Carbon Tax

Lessons from the Death of the Aussie Carbon Tax

Putting economies on an energy diet is not the way to fight climate change.

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Global Warming
The PIX-JOCKEY (visual fantasist) / Foter

Environmentalists had a global meltdown last week after Australia scrapped its carbon tax. They denounced the move as "retrograde" and "environmental vandalism."

They can fume all they want, but Australia's action, combined with Europe's floundering cap-and-trade program, signals that "mitigation" strategies—curbing greenhouse gases by putting economies on an energy diet—are not winning or workable.

Australia leapfrogged from being an environmental laggard (initially refusing to even sign the Kyoto Protocol) to a leader when its Green Party-backed Labor prime minister imposed a tax two years ago. It required Australia's utilities and industries to pay $23 per ton of greenhouse gas emissions.

But the tax was an instant debacle.

Australia has the highest per capita carbon dioxide emissions in the world and the main reason is that it's even more coal-dependent than America. Coal supplies 75 percent of its energy needs (compared to 42 percent in America). But contrary to green expectations, the tax didn't prompt companies to rush toward renewable sources, because they are far costlier.

Rather, utilities passed their costs to households—whose energy bills soared by 20 percent in the first year. Other industries that face hyper-competitive environment such as airlines suffered massive losses. (Virgin Australia alone reported $27 million in losses in just six months.) The tax also made Australian exports globally uncompetitive, deepening the country's recession economic slump.*

This spawned a backlash that brought down the Labor government and catapulted into office the Liberal Party's Tony Abbott, who made a "blood promise" to ditch the tax, which he did promptly once elected, despite warnings that Aussie lowlands are more vulnerable to rising sea levels and other dire consequences of global warming than other countries.

Europe's cap-and-trade program has managed to hang on, but only by neutering itself. The program hands companies an annual emission allowance. If they exceed it, they have to buy more on the open market or invest in clean technologies.

But the program handed out far too many allowances for free initially, causing their price to repeatedly crash. Worse, the European Parliament last year refused to scale back the allowances as planned for fear of prolonging the recession.

 The upshot is that despite spending $287 billion, Europe has little to show for it. (Australia's tax at least reduced its carbon emissions 1.5 percent in the first year). According to a study by UBS, Switzerland's biggest bank the program has had "almost zero impact" on emissions—challenging the much more rosy assessments of the European Commission.

Environmentalists blame Europe's failure on "design flaws" like basing its initial allowance cap on companies' own projections of what they need and then handing them these allowances for free.

Hence, California, which implemented its own version of cap and trade in 2010, set its cap based on independent projections and auctioned a portion of the allowances.

It's too early to tell if the Golden State's program is cutting emissions. But its economic pain is beginning to kick in, especially for the poor. If applied as written, it will cause California's gas prices, already 50 cents above the national average, to rise another 40 cents.

This prompted 16 state senate DemocratsDemocrats!—earlier this month to ask emissions czar Mary Nichols to neuter—I mean, "redesign"—the program.

But the "redesign" can't change the fundamental conundrum of mitigation strategies whether carbon taxes or cap-and-trade: In order to work, they have to administer bitter economic medicine. But when the do, the public revolts.

That's why even gung-ho global warming warriors are beginning to have second thoughts about emission cuts. Canada withdrew from the Kyoto Protocol in 2011. Japan retreated from its pledges last year. And South Korea's finance minister is hinting that his country will delay its cap-and-trade program. (This ensures that next year's Paris summit to discuss even more ambitious reductions will be a complete waste of time and emissions.)

But even if the whole world kept its Kyoto pledges, the global temperature would come down by a grand total of 0.11 to 0.20°F by 2100. Clearly, this is too much pain for too little gain.

So what should enviros do?

Accept that sins of emission can't be legislated away and abandon their quixotic quest for radical cuts in favor of less economically destructive coping strategies. These include sequestration (capturing emissions and diffusing them in a safe way) or growing carbon-sink forests or "ugly" geo-engineering fixes.

Australia's lesson is that in any serious contest between the economy and the environment, the environment looses. 

This column originally appeared in the Washington Examiner

* Whether or not Australia was in a recession is unclear.

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  1. Shikha Dalmia on Failed Green Theiving Strategies to Fight Climate Change Ghosts

    FIFY

    1. What about the failed strategies to include alt text.

      1. Anything posted on the reason.com main page as opposed to the hit&run; page never has alt-text.

        I think it’s part of their agreement with the Squirrel God.

        1. There’s a reason.com Main Page?

          1. its only a rumor. nothing to see. move along.

  2. What should Greens do?

    Shell out their own money to buy land and plant trees to catch all that ‘eeeeevil’ carbon. They can keep their hands out of my wallet.

    1. I would have suggested seppuku, since they think overpopulation is a problem.

        1. But wait! If you act now, we’ll throw in another knife. Absolutely free!

    2. I can’t find the story, but it seems I recall a California city in which do gooders planted trees along the roads and sidewalks. So green, so eco-friendly, and so beautiful. Now they are ravaging the sidewalks, which means more taxes – and I wonder what the carbon penalty is for having to repair all those miles of streetscape?

      Everything these loons touch is left in ruin.

      1. In SF, the folks at Urban Forest sort of canvassed the city and offered to plant trees. A lot of folks took them up on it.
        The trees are some sort of Ficus; they tend to lose large limbs in storms, and the shallow roots demolish the side walks.
        The owner of the building is liable; the UF folks say, uh, well.

    3. I planted just over 100,000 trees this year. Fuck the greenies.

    4. “Shell out their own money to buy land and plant trees”

      They may do that, but I expect a campaign of terror and sabotage to get underway some time in the future. If Greens are serious, they will realize such a campaign is the only way they can stall the emissions. If they are not serious, they will confine themselves to shelling out their own money to buy trees.

  3. The tax also made Australian exports globally uncompetitive, deepening the country’s recession.

    FFS, what recession? We famously haven’t had one in over 20 years. We kept growing right through the GFC. The mining boom helped drive up our dollar, which in turn helped made Australian exports globally uncompetitive. Imposing a CPM which gave us crazy high carbon prices wasn’t a great idea and obviously had some ill-effects, but straight-out factual bullshit like this won’t win any arguments

    1. You don’t think that increased production costs increase wholesale prices? Those carbon taxes were imposed on manufacturers, and in industries with already thin margins, imposition of a new and costly tax can damage an exporting manufacturers ability to compete with emerging nations where the taxes don’t exist.

      1. Please reread my post. Of course increased production costs increase wholesale prices. I am saying:

        a) she is factually wrong about there being a recession
        b) the carbon tax was not the sole factor in the rise of our global uncompetitiveness
        c) gilding the lily in this fashion won’t win the argument as it’s so easy to disprove

        1. A. http://www.macrobusiness.com.a…..recession/

          If,this,is,wrong or not a reputable source, please let me know. I just googled “Australia recession” and,this,was,me of the articles that popped up.

          B. I don’t know what other factors were being,discussed in the article. But,they certainly didn’t help,the Aussie products be,more,competitive. And we are talking about a game where price is king.

          C. I can’t speak to Dalmia’s methodology, but I do know that higher production costs or higher compliance costs,do,have a net negative impact on competitiveness..especially in industries with thin margins.

          1. a) Generally here we use the traditional metric – two consecutive quarters of falling growth. That article is arguing we’re in recession by using other metrics. That might be a better way to judge the situation, but it’s not the one we commonly use. And by the two-quarters metric, we’re not. The concern here is that we’re heading for one

            b) Agreed for the most part. Again, my point is that SD made a claim that the CPM is the sole cause of our uncompetitiveness, which is just nonsense (the high dollar and our appalling industrial relations laws as probably equally significant, if not greater, than the CPM).

            c) That doesn’t respond to my point. She’s singling out one cause of higher costs and claiming it’s the sole cause of lower competitiveness, at least in the statement I quoted.

            In short, she is blaming the CPM for too much. This is not to say the CPM has no deleterious effect, only that she’s being too broadbrush. But as SD doesn’t even mention the effect of the Renewable Energy Target, her grasp of Australia’s economy and laws is clearly not great – not that it stops her from writing articles like this

            1. A. Gotcha.

              B. I wouldn’t say she’s claiming it was the sole cause. It was just the subject of her article. I’ll giver her a pass here.

              C. I would refer you to B.

              As to your overarching point, I am not from there and don’t know the intricacies of your economy or politics so I’ll have to defer to your wisdom.

              1. defer to your wisdom

                Them’s fightin’ words 🙂

                1. All I know is that living in a place that has never emerged from recession conditions for the populace at large, it’s easy to believe that any other given economy is doing poorly. I know that it’s the diseased environment in New York that’s doing it, but the malaise it induces has a toxic effect.

                2. Well Bless his heart.

    2. And in the USA, we have low levels of inflation and unemployment – officially.

      1. Don’t forget the low levels of workforce participation

        1. No, it’s okay to forget that.

          /Team Blue

        2. Only because the teabaggerz and faux noize viewers have convinced their racist employers to hoard their money to starve all of the women and children that are hardest hit when the minimum wage is kept too low for people to earn a livable wage.

          1. you forgot the teathuglicans refusal to provide free birth control. And amnesty.

            1. I’ll work on it.

        3. What? Are you saying something happened in late 2008 to cause people to leave the workforce?

          Because that’s a racist insinuation.

      2. Not to mention Obama has cut the deficit in half, and the Dow is at an all time high. Which has always struck me as a weird boast for the left to make.

  4. Nonsense, it will work. The reason it does not work is that there are “wreckers” that are against the people. Just need to start putting more people in jail and then it will work. Not in jail for life. Just until reality “catches up” to the noble ideals of the greenies.

    1. Or you could push a button that blows them up, like this.

  5. be?night?ed, adjective
    1. in a state of pitiful or contemptible intellectual or moral ignorance, typically owing to a lack of opportunity.
    “they saw themselves as bringers of culture to poor benighted peoples”
    2. overtaken by darkness.
    “a storm developed and we were forced to wait benighted near the summit”

    Benighted? And yet, isn’t the US the only country that actually managed to comply? Why no reference to that?

  6. I’ve been watching the German Energiewende policy. The Germans shutdown their their nuke plants and, through generous subsidies, incentivized various “green” energy sources. Consumers, especially home consumers (industrial/export consumers get shielded) carry most of the costs of those green energy.

    German consumers, though they’ve drank the koolaid of glowball warming, are steadily losing their enthusiasm for the policies. The politicians and elites of course think it’s great and are barreling full speed ahead.

    Interestingly, this policy has increased reliance on coal (dirty, dirty coal).
    http://www.bbc.com/news/business-26820405

    1. And, comically, the French continue to generate cheap and safe nuclear energy…as they’ve done for decades.

      1. Cheese, calvados, and nukes. What else are the French good at?

        1. I’m partial to their method of kissing.

          Ooh, and their freedom fries are pretty good.

          1. Those were actually Belgian.

            1. A “Belgian kiss”? I thought that was like ATM or something.

          2. I’m partial to their method of kissing.

            She’s partial to it, too

        2. Laying down their arms?

          Designing really, really beautiful cars? Well, used to…

          Um….I got nothin’.

            1. exACTly

        3. They can proudly claim Frederic Bastiat as one of their own.

        4. “What else are the French good at?”

          Centrally planned economy?

        5. Spectacular looking pastries, that taste quite good.

          Also, they seem to have cornered the market on skinny tiny large nosed women who are actually quite sexy.

      2. nuclear is the one thing the French do that the cool kids in the US refuse to emulate. Not enough coercion apparently.

        1. It’s icky. So there!

  7. “Australia’s lesson is that in any serious contest between the economy and the environment, the environment looses.”

    Poor spelling, poor reasoning. The environment has “lost” what, exactly? I guess if you swallow the whole Al Gore line, then you can reach that conclusion…

    1. I noticed the shitty spelling, it appears to be poorly copied, because the original article didn’t have those typos.

      Also, the fact that you’re having trouble understanding the intent of that line because you’re reading it literally is hilarious.

  8. These enviros are either too stupid or too dishonest to realize that the logical conclusion of their crusade against fossil fuels is to go back to a pre-industrial age lifestyle.

    They want the world to live in poverty.

    1. These enviros are either too stupid or too dishonest to realize that the logical conclusion of their crusade against fossil fuels is to go back to a pre-industrial age lifestyle.

      Sarc, most of them think the pre-industrial age was a romantic time. Fresh air, sunshine, etc. They don’t realize just how hard it was to live. Of course I don’t think they want to live like that, just the rest of humanity.

      1. Lest we forget that they want to go back to a pre-industrial energy scheme, BUT do not want to go back to the economic system where capital was concentrated in the hands of the landed gentry.

        Well, they do, as long as they’re the landed gentry.

        1. They’re so intent upon screwing other people over that they never contemplate that the policies they favor could be used against themselves.

        2. They don’t think very far ahead.

          Fossil fuels are dirty, so they’re BAD; green energy is green, so it’s GOOD.

          That’s about the extent of it.

        3. With dark ages life style comes dark ages justice. Alternating between dunking and burning the enviros until they recant their false teachings. At which point we go straight to the beheading and prayers for their souls.

      2. And would it really be better? We’d be burning lots of wood for fires to cook our meals and light our nights…I am sure deforestation would quickly become apparent. Imagine a town of 50k population would have at least 10k little campfires in their stove.

        1. Don’t remember the source now, but I use the following in one of my lectures introducing the Industrial Revolution:

          a city of 30,000 required 600 horse-drawn cart loads of wood in the summer and 1000 in the winter.

          1. Which, of course, is not at all “green.” The only way to have the “green” society that enviros want is to greatly reduce the population. Rolling back the last 300 to 400 years of development will actually accomplish that through exposure and starvation. What goal for them to be proud of!?

    2. using ‘logical’ and ‘enviros’ in the same sentence is the embodiment of oxymoron. Then again, this is part of prog universe; when in doubt, always choose dishonesty as the motivation.

    3. The dark ages could be fun, if you were a noble.
      They don’t plan to be the serfs.

      1. I dunno. I think I’d rather be poor in today’s America than rich in the Dark Ages.

        1. Oh, I’m with you on that one. Some people just want to rule, you know.

          1. Don’t go all Lorde on me here.

    4. They want the rest of the world to live in poverty, just not them personallyThey are enlightened and deserve the level of elite.

      Thids reminds me of one of the Occupy troops being interview about his desire to do away with private property. When asked about his Ipad and could just anyone use his Ipad he refused saying that his Ipad was “personal” property.

  9. “According to a study by UBS, Switzerland’s biggest bank the program has had “almost zero impact” on emissions?challenging the much more rosy assessments of the European Commission.”

    Thanks for adding a link to the australian for that UBS study, has anyone seen the *actual* study? Id really like to know more details on why the European carbon market failed so badly.

    Searching the UBS site for the quoted phrase yields nothing:

    Google search

    All the links that google provide just point back to the Australian.

    Also, searching ubs.com for “$287bn carbon” should yield something, but doesnt. I wonder if they issued the report and then realized that it might adversely affect their market for carbon indulgences.

    http://www.ubs.com/us/en/searc…..set_=UTF-8

    1. It seems to be something UBS charges for, so it’s not online.

      This might be useful

      1. Interesting, thanks for the link.

  10. Hang on just a minute. I thought that about six years ago we reached the moment when the rise of the oceans began to slow and our planet began to heal. Did I miss something?

  11. Nature will take care of the environmental problems. The planet will flick us off like a bad case of fleas. . .
    http://www.youtube.com/watch?v=NL8HP1WzbDk

  12. The whole thing sounds pretty narly to me dude.

    http://www.WentAnon.Tk

    1. What? No jsut?

  13. “sins of emission”…Good one Shikha, and that (almost) makes up for lack of alt-text.

    1. Also, a great band name.

  14. So in order to solve the world’s greatest crisis we can only choose options that are politically popular and don’t cost anyone any money.

    1. Or we could choose options that actually work, and aren’t just feel good measures for lefties.

    2. “So in order to solve the world’s greatest crisis”

      No worries, he’s term limited.

    3. So in order to solve the world’s greatest crisis we can only choose options that are politically popular and don’t cost anyone any money.

      October 1962 was a far greater *crisis*, and your answer suggests that you would’ve preferred the most costly and least popular resolution to that crisis.

    4. world’s greatest crisis

      The feeble minded continue to be enthralled by doomsday cults.

    5. I do not see how you comment applies to solutions to ballooning national debt?

    6. Gee, Tony, why is it the Greens chose as their ‘go to the mat’ issue the Keystone XL pipeline – a project that all ‘sciencey people’ agree has zero impact at all on climate change?

      It seems the Greens go out of their way to choose options that cost everyone else shitloads of money, but have no real material benefit to anyone.

      Same with Biofuels! except they also make the environment worse. So even when Greens get the policies they want, they serve only to enrich the baddies and make the earth die faster?

    7. Histrionics are histrionic.

    8. Tony:

      So in order to solve the world’s greatest crisis we can only choose options that are politically popular and don’t cost anyone any money.

      How, exactly, do you think democracy works?

    1. The intention of the project is for the plankton to absorb carbon dioxide and then sink to the bottom of the ocean. George is hoping to cash in on lucrative carbon credits.

      Incentives. Yes ?

      1. I just love it when all the environmentalist’s freaked out about this guy, calling for his head on a pike, saying this would never work. You know what ?? It did !!! http://www.nationalreview.com/…..ert-zubrin

  15. If the problem is that the energy-producing energy industry doesn’t want to build renewable energy sources because they need more profits for the BofD, why not just nationalize their polluting industries, run the company as a public utility, and use the profits to build infrastructure that won’t pollute the planet?

    1. Like Nuke plants which likely represent the safest way to generate power? Why do green fascists ignore/oppose nuclear power? The fantasy that renewables really work? They saw a Godzilla movie as a kid? Stupid fucks?

      Maybe this is more your style

      1. Ha !! Germany, and it’s citizens could have cut their emissions, reduced power consumption, and saved a bunch of money if it just gave away those solar panels, and turbines to private citizens, and companies.

        Powergrids. How do they work ?

      2. The real questions is why do libertarians shill for nuclear, considering nuclear plants can never ever exist in a free unsubsidized market. Environmentalists largely support it, contrary to this distracting bullshit.

        1. Tony. So Libertarians, and Environmentalists are shilling for nuclear power ? The KKKoch conspiracy goes deeper than I thought. They must run the Government too because nuclear power plants are like roads.
          Do you prefer the thin tinfoil, or do you go for the thicker industrial stuff ?

    2. How about letting energy companies rise, and fall according to consumer demand in a free market ?? Nah. that will never work. We need to use subsidies to pick winner’s, ans loser’s then nationalize the winner’s for maximum state profit.

      1. And state control of your life.

    3. Look! Socialist doesn’t understand how ‘profit’ works! shocker.

      Apparently ‘boards of directors’ have replaced shareholders in some new version of Cartoon Capitalism.

      1. C’mon, GILMORE, profits are just surplus labor value stolen from the worker by greedy capitalists, duh!

    4. american socialist:

      If the problem is that the energy-producing energy industry doesn’t want to build renewable energy sources because they need more profits for the BofD

      Well, there you go. No need to read past that.

  16. why not just nationalize their polluting industries, run the company as a public utility, and use the profits to build infrastructure that won’t pollute the planet?

    Like Venezuela?

  17. “This ensures that next year’s Paris summit to discuss even more ambitious reductions will be a complete waste of time and emissions.”

    Am I the only one who finds it funny they never hold these climate change summits in Hoboken or Newark. They always are some plush place like Paris or the Caribbean. Seems if they were truly concerned about climate change they would skip the flying and Skype it.

    1. Seems if they were truly concerned about climate change they would skip the flying and Skype it.

      Then how are they gonna take their private jets around the world while shaming you for the carbon footprint of your Honda Civic?

  18. You had to know this was coming.

    “Environmentalists blame Europe’s failure on “design flaws” like basing its initial allowance cap on companies’ own projections of what they need and then handing them these allowances for free.”

    Translation “yeah our leftist policies failed yet again but that cause it wasn’t run right and by the right people. Trust us we will get it right this time.”

    Leftists always trot out this same line everytime. USSR, China, Venezuela, Detriot does not matter failure is not failure. It is never their principles it is they just are not conducted properly.

  19. “But contrary to green expectations, the tax didn’t prompt companies to rush toward renewable sources, because they are far costlier.”

    Duh, you’re talking about a market. When a cheaper alternative exists that pollutes less, everyone will rush to it. What these socialists fail to understand is that you can’t just force the market this way or that way without massive negative consequences for the end consumer. This type of poking and prodding people to change their market behaviors might work for non-essentials. For instance, if you put a $23 dollar tax on every hamburger sold, most people would stop eating hamburgers and would just eat something else. If you put a heavy tax on energy, people don’t have the same types of market options to avoid the heavy hit.

    These people are literally inducing suffering as leverage to make changes. What a responsible person does is use innovation as leverage to make changes.

  20. I must admit, Shikha, I do get a laugh out of climate articles from Libertarians.

    You say, “But even if the whole world kept its Kyoto pledges, the global temperature would come down by a grand total of 0.11 to 0.20?F by 2100.”

    Which is interesting in and of itself in that most concerned about AGW never thought the Kyoto goals were enough. But OK, you then tell us that your wonderful plan is sequestration, carbon sink forests, and geo-engineering.

    Wow.

    So do tell, Shikha, how much reduction in temperature from all 3 do we expect, since that is the standard you hold everyone else to. Funny how I guess you just want us to take your word for it that those 3 are better suggestions.

    And all three are at this point just pipe dreams. I doubt any environmentalist would be against the first two. But in a world where forests are being destroyed, and populations will spread urban environments even further, I doubt some grand plan on carbon sink forests will achieve that much. And what are proposing in the meantime, that we cut down more and more forests? The ones we have are carbon sinks, and they are decreasing.

    Geo-engineering? Solar and wind are here and now…what are you proposing, government investment in geo-engineering solutions?

    And sequestration? Are you suggesting legislation that coal gets sequestered? Or do you think coal will, on their own free will, take on expensive sequestration? How much time will that take, as we continue to add CO2 to the atmosphere?

    1. Here is the truth, Shikha, as a Libertarian, you don’t have a solution. Your preference is to just let things continue the way they are as far as CO2. You should just admit it.

      1. @ Jackofinhandass You have contributed nothing to this conversation. Even Tony is smarter than you. Eat a bag of dicks.

        1. And your last sentence, JP, tells us all we need to know about the level of your intelligence as well as your offering to the discussion.

          Hopefully you’re not indicative of Libertarian additions to discourse.

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