Monday, November 09, 2009

Perhaps we should rename it the "Carbon Pollution Compensation Scheme"

What kind of scheme would pay more in compensation for itself than it actually collected?

Australia's proposed Carbon Pollution Reduction Scheme, that's what kind.

Here's how Shane Wright puts it in the West Australian:
The revenue from the pollution permits is expected to reach $114 billion over the next decade. And that $114 billion, plus an extra $2.5 billion, is going to be recycled back to business and households.

His full piece is below the fold. It might make you angry.

Bell tolls for snows of Kilimanjaro


Fortunately, you can’t see Canberra from the top of Mt Kilimanjaro.

Unfortunately, Canberra’s debate about the proposed emissions trading scheme — and the argument that will soon take place in Copenhagen about reducing greenhouse gas emissions — seems to be ignoring what is occurring at the peak of Africa’s highest mountain.

A study out this week, printed in the Proceedings of the National Academy of Sciences, should be
compulsory reading for those with a passing interest in the future of this planet. Even the Nationals should have a look.

The study examines specifically the way glaciers and snow on Kilimanjaro is rapidly disappearing because of man-made climate change.

According to the study, summit ice decreased just less than one per cent a year between 1912 and 1953. But between 1989 and 2007, this loss accelerated to 2.5 per cent a year.

Of the ice cover that existed in 1912, 85 per cent is gone. Twenty-six per cent of the ice that was there in 2000 is now gone.

In about 20 years it will have completely disappeared.

Now you could argue that this is just “natural” change. Natural, of course, if you ignore the fact that Kilimanjaro has had ice fields for the best part of 12,000 years and it’s never fallen away like this, even during a 300-year-long drought.

“The climatological conditions currently driving the loss of Kilimanjaro’s ice fields are clearly unique within an 11,700-year perspective,” the report’s authors said.

Not only that, they add that Africa’s remaining glaciers will soon disappear, those in tropical South America are “in rapid retreat”, the few remaining glaciers in Indonesia are “rapidly disappearing”, while across the roof of the world “most Tibetan glaciers, including many in the Himalayas, are also retreating”.

For a few this is just another brick in the vast conspiracy that is anthropogenic climate change.

But for anyone who has been looking at the science on climate change this report is just further confirmation of what anyone who has lived in rural Australia for the past two decades might have picked up – the climate is changing.

Not that you would get that impression from the emissions trading scheme debate which appears more about political point scoring by the Government over the Opposition. And the Opposition itself is riddled with problems, from how to deal with climate change to whether the climate is really changing. All of this seems to ignore what’s on the table – the scheme.

Last week the Government released the first figures relating to that scheme. And they are more than a tad scary, for all sides of politics.

The Government’s official line is that every cent raised by selling the permits to pollute will be returned to households and businesses to help them adjust to a more expensive world.

What the mid-year update showed, however, is that because of the strengthening Australian dollar and growth in emissions in areas not covered by the scheme, there is now a $1.2 billion hole in the ETS that will have to come from the Budget bottom line.

As you can see from the graphic on this page, the $1.1 billion cost to the Budget is from the current financial year to 2012-13. Overall, the cost between 2009-10 and 2019-20 is $2.5 billion. But the graphic highlights some of the absurd aspects of the ETS.

The revenue from the pollution permits is expected to reach $114 billion over the next decade. And that $114 billion, plus an extra $2.5 billion, is going to be recycled back to business and households.

This churn of cash through Canberra is not on the same scale as that of the welfare system (don’t get me started on the stupidity of that) but it does suggest substantial deadweight losses on the economy, ordinary people and the tax system.

More than $20 billion of that churn is caused by fuel tax offsets. It was bad policy when Brendan Nelson proposed it, and it was even worse when Kevin Rudd effectively matched it in the construction of the scheme.

Some of the handouts to low and middle income families are to help cover the cost of higher electricity bills that will lift sharply once a price is put on the pollution created by coal and gas fired power stations.

As part of the Government’s stimulus program, it is effectively bankrolling the insulation of hundreds of thousands of homes in a move it claims will save those households about $200 in lower power bills.

That’s fine — indeed, it’s a policy that produces long-term environmental and economic benefits — but the Government is effectively giving these households a $200 windfall (via the cheaper power bill), and $1200 to cover the insulation while also pledging to “compensate” them for the cost of the ETS.

Don’t get me wrong. Putting a price on greenhouse emissions is the only real way this planet is going to deal with climate change.

Personally I believe a carbon tax would be far easier and more efficient, although there is a substantial trade-off in how we come to bring down total emissions.

But that ship has sailed.

However, it doesn’t mean we can’t improve the system that’s being proposed.
Unfortunately, none of the suggestions from either side of the political fence is designed at improvement.

Perhaps our policy makers should have a look at another recently published paper (Household actions can provide a behavioural wedge to rapidly reduce US carbon emissions) that reckons American families could cut the US emissions by more 7 per cent within a decade by making 17 changes to the way they live.

These include washing clothes on cold cycle, using efficient water heaters, carpooling, putting low rolling resistance tyres on cars, installing house insulation and drying clothes on the clothes line rather than the powered dryer.

Yep, simple things like that.

None of this will stop the melting of Kilimanjaro’s glaciers. It is far too late for that.

But if we’re going to do something that ensures our future generations have a liveable environment, we must think much clearer about our policy responses.

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