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 may have messed up the formatting on that last post. Apologies if the whole thing appears in italics, instead of only the quotations (which are indented, except the opening line).
[Correct now? .mod]
Leo Geiger says- ‘Australia is only a few percent. ‘
And according to IBUKU Australia is a carbon sink. Reparations now.
There’s much more behind AGL’s bleating than the impact of the carbon tax. Check out their investment in renewable energy. Their website won’t tell you about the massive consumer-funded subsidies they receive from that. http://www.agl.com.au/about-agl/how-we-source-energy/renewable-energy
These big energy companies are going to be hit hard once Australia’s Renewable Energy Target (RET) is dismantled – the Abbott Govt’s next major focus, which is so complex most Australians don’t understand it. Under the RET a single wind turbine can pull in $500,000 per year – paid to the companies and subsidised through consumers’ electricity bills (which are phenomenally high). Energy companies like AGL have invested in windfarms with over 100 turbines, as well as those other renewable energy enterprises that have swallowed government funding and are going down the gurgler. Go figure.
If you’re an investor, pull your money out and move it somewhere much, much safer. Today.
Leo Geiger says:
July 17, 2014 at 9:15 pm
As I pointed out in the post you claim to have read, the BC government uses the following definition, which I discussed at length:
Note that I didn’t make a new definition. I pointed out that despite their definition, the poor take it in the shorts. And I pointed out that in fact it is NOT revenue neutral, viz:
The government is siphoning off thirty megabucks of tax dollars every year, and you claim that is “revenue neutral”? Get real. But that’s not all the government gets:
So the government employees are making good money out of the so-called “revenue neutral” tax, you know, the tax where the BC Governments claims that “every dollar generated by the tax is returned to British Columbians through reductions in other taxes” … but where are the dollars coming from to pay the carbon cops and the paper pushers? Why … from the BC taxpayer to the government. How on earth can you claim that is “revenue neutral”? But it gets worse
How many of your BC tax dollars have flowed to the rent-seekers as a result of the tax, in consulting fees and commissions and for reports and analyses and carbon inventories and the like … and where does that money come from? Fairies? Or the taxpayers of BC?
My friend, it’s clear that YOU don’t understand the concept of “revenue neutral”. I’m using the BC Government’s definition, and guess what? Under that definition, it’s not “revenue neutral” in the slightest.
You go on to say:
My point is that the costs of the carbon tax are huge for the people of BC. Perhaps you think such huge costs are justifiable for the sake of a POSSIBLE cooling of 0.003°C. I’m sure many BC taxpayers would disagree, whether or not anyone else joins your fantasy parade …
So your claim is that a few people paying a huge amount, and screwing the poor in the process, for a really tiny gain is worthwhile, because if everyone paid a huge amount, we MIGHT see a quarter of a degree of cooling?
Leo, the BC tax has done untold damage to the poor already, as my four posts amply demonstrate. You justify it on the basis that it MIGHT help the poor in the future. I hope you realize how cold and callous that sounds …
Next, you conveniently ignore the fact that something like a quarter of BC’s income, the very wealth that allows BC folks to live your nice lifestyle, the income that pays the taxes that support the carbon cops, comes from selling dirty, nasty coal … but of course, you don’t include that in YOUR emissions, oh, no, that’s on all the bad evil folks that are responsible for burning the coal that YOU mined and sold … you’re a bunch of coal barons making megabucks off of CO2 emitting fossil fuels, your hypocrisy in this is palpable.
Finally, the idea that India and China and the third world is somehow going to join your fantasy world is a cruel joke. The emission problem is not in the west, it is in the developing world. And they will not tell their people they can’t have refrigerators just because some BC loonies say it’s a bad idea to burn coal, the main fuel they have … you know, coal, the fuel you sell them and then blame them for burning? That coal?
Not only that, but you are swimming upstream. Canada has already opted out of Kyoto, as have Russia and Japan. Australia just got rid of their carbon tax. The Copenhagen and Doha rounds of the climate gorgeapalooza showed that no one wants more sacrifice for such a low return.
Perhaps you or your friends might make that mistake. I and my friends wouldn’t.
Oh, please. I note that you don’t say why BC is staying afloat economically … the answer is exports of coal and natural gas. BC coal export capacity is doubling, and BC has just signed an agreement with India to export more coal to them. The 2012 economic report says:
and
Coal is BC’s number one export, and the rise in coal prices is keeping you prosperous… you sure you want to boast about how well your economy is doing because of increased coal profits and the concomitant CO2 production that you conveniently forget to add to your emissions totals?
And according to “Canada Emissions Trends 2013“, while you dropped your per capita emissions by 16% from 2005-2011 (the last years of record), Ontario kicked your butt with a 22% drop in emissions, and even the freakin’ Territories did better than you with a 19% drop … and that doesn’t even begin to count the coal emissions from your exports. Color me totally unimpressed.
Dude, I provided DATA that shows just exactly that, and lots of BC folks chimed in to say I was right. Even Albertans don’t buy fuel in BC. You can’t hand-wave facts away just because you don’t like them. In addition, every province in Canada reduced its emissions over the period 2005-2011, you aren’t special in the slightest.
You clearly don’t understand one thing about a scientific discussion. Opinions are worthless in science. Nobody cares what you think, only what you can demonstrate and substantiate. I have done exactly that to show the manifold problems of the BC tax. You think shaking your head and flapping your lips will make that go away? Think again.
To date, you have made a bunch of claims, but you have not demonstrated that one single thing that I said in my posts was in error. Heck, you didn’t even notice that I was discussing the official BC Government’s definition of “revenue neutral”, not my own as you speciously claimed. And despite my providing evidence showing that the Federal Government is taking $30 million per year out of your economy, not to mention the payments for the parasites and the porkoisie, you still claim that “no money is taken out of the economy” … laughable.
Now if you want to start over to try to show that my claims are wrong, fine. We’ll declare this first round a mulligan. To do it, you have to find something somewhere in my four posts that you can SHOW to be false. Not claim to be false, but show to be false. I did a huge amount of research and study to write those pieces, and everything is cited and referenced. If you want to take that on, you’ll have to do more than paint pretty word pictures about some glowing future where India and China decide to cut their own throats to please a bunch of quiche-eaters in British Columbia … and in fact, you better hope they don’t, or your coal exports will be worthless and your economy will be down the tubes.
Good luck with your project, thanks much for standing up for what you believe in, report back with your findings.
All the best,
w.
Tom J says:
July 17, 2014 at 8:47 am
I’m shocked. Shocked to discover that there’s gambling going on in this establishment. (And I always thought Casablanca was in Morocco.)
Oh, what a wicked web we weave, when first we practice to deceive. (They must’ve had AGW in Shakespeare’s day.)
Sorry to be a pedant, but it was Sir Walter Scott, “Oh, what a tangled web we weave, when first we practice to deceive!”
Nice rebuttal Willis, as always, no body does it better (Oh & that was Carly Simon)!
Nice response, Willis. Unfortunately, Leo is representative of an entire province. There IS a reason we call it the Left Coast. They actually, truly believe what they are saying. Genuinely. Personally I’d like to point out that The Eagles discussed all of this in Hotel California, a concept album that covered the mindset.
and
Although BC residents don’t care, I’m saddened by what they have become. And if any apologizing is to be done to grandchildren, it should be for wasting trillions of dollars building the insanely wasteful and useless wind generators and PV farms instead of building a healthy, reliable power/water/transportation infrastructure. ALL of that has been left behind in the rush to enrich swindlers, con artists, and lawyers.
CodeTech says:
July 18, 2014 at 4:42 am
– – –
Are you sure you aren’t thinking about Ontario?
I have only seen 1 (one) single windmill in the lower-mainland, somewhere either in southern New Westminster or Southern Burnaby. I haven’t seen any PV farms. We mostly need supplemental power in the winter months to help heat or light our homes. The Burrard Thermal Plant kicks in during the cold spells :
http://www.portmoody.ca/index.aspx?page=839
Natural gas heats most homes in B.C. during the cold months (Sept to Juneuary mostly 🙂 ) and heats our cold water to make, um, hot water.
One of my sisters had a stove installed in her home and can easily heat her home with firewood. I was visiting her this Christmas and I was surprised to find out that her large warm house was completely supplied heat by the stove. She asked one of her friends about how well her friends home was heated by their fireplace and was told that their home gets colder when they put a fire on.
There are all sorts of people throughout B.C. You can reserve your derision for the Vancouver folks. I refuse to visit Vancouver until Mayor Gregor Robertson is no longer mayor. Besides, every time I visit Vancouver I’m told “Don’t ride your bike on the sidewalk”, or “Your not a pedestrian”. Grrrr.
Make no mistake, I want the Carbon Tax gone, gone, gone.
Talking about expenses. The Canadian federal standards for the building code caused a massive multi-billion dollar disaster known as the Condo Rot disaster. B.C.rs also added an extra billion dollars a year to costs for businesses by reinstating two separate accounting requirements for the G.S.T (federal) and the Provincial Sales Tax instead of merging into one accounting paper work system known as the Harmonized S.T. (HST). So that 30 million tax on tax pales in comparison.
My city by the way had the lowest tax increase of all cities in B.C. in fact it decreased by 0.21 % :
http://www.portcoquitlam.ca/Assets/2014+Tax+Edition.pdf?method=1
Willis Eschenbach says: “…find something somewhere in my four posts that you can SHOW to be false.”
OK.
The cuts to income and corporate taxes have actually exceeded the revenue brought in through the carbon tax by about 500 million dollars since its introduction. From the BC government: “Since it was first introduced in 2008, the carbon tax has returned $500 million more to taxpayers in tax reductions than it has raised in revenue.” http://www.fin.gov.bc.ca/tbs/tp/climate/A6.htm. The number is even higher in other more recent sources.
Complex? Before the carbon tax in BC, fuel taxes, sales taxes, income taxes, and corporate taxes already existed and were being collected, just like in every other jurisdiction on the planet. The “overhead” is the same “paper pushers” involved with the existing tax system. (Shultz and Becker mention this). Please point to an actual source, any source, that shows the size of the BC government bureaucracy has significantly increased due to the carbon tax, instead of assuming this must be the case.
I suppose the carbon tax technically isn’t revenue neutral since they made the income and corporate tax cuts a bit too big and the government is taking in less total revenue now, to the benefit of BC taxpayers. The 500+ million dollars total in lost government revenue dwarfs the “thirty megabucks” and other costs (rent-seekers, bureaucratic costs, etc) you are concerned with, but if you have sources with some actual numbers for these things in BC that says otherwise and adds up to 500 million dollars, I would certainly be interested to read about it. I am sorry Willis, but I do give more weight to Nobel prize winning economists and published studies than your blog posts.
I’ll stop there. You aren’t arguing with me, by the way. You are arguing with people like George Shutlz and Gary Becker.
Willis Eschenbach says: I provided DATA that shows just exactly that, and lots of BC folks chimed in to say I was right.
Some additional reading on the subject of BC cross border gas fill-ups you may not be aware of that goes beyond anecdote:
http://critical-angle.net/2013/08/18/the-effect-of-cross-border-shopping-on-bc-fuel-consumption-estimates/
http://daily.sightline.org/2014/05/21/the-canadians-are-coming/
Leo Geiger says:
July 18, 2014 at 6:05 am
Really? I point to the BC Government as my source. I suppose you think that the brand new, fully staffed “Ministry of Environment Climate Action Secretariat was made out of recycled bureaucrats that they just happened to have lying around in some back room? And that they go to the series of meetings that they organized riding on unicorns?
You know the CAS, the one that just hired a brand new Executive Director, presumably to work for free since you claim that there are no new costs for bureaucrats …
Truly, my friend … is there anything you won’t believe? You actually think there’s a new government program anywhere on this planet that doesn’t create a new bureaucracy, and continue to grow from there until it is somehow killed? Really?
Well, I guess it makes sense to me now that they could sell the carbon tax in BC, if that represents the level of critical thought in the Province.
w.
Leo Geiger says:
July 18, 2014 at 6:05 am
If George Shutlz and Gary Becker show up to defend the tax, whoever they might be, I’ll discuss it with them. Until then, it’s just you and me and the ugly facts … plus a citation to Shutlz or whoever you choose to cite.
I fear that your attempt to impress me with names of folks I’ve never heard of isn’t working ..
w.
Leo Geiger says:
July 18, 2014 at 6:05 am
The size of the cuts to taxes have been a MISTAKE, as everyone agrees. They overestimated the amount of money that the carbon tax would bring in (because of course people buy fuel in Washington and Alberta and evade the tax in every way that they can), so they overestimated the amount of money to return to the people of BC. In other words you got very lucky, it was not the plan to return one extra cent to you … but don’t worry, they’re working to fix that error as we speak.
My point is that when they do hit their target and return every tax dollar to the good burghers of BC, they’ll still be siphoning $30 million per year out of your pockets.
w.
Leo Geiger says:
July 18, 2014 at 6:05 am
You mean Nobel Prize winners like Steven Chu, our unlamented ex-Secretary of Energy who had trouble converting from °C to °F? You want to put weight on his word, be my guest …
As Richard Feynmann said, “Science is the belief in the fallibility of experts”. My advice is to not give weight to anyone’s opinions, including mine. Instead, look at the data and make up your own mind.
w.
I’m surprised that nobody has mentioned the Pacific Carbon Trust (PCT). The PCT has turned out to be a huge and expensive boondoggle, to the citizens of British Columbia.
The PCT was set up to sell “carbon credits” to the public sector at $15 per ton. That money was then given to environmental groups for forest lands.
The whole thing reminds me of an episode of “King of the Hill”.
Spend 15 minutes watching the BC Auditor General’s video report.
An Audit of Carbon Neutral Government
http://www.bcauditor.com/pubs/2013/report14/audit-carbon-neutral-government
That’s something I suppose — at least you have now acknowledged that there was a net tax reduction in British Columbia, and quite a large one, as a result of the carbon tax. It did not cost B.C. tax payers more money, whatever you might have earlier suggested. I see the goal posts have moved and this tax reduction now doesn’t count because it was a “mistake”. Good enough for me, we’ll leave it at that.
No, Willis, I actually think that if you are going to imply that the implementation of a carbon tax creates significant bureaucratic and administrative costs, then you should be able to demonstrate significant bureaucratic and administrative costs these past six years in B.C. Economists writing on the subject nearly universally say a carbon tax presents very little administrative cost since it only involves changing rates on existing taxation mechanisms. So if you have some analysis that says otherwise for B.C. (departmental budgets for the period before and after the tax? Something? Anything?) please share.
The bottom line: B.C. has had a carbon tax for 6 years. Economic growth during that period matches the Canadian average while emissions are down. The budget is balanced this year in B.C. (and in Canada too, for that matter). B.C. has the smallest public sector in Canada and the lowest corporate and personal income tax rates. The carbon tax came and the world didn’t end.
Does this mean the carbon trading company also has to announce in Australia that they will see a revenue drop? I mean, there must have been a carbon trading board?
garymount, I did wax poetic on my last paragraph, and was more talking generalities than BC.
However, I stand by my comparison of BC to California, Oregon and Washington, and the establishment of a “Left Coast” way of thinking. And don’t worry, I have equal derision for like-minded people everywhere in the First World that hold power and attempt to drag us back to a third world way of life.
Gawd…more reminders of the loony Rudd / Gillard era
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Leo Geiger says:
July 18, 2014 at 10:09 am
No, we won’t leave it at that. The fact is that the populace got lucky, because the estimates were off. If the estimates had been correct, the amount returned to the people would have been exactly the amount of carbon taxes collected … less the $30 million per year sent to the Federal Government for the tax on the tax, less the cost of the bureaucrats, less the cost of the bureaucrats’ pensions, less the cost of the consultants, contracted emissions analysts, and other rentseekers.
This is NOT a revenue neutral situation.
Oh, I see. Now, you admit that there are bureaucratic and administrative costs, but you claim they are “not significant” … the discussion was whether it is “revenue neutral”. If there is one penny of additional cost it is not revenue neutral as you have claimed.
Hogwash. They’ve set up, as I linked and cited, an entire new bureaucracy to administer the carbon tax. Did you not read my links?
Ah, no, my friend. YOU are the one claiming it is revenue neutral, so it is up to YOU to do the legwork. I’ve done mine, and published four posts on it. Now you want me to do yours? Fugeddaboutit.
That’s your measure of success, that the world didn’t end? Schools and hospitals are getting the shaft, but it’s OK because the world didn’t end? The Federal Government is taking $30 million from the BC taxpayers, but no worries, the world didn’t end?
Yes, your economy is doing well, in large part because of EXPORT SALES OF COAL. The fact that you do not include emissions from that carbon proves your hypocrisy. You are willing to trumpet your economic success, but totally unwilling to include the CO2 emissions upon which that success is founded.
When you include the emissions of the coal and natural gas that you so proudly claim the economic benefits of, BC is per capita the most CO2-emitting province in Canada. Spare me your pious platitudes, Leo. You are coal barons living high off the hog on your coal sales and pretending to be greenies, and it turns an honest man’s stomach to see it going on.
w.
Leo, who do you think is paying for the following:
You have totally ignored the part of my analysis covering the costs of compliance with the carbon laws. These range from the time individuals take to fill out the forms, to the large expenses companies face for “training, validation, and verification services based on the ISO 14065 standard to assist companies in meeting the requirements of evolving GHG programs”.
Revenue neutral? Who pays KPMG, the fairies?
w.
There are many calls in B.C. to stop the “revenue neutral” component of the carbon tax, but of course to keep the tax.
Example :
Metro Vancouver mayors counting on carbon tax to fund $7.5-billion transit plan
http://www.canada.com/technology/Metro+Vancouver+mayors+counting+carbon+fund+billion+transit+plan/9932919/story.html
garymount says:
July 20, 2014 at 4:12 pm
Thanks, Gary, I’d seen that and couldn’t remember where.
Leo seems amazingly uninformed on the nature of bureaucracies. They continue to grow in cost until they die. He actually thinks that if e.g. $100 million in taxes is collected, and $100 million is returned to different people than it was taken from, screwing schools and hospitals and the poor in the process, that the books somehow balance. He thinks the carbon fairies staff the newly created bureaucracy to manage the carbon ripoff, and that there is no cost to the consumer in time, hassle, and money to comply with the law. He believes that the $30 million dollars each year siphoned off by the Federal government is monopoly money or something. He believes he has no responsibility for the coal sales that support the BC economy, and he doesn’t include those emissions in his bizarre accounting. He thinks that when KPMG advises some poor company on how to comply with the regulations, it comes out of the unicorns’ paychecks …
And they call us deniers???
w.
Still at it?
Willis: the link you provided was to the Climate Action Secretariat. This “entire new bureaucracy to administer the carbon tax” has nothing to do with the administration of the carbon tax. That’s done by the Ministry of Finance.
These “little” details matter in serious knowledgeable discussions. But you have moved firmly into fairies and unicorns so I’m moving on. Good luck with the ongoing alarmist fear mongering campaign about BC carbon taxes. Maybe the economic data will cooperate eventually.
Leo Geiger;
As a retired and low-income resident of BC, I can assure you that the cost of the carbon tax greatly exceeds any “neutralization” I receive. I resent being cited as evidence that such schemes do anything except inflate gross and net government revenues (in the short term, until the economic drag comes home to roost)