The Productivity Commission’s long-awaited exploration of carbon abatement programs overseas was partly established to inform the absurd debate about whether there was any risk of Australia leading the world on climate change action. To the extent that this looked like an argument over whether a runner about to be lapped was “ahead” of the athletes closing in behind him or her, this was vaguely amusing, although not necessarily in a way our descendants are going to laugh about.
But it’s best considered as a companion piece to the work of another government agency, the ANAO. Last year the ANAO looked at carbon abatement and renewables programs worth $1.7 billion, administered by the Howard and Rudd governments over a decade, and found the biggest program had successfully driven uptake of renewable energy, but at a carbon abatement cost of $447 a tonne — about 20 times the sort of price per tonne Labor keeps dropping hints about in the carbon price debate.
The PC mostly examined similar schemes in the US, UK, Europe, South Korea and China — hundreds of them. But luckily it had the EU’s emissions trading scheme to consider as well (the Kiwis have one but it’s only just got off the ground, and there are also voluntary trading schemes in place elsewhere). Lucky because that allows the simple comparison that lies at the heart of the PC’s conclusions — that for electricity generation, carbon abatement obtained via emissions trading is cheaper — significantly cheaper — than abatement obtained through direct action programs such as subsidies or feed-in tariffs.
Between them, the PC and the ANAO have demonstrated, in terms surely compelling enough even for climate change interventionists such as Socialist Action and the federal opposition, that direct action programs are a grotesque waste of taxpayers’ money compared to an ETS. The PC is particularly damning of biofuels — in NSW, courtesy of the thankfully liquidated Labor government, motorists are paying an invisible subsidy to the biofuel industry courtesy of a 10% biofuel mandate every time they fill up. Biofuels emerges poorly from the report, with data showing that, apart from China where proper information is hard to obtain, it costs several hundreds dollars per tonne of abated carbon — from $300-plus a tonne in Europe and Australia through to more than $800 in South Korea.
What is more surprising is that the PC also finds that fuel taxes may be a cost-effective way of reducing emissions. There’s a widespread assumption that fuel use, particularly for transport, is more inelastic than other forms of energy consumption — if you’ve got to drive to work, you’ve got to drive to work. But the PC concludes that abatement achieved via fuel taxes, while costing more than $100 a tonne in Europe and Japan, costs $60 a tonne here and only about $20 a tonne in the US and China.
The only sensible conclusion from the PC’s work — and that of the ANAO — is that taxpayers in Australia (and overseas) have been paying far too much to cut carbon. We’re being gouged, ripped off and rorted by politicians content to pay 10 times what we need to pay to cut emissions.
Of course, you’ll look in vain for the same levels of media outrage that accompanied revelations that it cost the NSW government 6% more to construct BER projects in a hurry. The ANAO report on greenhouse programs got minimal coverage, despite the basic maths suggesting $900 mllion of a $1 billion program had been wasted buying carbon for 10 times what a $40 a tonne ETS would buy. And yesterday there were journalists seizing on lines about how no country in the world had an economy-wide ETS — which would be an impressive achievement if it happened since no one has managed yet to work out how to measure agricultural emissions from sources such as farting cows (short of doing this to every animal). There were even some commentators (the IPA’s Tim Wilson, most risibly) suggesting the PC had demonstrated Australia was ahead of other countries in emissions reduction efforts — a strange conclusion given we trail only the oil monarchies in per capita emissions.
The PC’c conclusions also back Ross Garnaut’s view that once an emissions trading scheme is established, supplementary policies such as a Mandatory Renewable Energy Target — a tripartisan policy at the moment — become superfluous and costly add-ons. An effective emissions trading scheme with a high enough price should drive the transition to lower emissions-intensive electricity generation by itself. The problem is, of course, the sort of price that Labor is considering — $20 — won’t be anywhere near high enough to accomplish this. We’re likely to end up with a half-baked carbon pricing scheme that doesn’t eliminate the need for supplementary programs to encourage the switch to renewables or gas, in the interim.
And as has now been demonstrated conclusively, those supplementary programs are a waste of taxpayers’ money.
Shame it doesn’t fit the media narrative to jump up and down about it.
The Productivity Commission was told what countries to benchmark again. It was in their brief and they could not go outside it.
So they missed our competitors Canada, Brazil etc, who we compete with and who HAVE NO CARBON TAX or the like.
More spin from Gillard
Last night there was a riot at Christmas Island, the Dept of Immigraton denied it this morning and then recanted when the media found out. Its all SPIN and media management.
After the various reports relased over the last week I think Labor’s strategy has become crystal clear, give Abbott enough rope and he’ll hang himself. All his one liner’s “Australia is going it alone”, “direct action is the smart way and a price on carbon is the dumb way” “working families will be worse off” etc have all been exposed as falsehood’s and nbow he is left clutching at thin air.
Gillard hung herself by the way she spoke and dismissed the homeless aboriginal women on TV last night, like a naughty schoolgirl.
Lots of good footage there to use in the next election camapign. Priceless Jimmy
CA – You are delusional, even if the PC didn’t study every economy it studied enough to show 1) We aren’t going it alone & 2) “direct Action” os much more expensive tha putting a price on Carbon.
CA – Try to stick to the topic.