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Overview of My Opinions on the Carbon Tax

1 July 2011

The topic of the Australian carbon tax is so big it’s hard to know where to begin covering it. Every aspect is inter-related to every other aspect. So here is a quick overview of my opinions and a list of possible topics I may cover in the near future.

The atmospheric level of CO2 must be returned to 350 ppm to prevent dangerous anthropogenic interference with the climate system. Because of the long lifetime of CO2 in the atmosphere, to reduce its concentration humanity must stop emitting so carbon sinks can start absorbing. Every year the world delays, CO2 rises by another 2 ppm and the 350 goal slips further from our grasp.

The only realistic way to achieve the required transition to a zero-carbon economy is to phase out fossil fuels as quickly as possible. This seriously calls into question the fashionable view of gas as a transitional fuel. While renewables are a zero-carbon energy source, gas is merely a lower-carbon one. A two-staged transition, from coal to gas then to renewables, would waste precious time. And it makes little sense for energy companies to invest in gas power plants, when they will eventually have to be shut down anyway.

Australia should be a leader in climate change mitigation, not a follower. Australia must rapidly transition to a zero-carbon economy as part of a 350 ppm global mitigation effort. The Zero Carbon Australia 2020 Stationary Energy Plan made a convincing case that Australia can create a 100% renewable energy economy in just ten years, by rapidly scaling up concentrated solar power technology (which has the storage capacity to provide power 24/7).

A carbon price should help to drive the transition to renewables. A badly-designed carbon price may be even worse than no price at all, if it locks in unlimited fossil fuel burning for another decade.

  • A politically realistic carbon price, on its own, will not create the needed investments in renewable energy. It must be as high as possible, rise as fast as possible, and be complemented with other strong, effective renewable energy incentives to make large-scale solar power stations economically attractive. These can be funded by carbon tax revenue, and by cutting the $12 billion of fossil fuel subsidies. The Government could also invest directly in zero-carbon infrastructure.
  • A badly-designed compensation package will decimate the intended price signal. For this reason a principled approach should be used for trade-exposed industries, and there must be no compensation to electricity generators except in the form of structural adjustment assistance.
  • A badly-designed emissions trading scheme will not provide either price certainty or certainty that the intended net emissions outcome will be reached. This can be avoided by retaining the initial tax as a floor price; limiting dubious international “offsets” (hiding Australia’s emissions overseas is not seriously tackling Australia’s contribution to climate change); and handling land use separately to fossil fuels (even if the Earth had as many trees as it did pre-industrially, the carbon cycle would still be completely overwhelmed by fossil fuel emissions).

Here are some of the topics I’m thinking of covering:

  • Updates on the progress of MPCCC negotiations
  • The Garnaut Climate Change Review which advised the Government, including my criticisms of its recommendations:
    • Why we should invest in renewable energy, not merely what is cheapest today
    • Why I believe Australia should be a leader, not a follower
  • Why radical climate action is urgently needed
  • Why we need a carbon price
  • How best to design a carbon price
    • Possible combinations of starting prices and complementary measures
    • Compensation to power companies, compensation to households, and whether it damages the price signal
    • What to do about fossil fuel exports
    • Flexibility, investment certainty, and the switch to emissions trading
    • Price certainty and target certainty in the emissions trading scheme
    • Compromises, centrism, and political reality
  • The dynamics of the current Australian Parliament
  • The Liberal Party’s policies
  • Commentary on rhetoric from all sides, including the scare campaign against carbon pricing
  • Putting the carbon tax debate in perspective
  • Media coverage of climate change and the carbon tax
  • Public opinion about climate change and the carbon tax
  • And much more…

It is both necessary and possible to rapidly eliminate Australia’s, and eventually humanity’s, CO2 emissions. If it is not currently politically possible, then it must be made so. The climate operates according to the laws of physics, and we cannot compromise with the laws of physics. If we try, we will all inevitably lose.

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