They’re much the same, a cost per tonne incentive to reduce CO2 emissions, to meet targets set by international agreements. They’re also much different, with tax being certain and staying in Australia while ETS is uncertain, in whichever countries hedge funds choose to gamble. Of course, free market evangelists, drooling over the $Billions involved, insist that ETS is always cheaper and more efficient. Needless to say, they’ll also insist on bail outs when their gambles fail. Both need political will.
With tax, it’s the amount per tonne, gradually increased, until it’s cheaper to invest in efficiency improvement and zero carbon energy sources, than pay tax. With ETS, it’s the total tonnes of national emissions, gradually reducing the number of one tonne permits, traded in the “markets”, with price increasing as supply is reduced, until, as with tax, it’s cheaper to invest than pay inflated marginal price for permits. Claims that ETS is cheaper relate to current value of linked permits in Europe, cheaper now but uncertain for both value and exchange rate in future. Where it gets really messy is with carbon offsets. These are essentially the same as emission reductions, and in one tonne units, except that they’re about paying for protection of amounts of carbon in forest timber. Worldwide, incidence of large bush fires is increasing, so protection of this kind of carbon is prone to failure.
Mr Howard donated $100 million to Indonesia for reforestation but recent news is that it’s been deliberately burnt, with smoke pollution off the scale as it blows across to Malaysia and Singapore. Here in Australia, there’s a 10,000 investor class action against Timbercorp and Great Southern for total loss of funds in large scale timber planting, with plantation land, rented from farmers, now being burnt to return land to farming. Omens not looking crash hot for ideas like Green Army. Surely we need certainty in Australia, to enable sensible investment, based on emissions reductions? Emissions trading, also with offset trading, internationally, as well as domestically, is surely a recipe for even crazier web of transactions, through tax havens, than existing big corporate tax dodging. For the 370 biggest emitters, it will be as much of a joke as the mining fiasco. Our leaders have been competing to be free market small tax, small government and budget surplus, to the point that they can’t even afford self-respect any more. So let’s have a certain, continuing carbon tax, with honest CO2 reductions,
Bernie McComb, Cowes.