Tuesday, February 09, 2010

CPRS: Breaking the deadlock?

Disclaimer: I am no economist nor an economist's son. All opinions expressed to be taken with a pinch or three of salt.

The current debate in Australia over the Government's proposed Carbon Pollution Reduction Scheme (CPRS) seems bogged down, and has even reached a point where it has given Kevin Rudd the necessary trigger to request a double dissolution (though he seems unlikely to use it just yet). The danger is that the CPRS may continue to be blocked or watered down by the Opposition, delaying any significant carbon policy from Australia and contributing to the broader global impasse reached at Copenhagen. The even larger danger is that it might be passed in something like its current form and pitiful targets will be locked in for decades.

Back in 2007, "Professor Ross Garnaut was commissioned by all of the governments of Australia’s federation to examine the impacts of climate change on Australia and to recommend policy frameworks to improve the prospects of sustainable prosperity."[1] The Garnaut Climate Change Review was published in late 2008. Chapter Fourteen of the Review recommended that for an initial period there ought to be a fixed price on carbon at AUS$20/tonne (in 2005 dollars) without offsets or international trading. This was to reduce uncertainty during the period in which an international agreement was being negotiated and would give businesses something firm from which to begin their necessary modifications. Such a fixed period was to start in 2010 and cover until at least the end of the Kyoto Protocol in 2012.

I think that as an interim measure, this suggestion has merit. Undoubtedly, it is not perfect, but it may be a way of breaking the current deadlock and of avoiding a situation in which Australia ties itself to weak targets. I'm pleased to hear that the Government has entered into serious negotiations with The Greens about this suggestion, since it might represent the best that it is currently possible to do, while not closing down future improvements.

UPDATE: The dangers of carbon uncertainty from a US perspective.


Andrew Chirgwin said...

To be brutal, from discussions I've had with guys in a Big4 accounting firm from a team all about monitoring carbon footprints, etc... For the CPRS to really work, there should basically be NO subsidies or "free credits" given out to anyone above the "baseline". But there should be subsidies/credit generation for those who generate things such as power without generating "carbon". Any revenue generated from selling permits should go into things such as: solar power, subsidies for green improvements to homes and government buildings, improvements to public transport, studies/science for making our society less impacting.

To change the way our economy works, someone somewhere has to pay. It will be the common person in the end. We need to get used to turning off the lights, not chewing up power, buying food that comes from 10km away instead of 1500km and most of all in Australia (and definately Sydney) we need to increase our population DENSITY. It's all one big hand-in-hand. The way we've built our society and cities needs to get overhauled in the same drastic ways that gunpowder brought an end to the castle.

Mister Tim said...

Did you read/hear Malcolm Turnbull's spech in Parliament this week on the CPRS legislation (starts on page 6 of Hansard for 8 Feb 2010). It's one of the best speeches in the House in recent years. It's kind of funny that a member of the opposition can 'sell' the CPRS better than the Government that introduced the Bills for it ever has...

byron smith said...

Andrew - I agree with pretty much everything, though would add one point. To change the way our economy works, someone somewhere has to pay. It will be the common person in the end. Hopefully, it will be everyone contributing to the problem, especially those who are the largest contributors.

Tim- I hadn't seen/heard about that. Thanks for the link. Do you think Turnbull is going to stay with the Liberals or is he burning too many bridges on this issue?

Mister Tim said...

Byron - that is an excellent question and one to which that many people wish they knew the answer. There has been some speculation in the press that Turnbull would start his own party. I don't think that is particularly likely. More likely is that he will leave politics, but I haven't heard any indication along the lines that he won't stand at the next election. Nobody, at this point, really thinks he could lead the Liberals again though and I can't imagine him doing the long, hard yards on the back bench.

Turnbull is a funny character - he probably would have done reasonably well in the right wing of the Labor Party, although I can't imagine him as a factional warrior. If you haven't read it, it would be worthwhile getting a copy of Annabel Crabb's essay on him (Stop at Nothing)that was published in Quarterly Essay last year.

David Palmer said...

Hi Byron, I hope to make a start on my paper on climate change next week and will start interacting with you thereafter, perhaps on this thread.

I find I quite like what you have to say, though I think we will have some disagreements....

I don't know whether you have seen this article http://wattsupwiththat.com/2010/02/09/climategate-plausibility-and-the-blogosphere-in-the-post-normal-age/#more-16262 from Jerome Ravetz - Institute for Science, Innovation and Society at Oxford University - he and Mike Hulme were discussing what Climategate meant last Dec on the BBC). I think he has a lot of worthwhile things to say. Interestingly he gave it to WUWT to publish.

I too agree with the comments of Andrew above that if we are to reduce the dependence on fossil fuels the way to go is a carbon tax and no credits/subsidies to anyone. Rudd's CPRS is a chimera as in a vain or idle fancy.

byron smith said...

Jerome Ravetz's piece is indeed interesting and his field of research is fascinating. There ought to be more like him. The naivety of many scientists towards the history and philosophy of science is depressing and someone who can attempt to relate science to policy is crucial.

However, reading his piece in WUWT, I noticed he holds to a number of quite problematic positions that direct his attention.

Here are some quotes:
the committed inner core were confessing to each other that global temperatures were falling, but it was far too late to change course.
Given that he offers no evidence for this claim, I take it that it is simply a repetition of the erroneous reading of the Tremberth email about it being a travesty that we can't account for the lack of warming at the moment, or perhaps the one from Phil Jones about hiding the decline. Both are basic and demonstrably false misreadings of the emails (or see here for briefer text summary). Perhaps there are other emails where these confessions of falling global temperatures were made, but I have not seen them.

And the ‘hockey stick’ picture of the past, so crucial for the strict version of the climate change story, has run into increasingly severe problems.
Michael Mann's hockey stick graph was broadly confirmed in a detailed study by the NAS, and then more recently an investigation by Pennsylvania State University has also found no evidence that he has manipulated research.

the catalogue of unscientific practices revealed in the mainstream media is very small in comparison to what is available on the blogosphere
And here perhaps we see the cause of his confusion. He is apparently relying on bloggers to inform his reading of this situation.

I could go on, but don't currently have the time.

While the CRU emails do contain elements that are disappointing, possibly illegal and unworthy of academic activity (as I acknowledged from the start), it is very important these are carefully and correctly characterised and the extent of the problems (personal and systematic) articulated, and not overblown and sensationalised.

byron smith said...

For more criticism of this piece, see here.

Juggernaut1981 said...

CPRS and all systems like it are basically designed to encourage the end-user to change what they buy.

There is an obvious parallel that happened in Sydney in recent history. About 18 months ago, petrol prices in Sydney spiked. Serious spike... 50% increase in prices kind of spike. Public Transport journeys increased by something like 15+% for the duration of the price-spike.

So, if we're going to reduce the use of airconditioners, utilise solar power, use public transport and pushbikes, improve our insulation, etc, etc, etc the end-user (you and me and your neighbours) need to be convinced via their wallet, that being environmentally unfriendly is too expensive.

If you powerbill increases by 20% to cover the carbon cost, you'll probably use less. Maybe not enough to drop the price back to where it was, but certainly lower. That would reduce the carbon output of our cities.

If a politician attempts to convince you that an ETS/CPRS will NOT increase prices to the end user, they are pulling the wool over your eyes. It is exactly what an ETS is intended to do. Push up prices, based on the cost of carbon emissions, to the end-user (Joe Citizen) until they reduce the net carbon emissions of the society.

byron smith said...

Juggernaut - yes, I agree that the wallet is one way of trying to influence behaviour and that any scheme based on a market approach needs to make the price of carbon intensive activities rise in order to achieve the goal of reducing emissions. Ideally, there should be no concessions, because that simply places more pressure on other activities to carry the load (or undermines the chances of reaching a target).

byron smith said...

I've just come across this fairly old article in which it is reported that Ross Garnaut has criticised Labour and thrown himself behind the Greens on this.

byron smith said...

Looks like they are (finally) going to take Garnaut's advice on this (though the price is not yet set).

And here is the inspirational quote from our fearless leader: ""I do not believe that Australia needs to lead the world on climate change, but I also don't believe that we can afford to be left behind. That is why the time is right and the time is now."

byron smith said...

Interestingly, Gillard's Clean Energy Plan is basically what was being recommended here and by Garnaut: starting with a fixed price before moving to a market.