Carbon Tax – it’s official … nearly

Well it’s in – a carbon tax is through the Australian Parliament and come mid-2012 emitters will be hit with a $23/tonne carbon price. To start.

Once the dust has settled and the back-slapping and self-congratulation has died down what does this actually MEAN at the end of the day for the planet? We were told by the spin doctors that it will mean everything, but will it?

We were told a tax on carbon will mean a reduction in emissions. How? How does one directly lead to the other?

When I phoned the office of the Minister for Climate Change even THEY couldn’t tell me.

If this is the primary purpose of the carbon tax – a tax leading to the reduction in emissions – won’t taxing the big emitters, who then pass the additional cost onto end-users, then the government excludes some industries and provides offsets to others, and then pays households $10.10/week to cover the increased costs to them, lead to a net zero effect on emissions? Isn’t it just shifting money around?

Again, the Minister’s office couldn’t tell me. But they’re the ones who wrote the legislation!!

If the government intends to use the revenue generated from the carbon tax on research and development of cleaner energy technologies that’s great! How do they then get the emitters to use the new technology? Why aren’t they providing the big emitters with more incentive to research cleaner energy technologies themselves? There’s no incentive when you tax them with one hand, but provide keys to the back door with the other.

We’re told that the carbon tax is a stick approach on heavy emitters, but  the emitters are being told they can purchase carbon credits from here or overseas. What does this mean?

Carbon credits will become a tradeable commodity. Let’s say I’m a farmer. I can get carbon credits for any carbon offset activities I undertake. This could mean planting trees or methane gas capture. I can then sell those carbon credits to emitters and have an extra source of revenue.

Now let’s say I’m a power station – a big emitter. Keeping the numbers simple, let’s say I’m allowed to emit 1000 tonne of CO2 a year. But I emit 2000 tonne. Under the carbon tax I would pay tax on the additional 1000 tonne. At the starting price of $23/T I’d be paying $23,000 in tax.  So what do I do? First up I pass on the additional cost of production to end users. Next, I purchase carbon credits (the price of which has yet to be determined) to offset say 500T of CO2. Now I only have to pay tax on 500T – or $11,500. But this can be at least partially offset by the increase in revenue I’m getting from the end-users – fully offset if I pass on the full effect of the tax.

This is an oversimplification of course but is the scenario I presented to the Minister’s office. And they still couldn’t tell me how this carbon tax will reduce emissions.

If you’re going to use a stick to incentivise big emitters to reduce their CO2, why not tell them they can’t pass the increased costs on? Clearly there are other economics at play here – naturally Australian businesses need to remain competitive in a global marketplace – one in which a carbon price is equal across the board … which unfortunately, right now, it isn’t.

Australia’s emissions account for less than 1% of total global emissions. Yet we now have a carbon tax more than double what is charged in Europe. And the biggest emitters have no carbon tax at all.

Does that mean we do nothing? Of course not! Does it mean the Government rushed this through while they still had the chance, with the socialist Greens controlling the Senate? Probably. Does it mean there will be a measurable reduction in emissions in Australia? No one can tell us.

I’d like to see, once this is in place, within say 5 years some research showing measurable, quantifiable differences in emissions before I decide if this is a good thing or just political spin.

Climate change is real – of course it’s real. The climate has been changing for millennia. If the Government is all about leading the way on climate change then why aren’t they doing something about the continued large scale clearing of the earth’s lungs – trees – which are the planet’s carbon ‘scrubbers’? Why isn’t more being done for reforestation? Land-clearing prevention?

If this government is all about climate change prevention why are they cutting the rebate on solar panel installation – a sustainable, alternative energy source? Why are they not doing more about investigating alternative energy sources like in-flow generators, wind farms etc?

Perhaps some of the revenue raised from the carbon tax will go to these endeavours – it was the intention of the Opposition’s proposed carbon plan to do just this. But one wonders whether this is merely a neat way to generate enough revenue to meet the Government’s promise of budget surplus by 2013.

So the question remains: HOW will taxing CO2 directly lead to a reduction in emissions? If anyone can tell me, please share your comments below!

©Earth Goddess Wisdom


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