Three Questions for Mr Constance
At the recent carbon tax information session at St Johns Church in Bega, Mr Andrew Constance was very keen to avoid a debate. I think participants and audience showed great respect for his wishes.
Since that meeting however, Mr Constance has been quoted in an article in the Bega District News titled “Constance Slams Carbon Tax”. In that article, Mr Constance has made several statements that I feel need to be challenged.
The Frontier Economics report, commissioned by the O’Farrell government states that “the adverse affect of the carbon tax will be modest”. According to the report, the economy will continue to grow and jobs, incomes and standards of living will continue to rise.
Mr Constance says the carbon tax will result in the “loss of thousands of jobs”. He correctly refers to job losses in the Hunter and Illawarra, but I have questions about his comment that “NSW Treasury analysis has found the carbon tax will cost at least 31,000 jobs.”
The Frontier Economics report predicts jobs and productivity growth in nearly all regions in Australia apart from the Hunter and Illawarra.
If you take account of jobs growth in the renewable energy sector and billions of dollars in compensation for polluting industry (which the Frontier Economics report does not) then there will be 400,000 new jobs created by 2020 in NSW alone, according to federal treasury modelling.
Mr Constance says the carbon tax “will also force up electricity prices for NSW households by up to $498 a year” and that “Labor’s carbon tax will be a disaster for NSW families and seniors.”
Ben Phillips is the principal research fellow at the National Centre for Social and Economic Modelling at the University of Canberra. On ABC radio last week he was quoted as saying that the average Australian household will be $2.50 per week better off under the carbon tax after all costs, compensation and tax breaks were taken into account.
I have three questions for Mr Constance. How do you arrive at the “31,000 job loss” figure given that the modelling you quote describes a net increase in employment? Could you explain what you think the cost to households will be once compensation is taken into account? If you have a more cost effective solution to climate change, could you tell us what it is?
Mr Constance, I think you should reconsider your opposition to the carbon tax. Modelling commissioned by your government demonstrates that the proposed carbon tax will have a positive impact on jobs and output in SE NSW. The benefit is clearly spelt out on page 35 of the Frontier Economics report, which is available on the www.cleanenergyforeternity.net.au web site.
Clean Energy For Eternity support the Eden Wind Farm Project.
The Eden Wind Farm Project will have many benefits for our community.This project will be another huge leap forward in our community reaching the 50/50 by 2020 targets. Our community is actively embracing renewable energy and its benefits, we already are one of the densest solar PV communities in Australia.
This is another project that will help identify Bega Valley Shire as a progressive community willing to embrace renewable energy. A community aware that this scale of investment in our shire will have long term benefits for everyone. Being a community identified as one willing to embrace renewable and energy efficient technology makes our community more attractive to investors who are willing to plough millions of dollars into projects such as this one.
The chosen site already has the electrical infrastructure to cope with the energy load, no new power lines need to be built. Roads and good access already exist and if required the wharf could be used for unloading, no large scale access road works are required. The environment will suffer minimal impact in the construction zone due to its industrial nature.
This renewable power station will generate enough power for 4200 homes. It will see a drastic reduction in emissions when compared with fossil fuel based energy generation, some 250,000 tonnes of carbon dioxide per year. It will contribute to Australia?s national target of 20% renewable energy use by 2020.
The Eden Wind Farm will create new jobs for our community in construction and maintenance, with spin off benefits to local business including building supplies, earthworks, hospitality and many more.
Wind farms are an important part of the mix of renewable energy required to meet our national obligations in dealing with the impacts of climate change. This project is a demonstration to other regional communities that they can attract small to mid scale renewable energy projects and harness their own unique natural energy systems creating local employment opportunities.
Our region is about to see some exciting changes. Eden Monaro will look very different in 2020.
By 2016, solar electricity will have reached grid parity. 500 people will be directly employed in our part of the world installing solar panels, and by 2020 90% of households will have solar panels on their roof. 95% of households will have solar hot water, and no house will have an electric hot water service. Eden Monaro will have the fastest uptake of solar of any region in Australia.
By 2020 30% of households will be producing more energy than they use and a growing number of families will list energy production as their main source of income. All houses will be connected to the grid via smart meters that haven?t been invented yet. The integrated new smart grid will be one of the solutions to coping with the intermittency of renewable energy
A large wind farm in the Monaro will allow the Bombala and Cooma Monaro shires to be leaders of an energy revolution. Smaller wind farms in Eden and along the coast will allow people to see that Eden Monaro is well placed to become one of Australia?s energy generating powerhouses.
By 2020 the wave farm at Eden will have been through several expansions. The pilot project will be powering a large proportion of Eden?s electricity needs, and several smaller wave generators along the coast will be making wave power the fastest growing energy source after wind energy.
Tathra, Bermagui and Eden will be the first towns in Australia to meet a 50/50 by 2020 target. All three towns will be striving to be the first to be powered by 100% renewable energy. The competition will be hotly contested, with the prize of leadership, national media interest, and a tourist drawcard.
After over a decade of wading through waist deep obstructive federal and state government red tape, Clean Energy For Eternity will finally get the region?s first community owned solar farm up and running in Bega in 2016. By 2020, eight solar farms will have been built around the region, including a pilot solar thermal station with graphite storage which allows the station to provide base load power.
By 2020, over 2000 people will be directly employed in the renewable energy sector in SE NSW, with that number growing rapidly.
We will look back to 2012 when a national price on carbon was introduced and wonder what all the fuss was about.
The Vexed Issue of Natural Gas
Natural gas will be an important energy source over the next decade if Australia is going to reduce emissions. Natural Gas produces half the CO2 emissions of coal fired power stations, and can be turned on and off quickly. For those reasons, gas is a very good way of helping the grid cope with the intermittency of renewable energy sources. Natural gas is a bridge between high emission coal and low emission renewable energy. So why is there so much controversy about coal seam gas at the moment.The Vexed Issue of Natural GasThe Vexed Issue of Natural Gas
There are several issues that need to be carefully considered.
In some cases, where recovery of natural gas is slow because the gas is tightly held within a coal seam, the method of hydraulic fracturing (fracking) is undertaken. This process involves high pressure injection of a sand/water slurry (including in some cases a range of chemicals) into the coal seam to fracture the rock and hold the fractures open, thus releasing the gas. Some of the chemicals used in the extraction are potentially toxic and can leak into aquifers. Fracking represents a threat to long term water storage.
In 50 years time I suspect water in Australia will be a far more valuable resource than gas. Long term water storage in large natural aquifers must not be put at risk by a reckless expansion of coal seam gas exploration.
Large amounts of salty water are brought to the surface during the fracking process. Recent practice has been for poor quality water to be contained in storage ponds. How best to deal with the large amount of salt extracted is not clear.
Methane is 20 times more potent as a greenhouse gas as CO2. If the amount of methane leaking from gas wells can be kept below 2.5% of the total methane used, natural gas can reduce emissions compared with coal. If it is higher than 2.5%, then it is worse. The Australian Petroleum Production and Exploration Association says the rate of leaks from coal seam gas wells in Australia is ?negligible?.
Natural gas is a fuel that works well in combination with renewable energy, and will help us transition away from coal. Careful consideration needs to be given to the extraction process when the long term viability of aquifiers is put at risk.
Angry Anderson, Lord Monckton and Alan Jones form an unlikely coalition to spearhead Tony Abbott?s carbon tax “people’s revolt”. Meanwhile economists are quietly queuing up to support a price on carbon as the most cost effective way for Australia to reduce its emissions. Here are some examples.
The Productivity Commissions clear finding is that “the cheapest and most cost effective way of reducing emissions is via a market based price on carbon.” The commission reports that a Direct Action approach is expensive and ineffective.
Professor Ross Garnaut is is a Distinguished Professor of Economics at the Australian National University. He says “reducing greenhouse gas emissions would not come at the expense of Australia’s economic growth.”
The Australian National Audit Office (ANAO) and the Grattan Institute (an independent public policy think tank in Australia) have reviewed competitive grant schemes similar to those proposed by the Coalition’s direct action policy and found that they:
Take far longer to achieve their objectives than originally planned
Achieve much less than expected
Cost far more than was budgeted.
Dr Richard Denniss is the Australia Institute Executive Director and says “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.”
The Grattan Institute says “[A] carbon trading scheme or tax will not be costless, but it is highly unlikely that government can achieve 2020 emission reduction targets at a lower cost through alternative measures.”
Rod Sims, chairperson from the Independent Pricing and Regulatory Tribunal (IPART) says “a carbon price would allow lowest cost measures to be chosen.”
Professor John Quiggin, from the School of Economics at the University of Queensland won this years Distinguished Fellow of the Economic Society of Australia. He says “while the [carbon tax] package will drive substantial changes in patterns of energy production and energy use, the overall impact on the economy will be so small as to be undetectable against the background of year to year variations in levels of economic activity driven by factors such as exchange rate movements.”
The Australia Institute has looked at the cost effectiveness of the carbon tax compared with alternatives. In terms of dollars per tonne of carbon abatement, the carbon tax will cost $23. The NSW Greenhouse Gas Abatement Scheme costs $40, and the Coalitions Direct Action will cost $140. According to the Australia Institute “the coalition would have to allocate around $100 billion to meet the 5% by 2020 target. This is far in excess of what the Coalition has budgeted for.”
Responding to the fact that economists are backing the carbon tax over Direct Action, Tony Abbott said “It may well be, as you say, that most Australian economists think that the carbon tax or emissions trading scheme is the way to go,” he said. “Maybe that’s a comment on the quality of our economists.?”
7/10/11 The NSW state government this year commissioned Frontier Economics to look at the economic impact of a carbon tax on Australia.
Mr Barry O?Farrell quoted the Frontier Economics report as saying that ?31,000 jobs will be lost in NSW.? That news created front page headlines across the country.
That was not the impression I got after reading the report.
The conclusion of the Frontier Economics report is that the adverse affects of the carbon tax will be modest. The economy will continue to grow and jobs, incomes and standards of living will continue to rise.
The report states that a carbon tax will force significant shifts in where people are employed and in what industries. The changes are most pronounced where emissions intensive trade exposed industries are important to regional economies. The most adversely affected regions are Hunter NSW, Gippsland Vic, Northern SA, Illawarra NSW, Fitzroy Qld and Central West NSW. In all cases the carbon price results in slower growth in output rather than absolute declines on current levels.
According to the Frontier Economics report the three regions in Australia that will most benefit from a carbon tax in terms of jobs created are southeast WA, far north Queensland, and southeast NSW. That is very good news for our part of the world. Our region will have more jobs and higher growth with a carbon tax compared with business as usual, according to the Frontier Economics report.
Frontier Economics does not factor the influence of new jobs created in the renewable energy sector, or the $9.2 billion in compensation to emissions intensive trade exposed industries. Federal Treasury modelling does.
Federal modelling shows that national employment is expected to increase by 1.6 million jobs by 2020. The modelling predicts 400,000 new jobs in NSW by 2020. These figures are broadly consistent with CSIRO modelling.
When you look at federal treasury modelling and the state commissioned Frontier Economics report, the evidence suggests the economic impact of a carbon price will be modest, and positive in many instances. Some regions will grow slower than a business as usual scenario (The Hunter and Illawarra), and some will grow faster (southeast NSW).
Carbon Tax Discussion
A carbon tax is soon to be introduced. The legislation is before federal parliament and looks like passing through both houses.
A public discussion on the economics of the carbon tax will be held in Bega on Wednesday 5th October. The meeting will be held at St Johns Church in Bega at 5:30pm, and will be chaired by Bishop George Browning. Mr Andrew Constance has accepted an invitation to participate, and I am hoping that Mr Rob Stokes (NSW Parliamentary Secretary for Renewable Energy) will be able to attend. Unfortunately Dr Mike Kelly will be hosting a meeting in Bungendore on the same night, so will be unable to attend. A lot of important issues need to be discussed.
I want to compare the federal government?s Carbon Tax with the opposition?s Direct Action policy and the NSW government?s Greenhouse Gas Abatement Scheme. I want to consider the strengths of each approach.
We will discuss the impact of a carbon tax on jobs, and on the cost of living, looking particularly at local impacts.
I am looking forward to a calm discussion about important issues.
This is a Clean Energy For Eternity event. Entry will be free but donations will go towards solar panels for the Upper Brogo Rural Fire Shed.