters at gaming the system. …”

    Dang right …manufacturing banned HFCs and then getting paid 75 times the incineration cost to destroy them: Carbon offset paid Euro 15.00/Tonne. Cost ot incinerate: Euro 0.20/Tonne

    “In order to offset their own greenhouse gases, companies and utilities in Europe that are subject to the emission limits of the Kyoto Protocol have been paying vastly inflated prices to Chinese companies to destroy hfc 23, and in the process have been providing the Chinese government with hundreds of millions of dollars in tax revenue to compete against Europe’s own “green” industries. ”

    “It’s perverse,” says Gerben-Jan Gerbrandy, a Dutch member of the European Parliament. “You have companies which make a lot of money by making more of this gas, and then getting paid to destroy it.”

    “The United Nations Environment Programme reports that from 2004 to 2009, production of the ozone-depleting hcfc 22 refrigerant gas grew from 15 million to 28 million tons, paralleling the evolution of the offset program intended to eliminate its byproduct, hfc 23.”

  49. “klem says:

    July 15, 2013 at 6:16 am”

    China and India are already, and have been for some time, “exploring” Africa. It simply is too expensive for the Chinese to buy Aussie minerals now. I predicted the rise of the Chinese Dragon in the late 1990’s while I was in New Zealand. Maybe a few years off, but not too far off the economic impact to local economies!

  50. “ferd berple says:

    July 15, 2013 at 6:59 am

    The bulk of the EU Credits are from China. You will be paying your taxes to the Chinese.”

    So that they can burn our (Aussie etc) coal and we pay for their emissions. So that Aussie (Etc) emissions “look” lower…sounds like a scam to me! Oh wait!

  51. What are the prospects of the carbon tax being undone if the opposition wins the September elections in Australia?

  52. “Australia’s flawed Carbon Tax is going to morph into an emissions trading scheme in 2014, one year ahead of schedule”

    Australian PM Kevin Rudd once assured his countrymen that he was an economic conservative and rationalist (but not an economic rationalist). How does that sit with his decision to bring forward the transition to an ETS?
    If his economic decisions are evidence based, as he claims, what does that imply about his governments certainty about the scientific evidence for the climate change threat and the effectiveness of policies aimed at reducing the threat?
    Considering that a Carbon Tax can be readily abandoned but an ETS is a long-term commitment, bringing forward an ETS implies increasing certainty.
    But how can that be, after so many years with no significant atmospheric warming, and with an upper-ocean warming hiatus since 2004 (or earlier)?
    Hasn’t the scientific basis been steadily becoming less certain over the past decade?
    My impression is that a comprehensive falsification of the IPCC’s version of Carbon Dioxide Theory of Climate Change is imminent, and consequentially the rational evidence-based policy decision would be to indefinitely delay the shift to an ETS- and to rationalise the basis of any carbon tax.
    Kevin Rudd’s policy shift appears irrational.

  53. “Chad Wozniak says:

    July 15, 2013 at 11:20 am”

    Abbott (LNP Opposition leader) is not a popular leader. Rudd is simply “loved” by the masses, and he has the lead as preferred leader/PM. Rudd is not popular internally with his own party, the ALP however. With Gillard gone, there is a real possibility the ALP, along with the Greens, will win this year. If the ALP/Greens don’t win and the LNP does, I suspect Abbott will be ousted in favour of Turnbull, as he is more popular, as the LNP Leader and thus PM. If that happens, there will be no repealing a carbon tax or ETS. Turnbull is an ex-banker and firmly in support of some for of “scheme” to price carbon. He can see his banker mates can make money, literally, out of thin air.

  54. Just listening to a newscast on SBS here in Australia, apparently 40% of those questioned did not know how long the Earth took to orbit the Sun (Jaw dropping!!). It’s no wonder there is so much support for a carbon tax.

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