How will a carbon tax reduce emissions?
A price on carbon, starting with a tax, and transitioning to an Emission Trading Scheme in 2015, will be introduced in Australia next year.
A price on carbon emissions (paid for by big polluting industry) will change the dynamics of energy investment. Market certainty and business confidence will attract investment in renewable energy, which will allow Australia to gradually phase out coal fired generation.
A carbon price generates revenue. Two billion dollars a year will be directed towards renewable energy and energy efficiency projects.
Part of the revenue will be put aside to support the closure of 2000MW of coal fired electricity by 2020. That will probably see the closure of the two most polluting coal generators in Australia. That generation capacity will have to be relaced by renewable energy.
Some of the revenue will go towards rewarding farmers for reducing emissions, and improving soil carbon.
A commission has been set up to look at how the national grid can be set up to cope with 100% renewable energy.
A suite of renewable energy technologies, with emerging geothermal generation and natural gas backup, will see the strategic phase out of coal generation in this country. An 80% reduction in emissions is entirely feasible. Getting there will put Australia into a position of leadership, and that will allow us to put pressure on the United States to get serious about climate change. China will no longer be able to use Australia as an excuse for inaction.
A carbon price will reduce emissions. In fact it is probably the only mechanism that will. It is only a start. If every country made the same sort of effort as Australia, we would be facing a global temperature rise by the end of the century of about 4 degrees centigrade.
The three independents in the Multi Party Climate Commission have made sure that a carbon price is a good deal for regional Australia. Investment in renewable energy means jobs for regional Australia. It means that a 50/50 by 2020 target is achievable. SE NSW is well placed to to assume a leadership role.
Mike Kelly, we want a chunk of the carbon tax revenue directed towards SE NSW. You need to help our region get community solar farms up and running. We want wind farms and wave generators, and we want SE NSW to lead Australia in energy efficiency.
A carbon price will reduce emissions. In fact it is probably the only mechanism that will. A carbon price will benefit regional Australia. We stand on the cusp of some exciting changes.
The cheapest way to reduce emissions?
There is bipartisan support in Australia for an emission reduction target of 5% by 2020. It is important that we achieve this target in the most cost effective way.
There are two broad and conflicting approaches to the problem, and all the economic advice suggests that Gillard?s proposal delivers the best bang for its buck.
Gillard wants a price on carbon, initially starting with a tax, and transitioning to an emission trading scheme in 2015. This is a market based approach.
The Abbott coalition are looking at a ‘direct action’ plan, relying on tree planting and soil sequestration. Under Abbott’s plan the government, rather than market forces, will determine important decisions.
Some of those backing a carbon price include the Productivity Commission, the Australia Institute, Ken Henry, and Ross Garnaut.. No economists are backing Abbott’s ‘direct action’ plan.
The Productivity Commission’s comprehensive study of carbon policies in key economies confirms “the world is increasingly acting on climate change and a carbon price is the lowest-cost way to cut pollution.” Their report can be found at www.pc.gov.au
Dr Richard Denniss is the Australia Institute’s Executive Director. He is an economist and Associate Professor at the Crawford School of Economics and Government at the Australian National University. This month he published an analysis of the Coalitions Direct Action Plan which can be found at www.tai.org.au. He found that “the Coalition’s Direct Action Plan will cost far more than is budgeted for and is unlikely to find sufficient greenhouse gas reduction projects in order to reach the Coalition’s emissions reduction target”. Denniss concludes that “after analysing the Coalition’s Direct Action Plan we find that it is significantly more expensive than what could be achieved with a broad-based carbon price.”
The secretary to the Treasury Ken Henry states that “as far as climate change mitigation is concerned, all I want to say today is that the imposition of a price signal to reflect the negative externalities of greenhouse gas emissions is intended to cause a significant shift in the structure of the Australian and global economies over coming decades; quite possibly the largest structural adjustment in economic history. That is the point of doing it.”
The present secretary of the Department of Climate Change and soon-to-be secretary to the Treasury, Dr Martin Parkinson said in a speech last year that “the lack of a carbon price signal is fundamental, and no long-term policy solution is possible without the creation of price incentives to protect the integrity of our climate system and reduce the risks of dangerous climate change.”
Professor Ross Garnaut is is a Distinguished Professor of Economics at the Australian National University and both a Vice-Chancellor’s Fellow and Professorial Fellow of Economics at The University of Melbourne. His report on the economic impact of a price on carbon showed that reducing greenhouse gas emissions would not come at the expense of Australia’s economic growth.
Economists are backing the Gillard government’s emission reduction strategy. Abbott’s emission reduction strategy is expensive and ineffective, which will ultimately cost households more.
A new direction for Australia
Community group, Clean Energy for Eternity welcomes the promised commitments to action on climate change in the carbon price package and calls for them to be delivered as soon as possible.
“A price on carbon, coupled with an ambitious target to reduce greenhouse emissions by 80% by 2050 and a new commitment to renewable energy, is a great result for Australia, the Bega Valley and for the entire electorate of Eden-Monaro,? said Matthew Nott CEFE founder and President.
The Climate Committee has shown that it is serious about setting Australia on a course towards a renewable energy-powered future with three substantial measures:
· The creation of an independent Australian Renewable Energy Agency to oversee all existing renewable energy programs (no new money but budget $3.2billion to 2019)
· A Clean Energy Finance Corporation set up from 2013 with new funding ($10 billion over 5 years), at least $1b/yr dedicated for renewable energy (excluding clean coal)
· Australian Energy Market Operator to commence Plans for a 100% renewable energy grid, ie. investigate potential for our electricity grid to operate with 100% Renewable energy
?We?re keen to see as much of the carbon revenue as possible go to renewables and energy efficiency and not polluting energy sources such as fossil gas and clean coal. The promise to negotiate the closure of 2000MW highly polluting generation capacity by 2020 is encouraging.”
“Renewable energy poses a huge opportunity for our region with our sun, wind and wave resources. There is huge potential to create new jobs and investment here. Making renewable energy cheaper is the best thing we can do to guard against rising energy prices into the future.?
Importantly, this package also includes compensation for the community and provides significant new opportunities for farmers and landholders in the transition to a low carbon economy.
The carbon price will not apply to agriculture and there is no requirement to pay for animal or fertiliser emissions. However, three schemes will offer economic rewards for farmers who reduce their emissions, protect biodiversity or store carbon in the landscape:
· The Carbon Farming Initiative will help farmers and landholders benefit from carbon farming by rewarding those who can reduce emissions or store carbon in the landscape
· The ongoing Carbon Farming Futures program ($429million over 6 years) will support R&D, soil carbon measurement approaches and on-ground action to reduce emissions or store carbon, including support for conservation tillage equipment.
· The Biodiversity Fund ($946 million over the first six years) will be established for projects to protect biodiverse carbon stores and secure environmental outcomes from carbon farming.
Significantly for our biodiversity, the Renewable Energy Target will be retained at 20% but native forest biomass will no longer qualify for the RET scheme. The Government remains committed to sourcing 45,000 GWh of Australia?s electricity from renewable energy by 2020.
For the community at large, the compensation and on-going support for households includes:
· Tax cuts, higher Family Tax Benefit and increases in pensions and allowances
· Tax free threshold increased to $18,200 in 2012-13 together with$443 low-income tax offset.
· Family benefits, pensions and allowances will be permanent and will keep pace with the cost of living automatically rising in line with the CPI
· Tax cuts will increase over time with a second round of tax cuts in 2015-16 matching the impact of the carbon price.
·’We are delighted that Dr Mike Kelly has heard the call from the community of Eden-Monaro for action on climate change and support for a transition to renewable energy’
‘The entire region stands to benefit from new projects generated in our area, from renewable energy to the Carbon Farming Initiative and the new Biodiversity Fund, so we applaud Dr Kelly for standing up in support of these constructive measures,’ concluded Dr Nott.
We Must Price Carbon
A new analysis commissioned by the Australian Industry Group has again found that ?carbon pricing, including through the imposition of a carbon tax, is the most effective way of achieving least-cost abatement, particularly in the long term.?
The Industry Group report reinforces the same message from the Productivity Commission, concluding that carbon pricing is the right direction for our country to be heading.
Putting a price on carbon, by making it more expensive to pollute the atmosphere with greenhouse gases, will force us to find more efficient and less polluting ways to generate electricity.
With economists backing a price on carbon, and with the multi-party climate change committee close to arriving at a consensus position, Australia seems set to see the introduction of a carbon price next year.
That is very exciting news for our region. A carbon price will drive investment in renewable energy, which will be a huge economic stimulus for SE NSW. A carbon price will generate jobs, and will allow the development of wind, solar and wave technology right across our region.
The cost of a carbon price will be passed on from the big emitters to consumers. There are several ways to get around that. Firstly, households will be compensated, and it will be interesting to see what level of compensation the Gillard government arrives at.
Secondly, households will need to start thinking more carefully about energy conservation. Turning switches off, using low energy appliances, switching to gas hot water, investing in solar electricity and hot water, and hanging washing on a line rather than using a dryer will allow most households to offset an increase in electricity bills.
The answer to climate change will come from innovation – finding more efficient and less polluting ways to generate power. “Winning” technologies will generate jobs and a new economy. Pricing carbon is how we will get there. Exciting times are ahead.
What NASA is really saying.
There have been several letters to the editor in recent weeks misrepresenting what NASA has to say about climate change. Here are a few direct quotes from the NASA website:
“Even though the 2000s witnessed a solar output decline resulting in an unusually deep solar minimum in 2007-2009, surface temperatures continue to increase. Global surface temperatures in 2010 tied 2005 as the warmest on record. All three major global surface temperature reconstructions show that Earth has warmed since 1880. Most of this warming has occurred since the 1970s, with the 20 warmest years having occurred since 1981 and with all 10 of the warmest years occurring in the past 12 years. The current warming trend is of particular significance because most of it is very likely human-induced and proceeding at a rate that is unprecedented in the past 1,300 years.
The Greenland and Antarctic ice sheets have decreased in mass. Data from NASA’s Gravity Recovery and Climate Experiment show Greenland lost 150 to 250 cubic kilometers of ice per year between 2002 and 2006, while Antarctica lost about 152 cubic kilometers of ice between 2002 and 2005. September Arctic sea ice is now declining at a rate of 11.5 percent per decade, relative to the 1979 to 2000 average. Glaciers are retreating almost everywhere around the world ? including in the Alps, Himalayas, Andes, Rockies, Alaska and Africa.
Global sea level rose about 17 centimeters in the last century. The rate in the last decade, however, is nearly double that of the last century. Sea level rise is caused by the thermal expansion of sea water due to climate warming and widespread melting of land ice.
Since the beginning of the Industrial Revolution, the acidity of surface ocean waters has increased by about 30 percent. This increase is the result of humans emitting more carbon dioxide into the atmosphere and hence more being absorbed into the oceans. The amount of carbon dioxide absorbed by the upper layer of the oceans is increasing by about 2 billion tons per year.”
‘If we don?t begin to reduce greenhouse gas emissions in the next several years, and really on a very different course, then we are in trouble,’ Dr. Hansen said at NASA?s Goddard Institute for Space Studies in New York, which he has directed since 1981.