Coal generator admits its profits will fall without a carbon tax
Guest essay by Phillip Hutchings
Within minutes of the Australian parliament voting to scrap our carbon tax today, one of our major coal-fired electricity generators issued a profit warning announcement.
(You’ve got to love the ASX. Listed companies here must publicise anything which has a material impact on profits – favourable or negative)
In this case, AGL Energy announced its pre-tax profits will fall by $186 million in 2014/15 solely due to the removal of the carbon tax. The majority of this is related to the very large, but inefficient Loy Yang brown coal station which supplies 30% of the power needs of the state of Victoria.
Loy Yang, on AGL’s own figures also released today, emits 50% more carbon dioxide than the average of Australia’s power generators. It’s amongst the single biggest emitters of CO2 in Australia.
Yet it was due to get $242 million of “Government assistance” under the carbon tax arrangements this year. Most of which found its way to the bottom line.
Go figure.
Source – AGL Energy Limited 17 July 2014
I’m for the carbon tax as long as there’s an offsetting reduction in income taxes. Because carbon taxes can impact the poor
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if carbon taxes will get rid of CO2, then taxes on the poor will make them wealthy. Similarly, if we were to tax stupid it would make everyone smart. Let’s start by taxing politicians the heaviest, and thus make them both wealthy and smart.
Big Business LOVES Big Regulation. They profit by mandates and regulations that destroy smaller competition, and they often find ways to work in some easy cash by publicly supporting the latest government program. Most liberals do not realize this at all. If they did, we’d have a better world. Regulations hurt small businesses and everyone but the big, government-crony businesses.
Another item illustrating the need to uncover carbon “pollution” for what it really is:: plant food AND
BENEFICIAL TO HUMAN BEINGS DIRECTLY.
We can breathe more deeply with a higher carbon dioxide concentration, thus getting more oxygen. I think the reason we love coke and soda so much is because it gives us more carbonic acid, enabling deeper breathing.
@Leopold Danze geiger – it is not a “revenue neutral” tax. It is a redistribution tax. – http://www.fin.gov.bc.ca/tbs/tp/climate/carbon_tax.htm
it may be “revenue neutral” to the state, but not to the citizens.
In the regulatory framework of U.S. utilities, the provider is guaranteed a fair rate of return and the rate payers make up the difference be it nuclear plant cost over runs, storms, or any other verifiable losses.
More on the BC revenue neutral carbon tax, since the comment here continue to suggest most people know little about it:
http://www.theglobeandmail.com/globe-debate/the-insidious-truth-about-bcs-carbon-tax-it-works/article19512237/
http://www.economist.com/blogs/americasview/2013/08/climate-policy-canada
Leo: At last! Now I know why there has been no global warming in the last 17 years!
But Leo, how many people in BC drive to Washington to buy no-CO2-Tax Gas at the stations right across the border? How many Vancouverites arrange their weekly errands to include at least one trip across the border to shop and fill the tanks.
A tax scheme that transfers wealth across the border doesn’t really help anything. We had a post on here not long ago (probably last winter) that analyzed the change in driving habits in BC that showed the miles driven hadn’t changed, just the source of fuel. As always people will do what they have to do to survive and all government does is make them get more creative in how they go about it.
That’s it, Lou… quote the Globe and Mail. Because that’s not a biased source at all, is it?
Well, here’s the thing. You just go on ahead and champion BC’s carbon tax. Once it’s all “phased in” you will maybe, dimly, begin to understand where the problem lies. Oh, did I use the word “lies”? Why, yes, I did.
By the way, I am an Albertan, and have made the conscious decision to simply never go to BC ever again. I’ve sold the BC property I used to own. I no longer have friends there (the last few moved back to Alberta in the last year or two). Nothing west of the Rockies matters any more. I mean, they’re just trying to block our progress, take our cars, jack the prices of everything, while whining and moaning about how destructive Albertans are.
I suspect some sort of LSD infusion in the water supply.
#GreeniesAreStupid
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rgbatduke says:
July 17, 2014 at 10:03 am
This is something that people just do not understand. If you “follow the money”, the single group that benefits the most from carbon taxes, panic over anthropogenic warming and/or “climate change”, increased energy prices in general is (drumroll please!) — the energy industry, especially those parts of the industry that use or provide fossil fuels.
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Bob,
You got part of it. Things of course are never quite as simple as the model one creates to understand something. The bribe up front where the industry folks profit initially is actually a bit of a bribe to reduce their opposition to horrible ideas. Also, while an industry can be found dabbling in politics this way, it’s usually to screw the competition, direct and or indirect. For instance, the coal industry would like to mess up the natural gas industry and the nuclear industry and the nuclear industry wants to screw up the natural gas and coal industries. Note that since in some cases coal and natural gas may be divisions of the same company so there is less of a combative nature there than with nuclear. You can bet the fossil fuel guys are backing the anti nuke nutcakes while the nuclear guys are backing the anti carbon dioxide kooks.
I am afraid in this case though that these front end bribes are not part of some long term relationship at the expense of the customers – probably like the industry guys are expecting.
So basically what I see here is that any tax at all is designed to suck to teat of as many industries as possible, good or bad, polluter or not, so that a governing body can redistribute income to …. entities that support campaigns? No wonder conservative and liberal industries send money to both sides of the isle. They know they’ll get it back.
Leo Geiger says:
July 17, 2014 at 8:15 am
My goodness, Leo, you must be living in a different universe. See my four-part series on the BC lunacy, viz:
The Real Canadian Hockeystick
Fuel On The Highway in British Pre-Columbia
British Columbia, British Utopia
Why Revenue Neutral Isn’t, and Other Costs of the BC Tax
In addition to not being revenue neutral at all, and being a war on the poor, as I point out in the final installment:
I constantly am surprised at folks like yourself who think that a 0.003°C POSSIBLE reduction of temperature in fifty years is worth any pain and suffering at all, much less that incurred by a carbon tax.
Anyhow, read the posts, and if you still think the BC plan is a great idea, come back and we can discuss it …
w.
CodeTech says:
July 17, 2014 at 1:10 pm
Not only that, but the good BC folks make about a quarter of their provincial income by selling … you guessed it … evil coal. They’re too pure and green to burn it themselves, and are blessed with hydro so they don’t have to, but by golly, they’re happy to dig it up and sell it regardless of CO2.
It does, however, give you an insight into the guilt that drives the BC claims of green nobility …
w.
Its long since known that the “big polluters” have been profiting handsomely since the carbon tax was introduced. Even Hydro Tasmania in the first year made an addition ~$50mil profit as a direct result of the “price on carbon”.
Our Aussie Greens are more honest than your BC ones; if ours could muster 50% of the vote instead of 8%, they would ban the export of coal completely! Stupid, ignorant, etc etc but in this respect, honest. (They aren’t honest in anyother respect).
About BC: There are a lot of loonies here, and the great eco-fraud money launderers are very active here, spreading dissent, bribing native tribes (well, “first nations” to us locals), and threatening anything that might be industrial, commercial or resource-based. People like Dr. Tim Ball are finally getting their say in more and more places, as evidenced by his appearance today on a talk show that has, for several years, licked the manure-stained boots of Andrew Weaver etc.
Weaver finally came out of his academia-shrouded political closet as a Green Party pol, and while he did get elected to our province’s legislature (in a riding of yuppie, Lycra-garbed latte sippers and older coupon-clippers), his influence is largely aromatic, or at least tending that way.
We must all walk a fine line to avoid the extreme wrath of 13 Billion dollars a year of eco NGO propaganda which lays in wait for any right-of-centre government to make the wrong move. It isn’t the gov, baby, it’s the Green Machine that gave us our Carbon Tax but I can feel the tide turning….
Amen Willis, Amen.
The concept of a “revenue neutral” tax is such a phantom. Making something which makes economic sense more expensive (taxing) and using the proceeds to redistribute to offset the distortion in a free and functioning market always carries costs. Those who think otherwise are invariably superannuated bureaucrats or other similarly real world isolated academics who view the economy as a zero sum game. I so tire of people who cannot understand mathematics; when something grows by more than price inflation, other factors are in play. Every artificial distortion is a drag on growth. Unfettered markets are by definition and fact efficient. Try telling that to virtually anyone without skin in the game and they go blank.
As a British Columbian who was born in Toronto and lived in Lethbridge Alberta as a child and the past 47 years half an hour east inland of Vancouver in a city called Port Coquitlam surrounded by rivers to the east, west and south and mountains to the north, I might have some insights to the comings and goings of BC’rs.
There are all sorts here. I don’t know how Global Warming caught hold here. I recall in my late teens or so considering emigrating south for the sake of my future family because of the coming ice age. During Expo 86, themed on ‘Transportation’, with video of coal seams being blasted to smithereens by dynamite in promotional video about B.C. A lot of what goes on appears to be a game, pretending to believe the media party’s line about global warming. The NDP (socialists “New” Democrat Party) was 20% ahead in the polls during the last election when the leader open his mouth and announced he wouldn’t allow upgrading the Kinder Morgan pipeline, after the election the NDP had fewer seats then before.
During a Liberal (current governing party) convention, they had considered axing the carbon tax but decided that the reduced taxes to make the carbon tax revenue neutral would be to hard to revert back to a higher rate, so they kept the carbon tax.
We have built a new replacement Pitt River Bridge, a new Golden Ears Bridge linking Maple Ridge with Langley (which I used today, on my bike 🙂 ), and a new Port Mann 10 lane bridge (I’m still waiting for the bike lane to be built on that one).
A new Bridge will probably be built to replace the Massey Tunnel that goes under the Fraser river, which will allow deepening of the river once the tunnel is removed so bigger ships (coal laden 🙂 ) can make their way to new ports.
I know many skeptics, and I teach a few as well here in Lotus land. I’m going to put up a Monckton “No Global Warming for 17 years 8 months” (the most current one I have) poster here in the Langley Starbucks I’m sitting at before I trek on back home. Done, and I took a picture 🙂
Fernando Leanme says:
July 17, 2014 at 10:07 am
“I’m for the carbon tax …”
Disgraceful
NotAGolfer says:
July 17, 2014 at 11:23 am
Big Business LOVES Big Regulation (socialism). They profit by mandates and regulations that destroy smaller competition, and they often find ways to work in some easy cash by publicly supporting the latest government program. Most liberals do not realize this at all. If they did, we’d have a better world. Regulations hurt small businesses and everyone but the big, government-crony businesses.
Very well put. It is sad most people don’t get this very simple point.
Look and listen, it is not about climate change or C02, it is all about advancing a new economists theory of exchange, profit making and distribution to achieve whatever social change you desire to impose on the unsuspecting and gullible voters.
The users cloak the agenda with whatever propaganda they can use to achieve that objective, and saving the world, or the most specious emotional claptrap is an essential tool – makes their agenda look good, urgent, absolutely necessary so that dumb voters will buy it.
How those with an agenda must hate the internet for its ability to question rather than meekly accept what is dished up to them dressed in that emotional propaganda and a good reason we will see increasing attempts to suppress or curb the free exchange of ideas or theories via the internet. May we always have the right to read freely, debate issues, think, reason, and consider, as basic to our freedom and respect for society.
In Australia the carbon tax was political window dressing while profiting from doing the opposite for some and by wrecking our economy. Imposing incredible economic pain and division within the community in the process.
@ur momisugly Neil
“… The purpose of the Carbon Tax was to raise prices of electricity via taxation based on the premise that CO2 is bad, and hand that money back to lower wage earners as a tax offset. …”
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That doesn’t answer my original question, unless you think AGL Energy is one of those “lower wage earners”? If that’s where the carbon tax money was supposed to go, why did AGL expect to get $242 million of “Government assistance” this year under the carbon tax? I have yet to see anyone explain that.
I’ve seen Albertans drive…
Be afraid, be very afraid.
CodeTech says: That’s it, Lou… quote the Globe and Mail. Because that’s not a biased source at all, is it?
Maybe the same arguments in favour of a revenue neutral carbon tax coming from a different source would have more weight here. Here are George Shultz, economist and Secretary in the Nixon and Reagan cabinets, and Nobel Price winning economist Gary Becker, writing last year in The Wall Street Journal:
http://online.wsj.com/news/articles/SB10001424127887323611604578396401965799658
Willis Eschenbach says:
I am aware of your posts. I am also aware that economists use the term “revenue neutral” in regards to a policy like this to mean revenue neutral for the government, not the individual, and for good reason. This is the situation in British Columbia. You can make up your own definition of “revenue neutral” to use in blog guest essays and declare
but that is not how the term is used out in the world.
Two things:
First, BC has about 4.5 million people. That represents 0.065% of the world’s population. Of course their contribution to the total amount of GHG in the atmosphere will be small, as will the impact of any policy to limit emissions compared to the total.
This same logical fallacy is used again and again. Canada is only a few percent of the total emissions. What happens in Canada doesn’t matter. Australia is only a few percent. What happens in Australia doesn’t matter. Why stop there? The U.S. might be a top emitter in total, but on a state by state level, each state is only a few percent of the total, so each state doesn’t matter.
I get the impression that people who make this sort of argument would be easily caught up by the old trick question “What weighs more: a tonne of feathers or a tonne of bricks?” “A tonne of bricks, of course!” they would say, “because a feather is inconsequential, so if you add up all the feathers they’ll weigh nothing….”
Second, since the economic data from the past 5 years shows that “pain and suffering” means economic performance that matches (or slightly exceeds) the national average in Canada while simultaneously achieving a 17% emissions reduction (compared to a slight increase in emissions in the rest of Canada), bring on the pain and suffering.
No doubt the emissions reductions will all be explained away by the usual claims that everyone in B.C. is filling up their car in Bellingham, Washington now.
People are smarter than governments. Individuals and businesses do a better job of finding ways to reduce emissions through economic pricing signals than governments can, in a system that sees all carbon tax income returned through income and corporate tax cuts. No money is taken out of the economy. As B.C. has shown these past few years, the policy can and does work. I understand that some people would prefer it didn’t work since the real world B.C. example makes it hard to keep fear mongering about this type of policy causing economic catastrophe, though.