Comments on David Hodgkinson, and Rebecca Johnston "Politics aside, a simple carbon tax makes more sense than a convoluted emissions trading scheme", 2/08/2015
While the two do have significant differences, they also share some commonality, or equivalence. For example, the ETS implies a equivalent price or tax to the carbon tax when the target of emissions is set as the exactly same that a carbon tax would achieve. Of course, there are other conditions that would need to meet. For example, the ETS must be a national and include all emissions sources where the carbon tax would apply to and the ETS market needs to be efficient and there is only one national price.
While the Abbott politics has hit hard on carbon taxes imposed by ALP government, there is no point to deny the equivalence of an well functioned ETS and a carbon tax.
To do it is just too cowardly in the wake of the very effective attack on the ALP government's carbon tax. Those who attempt to battle the Abbott anti carbon tax mantra should do better than that.
Showing posts with label carbon tax. Show all posts
Showing posts with label carbon tax. Show all posts
2011-10-19
No need to confuse the purpose of the carbon tax
manufacturing, PM told by Andrew Liveris”, 7/10/2011, http://www.theaustralian.com.au/national-affairs/industrial-relations/use-new-taxes-to-rescue-manufacturing-pm-told-by-andrew-liveris/story-fn59noo3-1226160724916
Mr Liveris argument for setting aside the mining revenue for use for more productive and innovative purposes is good, but the same argument of his for the carbon tax is not necessarily equally well made.
The proceeds from the carbon tax should not simply be taken as a government revenue source as such, instead, it should be ideally completely neutral to the government. The main reason is that the purpose of a carbon tax is not to raise revenue per se, but to use it as a price signal to reduce carbon emissions. Treating the carbon tax as a revenue source just simply confuses the end with means and loses the public support for a carbon tax even further and makes it politically less feasible.
The proceeds from any carbon tax should be returned to the Australian residents who have the rights to a good and/or better climate. Only when it is done exclusively, explicitly and completely transparently for the purpose of emission mitigation that it will be most efficiently and effectively with the support of the majority of the Australian public.
Further, whether rescuing the manufacturing is the right course or not, needs a careful study and objective debate to be resolved. It is another matter entirely.
Mr Liveris argument for setting aside the mining revenue for use for more productive and innovative purposes is good, but the same argument of his for the carbon tax is not necessarily equally well made.
The proceeds from the carbon tax should not simply be taken as a government revenue source as such, instead, it should be ideally completely neutral to the government. The main reason is that the purpose of a carbon tax is not to raise revenue per se, but to use it as a price signal to reduce carbon emissions. Treating the carbon tax as a revenue source just simply confuses the end with means and loses the public support for a carbon tax even further and makes it politically less feasible.
The proceeds from any carbon tax should be returned to the Australian residents who have the rights to a good and/or better climate. Only when it is done exclusively, explicitly and completely transparently for the purpose of emission mitigation that it will be most efficiently and effectively with the support of the majority of the Australian public.
Further, whether rescuing the manufacturing is the right course or not, needs a careful study and objective debate to be resolved. It is another matter entirely.
2011-08-18
Costs of carbon tax and modelling work
Comments on Gary Johns "Convoy a revolt of working people" 18/08/2011, http://www.theaustralian.com.au/national-affairs/commentary/convoy-a-revolt-of-working-people/story-e6frgd0x-1226116943715
While what Johns argues may seem reasonable, the same line of argument could/would put the costs of no action on carbon equally large, or they might be even higher.
There are many variables, factors and scenarios that are very difficult to model, as most modellers or people close to modelling works are aware. This may be a double edged sword, and could be used either in favour of the Treasury modelling or against it.
The real issues are whether actions should be taken to mitigate emissions of carbon dioxide, and if the answer is positive, how actions should be taken.
While what Johns argues may seem reasonable, the same line of argument could/would put the costs of no action on carbon equally large, or they might be even higher.
There are many variables, factors and scenarios that are very difficult to model, as most modellers or people close to modelling works are aware. This may be a double edged sword, and could be used either in favour of the Treasury modelling or against it.
The real issues are whether actions should be taken to mitigate emissions of carbon dioxide, and if the answer is positive, how actions should be taken.
2011-08-17
The carbon tax and governance
Comments on Dennis Shanahan “Credibility joins carbon crusade”, 17/08/2011, http://www.theaustralian.com.au/national-affairs/commentary/credibility-joins-carbon-crusade/story-e6frgd0x-1226116270286
The government would sound more credible if it hasn't used the carbon tax as a way for wealth/income redistribution as it has proposed in its carbon tax package, and it got a border carbon adjustment to not distort and reduce Australians' comparative advantage in trade of goods and services with other nations.
These fatal shortcomings of the government's carbon tax bill are related to ALP Robin Hood ideology and its cowardice to confront other powerful nations in terms of equal treatment.
Of course, the compensations for businesses should not be as generous to recognise that businesses can pass the higher costs due to carbon tax either fully or at least partially as they are proposed in the bill, and more compensations should be for households on an equal per capita basis to remove the income distribution effects.
Further, it is hard to understand why it will be necessary to move from a carbon tax system to an ETS, given that the former is more efficient and involves fewer transaction costs. Of course, some financial market participants would like to have an ETS for the addition financial opportunities created by that to benefit from it. Further, bureaucrats would like it to create more government jobs and powers for them.
Taken together, it shows the government is incompetent, out of date and out of touch. This is another reason that it would be better for the government to seek a mandate for its carbon tax and ETS at an election. I should say I am not politically biased and is not pro or against any of the major political parties and I just would like to see fairness in politics and in governance.
2011-06-07
Carbon tax and international ETS
Comments on Michael Stutchbury “Carbon price may take the heat off “, 7/06/2011, http://www.theaustralian.com.au/business/opinion/carbon-price-may-take-the-heat-off/story-e6frg9p6-1226070476597
While it is true that "the Labor-Greens carbon tax model does not allow business to buy international permits for up to the next five years", it is because no hard thinking has been done on how to linking a carbon tax with an international ETS, partly as a result of no international ETS available yet.
It is possible to have a carbon tax model in Australia and use the tax revenue to buy international carbon emission reductions. In this scenario, the nation as a whole is a buyer of emission permits, as opposed to individual companies to do it to allow them to emit above their domestic quotas that would be the case under a domestic ETS.
As long as the combined reduction in emissions under a domestic carbon tax and the purchased emissions reduction meets whatever targets set as the country's requirement, the country would have fulfilled its reduction obligation.
So, carbon tax models and international ETS can coexist with no difficulty.
It is interesting that for so long few people have focused on this most efficient system to achieve emissions reduction. A carbon tax is arguably more efficient means than ETS in administration.
It is time for domestic ETS proponents to discontinue their myth on ETS and recognise the more efficient carbon tax approach.
PS: of course, no matter it is the traditional ETS and my proposed system of carbon tax and ETS, they will all involve international transfer of payments for emissions entitlements. It would mean high emissions countries will need to pay for low emissions countries for above their average emissions. This can be politically difficult for any individual country at present without a well functioning international market.
While it is true that "the Labor-Greens carbon tax model does not allow business to buy international permits for up to the next five years", it is because no hard thinking has been done on how to linking a carbon tax with an international ETS, partly as a result of no international ETS available yet.
It is possible to have a carbon tax model in Australia and use the tax revenue to buy international carbon emission reductions. In this scenario, the nation as a whole is a buyer of emission permits, as opposed to individual companies to do it to allow them to emit above their domestic quotas that would be the case under a domestic ETS.
As long as the combined reduction in emissions under a domestic carbon tax and the purchased emissions reduction meets whatever targets set as the country's requirement, the country would have fulfilled its reduction obligation.
So, carbon tax models and international ETS can coexist with no difficulty.
It is interesting that for so long few people have focused on this most efficient system to achieve emissions reduction. A carbon tax is arguably more efficient means than ETS in administration.
It is time for domestic ETS proponents to discontinue their myth on ETS and recognise the more efficient carbon tax approach.
PS: of course, no matter it is the traditional ETS and my proposed system of carbon tax and ETS, they will all involve international transfer of payments for emissions entitlements. It would mean high emissions countries will need to pay for low emissions countries for above their average emissions. This can be politically difficult for any individual country at present without a well functioning international market.
2011-05-19
A rather poor thought bubble from Sinodinos
Comments on Arthur Sinodinos “Turn carbon price into a GST with tax cuts”, 19/05/2011, http://www.theaustralian.com.au/national-affairs/budgets/turn-carbon-price-into-a-gst-with-tax-cuts/story-fn8gf1nz-1226058476248
I am afraid to say that this piece appears to represent a very poor thought bubble.
A carbon tax is a price signal to change behaviour and emissions.
To turn it to a general tax like the GST does not have any price signalling effects, let along the public resentments on increases in taxes.
It sourced the idea from Geoff Carmody, a founder of Access Economics. Carmody may be a good economist, but it does not mean is a saint and every of his idea is best or equally.
A link to direct action by government has some merits, but having the government instead of the market to do the work and select the winners is equally poor thought bubble.
This is a fairly partisan view, as opposed to a general good advice to the government or an excellent commentary from a respected independent commentator.
The government’s approach to the carbon tax has been poor, but it does not mean that any other idea is automatically and necessarily better than it or can improve it.
Abbott's direct approach without explicitly charging a tax or changing existing taxes, though having its own deficiencies and shortcomings, is far better than what Arthur Sinodinos' proposal.
I am afraid to say that this piece appears to represent a very poor thought bubble.
A carbon tax is a price signal to change behaviour and emissions.
To turn it to a general tax like the GST does not have any price signalling effects, let along the public resentments on increases in taxes.
It sourced the idea from Geoff Carmody, a founder of Access Economics. Carmody may be a good economist, but it does not mean is a saint and every of his idea is best or equally.
A link to direct action by government has some merits, but having the government instead of the market to do the work and select the winners is equally poor thought bubble.
This is a fairly partisan view, as opposed to a general good advice to the government or an excellent commentary from a respected independent commentator.
The government’s approach to the carbon tax has been poor, but it does not mean that any other idea is automatically and necessarily better than it or can improve it.
Abbott's direct approach without explicitly charging a tax or changing existing taxes, though having its own deficiencies and shortcomings, is far better than what Arthur Sinodinos' proposal.
2011-05-02
Why need more bureaucracy!
Comments on “Call for a carbon RBA”, reported by Giles Parkinson, 2/05/2011, http://www.climatespectator.com.au/commentary/call-carbon-rba?cookie_check=1&=
It is an interesting but a very poor idea from a possibly heavily vested interest group.
Why do we need more bureaucracy for carbon tax?
Why can't we have the ATO collect the tax and then have the revenue simply distributed to residents on an equally basis to compensate for their rights to the climate environment?
It is an interesting but a very poor idea from a possibly heavily vested interest group.
Why do we need more bureaucracy for carbon tax?
Why can't we have the ATO collect the tax and then have the revenue simply distributed to residents on an equally basis to compensate for their rights to the climate environment?
2011-04-29
Carbon tax and compensation issues
Comments on Robert Gottliebsen “Alinta's fiery carbon resolve”, 29/04/2011, http://www.businessspectator.com.au/bs.nsf/Article/carbon-tax-Dimery-Alinta-energy-prices-pd20110429-GCS8F?OpenDocument&src=sph&src=rot
That just points to why all compensations on a revenue neutral basis should go to residents and not businesses, because most residents have no where or no means to pass on the higher energy costs (they don't sell things) to while many businesses can because they sell more than they buy.
Businesses can pass on, at least some of the carbon tax to consumers, because the average industry costs, as opposed to just some firms in an industry, will be higher under a carbon tax, so all business members will pass on that higher average costs. A caveat is the shape of the demand curve - if vertical, then all the tax will be passed on to consumers; but if horizontal, none of the tax can be passed on. But in the short term, it is likely to be more vertical than horizontal, especially as energy products are concerned.
The second point is that brown coal power will be less profitable than gas fired power if the electricity has the same market price irrespective how it is generated.
That is the main point of a carbon tax to reduce emissions - a market mechanism as liked by many economists or the likes.
That just points to why all compensations on a revenue neutral basis should go to residents and not businesses, because most residents have no where or no means to pass on the higher energy costs (they don't sell things) to while many businesses can because they sell more than they buy.
Businesses can pass on, at least some of the carbon tax to consumers, because the average industry costs, as opposed to just some firms in an industry, will be higher under a carbon tax, so all business members will pass on that higher average costs. A caveat is the shape of the demand curve - if vertical, then all the tax will be passed on to consumers; but if horizontal, none of the tax can be passed on. But in the short term, it is likely to be more vertical than horizontal, especially as energy products are concerned.
The second point is that brown coal power will be less profitable than gas fired power if the electricity has the same market price irrespective how it is generated.
That is the main point of a carbon tax to reduce emissions - a market mechanism as liked by many economists or the likes.
Protect union jobs and enhance national wealth too
Comments on Tony Maher “Where are jobs in carbon plan?” 29/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/where-are-jobs-in-carbon-plan/story-e6frgd0x-1226046535916
It is understandable that a union leader is and will be aimed at protecting jobs of its members.
It should be better done in the context that also enhances the nation's wealth.
If those two are combined, then few will object what Tony Maher argued, such as: "Unions should campaign long and hard to ensure any restructuring of the energy sector maximises the jobs dividend."
The key is productivity and international competitiveness.
We should use all internationally acceptable policy means and technologies and management practices to achieve the duel objectives.
It is understandable that a union leader is and will be aimed at protecting jobs of its members.
It should be better done in the context that also enhances the nation's wealth.
If those two are combined, then few will object what Tony Maher argued, such as: "Unions should campaign long and hard to ensure any restructuring of the energy sector maximises the jobs dividend."
The key is productivity and international competitiveness.
We should use all internationally acceptable policy means and technologies and management practices to achieve the duel objectives.
Government and its carbon committee to blame
Comments on Siobhain Ryan “Tony Windsor's carbon call for BHP”, 29/04/2011, http://www.theaustralian.com.au/national-affairs/tony-windsors-carbon-call-for-bhp/story-fn59niix-1226046579423
While Tony Windsor has an obvious point, the government and the carbon committee have not helped in their own duties either, by not having stated of a broad trade neutral approach or framework.
That largely is the problem with the government and the committee.
Why haven’t they announced such a broad framework in the first place and leave any details to be worked out? Is an announcement of intention that difficult?
So Windsor may suffer a problem himself too, as a member of the committee.
While Tony Windsor has an obvious point, the government and the carbon committee have not helped in their own duties either, by not having stated of a broad trade neutral approach or framework.
That largely is the problem with the government and the committee.
Why haven’t they announced such a broad framework in the first place and leave any details to be worked out? Is an announcement of intention that difficult?
So Windsor may suffer a problem himself too, as a member of the committee.
2011-04-20
How Gillard has got it so wrong on carbon?
Comments on Paul Kelly “Perfect storm for carbon crusader”, 20/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/perfect-storm-for-carbon-crusader/story-e6frgd0x-1226041798709
The question, though a bit late now, is whether there were better strategies Gillard could have taken to avoid the current big mess?
I would think that Gillard rushed unnecessarily to form alliance with the Greens and to change her stance on not introducing a carbon tax.
The Greens will always support ALP and Gillard over the Coalition's Abbott irrespective Gillard's alliance with it or not, so Gillard should have realised that and formed an independent ALP minority government with no alliance with the Greens.
By being independent, it would have had more policy freedom and more power in bargaining with the Greens, as well as the independents in the house.
Secondly, in terms of carbon pricing, Gillard made the first mistake when she made the pre-election pledge of no carbon tax. She then made the second mistake by forming the parliamentary committee including the Greens and the independents. Her third mistake was to rush to a self imposed schedule of legislating for a carbon tax to be introduced from 1 July 2012.
She should have continued her pre-election cautious approach to this and adopt a strategy to have a full carbon pricing scheme ready to take to the next election as a central focus.
The question, though a bit late now, is whether there were better strategies Gillard could have taken to avoid the current big mess?
I would think that Gillard rushed unnecessarily to form alliance with the Greens and to change her stance on not introducing a carbon tax.
The Greens will always support ALP and Gillard over the Coalition's Abbott irrespective Gillard's alliance with it or not, so Gillard should have realised that and formed an independent ALP minority government with no alliance with the Greens.
By being independent, it would have had more policy freedom and more power in bargaining with the Greens, as well as the independents in the house.
Secondly, in terms of carbon pricing, Gillard made the first mistake when she made the pre-election pledge of no carbon tax. She then made the second mistake by forming the parliamentary committee including the Greens and the independents. Her third mistake was to rush to a self imposed schedule of legislating for a carbon tax to be introduced from 1 July 2012.
She should have continued her pre-election cautious approach to this and adopt a strategy to have a full carbon pricing scheme ready to take to the next election as a central focus.
2011-04-13
Consumer compensation too little and its distribution unfair
Comments on James Massola “Carbon compensation via tax system: Combet”, 13/04/2011, http://www.theaustralian.com.au/national-affairs/climate/carbon-compensation-via-tax-system-combet/story-e6frg6xf-1226038354055
The Gillard government and Minister Combet have surrendered to powerful business lobbies and have sold out the interests of Australian consumers and personal taxpayers.
By any measure, 50% for consumers in total is too low and too little. Instead, the bulk, 80 per cent at the least, of the revenue should be returned to consumers.
Further, there is no justification that other consumers are not compensated for higher energy costs.
Carbon pricing and tax should not be used for income redistribution purposes. It should simply be distributed to each and every Australian resident living in Australia, according to well established and accepted economic principle to deal with environmental externalities, such as carbon emissions.
Each and every Australian resident is entitled to the same right of reasonable climate.
As such they should be compensated equally for damages done to their rights.
This is another case of a government lost its way.
PS: According to the report, 'Mr Combet said there were a number of ways to deliver the billions of dollars in assistance.
"One of the most efficient ways is through the tax and transfer system," he said, pointing to likely tax cuts or welfare changes.'
But why didn't he see the more efficient and just way to distribute the tax proceeds equally among Australian residents? Isn't an equal distribution more efficient and more just than his distorted way that is still unclear yet?
The Gillard government and Minister Combet have surrendered to powerful business lobbies and have sold out the interests of Australian consumers and personal taxpayers.
By any measure, 50% for consumers in total is too low and too little. Instead, the bulk, 80 per cent at the least, of the revenue should be returned to consumers.
Further, there is no justification that other consumers are not compensated for higher energy costs.
Carbon pricing and tax should not be used for income redistribution purposes. It should simply be distributed to each and every Australian resident living in Australia, according to well established and accepted economic principle to deal with environmental externalities, such as carbon emissions.
Each and every Australian resident is entitled to the same right of reasonable climate.
As such they should be compensated equally for damages done to their rights.
This is another case of a government lost its way.
PS: According to the report, 'Mr Combet said there were a number of ways to deliver the billions of dollars in assistance.
"One of the most efficient ways is through the tax and transfer system," he said, pointing to likely tax cuts or welfare changes.'
But why didn't he see the more efficient and just way to distribute the tax proceeds equally among Australian residents? Isn't an equal distribution more efficient and more just than his distorted way that is still unclear yet?
Return carbon tax revenue to where it belongs - the peope
Sid Maher “Labor to ease the carbon squeeze with $6 billion for households”, 13/04/2011, http://www.theaustralian.com.au/national-affairs/labor-to-ease-the-carbon-squeeze-with-6-billion-for-households/story-fn59niix-1226038147201
It is so obvious and just that the bulk of the revenue from the carbon tax or sale of emission permits in the future needs to go to households as they will bear the bulk of the costs and have no means to pass on any of the higher energy costs under carbon pricing, and the fact that it is people who are the owners of the environment and are entitled to good climate.
Businesses, on the other hand, can mostly include the the carbon price in the price of its goods and services and pass on to consumers.
That difference is abundantly clearly.
The argument for 45% of the revenue to go to trade exposed businesses is ludicrous. Whoever argues it should tell us how much share of our exports in the GDP, should that be considered as a benchmark of the upper limit for possible compensation.
Further, many of our trade partners have one sort or another of direct or indirect carbon pricing may match or even more than match ours and that already levels the play fields for our exporters.
More importantly, the compensation to households must increase over time and the compensation for businesses should decrease over time.
Eventually all compensation should go to households with equal amount for each and every Australian resident living in Australia.
It is so obvious and just that the bulk of the revenue from the carbon tax or sale of emission permits in the future needs to go to households as they will bear the bulk of the costs and have no means to pass on any of the higher energy costs under carbon pricing, and the fact that it is people who are the owners of the environment and are entitled to good climate.
Businesses, on the other hand, can mostly include the the carbon price in the price of its goods and services and pass on to consumers.
That difference is abundantly clearly.
The argument for 45% of the revenue to go to trade exposed businesses is ludicrous. Whoever argues it should tell us how much share of our exports in the GDP, should that be considered as a benchmark of the upper limit for possible compensation.
Further, many of our trade partners have one sort or another of direct or indirect carbon pricing may match or even more than match ours and that already levels the play fields for our exporters.
More importantly, the compensation to households must increase over time and the compensation for businesses should decrease over time.
Eventually all compensation should go to households with equal amount for each and every Australian resident living in Australia.
2011-04-11
Resolve the "Carbon illusion we can't afford"
Comments on Sinclair Davidson “Carbon illusion we can't afford”, 11/04/2011, http://www.theaustralian.com.au/news/opinion/carbon-illusion-we-cant-afford/story-e6frg6zo-1226036879214
While most of Sinclair Davidson's arguments are correct, there can and should be a very simple solution to many of the issues in his argument.
That is, to allocate the carbon tax revenue among Australian consumers on an equal per capita basis and the amount is adjusted according to the revenue. This should ensure revenue neutrality.
As Sinclair Davidson argued businesses can pass on most of the costs and also they will need to share of some the costs in emissions reduction as consumers as a whole will in terms of their real income due to rising energy costs they have to pay with little possibility to pass on or avoid.
In addition, Productivity Commission should be asked to advise on a simple, efficient and effective border adjustment that may vary broadly according to groups of countries that have a broadly and effectively similar carbon scheme and on very broad categories of products and services to make it trade neutral and take into account climate actions by others.
Further, Sinclair Davidson arguments just expose the extraordinary influence and greedy nature of large businesses, in terms of asking for compensation and more compensation.
PS: One should note that the two simple measures have sound economics basis. Can you explain them?
While most of Sinclair Davidson's arguments are correct, there can and should be a very simple solution to many of the issues in his argument.
That is, to allocate the carbon tax revenue among Australian consumers on an equal per capita basis and the amount is adjusted according to the revenue. This should ensure revenue neutrality.
As Sinclair Davidson argued businesses can pass on most of the costs and also they will need to share of some the costs in emissions reduction as consumers as a whole will in terms of their real income due to rising energy costs they have to pay with little possibility to pass on or avoid.
In addition, Productivity Commission should be asked to advise on a simple, efficient and effective border adjustment that may vary broadly according to groups of countries that have a broadly and effectively similar carbon scheme and on very broad categories of products and services to make it trade neutral and take into account climate actions by others.
This should be accompanied by a country to country reimbursement scheme based on a country's relative emission level to ours’. That should ensure not only domestic fairness, but also international fairness - an important but largely and effectively ignored point by governments in industrialised countries in trying to achieving an international agreement, like that in Copenhagen in December 2009, which had an accidental effect in Australia that both major party leaders were deposed of their top posts.
PS: One should note that the two simple measures have sound economics basis. Can you explain them?
Compensations for businesses and consumers for carbon tax
Comments on Dennis Shanahan “Pressure mounts as industry speaks out” 11/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/pressure-mounts-as-industry-speaks-out/story-e6frgd0x-1226036933238
There are a number of interesting questions:
1. Why do some people including businesses continue to talk as if Australia is indeed 'go it along', given that many countries have done much more than us already?
2. Even assuming a $25 per ton carbon tax, it is likely to fall below the real effect of the CPRS cap due to the government and Treasury miscalculation of that carbon price under the CPRS, so why they say the compensation levels to businesses designed then were out of date?
3. For some energy producers like LNG producers especially exporters, how much emissions do they produce directly in their production processes and how much carbon tax they have to pay for those emissions?
4. Given that many businesses can pass on part or full carbon tax, and consumers can't, so how much businesses would expect consumers should be compensated, if they think the compensations under the CPRS design are not enough for them?
There are a number of interesting questions:
1. Why do some people including businesses continue to talk as if Australia is indeed 'go it along', given that many countries have done much more than us already?
2. Even assuming a $25 per ton carbon tax, it is likely to fall below the real effect of the CPRS cap due to the government and Treasury miscalculation of that carbon price under the CPRS, so why they say the compensation levels to businesses designed then were out of date?
3. For some energy producers like LNG producers especially exporters, how much emissions do they produce directly in their production processes and how much carbon tax they have to pay for those emissions?
4. Given that many businesses can pass on part or full carbon tax, and consumers can't, so how much businesses would expect consumers should be compensated, if they think the compensations under the CPRS design are not enough for them?
2011-04-09
Why should miners be compensated for carbon tax?
Comments on “Miners in row over carbon tax pay: report”, NEWS - Resources and Energy, 9/04/2011, http://www.businessspectator.com.au/bs.nsf/Article/Miners-in-row-over-carbon-tax-pay-report-pd20110408-FQRNN?OpenDocument&src=hp3
How much a carbon tax will directly affect the costs of mining, due to its use of energy/carbon?
I would have thought that the impact on mining is indirect through reduced demand for carbon energy products.
If that is the case, why should mining be compensated at all from the first place, except for the fact that large miners have financial resources and power to extract subsidies or compensations if you like from the government?
To me, there is a broad and reasonable argument for a full or partial exempt of the tax on carbon for miners that export their products overseas, according to the proportion of output being exported. On the other hand, there is no or little ground for compensating them for any other reasons.
The government should set out a set of transparent criteria for compensation for businesses and articulate the rationale for them. Then it should stand firm against special interest groups' lobby for compensations beyond that would be eligible set out in the criteria.
At the moment, it is largely backroom bargaining and there is little transparency and the public is kept out of any scrutiny of any government compensations for businesses.
And that is hardly good governance and satisfactory.
How much a carbon tax will directly affect the costs of mining, due to its use of energy/carbon?
I would have thought that the impact on mining is indirect through reduced demand for carbon energy products.
If that is the case, why should mining be compensated at all from the first place, except for the fact that large miners have financial resources and power to extract subsidies or compensations if you like from the government?
To me, there is a broad and reasonable argument for a full or partial exempt of the tax on carbon for miners that export their products overseas, according to the proportion of output being exported. On the other hand, there is no or little ground for compensating them for any other reasons.
The government should set out a set of transparent criteria for compensation for businesses and articulate the rationale for them. Then it should stand firm against special interest groups' lobby for compensations beyond that would be eligible set out in the criteria.
At the moment, it is largely backroom bargaining and there is little transparency and the public is kept out of any scrutiny of any government compensations for businesses.
And that is hardly good governance and satisfactory.
2011-04-08
Truth about ETS and carbon tax
Comments on Henry Ergas “Treasury should know better about an ETS”, 8/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/treasury-should-know-better-about-an-ets/story-e6frgd0x-1226035611467
Good point, Ergas.
Maybe another way to put it more clearly would be that either the government, not Treasury can't honestly and truthfully tell how much the costs of energy would be for consumers under an ETS to achieve the 5% reduction in emissions.
Further and arguably, ETS won't be able to tell exactly whether a target of reduction in percentage terms is achievable or not, given the fact that surely certain sectors or activities will be excluded or not included in the ETS as the original one indicated. That ETS can only tell the parts that are included and that is only a partial as opposed to a full account emissions in the target reduction.
So, it is good politics to hide the costs and not to tell the public about hit pocket costs (leave that to the market, that is their argument of course).
But that is not transparent and honest politics with the public, nor will that provide any certainty to business in terms of investment decision, because the future price of carbon is unknown even though on any day the ETS market may give you a current price.
Any argument of business certainty was, is and will be fanciful thinking and self delusion.
It is good politics too clever by half.
Good point, Ergas.
Maybe another way to put it more clearly would be that either the government, not Treasury can't honestly and truthfully tell how much the costs of energy would be for consumers under an ETS to achieve the 5% reduction in emissions.
Further and arguably, ETS won't be able to tell exactly whether a target of reduction in percentage terms is achievable or not, given the fact that surely certain sectors or activities will be excluded or not included in the ETS as the original one indicated. That ETS can only tell the parts that are included and that is only a partial as opposed to a full account emissions in the target reduction.
So, it is good politics to hide the costs and not to tell the public about hit pocket costs (leave that to the market, that is their argument of course).
But that is not transparent and honest politics with the public, nor will that provide any certainty to business in terms of investment decision, because the future price of carbon is unknown even though on any day the ETS market may give you a current price.
Any argument of business certainty was, is and will be fanciful thinking and self delusion.
It is good politics too clever by half.
2011-04-07
Such a market is not good!
Comments on John Daley and Tristan Edis “Markets still best climate option”, 7/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/markets-still-best-climate-option/story-e6frgd0x-1226034919878
Parts of the article are nonsensical, as the following paragraph from it shows:
"Government should also set a floor to prevent the carbon price falling too low, potentially destroying the value of the market, if emissions reduction turns out to be easier than anticipated."
Isn't it crazy to have a carbon price that is higher than necessary to achieve the target of reduction in emissions?
Why is there a need to artificially inflate extra costs than necessary, for the purpose of that market?
Isn't it suggesting that kind of market would have unnecessarily higher costs?
Is it just to make that market for some people to profit, from that market at the expense of taxpayers and consumers, the same as those genius Wall Street financial engineers to create various complex financial products that led to the near death experience not long ago?
What a silly idea it is!
PS: it may imply that a carbon tax instead of the kind of concept of a carbon market is better and should be preferred.
Parts of the article are nonsensical, as the following paragraph from it shows:
"Government should also set a floor to prevent the carbon price falling too low, potentially destroying the value of the market, if emissions reduction turns out to be easier than anticipated."
Isn't it crazy to have a carbon price that is higher than necessary to achieve the target of reduction in emissions?
Why is there a need to artificially inflate extra costs than necessary, for the purpose of that market?
Isn't it suggesting that kind of market would have unnecessarily higher costs?
Is it just to make that market for some people to profit, from that market at the expense of taxpayers and consumers, the same as those genius Wall Street financial engineers to create various complex financial products that led to the near death experience not long ago?
What a silly idea it is!
PS: it may imply that a carbon tax instead of the kind of concept of a carbon market is better and should be preferred.
2011-04-01
Tony Shepherd's myths
Comments on Tony Shepherd “Eight myths of a carbon tax”, 1/04/2011, http://www.theaustralian.com.au/national-affairs/commentary/eight-myths-of-a-carbon-tax/story-e6frgd0x-1226031613147
Instead of expose the myths as the title suggests, the author creates his own myths, by misleading information, incorrect facts and distorted logic.
In another word it is purely self-interest serving, implying lobbying for potentially more compensation.
Let’s expose this by one example in the article. It says: “1. The greatest myth is that if we lead the world in carbon pricing the rest of the world will follow. We produce 1.5 per cent of the world's CO2; China and America account for 40 per cent. A 5 per cent reduction in Australia's emissions would be cancelled out by as little as a 0.3 per cent increase in China's emissions.”
There is no such a myth in here in Australia at all. We are not leading the world. To the contrary, we have been lagging or dragging it behind. As Tony Shepherd mentioned in the article, there is the CO2 trading in Europe as the obvious precedent scheme.
What does that mean to his distorting argument as if we are leading the world? It means he is contradicting himself.
Note that that is his number one and greatest myth!
Credible or incredible?
Instead of expose the myths as the title suggests, the author creates his own myths, by misleading information, incorrect facts and distorted logic.
In another word it is purely self-interest serving, implying lobbying for potentially more compensation.
Let’s expose this by one example in the article. It says: “1. The greatest myth is that if we lead the world in carbon pricing the rest of the world will follow. We produce 1.5 per cent of the world's CO2; China and America account for 40 per cent. A 5 per cent reduction in Australia's emissions would be cancelled out by as little as a 0.3 per cent increase in China's emissions.”
There is no such a myth in here in Australia at all. We are not leading the world. To the contrary, we have been lagging or dragging it behind. As Tony Shepherd mentioned in the article, there is the CO2 trading in Europe as the obvious precedent scheme.
What does that mean to his distorting argument as if we are leading the world? It means he is contradicting himself.
Note that that is his number one and greatest myth!
Credible or incredible?
2011-03-29
Price carbon easier for a country than for many countries in the world
Comments on Martin Feil “The truth is, you can't put a price on carbon - no one can”, 29/03/2011, http://www.smh.com.au/opinion/politics/the-truth-is-you-cant-put-a-price-on-carbon--no-one-can-20110328-1cdei.html?posted=successful
I have difficulties in understanding Martin Feil's point.Yes, it is true that Australia can't put a price on carbon in the world as a whole, but it can put it in Australia, can't it?
It would be a huge task and would involve a lot of assumptions that may not necessarily be reliable to model the world carbon price, but it should be a fairly easy matter to model a price on carbon in Australia alone, shouldn't it?
I hope Martin Feil clarify his points in the post to clear the confusions generated from it.
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