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CPRS defeated – where to now?

The CPRS bill has been defeated through the joint actions of the Coalition and the Greens in the Senate. Labor will present the bill for a third time rather than seek a double dissolution of both houses of Parliament. My preference would have been to get this highly imperfect bill passed but it has been defeated. It is now difficult to see how, without totally destroying its intent, a reformulated bill will ever get through. Putting the issue before the people is the best way out of this mess. Although it won’t be easy, Labor should negotiate a tougher bill which forgoes at least some of the outrageously counterproductive concessions to the electricity sector and which leaves open the possibility of charging for emissions in the agricultural sector – hopefully this should attract the 5 Green votes in the Senate. If this attempt is rejected and fails then a double dissolution should be sought.

The Coalition are pushing the ‘big tax’ line – of course most of the relative price changes on consumers were fully compensated by income tax cuts before the Coalition forced its amendments through. It was these amendments which forced bigger emissions handouts at the expense of consumers. The Coalition is engaging in deceit on this issue and, by forcing alternatives to charging for emissions, increasing the cost to the community of meeting emission targets.

What should the Coalition do? I was dismayed to find that only two Liberal Senators crossed the floor to vote with the Government although sincere thanks to them. I have no idea how the Coalition can move on from here. Abbott now says that climate change is real (!) and must be addressed but, if he opposes the current CPRS on the grounds it is a ‘tax’, there is no way he will sensibly endorse a pure carbon tax. He has gossiped a bit over recent days about nuclear power but this seems to be daydreaming – no power station has been built in the US for decades. Anyway, is Abbott suggesting a supply-driven response to climate change along central planning lines? That doesn’t sound workable and will inevitably be expensive if carbon isn’t in some way priced. The policy vacuum at the centre of the Liberal Party debacle has not been resolved and I assume further major changes will occur. Literally nothing has been resolved by the replacement of Turnbull by Abbott – at least in terms of climate change policy.

Update: Comments by Joshua Gans on the Liberal’s anti-market policies and from this in The Australian.  The Liberal logic seems so bizarre that you wonder whether Paul Kelly is right and Abbott is just making-policy-up as he goes along.  Even the Business Council of Australia thinks the Abbott scheme is foolish. Bizarre indeed, but maybe Abbott didn’t expect to become leader and was sprouting opposition to the CPRS without thinking about alternatives – or because he didn’t believe in climate change – and therefore did not see the need for alternatives. He has presumably now come back to earth.

24 comments to CPRS defeated – where to now?

  • davidp

    There might be more construction of nuclear power stations in Europe though – I can remember reading somewhere (reputable) that there was more construction planned now than for a long time.

    That being said, am also very dismayed with the “we can cut emissions by 5% without any price changes” argument.

  • hc

    The nuclear power construction industry is something that would interest you David. It is obvious there are “learning-by-doing” economies but, strangely, inadequate pressures for standardisation of design. There are secular and unexpected construction cost increases that make nuclear power a risky option for the private sector even with large subsidies. Power stations now have greater efficiencies and longer lifetimes and the proliferation/waste disposal issues seem manageable but still the economics evoke fear among power generators. Yes moves to develop more nuclear are afoot in Europe – particularly the UK – maybe this offers promise. The French experience is difficult to evaluate because the power stations are public and the economics are non-transparent.

  • Apu

    What seems to get lost in the detail of argument is that any scheme will have a life of forty years at least. This means that from time to time there will be major rewrites of key elements of the bill depending on economic circumstances, the prevailing political wind and of course most importantly technological changes.
    The problem with most responses to the CPRS was that everyone got hung up on the details rather than stand back and look at the broad infrastructure.
    India has in the last few weeks signed supply deals for uranium with Canada and five build contracts are under way with one being built by the French and two each the US and Russia. This will do more to abate short term GHG emissions than anything India will be taking to Copenhagen.

  • Ros

    Equally what should Labor do. There are dangers for them now. Maybe what is happening looks more like this.

    Yesterday Penny Wong reiterated the Labor view, Along the lines of what we are promising is to totally change your world Australians, I think it was that CC required the change of the very nature of the Australian economy. Maybe it is that she gets Abbott’s message which I think is whatever the climate change arguments the solution is not to make Australia into a completely different place, so she is putting their counter argument now. Personally I don’t think Penny is on a winning message. If Australians conclude that the Coalition can achieve mitigation of “carbon pollution” without considerable pain, in contrast to what Rudd has his lieutenants spruiking, they will take it.

    I also think that you are finding inconsistencies in Abbot that aren’t there. I wonder if in fact he talks with Dick Warburton because the message is very similar. Particularly when in the Lateline interview you dismissed as nonsense Warburton was very strong on this, science is not settled, but and because of this, risk management requires action, but also requires that you don’t go to the extreme, and that actions of insurance include, cap and trade, carbon tax and other approaches. Talking to each other or maybe just an emerging view?

    If you revisit Laurie Oakes interview with Tony Abbott back in November, and his raising of the “the argument about climate changes is crap” (note the argument, which The Age for example reported yesterday with gusto but then didn’t notice what it was they were reporting), Tony Abbott’s statements were very much along the same lines as Warburton without the other approaches. Now he is Leader and the other approaches are under consideration.

    While Pew polls are about the thinking of US citizens there is no reason to suppose that Australians aren’t drifting along the same path. Essentially while there is still belief in climate warming, though reduced, there is growing doubt about the human factors, (prior to the CRU getting itself into trouble) and if they were well aware of cap and trade very strong opposition to it. A majority now put economic concerns above CC action. Only 36% now think that global warming is the result of human activities such as burning fossil fuels. Maybe driven by GFC but also maybe the “climate porn” has permanently turned them off. Americans think climate change is real, but why and what to do. Maybe they don’t know what to do, but they and Australians I suspect, are listening for alternatives.

    China and India have been putting out the message that if they don’t get what they want in their agenda (very definite non-negotiables within it they say and it sounds like they are economic ones not environmental) at Copenhagen they will walk. This is hardly a message that they think the greatest danger facing them is global warming. There has been a change in the atmospherics about CC, and just maybe Rudd will end up looking like a paternalistic wowser determined to radically alter our lives for no good reason, which can only be reinforced by his decision not to call a DD. Maybe they need to change their message, certainly need to do more than say, you don’t need to understand, and yes it will hurt, and yes life as you know it is gone, but it is all for your own good, just lie back.

    Anyway at some stage the people will get to say. And abandoning CC for a Workchoices fear campaign may not cut it.

  • Jason Soon

    Abbott rejects market based mechanisms to curb emissions for command and control regulation of energy efficiency standards.

    Like you Harry if this is really where it’s headed I’m done with the political right in this country. They have lost their collective minds.

  • hc

    Ros I think you are wrong about Chinese attitudes to climate change. They see it as a real threat. They have already agreed to dramatic energy intensity cuts, huge uinvestments in renewable energy etc. My guess is that they will go further than this.

    This “changing the world” stuff doesn’t sound right to me. The effects of the CPRS are mild – it is unmitigated climate change that will “change the world” for groups such as farmers.

  • Uncle Milton

    The political right has from time to time used its head to embrace market mechanisms (up to a point), but really only as a means to beat up on the people it hates with its gut, like the unions, the pointy heads and the greenies.

    But if using market mechanisms means acceding to the demands of those bludging pointy heads (this means you, Harry Clarke) and those unwashed feral greenies, then market mechanisms are entirely disposable. The gut beats the head every time. Politics can be about making the world a better place, but for the Nick Minchins of this world, it is a game whose object is to crush the people you hate in your gut. Tony Abbott vacillates between making the world a better place and the sheer visceral joy of the crush.

  • Ros

    Well I think Hulme and co are right Harry, that what people think and believe is crucial. And they don’t seem to be getting the message anymore. The Science Museum London has just been unpleasantly surprised by the negative outcome of a channel they established which they thought would be a tool of support for Copenhagen.

    I do realise that you are very well informed about China Harry, and my knowledge is patchy and possibly wrong. However engineers for example saw their announcement as eminently sensible because of their energy efficiency etc issues, (low energy efficiency associated with poor control of generation, distribution and transmission, along with lack of effective demand management). The energy intensity cuts are a sub-set of their economic and energy policy (the NDRC) not of their Environmental Protection Ministry.

    So with their very high carbon dioxide emission levels per unit of GDP, it makes sense for them to do what they are saying they are going to do (no validation to be allowed I understand), that they are doing what they were going to do anyway. A win win but not proof of their environmental credentials, just that they are smart, both economically and politically. If they walk because of economic and trade issues not environmental I would again suggest that they are not overly concerned about CC, at least it will always come second. I think also that China shows in polls a population that is at the low end of concern about CC.

    They are moving to a smart grid which I understand we are too. Is that what a supply side response is?

  • derrida derider

    As a matter of pure politics Abbott has adopted a clever tactic – push nuclear power for all it’s worth in the hope that it acts as a counter-wedge. Let’s see if Peter Garrett will finally spit the dummy. It might be a bit of a long shot, but there’s not much political downside to it and all the alternatives look very dismal.

    Of course, from a policy point of view it’s complete crap – a picking winners approach is likely to prove very expensive in all sorts of ways.

  • rog

    Abbot has denied that nuclear power is a policy, he wants a discussion about nuclear. His team are clamouring for it to be an election plank. Compared with gas or coal nuclear power is not economic unless there is a price put on carbon.

  • observa

    Where to now? Where you always should have been before you all got sidetracked on some grand, global, utopian vision that you thought this time round would be too big to fail and all that hubris and belief in some overarching human infallibility. When will humans ever learn eh? These dreamers in Canberra and their cheer squads who couldn’t even fix the MDB when they had wall to wall jurisdictional control over it, were off to save the world with all its jurisdictional problems. Trust them, this time it would be different folks. Well the proof of their magic pudding was always going to be in the eating and here we all are still bloody hungry with their ingredients lying all over the floor before it even hit the oven.

    Where was their fatal flaw this time round? Fundamentally the belief that lumpy, difficult to chew, quantitative control measures beats the superior, infinitely adjustable variability of price. Essentially you can gradually up the price of carbon via a straight tax, which allows us all to adjust our behaviour more gradually, rather than wham, bam cop that La Trobe generators as I’ve already pointed out. When push came to shove with quantitative measures, the need to ameliorate their immediate ‘humpy’ impact was obvious. It’s then the rent seeking begins in earnest with the usual outcome. Goodbye to their vision splendid right there, let alone the jurisdictional policing and admin problems they were taking upon themselves. All that remained was to deal with the credit creation process of their grand plan, following quickly upon the heels of all the poignant lessons of a GFC. Yes dear reader you can see clearly now how all this was definitely too big to fail politically.

    The alternative approach is transparent and obvious. Simply jack up the price via the CO2E mechanism with matching income tax relief and further. This can be an ongoing process that can be adjuted in pace gradually or faster depending on the ease of social coping. Essentially raise the private cost of carbon to reflect truer social costing, an upper level that could theoretically see all other taxes completely replaced by CO2E taxing only. Simpler to get an agreed international tax that negates the need to punish freeriders via tariffs and trade sanctions too. However it is quite feasible to take the exemplary road oneself in that respect. Lead and they will follow eh?

    Now notice I raised the spectre of that hypothetical maximum price and you can imagine how that would change fossil fuel consumption behaviour, as well as many other behaviours (what no tax deductibility of interest, no negative gearing or capital gains relief on housing I hear you ask..???)Which raises the next obvious question for AGW fans. Is that what you’re all really after, or is there something else bugging you? After all I can smell a pretty good political compromise in the offing if that’s all you’re banging on about chums.

  • Jason Soon

    More anti-market madness from the Libs. This is getting from bad to worse

    http://johnquiggin.com/index.php/archives/2009/12/03/libs-left-with-chinese-model/

    The fact that I am linking to Australia’s most prominent social democratic economist for an attack on the Libs from a free market perspective really says it all

  • observa

    Couldn’t agree more Jason and it’s certainly a mixed up world. Picking winners and quantitative controls is just more of the same human hubris. If we can agree on that then there’s all that taxation revenue currently available to collect via CO2E taxing. It makes sense that we all face the same level playing field on price, rather than as JQ slips back into bad habits with wanting mandated solar feed-in buybacks. Whilst I’m happy to enjoy that largesse currently, I know only too well who is actually bearing that cost, or effectively lowering the price I face. Tut, tut John.

    One thing I do note from both sides here is still this incredible focus on carbon to the detriment of all else it seems. I’ve given you the golden opportunity to imagine jacking the private cost up to erstwhile unexplored high social cost levels, albeit gradually and yet noone seems to consider it nor indeed have any of our best brains even calculated what that maxm $cost/tonne might be. I’m nonplussed by that given their extraordinary preoccupation with carbon generally. What is it with this stuff?

  • rog

    It would appear that nuclear power is a bit of a red herring as the enormous costs make it unprofitable and not feasible except in central command economies; even in the US it has been an economic flop. If the Libs proceed with this option further ideological backflips will be needed.

  • observa

    With a level playing field price for carbon rog, nuclear, wind, solar, tidal, geothermal or whatever should all have to stand in the marketplace on their own unsubsidised two feet. The question then is what that level playing field price should be properly be constituted at(that maxm ceiling again) As I said we haven’t even addressed what that could be nor whether we should go to that extreme. It was always quite feasible that under cap and trade the carbon price could easily have exceeded that upper bound, given the optimistic target caps being bandied about.

  • observa

    Actually when you think about those ambitious cap targets and having to let go of price completely, you could have the ludicrous situation whereby 1,2,3,4.. times GDP is involved and the Govt is busily funnelling our weekly or monthly compensation cheques back to us all. How on earth you’d do that internationally is anyone’s guess but perhaps that was always the grand plan.

  • hc

    Outrageous claims Observa and pure rhetoric with a sinister intent. For example:

    “Global warming was an academic Ponzi scheme. Its leading proponents were mini-Madoffs, peddling a vision of global catastrophe to gullible activists, bureaucrats and policymakers. The vision was so vast, the fear it inspired so pervasive, that it seized popular imagination, aided ably by hucksters like former Vice President Al Gore and his science-fiction feature film “An Inconvenient Truth.” But like any Ponzi scheme, global warming only worked if everyone kept investing and no one looked at the books. Once the truth came out – of manipulated findings, phony data, rigged peer-review processes and intimidation of skeptics – the scheme began to collapse.”

  • observa

    Well Harry if that’s what you got out of my comments here or at Troppo then either I haven’t expressed myself well at all or you’ve got your knickers in a twist for some other reason. I certainly didn’t mean to imply AGW was an academic Ponzi scheme, simply that like finance workers you could be innocently caught up in the larger crisis.(I said we all had a right and expectation to rely on honest science and scientists) Nevertheless you wouldn’t expect any finance worker to defend Madoff and Co, nor any other obvious malfeasant caught up in it all.

    Continuing on with the GFC analogy we can all argue about the causes and what’s needed to prevent it happening in future.(in hindsight we can appreciate a Harry Markopolos and Michael Crichton) Some would immediately say bang goes the EMH right there while this Austrian fan would say you can’t begin to have efficient pricing with funny money printing and that was the root cause. Whatever, but noone defends shonks within any perceived overarching root cause. The dog ate the homework doesn’t cut it in big school and won’t cut it in the big house where they’re going because a hacker or whistleblower blew the lid off them all and there for all to see was exactly what their critics had been banging on about for so long.

    As I said no crime in falsely believing in these charlatans so far as that goes, but there is collusion of a kind if you don’t see what Monbiot and others did so quickly and as a result of the continuing good work at WUWT and CA. That’s where the silence of the lambs is so shameful in our media and yes from our sandstones. Where is their reporting let alone outrage I ask? The dog ate the homework coupled with their commanding heights in the field and reliance of so much other supporting science on their work means AGW is just another interesting theory and all that flows from that. Where did most hear it first? Fox News and the funny man. Stony silence from the rest. Without fear or favour? I don’t think so and that’s been a long standing criticism.

    You want to stand with them Harry go right ahead but remember who you’re standing alongside. You won’t be standing alongside hypocritical Hollywood who will be scrambling for their Gulfstream jets and ringing their mates at Morgan Sachs to unload their mango tree offsets. Those same tossers who sat teary eyed as Gore got an Academy for a documentary that a Brit Court adjudged as overblown tripe and not fit for kids. That was as outrageous as Obama’s Nobel and now the honest docos can rightly ask for it back-http://www.pjtv.com/video/Poliwood/Climategate_Hits_Hollywood%3A_Should_the_Academy_Rescind_Gore%27s_Oscar%3F/2780/;jsessionid=abcowwO-8vPzC5mPVAyvs
    Not fit for kids but that didn’t stop the true believers brainwashing kids in our schools with it in what should rightly be called child abuse now. And while they did that they lectured down to their parents and slandered anyone who disagreed with them as ‘skeptics’, trying to redefine the noble scientific badge with delusionati and fruitloops. Yes you you silent lamb now John Quiggin. The same with opponents of a global ETS like me as they deliberately conflated the two issues for their own hidden agendas. Supporter like Hansen, agnostic like me or skeptic like their shamefully outed Bellamy, it was all the same as they defended any reasonable criticism of their gurus. Gore was just another tub thumping money maker but they wouldn’t see it. Their upmarket Michael More.

    And what was their main agenda Harry? Despite reasonable estimates that place a doubling of food prices in the last 2 yrs down to their grand plan’s carbon offset schemes and what that means, no evidence of any ETS efficacy to date, it was really their tax and spend new world order and their beloved UN.(careful Harry, Pauchari has jumped ship from the pitiful peer review line to we need an investigation now folks) You saw it clearly with that silent lamb and sycophant Tony Jones, who after playing echo chamber to Stern the night before did the same with Flannery and his ‘get out the vote’ campaign for Copenhagen the following night. Flannery finished off with a smug- one day we might all be voting this way for President of the UN Tony. So full of the sweet scent of Kumbaya, the grand plan, the vision splendid they can’t smell the smoke of their own hubris and belief in some infallible human body that knows best for us all. It’s also best they don’t have to be too close or beholden to their inferiors naturally. I must say I’ll enjoy watching the firestorm of their own making blow them away.

    And that’s a precis of who you’ll be standing with Harry as the outraged public come to defrock these false priests in their temples. The irony is they’ll be brought down by the same characters and traits they believed in so religiously themselves. I’m not sorry for them as we’ve dodged a bullet with their grand plan as the Saudis and India desert Copenhagen already. What Jones, Mann, et al have proved with their behaviour is exactly why they are and always will be wrong with this hidden agenda.

    When all this is done I’ll still be an agnostic on AGW Harry, not that it will matter much as there won’t be any pollies touching the research with a bargepole for a long while and who’s fault is that? That’s the real crime of Jones and Mann, et al but maybe you just can’t see it yet. Cheer up Harry when all this has run its course, there’ll still be that overarching environmental concern to be addressed. It won’t go away as Abbott, Minchin and Co will find. That’s what I’ve been banging on about for some time but couldn’t get through while this global ETS religious fervour held sway. Perhaps only then can we talk about real answers and a third way, exemplary approach, rather than all this OS Aussie cringe nonsense. If not us who then Harry?

  • The law suit to stop Gore’s movie being shown in schools was defeated — the judge ruled that it was fit to be shown to kids. And yet observa claims the opposite. Black is white and up is down in observa’s world.

  • observa

    Sure thing Tim and it’s OK if they have cigarettes at school as long as they come with health warnings on them. And these were the same people who believed lollies and lolly ‘fags’ had to be banned from school canteens. Sheesh!

    As I said they always had the Hansen option of honest, straightforward carbon taxation at their disposal right up to that hypothetical maximum. Why didn’t they choose the obvious long ago and be well down that track now? Work it out and save yourself Harry. It’s truth time in Planet of the Lost Ark. Work out who the real Dr Jones is and don’t be tempted to drink from the false cup of these hidden agenda, true believers and their vile new world order or you’ll burn with them. As for them all now, burn in Hell you bastards burn!

  • rog

    Too early in the morning for all this hell fire and brimstone!

  • observa

    Nothing like the smell of burning leftards in the morning rog. They’re everywhere with their same old new world order- http://www.news.com.au/national/walk-the-dog-or-go-to-jail/story-e6frfkvr-1225807140377

  • observa

    Let their epitaph forever read- They always meant well but it always ended in tyranny. Died from CLIMATEGATE 2009 http://www.quadrant.org.au/blogs/doomed-planet/2009/12/skeptics-in-wonderland

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