 | The Bullroarer - Tuesday 8 July 2008 | TOD: Australia/New Zealand | Australian Senate: New Select Committee on Fuel and Energy |  |
User login
Contact
- anz at theoildrum dot com
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
Archives
GAIA Host Collective
Where did I say Garnaut was proposing reducing energy use?
Whether they buy the permits year to year or forever makes little difference to this analysis. The government will have a revenue incentive to issue a lot of permits. They've already as much as said that the extra expense of the carbon permits will be balanced by tax reductions and subsidy increases elsewhere - it is, as I said, much like the state governments putting in a tax on gambling revenue but reducing other taxes, now they don't want to reduce the amount of gambling because they'd have to reintroduce the other taxes. So if the federal government brings in the ETS and makes money from selling the permits, and then reduces other taxes or increases subsidies, in the future they'll find themselves unable to reduce the number of permits.
How could a carbon tax result in an increase of CO2 as distinct from permits giving us an increase?
A carbon tax on coal exports would not make coal cheaper to burn here, the tax would be the same on coal whether exported or used domestically. The relative difference in domestically-used and exported coal prices due to contracts long-term or short would remain the same.
Your point about permits as a source of revenue, the least number of permits will raise the most revenue, if for example an excess of permits are sold the price will decline to almost zero( just like oil prices in 1986)because there will be no competition. If permits for only 50%of current CO2 were issued, prices would be very high much more than x2 if 100% of current CO2 permits issued, high enough for some coal burning power generators to stop using coal. So if the government wants to raise maximum revenue, we will get a good outcome for reducing CO2, but prices for everything will rise. If the government uses some of that revenue for example to off-set petrol excise, still a good outcome because we will be producing only 50% of CO2, and lets be sensible,even a 38cent reduction in petrol excise(the maximum possible) to compensate for a very high carbon tax of about $200 a tonne, would leave petrol at present high prices. We already have incentives to reduce petrol consumption, but no incentives to stop generating electricity with coal.
As for taxing coal are you suggesting domestic coal is taxed twice, once when produced and again when burnt in Australia? If not, for example if we stopped all exports by say $200 a tonne export tax, the local price for thermal coal would go back to marginal costs( about $20-30 a tonne) rather than the present $140 a tonne) so even with a carbon cost of $200 a tonne, local coal would be cheaper to burn($20+200) than what is proposed with no export tax( $140 +$200).
Garnaut supports a carbon permit price cap. (Read his draft report.) This rather torpedoes hopes for lowering permits and getting the same revenue from a higher price each. Whether the government will follow his recommendations we don't know. But that's what they are.
If you can with accuracy predict the price of things based on their particular supply levels, I suggest to you a career in the stockmarket. Those guys would love it if these things could be easily and accurately predicted.
I would propose carbon taxes by amount of carbon in the thing on all fossil fuels, timber and wood products the moment they come into contact with the Australian economy; whether dug up, imported, or whatever. Again, I don't see why that would change the relative position of domestic and export coal prices.
Kiashu,
Thank you for responding to my comments, the report is very long reading and takes a while to absorb, and it is easy to miss some of the finer points.
For example I note your comment;
"Garnaut supports a carbon permit price cap. (Read his draft report.) This rather torpedoes hopes for lowering permits and getting the same revenue from a higher price each".
In the interim report, page360( Table 15.1) it states at the bottom of table, under price controls;"not supported except during transition period to end 2012"
Your proposal for taxes, for example on wood, surely the issue would be if its used to build a permanent structure for example a house, or if its burnt as firewood. I can see the value of taxing say petrol at the refinery because we don't store this for 100 years.
The report appears to be in favor of forestry CO2 offsets,but I suppose once harvested would have to have a mechanism for buying back CO2 that is released.
As for oil or coal we need a consistent once only tax or permit, if we include imported oil that is burnt in Australia in our CO2 emissions, then the oil exporter shouldn't also count it. Same for our coal exports.
If we are heading for a dramatic climate train wreck due to CO2 emissions then there is value giving credits for any reasonable CO2 delays even 20-25 years for saw-log timber plantations, especially as the timber is unlikely to be burnt for at least another 20years.
Yes, as I said - Garnaut thinks a price cap is a good idea for the next four years. And as I said below, once a price cap is introduced it'll be politically difficult to remove it.
For housing timber, no it isn't carbon zero. That's because too often timber is not harvested sustainably, and the stumpy burned-out mess left behind is a source of further emissions, methane from rotting material, CO2 from the burnoff, etc, even if the timber you take out sits in a building for centuries.
Secondly, around half of all waste going to landfills is construction waste. Buildings nowadays last less than a generation, then are scrapped and most of their material sent to landfill - where the timber part of it will rot and emit methane.
Certainly just as we have taxes on emitting we ought to have rebates on absorbing. Those rebates should be less than the taxes; this encourages people to plant more than they harvest, and to care for it. The current greenpower standard is that the planting must be maintained, or if lost replaced, for seventy years. That seems a fair standard to port across to a tax or trade system.