It is a credit to ALS blogger John Humphreys and the CIS (his employer) that his recent opinion piece in the Australian prompted an almost immediate response from the Minister for Climate Change, Penny Wong.
JUST as Australia is poised to implement the reform needed to move to a low-pollution future, proposals for a carbon tax have resurfaced, from Richard Denniss, of The Australia Institute, and John Humphreys, of the Centre For Independent Studies, published in The Australian last Wednesday.
It is not true, as Denniss and Humphreys claim, that Australia has not had this debate.
However Penny Wong gets it wrong. Firstly Australia has not had this debate. A few committees and blogs have discussed the pros and cons of Carbon Taxes and the ETS however there has not been anything like a general debate in the media or the community at large. However this is a minor point. Where I think she really misses the mark is where she says;
Arguments around the merits of emissions reductions policies can be complex, but the core explanation for why emissions trading is superior to a carbon tax is simple. A carbon tax does not guarantee emissions reductions. A cap-and-trade scheme does.
This presumes (wrongly) that reducing emissions is the only criteria that matters. It suggests that the ALP is completely indifferent to economic and political considerations. And you can of course guarantee emission reductions with either approach, the issue really coming down to a question of “at what price”? Set high enough a carbon tax will reduce emissions just like an ETS. However an ETS assumes that we must reduce emissions whatever the price, whilst a carbon tax acklowledges that above a certain price further emission mitigation isn’t sane. In fact the ALPs ETS acknowledges this by putting a cap on the price of emission permits and in so doing actually leaves hollow the claim that an ETS guarantees reductions.
One might counter (although Penny doesn’t attempt to) that at ETS allows for a lower price. Whilst this is true at certain points in time the overall uncertaintly of the carbon emission price under an ETS means that investment in alternative energy technologies will require a higher aggragate price to achieve the same investment confidence. As such an ETS is at the end of the day a more expensive way to get the same industry response. And the certainty of revenue that would flow from a carbon tax ensures that the reduction of other taxes remains a viable position even when debating the ALP neo-socialists.
When it comes to countering the argument of Richard Denniss she completely side steps his point.
There has also been misunderstanding of the impact voluntary action by households can have under a cap-and-trade scheme. Some argue that household action simply frees up carbon pollution permits for others to use.
In fact, individual and community action to be more energy efficient not only saves them money, it will contribute directly to Australia meeting our emissions reductions targets. Strong household action also helps make it easier for governments to set even more ambitious targets in the future.
If you read between the lines she is admitting that under an ETS individual action to reduce emissions does nothing to exceed the collective target for reductions. All it does is offset reductions that the corporate sector would otherwise need to make. As such the ETS does in fact disempower individuals from taking meaningful action.