The Carbon Tax – Success or failure?

I was thinking about the carbon price this week, and how I don’t feel that it will actually change anything in regards to emissions in Australia. Already two of the dirtiest power plants, that were meant to be shut down in Victoria, have pulled out of negotiations with the government and continue to operate.

These two power plants were given massive payments in order to shut down. Now that they have pulled out of negotiations (they wanted more money), do they have to pay back the money that they have been given? Will they continue to be given those subsidies now, even though they continue to operate? I might point out that I believe these subsidies were in the amount of billions, not just millions!

Anyway, my understanding is that emissions in Australia are continuing to increase, despite the fact that there is a price on carbon. The price on carbon, according to spin by the government, was to reduce emissions, but if the emissions are still increasing, how has the carbon price actually benefitted anyone?

The problem with a carbon price, is that companies that emit get taxed, but this cost is then passed onto the consumer, with no impetus for the company to actually reduce emissions. This is a point that I raised with Associate Professor Mark Diesendorf (at a conference a few years ago) who, at least at the time, seemed to champion a carbon price.

One of the things that Diesendorf seemed to suggest, was that if the consumer received increased costs due to a carbon tax, the consumer would then be forced to change their habits, buy new appliances, or insulate their house in order to reduce their costs. However, a point that I raised in reply to him was, how does a struggling family afford new appliances to reduce their consumption of electricity, gas etc., if they haven’t the cash to do so? The poorer people just have to pay a higher price for their electricity, gas, water etc. (or do without) with next to no change in consumption.

Generally, if there is an increase in a cost to a company, the consumer ends up paying those costs. An increase in rent, electricity, gas, water etc. – all passed on to the consumer. How is a carbon tax any different. To date, the consumer has paid the increase. Sure in Australia at least, the people have had a reduction to income tax, but the carbon tax is still passed onto the populace with no impetus for the emitter to change its emissions.

My problem with a carbon price is that without regulation, how much pollution an entity can emit is not controlled. the result being no change in emissions – the cost will entirely be passed onto the consumer. The result of this is that consumers pay the carbon price, but the companies who emit, make no changes. This appears to be what is happening at present – and it is likely to continue to happen.

I believe the EU was one of the first to try to reduce emissions with its carbon trading mechanism, however that too seems to have failed as companies could simply trade their carbon credit without actually reducing emissions. The result of which was that emissions continued to increase – and still are!

Without regulation to control how much carbon an entity can emit, how is it possible to reduce emissions. With a carbon price you can simply pass on your increased tax. With a trading scheme, you can simply sell off your emissions. Neither of these would seem to be an effective system in order to actually achieve what they set out to do – that is, to reduce carbon emissions.

Current, governments around the world, seem to be unwilling to actually regulate their emissions. They believe that a “free market” system is the only answer – but is it working?

The answer would appear to be no. Why, because companies just pass on their costs, or buy their way out of their responsibilities – buying or selling carbon credits. No company, or at least not too many, is going to spend millions of dollars in order to reduce their emissions if they don’t have to. Hence they buy carbon credits, or pass on their costs, rather than reduce emissions.

Neither of these systems have demonstrated an ability to reduce emissions, as was their intention. You can’t use a market solution, to solve a market caused problem.

In the long term, buying carbon credits, or passing on the carbon tax, may work because newer technologies that are brought online, will actually reduce costs for the newer companies, and competition will eventually force those polluting companies to change or else they will collapse.

But can we wait decades for this to happen? Perhaps if we had started on this road 30 years ago, when scientists first raised this problem!!! ? But not now

The problem is that we have a very small window in order to reduce pollution and stop global warming. If you read the news from around the world, you will see that we now have century old ice melting. There have already been significantly changing ecosystems around the world that have been documented and clearly demonstrated.

A mammoth in Russia has just been uncovered due to melting ice. How many centuries has that ice been there? Now melted due to our human caused climate change. (Not that I wouldn’t love to see a preserved mammoth though 🙂 )

Once we reach the tipping point where runaway climate change will occur, there will be little chance to turn that back. Once the tipping point is reached there will be nothing that we can do about it. That is the concern that we need to address.

A couple of final points. Australia, with its 20 odd million people, < 0.3% of the world population, produces enough greenhouse gasses to achieve the sad distinction of being the 15th most polluting country in the world – and the most polluting county per capita. This is a disgraceful record that we need to address as a matter of urgency. Something that we should all be ashamed of.

That’s it from me for today.

Greg.

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About Blog of Greg

I consider myself a thinker and I like to discuss everything in life with those around me. Mostly I am serious, sometimes I am funny, and occasionally I am rude. I like to wear my heart on my sleeve and say what I feel, or think! It is important to me to be honest about how I feel and why! I detest pretense, big egos and self importance. I believe that I am no more important than you, and similarly that you are no more important than me! [apparently I should reflect on this more often] This blog is a way of engaging people in different aspects of life; its goal is to present a different view of life and contribute to a broadening of our awareness. While this blog is essentially my opinion, I also understand that there are other opinions out there. Though I encourage discussion, I may “delete” comments that I find are unhelpful, argumentative, or offensive towards myself or another person. Often I write about politics – apparently that is an interest of mine – but I also like to write about other more personal things that affect us in our day to day lives. Along with this blog, I also write to politicians and newspapers; I often present a commentary on my blog about following comments or decisions. That way everyone understands what they have said – and sometimes of course how big a buffoon they are:) Please feel free to comment on my posts, as I would like to hear what you have to say. After all…. Your opinion is just as valid as mine!
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