December 21, 2008

ET is seriously moronic

The Rudd government announced their modest emissions trading scheme during the week, aiming for a five percent reduction in carbon emissions by 2020, with the baseline year being 2000.

Let's just note a couple of things, shall we?

Firstly, emissions trading has failed everywhere and failed unequivocally.

Secondly, we already have ample experience of what can, does, and will happen when artificial markets are created for intangible assets of dubious and over-hyped value: a few people get very rich, others scramble to get a piece of the action, and the rest of us suffer and pay a stupendous price.

In sum, that's what ET will do, no matter how you spin it, slice it, or dice it, no matter the computer model, emissions trading is an opportunity to screw everyone over other than those who will swindle the scheme with a clear conscious, at the urging and with the blessing of governments.

"The trouble is that Kevin Rudd wants ET to be painless, so the scheme will give the generators almost $4 billion of free permits over the first five years — with no quid pro quo.

The Rudd model gives away so much to interest groups that it plans to spend the entire revenue from ET simply to compensate everyone affected. Only a tiny fraction of that would drive changes in behaviour.

Polluting firms, electricity generators, households, motorists and small business: everyone is looked after. Many will be deliberately overcompensated. Treasury predicts that ET will raise prices by 1 per cent. But the Rudd model uses the revenue to pay for a permanent 2.5 per cent rise in pensions, family benefits and all other welfare benefits.

Aluminium smelters whose electricity bills will rise with ET will be given that money back, in spades, receiving permits for one tonne of free emissions for every 0.7 tonnes included in their electricity bill. Come to Australia, polluters' paradise!

Coal-fired power stations will be given $700 million a year to compensate them for the loss of asset value. But if their asset valuations assumed that tackling climate change would not diminish the plants' value, they were unrealistic. That is not taxpayers' fault.

Ross Garnaut envisaged a rigorous emissions trading scheme with few exemptions, and raising $4 billion a year to speed research, development and commercialisation of clean technology. The Rudd model spends everything on compensation, and has nothing left over to help solve the problem."

Meanwhile, mulling over Rudd's announcement, Dr Richard Denniss, apparently incredibly confused about science and policy, is as gung-ho as any convert could possibly be to the 21st century affliction of getting hysterical over wanting to dominate the Earth's climate, and being so confused, he desperately, desperately believes that without an ET scheme we'll all be rooooned, roooooned!

At least he has the sense to recognize that the government policy has a few iss-th-ues:

"The industry assistance package proposed by Kevin Rudd is one of the most generous in Australian history; it should be known as the carbon polluters' rescue scheme.

The dirtiest brown coal-fired plants will receive the biggest slice of the $4 billion of help to coal-fired power stations, and 90 per cent of the permits required by "emission-intensive" activities, such as aluminium smelting, will be provided free. Also, the agriculture industry, which is responsible for about 16 per cent of Australia's emissions, will be excluded from the scheme until at least 2015.

We are told that our "trade-exposed" businesses will leave the country if we don't give them billions of dollars worth of permits, yet when the Australian dollar sailed up to 95 US cents early this year, there was no sign of them packing their bags.

The other argument is that they didn't see this coming and that it is unfair to the coal-fired power stations whose assets are worth less in a carbon-constrained world. Apparently all those highly paid executives ... did not notice that Australia committed to reducing greenhouse gas emissions at the Rio Earth Summit back in 1992.

It seems that when the Government's objective is to protect shareholders rather than protect jobs, the ideological concern with industry assistance is less strident.

Finally, the scheme is inequitable. Not only does it shirk Australia's responsibilities to the rest of the world by concocting some new measure based on per capita emissions, it contains an unexpected sting in the tail for those households and small businesses that want to "do their bit" to save the planet. If it goes ahead as planned, it will mean that no matter how great the efforts that Australian households make to reduce their own emissions, the only effect will be to free up emissions for the big polluters to use.

As the household sector uses less petrol and coal, the big polluters will have more permits available to them to increase their pollution.

There is, however, some consolation for householders who are keen to keep trying to reduce their emissions: the harder we try to save energy, the lower the demand for permits will be. The unlikely consequence of household and community efforts to "do their bit" will, therefore, be a reduction in the price of permits bought by the big polluters."

See how befuddled he is? Poor Dr Denniss probably also believes that hammering households to reduce their water consumption - of which they use around only 9%, or whatever - the lower will be the demand for water by business and agriculture, you know, those users of almost all of our water.

Of course, buiness and agriculture already pay a tee wee, insignificant smidgeon, itsy witsy amount for water (and power) compared with we dumb-schmuk consumers.

Kevin 07 morphs into a classic version of Howard

Households pay as big polluters cash in on climate change

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