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April 1st, 2011 - Aussies Have a Blue over Cahbon Taxes


April 1st, 2011 - Aussies Have a Blue over Cahbon Taxes  

Tom Markowitz - Saturday, April 02, 2011

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(c) Enerhope.com 2011


On March 23rd, 3,000 protesters gathered on the lawn in front of Parliament House, Canberra, Australia, to give a gobful to Prime Minister Julia Gillard, after her decision to impose a cahbon tax on fuels.


In the days after the rally, government leaders criticized the abusive language of the rally, which featured a harangue by Opposition Leader Tony Abbott.





Ladies, gentlemen, please! One should never use the word "bitch" in polite political discourse, unless, of course, one is a dog breeder or rap singer.

A famous Canadian political leader, T.C.Douglas, offered the following guidance:

"In politics, you should never call any man a son of a bitch.

However, you can mention that when that man goes home at night, his mother runs out from under the porch and bites him in the leg."


The March 23rd anti-cahbon tax rally followed a March 12th pro-cahbon tax rally, where 8,000 people chanted their support for a cahbon tax in Treasury Plyce, Melbuhne.





How did this struggle erupt, far beyond the day-to-day banter of Australia's rowdy political scene?
A few notes on Oz's history with climate change:


The first thing to mention is that Australia is highly vulnerable to climate change, and has already suffered from droughts and bush fires in the south, and floods and cyclones in the north-east. The corals of the Great Barrier Reef are in danger of disappearing.


At the same time, Australia is the highest per-capita greenhouse gas emitter, among industrialized nations because of long distances between cities, sprawling suburbs, a high air conditioning load, extensive agriculture, and coal-fired electricity.



In summary, an irresistible force acting on an immovable object.


A good chronology of Oz climate change events was put together by Gavan Ord, in A History of Climate Change Policy Development in Australia:



In 2008, Australia was on track to implement a large, complex emissions trading system. The Final report of the Garnaut Climate Change Review recommended a massive, well-designed emissions trading scheme as the central policy response to climate change. This single policy recommendation pushed Australia's climate change efforts into dangerous territory. Emissions trading has been successful in reducing emissions by large, direct emitters, e.g. cement kilns, petroleum refineries. However, emissions trading has never succeeded in reducing emissions by motorists, homeowners, or other small emitters.


(Then Prime Minister) Kevin Ruud attempted to sell to Australians a massive emissions trading system for all sectors of the economy, creating confusion and anxiety.


This Peter Nicholson cartoon from The Australian in 2008 captured the confusion and mind-numbing boredom that was presented to Australians as a policy:


The legislation that would have established an emissions trading scheme was defeated three times in the Senate.


In April, 2010, the Labour Party government, led by Rudd, backpedaled on its planned compulsory emissions trading plan, a decision that contributed to Rudd’s ouster as party leader in June by his successor, Julia Gillard.

Ruud postponed the emissions trading scheme until at least 2012.



In April, 2010, the Rudd Government transferred its entire emissions trading team into another program, putting plans for cahbon trading on the back burner.



In June, Julia Gillard replaced Ruud as Prime Minister and Leader of the Labour Party. Gillard expressed misgivings about the proposed emissions trading system. However, she firmly supported the establishment of a price on cahbon as an emissions reduction policy.



The new Prime Minister confronted the possibility that Labour could lose the general election in August, 2010, or that Labour could need the support of the Greens Party to maintain a majority in both houses. The Greens insisted on the establishment of a $23 AU/tonne ($22.28 US/tonne) cahbon tax as an interim measure, until the introduction of an emissions trading scheme.





However, Gillard declared before the August poll, "There will be no cahbon tax under the government I lead".



In the federal election on August 21st, Labour failed to achieve a clear majority of the seats in either of the two houses. Labour now depends on the Greens Party to maintain its majority in both houses.


In order to maintain the support of the Greens, Labour has changed its mind on a cahbon tax. On July 1, 2012, the Gillard government is set to introduce an interim cahbon tax, which will be replaced by an emissions trading system in about 2015-16.



Cahbon Taxes: Good or Bad?



In a word, bad.



A small cahbon tax, e.g. the $23AU/tonne of emitted CO2e specified by the Greens Party, would raise the retail price of gasoline in Australia by 4.3%.


Would this price increase change the behaviour of motorists?


Let's look at a scenario, in which a cahbon tax is applied to the price of gasoline, and its effect on the behaviour of motorists.






Previous experience shows us that motorists do not begin to change their fuel consumption behaviour until the price of gasoline increases by over 50%. Similarly, other consumers of other fuels would not change their fuel consumption behaviour.


Historical USA data (New York Times, May 2, 2010) show us that between 1990 and 2007, the average USA price of gasoline (adjusted for inflation), climbed from $1.87/USgallon (1990) to $2.95/USgallon (2007) (a 58% increase, 1990-2007) but the changes in the price of gasoline had no effect on total greenhouse gas emissions from gasoline combustion, which climbed steadily from 966 Mt CO2e (1990) to 1187 Mt CO2e (2007).


(The gasoline emissions data are from the following USEIA site:)



A large cahbon tax, e.g. $263AU/tonne CO2e, would encourage motorists to reduce their fuel consumption. However, such a large tax would hurt vulnerable people, and would encourage the culture of "Ned Kelly." Such a massive tax would not survive more than a few days in the political climate.


A large cahbon tax with rebaytes would create an administrative nightmare, and would be vulnerable to misunderstanding and "Ned Kelly."


Is a cahbon tax a good policy?


What is a good policy?


Here are 5 criteria of a good policy for combatting climate change, with comments about a proposed cahbon tax:



The policy must achieve its goal.

What a stupidly obvious statement! Not so fast! France, Quebec and British Columbia all imposed token cahbon taxes on gasoline. These taxes did not reduce consumption of gasoline by motorists.



The policy must send a clear message.

If the cahbon tax fails to reach its objective, it will be regarded by consumers as a nothing more than a thinly disguised new tax-grab.



The new policy must be harmonized with other laws, regulations, jurisdictions.

Probably not a big issue in Australia.



The new policy must not hurt vulnerable people.

Many studies have shown that low-income people pay a higher percentage of their total income for energy than wealthy people. A large cahbon tax would have a serious effect on the lives of low income citizens. The proverbial low-income family, who drive grandma to the hospital seven times per week in their old rusty car, would face an increase of hundreds of dollars per year in their transportation cost.



The new policy must be administratively possible.

A new cahbon tax, with rebaytes, would be an administrative nightmare, vulnerable to misunderstanding and fraud.




Don't give up, mytes!


The Government of Oz can and must begin many other new policies and programs to reduce Oz's greenhouse gas emissions.


These policies and programs include:


•           Regulations

•           Policies

•           Taxes

•           Information

•           Promotion

•           Subsidies

•           Government Purchase

•           Technology Development

•           Infrastructure

•           Training

•           Community Planning

•           Setting a Good Example

•           Changing Cultural Values


And remember:

An emissions trading system would be an effective way of reducing emissions from large, direct emitters.

An offsets system would encourage emission reduction projects from non-capped emitters.


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