Australians would dig deep to fight climate change

Good news for the government implementing an ETS. We won't stand in your way (but woe betide it turns out trust is misplaced).

A MAJOR survey of Australians' views on climate change has found an overwhelming majority think it is happening and they're prepared to pay to address it.

The study by University of Technology Sydney found Australians wanted to see cuts in the nation's greenhouse gas emissions irrespective of the actions of other countries.

The key findings include that 83.7 per cent believed global warming was occurring and, of those, 84.9 per cent said Australia should proceed with an emissions trading scheme (ETS) regardless of the international response. "The bottom line from this study is that Australians think now is the time to adopt a climate change program that has some real teeth," visiting economics professor at UTS Richard Carson said.

"They believe that climate change will cause serious problems in Australia and elsewhere in the world, and they understand there will be sizeable cost going along with it."

We want the revenue an ETS will earn, to help low-income earners cope with the changes, and middle income earners want the GST reduced. Will it be an unnecessary tax, after the cost of pollution becomes a production input?

An interesting question about the role of government arises. Is it more efficient to tax consumption, or 'externalities', that is, the social cost of pollution.

And most want 20 percent of the ETS revenue to be dedicated to climate change R&D.

Professor Carson said 58.7 per cent of participants supported spending 20 per cent of ETS revenues on R & D, in keeping with a recommendation of the Rudd Government-commissioned Garnaut Review.

"The public clearly favours spending 20 per cent of the money on R & D … even though we told them that if they did that they would redistribute less money to the public," he said.

"That shows the Australians are very forward-looking, they see it as a long-term problem and the R & D efforts will help them get over the hump."

Survey participants' views were also sought on the different government plans and opposition policies to tackle climate change.

A majority (57.1 per cent) supported the government's plan to begin emissions trading from 2010 over the Liberals' later 2012 start date.

Participants were quizzed on their political leanings and Professor Carson said Green and Labor voters were more likely to favour the government's plan.

Interestingly, more than half (53 per cent) of Liberal-aligned survey participants also favoured the earlier 2010 ETS start date instead of official policy held by the Federal Opposition.

Views were split on whether transport should be exempt for the first three years of the ETS - with just over half (50.6 per cent) for the move to temporarily delay price increases at the petrol bowser.

The study, entitled Survey on Controlling Greenhouse Gases, was conducted by the UTS Centre for the Study of Choice.

Professor Carson is a Professor of Economics at the University of California and is a Visiting Distinguished Professor at the UTS.

These figures are consistent with other surveys. If this survey gets media traction, it's the death-knell for the AGW denial industry.

Obama's Energy Plan: Really good

So says Climate Spin:

Obama came out with his energy plan yesterday. I agree with Joe over at Climate Progress that its pretty darn good from a major-party candidate (I don't recall if its better then Gore's 2000 plan. Anyone?)

Here are some good points:

• cap-and-trade program with all credits auctioned
  
• Reduce emissions to 80% of 1990 levels by 2050.
  
• Raise CAFE by 4% a year
  
• Increase building, appliance and power generation efficiency (still the easiest "win")
  

And tucked way at the bottom was this nice part about building more sustainable and livable communities: "Obama is committed to reforming the federal transportation funding and leveling employer incentives for driving and public transit." Yeah!

I didn't like the mention of exploiting oil shales in Montana and clean coal but, overall, this is great. Too bad energy, except for gas prices, and climate has fallen off the radar in the campaign or this might get more attention.

Technorati Tags: global warming, climate change

Sydney seeks to be carbon trading hub

Verity Firth, the NSW State Government Minister for Climate Change and the Environment, is sticking her hand up to have Sydney house the National Carbon Market.

Absolutely.

"Not a lot of people are aware but the Greenhouse Gas Abatement Scheme, which was introduced in 2003, was one of the world's first mandatory greenhouse gas emissions trading schemes," she said.

"It was run in NSW, has been running for the last four or five years and means that we now have a significant cluster of energy companies, financial service providers, law firms."

Ms Firth says she will be lobbying for NSW to be the base and regulator of the industry.

"We are establishing a taskforce in NSW and we'll be including representatives of the business community, who have a strong interest in the new carbon economy," she said.

"They'll be advising us on what we can do to help secure the hub for Sydney.

"I mean naturally we do believe that Sydney has the natural advantages. We have a well established finance sector and experience in carbon trading."

Well put. But I'm not biased.

AGL green paper briefing notes

The Rudd Green Paper Carbon Policy Briefing Note of the first Australian company to trade on the Chicago Climate Exchange, AGL, is accessible from their website.

Carbon Policy Briefing Note

Date: 16 July 2008
Subject: Commonwealth Green Paper
The Commonwealth Government has released a Green Paper outlining preferred positions for the introduction of an emissions trading scheme called the “Carbon Pollution Reduction Scheme”.

Key Considerations for your Business
› Are you a liable party under the scheme (do you emit more than 25,000 tonnes)?
› If you are trade exposed, are you likely to be compensated?
› Will your energy bill increase?
› What can you do to reduce emissions and take advantage of
opportunities under the scheme?
› Are there cashflow issues associated with your participation in this scheme?
› What are the taxation implications of this scheme for your business?

So, what are the key considerations for your business?

Thoughts on Rudd's Petrol Excise Cut 'n Run

Considered thoughts on the green paper on emissions trading from Oikos. He has approximately the same take on the petrol excise offset as I have, though is more eloquent in expressing it.

There are two ways to look at this – from a practical perspective or from a principle perspective. Either way, my view is that cutting the petrol excise isn’t good but isn’t really all that bad either.

The practical implication of cutting excise and therefore neutralising the impact that the scheme has on the petrol price is that...

Oikos also prefers for the review of the excise cut after a three year period to be a permanent cut instead, — why defer uncertainty for three years. I agree, it also makes Labor a political target, by keeping open the notion among industry lobby groups they can keep getting exemptions. The opposition has already signalled they could break from bipartisanship.

I don't know what configuration of emissions trading scheme is best for Australia, but surely political courage is an enabling ingredient.

Green paper tinged with blue hue

In the wake of the release of the Green paper, Michelle Grattan pings the electorate to see if they are still awake:

NO WONDER the Opposition is struggling in its efforts to pick a fight with the Government over its emissions trading scheme. The green paper model differs only marginally from the one John Howard endorsed last year.

The main variation is in timing. The Howard scheme, based on a report from a task group headed by then Prime Minister's department secretary Peter Shergold, was to start in 2011 or 2012. The Rudd plan is due to kick off in 2010.

For the rest, the similarities are great, including compensation in each scheme for the trade exposed sector and for other badly affected industries, notably electricity generators (although the green paper is rather tougher on both, as well as focusing on the household sector, brushed over in Shergold).

Notably, Howard had petrol in. As he boasted, "this emissions trading scheme will be world class in its coverage and governance" and would avoid "political fixes".

He did not propose any "fix", as the Rudd scheme does, to neutralise petrol's inclusion. Of course oil prices have shot up in the past year. The Coalition has shifted ground: it urged, and Labor adopted, an offset to ensure petrol prices don't rise as a result of the scheme.

In light of its history, it is a bit rich for the Opposition to be jumping up and down about the Government's plan to review this offset after three years' operation — which means five years from now.

There is continuity even in the bureaucratic work behind the two schemes. The Coalition's task group was serviced by a secretariat headed by Martin Parkinson, then a senior Treasury officer. Parkinson drafted the group's document. Now he is secretary of Penny Wong's Climate Change Department, established by this Government, and the most important bureaucrat in putting together the green paper.

In preparing the Shergold report, the challenge for the task group was to come up with something acceptable to Howard, at heart a climate change doubter, whatever his latter-day conversion under political pressure. Howard personally wrote the terms of reference, which inevitably made the report conservative.

The task group was successful: Howard adopted the report, more or less holus-bolus, although his government didn't last long enough to implement its measures.

The green paper is a statement of Rudd Government policy. In this case, the challenge has been to err on the side of caution and a slow start for reasons of political necessity, despite Labor's rhetoric about the imminent threat from climate change.

Approaching the task from different perspectives, the two exercises converged on a common centre.

I blame the Liberal opposition partisanship in the issue, in all but name. They are not really presenting as a party that is serious, rather as a ratbag collection of interest groups and factions. I would like to see an opposition that holds the Government to their election promises, asking why Garnaut is being swept aside for Shergold, for instance.

The rest of Grattan's piece sketches out the political landscape that new legislation will have to chart a course through.

Technorati Tags: global waming, climate change

Green Paper is cautious politics

The great Emissions Trading Scheme Sell begins, and the Rudd Government opens by signalling that they ease the pain of introducing the EMT, or whatever they will call it.

HOUSEHOLDS earning up to $150,000 and the nation's heaviest polluters will be helped to cope with the introduction of an emissions trading scheme in 2010 that the Government says will be "calm and measured".

Sounds a bit soft to me. A price signal should function as a price signal. But I don't have to stay in power, and it looks as if the Liberals have decided against a bipartizan approach. That makes me grumpy.

Labor have to position themselves for a hasty implementation, be seen to do so, yet not expose themselves to the Opposition canard that it makes no sense moving before China, India and the US. Someone should blow that damn meme out the water.

So what's the damage?

Releasing the green paper outlining the shape of the scheme, the Minister for Climate Change, Penny Wong, confirmed that increases in petrol prices would be neutralised by corresponding reductions in fuel excise.

She refused to guarantee that this would continue beyond 2013 and said motorists should start considering what types of cars they would be driving by then.

On first impression, I have doubt that market behaviour would change much by watering down the medicine. Economically, it misses the point. But, there is satisfying logic in weaning the Government of this revenue and reducing their conflict of interest with the oil lobby. I believe the revenue is about $2 billion a years, and Rudd's 'fiscally conservative' government is sure to fund the shortfall from revenue raised from issuing carbon permits to industry.

In addition, horrible hikes in the cost of oil are predicted anyway. I've been reading suggestion that market pressures going to have more of an impact on the cost of fuel, than a carbon tax.

Back to the question of damage:

When the scheme begins, electricity and gas prices will rise immediately. Under a $20-a-unit carbon price, electricity bills would increase by 16 per cent, gas bills by 8 per cent and the overall cost of living by 0.9 per cent.

Using some of the billions in revenue the scheme will generate, low-income households - those earning up to $53,000 a year - will receive full compensation through either the tax or family payments system.

Middle-income households - earning up to $150,000 - will receive partial compensation. Pensioners, carers, the elderly and others will have their pensions increased to compensate fully.

The payments will start either when or before the scheme begins and will help insulate Labor against expected electoral fallout.

So how are they going to fund this electoral fire-break?

A cap will be put on the amount of carbon that can be emitted. Within this cap, 1000 of the nation's biggest polluters will have to buy permits for each tonne of carbon they produce. The costs will be passed on to consumers and companies can trade unwanted permits. These are designed to act as incentives to reduce emissions.

The carbon price - the cost of each permit - will depend on the level of emissions.

UPDATE

Reaction (and a growing round-up of of reactions) from Not a Hedgehog: "Piss.Weak."

Technorati Tags: global warming, climate change

ASX preparing to trade carbon

Greed is good, but green greed is best.

The ASX has their eyes on their share of the $46.5 trillion investment market that the International Energy Agency says is required to reduce the world's CO2 emissions by 50 percent by 2030, 21.5 years away.

Robert Elstone | July 14, 2008

AS record high prices for coal, gas and oil - together with speculation as to the impact of the forthcoming emissions trading scheme on the Australian economy - dominate the headlines, the existing infrastructure of the Australian Securities Exchange remains a conduit to help firms raise and allocate capital as well as manage the risks associated with fluctuating energy and environmental product prices.

The International Energy Agency estimates that a $US45 trillion ($46.5 trillion) investment would be required to reduce the world's carbon dioxide emissions by 50 per cent by the year 2030.

Domestically, the National Generators Forum estimates that $150 billion is required to meet a 60 per cent reduction on year 2000 emissions by 2050.

While these estimates appear staggering, a well-designed ETS will generate an acceptable rate of return on the investment required. In other words, superannuants and other investors will be beneficiaries of the transformation process.

To put in context what needs to be achieved over the 42 years until 2050, one only has to look back over the same duration since 1966 to see how far that investment in new technologies and the sophistication of financial markets have advanced.

In 1966, we did not have personal computers or futures contracts on financial instruments such as equity indices and interest rate securities, let alone active derivative markets for compliance instruments such as emission permits and renewable energy certificates.

This is good news for prescient Australian companies who are already trading overseas, like AGL trading abatements on the Chicago Climate Exchange.

Technorati Tags: global warming, climate change