A strategy of the ALP climate change policy

Comments on Tony Wood "The latest turn in the twisty history of Labor’s climate policies", 18/07/2015

Yes, it seems a revenue neutral framework with an efficient ETS as wide as possible, but with reference to what other major countries will be doing, would be a winning strategy for the ALP to take.

But tactically, there is no need for the ALP to disclose its climate change policy yet, given that the Coalition government will have to announce its policies for post 2020 soon, be fore the Paris international meeting of the year at the latest.

ALP can afford to have a better policy stance when a number of things become clearer, including the government's policy and other countries' targets, policies and strategies.

The leak of whatever it was of the ALP's discussion paper or options was unfortunate for itself. It risks being misrepresented, misused and an unnecessary target for the Coalition government with a very effective attacking leader, that is, the Prime Minister Abbott. It was self indulgent and sabotage.

Abbott's attack, both past and current ones, on the ALP's climate change policies, may scare the ALP (under stress) from developing a good policy. It is important that ALP develop an effective strategy in counter attack, as well as a strategy for its own policy on climate change. A two pronged approach may prove to be effective.

Energy productivity not very meaningful

Comments on Frank Jotzo "China could outperform its carbon pledge", 16/07/2015

Firstly, it seems there is a typo in the fourth paragraph, that is, “Yet China could do better still. China is set to outperform its existing 2020 target of a 40–45 per cent improvement in emissions intensity compared to 2025.”

The last number should probably be 2005 instead of 2025.

Secondly, while the following sentence is understandable, I am not sure that it does not mask the shortcomings of a single factor productivity, particularly the huge differences in economic structures between different economies, such as the energy productivity:

"China’s energy productivity lags that of advanced economies."

China, as it is often called by many, is the world's manufacturing factory, as a result, it is not particularly meaningful to compare the so called energy productivity with the so called energy productivities of the advanced countries which are mostly services heavy, as opposed to industry heavy of the Chinese economy.

Thirdly, some of the arguments, while understandable in terms of impact on emissions, may not be particularly strong for China to adopt, if China has an overarching economic, urbanisation and climate change strategy/framework, or as the author put it "with overarching national policy priorities". For example, "If China’s government were to once again use large fiscal stimulus measures, it would need to avoid over-investment in infrastructure and thereby heavy industries."

Although China has made enormous progress in its infrastructure, the fact still remains that China's urbanisation is only about 50% and there is a long way to go simply for China to urbanise. There is no question that urbanisation means more infrastructure, and as a result, more investment in infrastructure will be needed.

When discussing climate change policy, it would be more helpful to put it into the appropriate framework.

I would bet that China is unlikely to sacrifice its urbanisation and hence investment in the related infrastructure purely for emission purpose.

Hamilton's account of Australia's Kyoto

Comments on Clive Hamilton "Australia hit its Kyoto target, but it was more a three-inch putt than a hole in one", 16/07/2015

It is an interesting account of Australian government's strategy and tactics on the Kyoto negotiations, although we need also analyse why the rest of the world accepted Australia's demand back then.

One of the main reasons could be that studies showed that the impact on the Australian economy of an equal proportionate reduction in emissions was projected to be harder than on most other international economies. I remember that the Australian Bureau of Agricultural and Resources Economics (ABARE) had done researches and policy simulations that may have fed into the Australian government's policy stance.

Of course, research is one thing and how research is used by people and/or governments is entirely another.

Further, it is probably not too much a stretch of imaginations that each and every country would have done some studies on emissions reduction policies and adopted what it thought the best in those negotiations. ABARE's research was probably qualitatively correct, even though one may argue about the specific results ABARE had got and supplied to the Australian government.

On another point, the author has argued quite reasonably why Russia got its bargain. If that argument is true, then the quoted of being "bracketed Australia with OPEC and Russia as the principal obstacles to progress in the negotiations", by two German analysts, Sebastian Oberthur and Hermann Ott, that was "two years later, when the dust had settled", as follows was unreasonable at least as far as Russia was concerned as it didn't take into account Russia's special circumstances:

"The Kyoto targets surely have two main winners: Russia and Australia… The considerable increase in emissions allowed to Australia … has set a bad precedent for future negotiations, especially with regard to developing countries."

If those two Germans are serious researchers, their arguments showed significant weakness. As a result, it simply demonstrates that even serious people can get their arguments wrong, either deliberately to be misleading or unintentionally as innocent errors.

Does Japan really deserve praise on climate change?

Comments on Llewelyn Hughes "Japan deserves some praise on climate change", 30/06/2015,

After reading this article, I failed to see the point the author was making in the wake of criticisms by so many others.

If I can summarize Japan’s positions,it would reduce its emissions by 18 per cent from its 1990 level by 2030, as opposed to its Kyoto pledge of how much (25 per cent) reduction by when 2010/2020? Even after taking into account of the disaster of its nuclear power plant, it does not look ambitious enough.

And for that, Japan should deserve praise? Are you serious and not kidding?

What should be the priority of environmental policy in China?

Comments on Adele C. Morris, Warwick J. McKibbin and Peter J. Wilcoxen "China’s carbon tax highlights the need for a new track of climate talks", 19/03/2013, http://www.eastasiaforum.org/2013/03/19/chinas-carbon-tax-highlights-the-need-for-a-new-track-of-climate-talks/

While China’s announcement of a carbon tax should be welcomed and the authors’ suggestion of establishing a carbon price consultation mechanism is undoubtedly very useful, from an economics point of view, whether unilaterally imposing a carbon tax is the most optimal environmental policy for China or not is a question.
I would suspect that the marginal benefits of reducing its tangible air pollution and water pollution are likely to be higher than the marginal benefits of a general reduction in emissions, particularly when measured against the costs and measured in local rather than global terms and the fact that a reduction in air pollution also has an effect in reducing emissions.
But economics is economics and politics is politics. Should China adopt a carbon tax, it will be good for the world.

Pollutions in China and its ETS - a wrong priority

Comments on Alex Lo “Carbon trading in the Asian Century: China’s ETS on track”, 16/01/2013, https://theconversation.edu.au/carbon-trading-in-the-asian-century-chinas-ets-on-track-11438


What you mentioned is too complicated than necessary.

One of the problems in international negotiations on climate change is that it has included too many details. Instead, it should be focused on important ones, such as CO2 and leave most relatively unimportant emissions out.

Further, the many problems you mentioned in the Nordhaus study/paper have the same relatively easy solutions. For example, the key for a global solution is the fairness of an agreement. Once that is achieved, participation other problems will be easy to dealt with.

What solution is there for international fairness? In economics, it is fairly simple, that is, a system of user or emitter pay would do.

Is that system difficult to achieve? No, once one realise to set an international carbon price and every country is taxed for carbon emissions and the revenue is then distributed by population shares to each country.

Such a system may not achieve all the objectives from the start, but over time it will be effective and achieve the target. This is because there will be enough incentives for innovations to reduce emissions and for the use of alternative and more economic energy sources.

The difficulties Nordhaus got is the unrealistically perfection that created unnecessary problems. If everyone falls into that kind of trap of thinking, then it would be a problem of unsolvable.

But once a different thinking is adopted, it is a whole different story.

Why is it so difficult to reach an international agreement, given in economics the principles and methods are so clear for a solution? The reason is that applying the economically sound principle and method would mean the rich and powerful countries would have to pay more, much more because they emit more on the per capita basis and powerful countries would not like to do it. That is why the US has refused to do Kyoto, that has caused a serious other problems, including developing countries refusal to commit to a legally binding regime for them.

Now large developing countries are strong enough to resist the pressures from powerful countries to an unfair agreement.

Effectively, it is a loss-loss situation, unless powerful countries realise there must be a fair agreement.

Now back to the focus of the article, that is, ETS in China. Looking at the air pollution in China including in Beijing recently it is clear that China has a huge task in dealing with environment.

It also points to priorities in its task in terms of benefits and costs of analysis to determine what is most urgent and what can be left for a different time.

From that point of view, while ETS may achieve that, it does appear to be the best approach to adopt, unfortunately.  

Focusing on the more visible and localised pollutions should be the priority and for that the international experience from industrialised countries is very valuable.

Should Australia junk Kyoto and the carbon tax?

Comments on Tim Wilson “Junk Kyoto and the carbon tax”, 10/12/2012, http://www.theaustralian.com.au/national-affairs/opinion/junk-kyoto-and-the-carbon-tax/comments-e6frgd0x-1226533235739

This is a disappointing piece of analysis or opinion, to say the least. The following statements reflect part of the disappointment: "That leaves only a core group of countries, including Australia, the EU, Norway and Switzerland, still flying the Kyoto flag from next year to 2020. Combined, these countries represent a mere 15 per cent of global emissions and don't include any of the major growing emitters in the developing world." While some of the content is of some value, like finding alternative ways to get climate change agenda going, the overall call for Australia to abandon both the Kyoto Protocol and its carbon tax is clearly a wrong call, wrong strategy and pointing to a wrong direction. Australia should not abandon either of them. Instead Australians should abandon listening to both such a shallow opinion and such a short foresight.

Of course, Australia needs to and must take into account what is going on in the UN climate change negotiations and make necessary changes to optimise its climate change policies. For example, its carbon tax should make some border adjustment to deal with differential climate policies across different countries so Australian businesses won't be unfairly affected in their international competitiveness. Or its level of carbon tax should be reflective of the world's climate change trend and policies. But that is not to say that Australia should abandon the carbon tax that is a more efficient climate policy than most other climate policies.

What the following statements mean is that the author is scared to mention the main spoiler in international climate change negotiations, that is, the US, instead he is saying major emitters in developing countries: "That leaves only a core group of countries, including Australia, the EU, Norway and Switzerland, still flying the Kyoto flag from next year to 2020. Combined, these countries represent a mere 15 per cent of global emissions and don't include any of the major growing emitters in the developing world." It has been the US that didn't ratify the Kyoto. That also led to the few countries running away from it. The author should point that out, as opposed to blaming developing countries.

Key to global deal for limate change - a fair deal on per capita basis

Comments on Pep Canadell "The widening gap between present emissions and the two-degree target", 4/12/2012, https://theconversation.edu.au/the-widening-gap-between-present-emissions-and-the-two-degree-target-11101

The author states "Perhaps the most immediate critical challenge to meet the 2°C target is the need to curb global fossil fuel emissions within the next ten years. This would require annual emission mitigation rates to around 3%. Some integrated assessment models show that this is possible globally without causing economic damage."


I would argue that those so called integarted assessment models are clearly unrealistic, given the annual growth in emissions over the past decade is 3% and to turn that into a reduction of 3% is a clearly acdemic excercise!

What it means is it is unrealistic and impossible to achieve the 2 degree limit (assuming the modellings for that 2 degree limits are correct) and the world has to learn to adapt to a warmer world more than 2 degree.

The first realistic step is to reduce the growth in emission to 0 for normal world economic conditions. After achieving that target, then the next step is to reduce emmissions.

The current difficulties in reaching an international binding agreement can only be overcome if a deal is fair and effective that requires per capita emissions have to be used as the basis for a deal. Failing to do that is unlikely to advance the cause very far.

A per capita deal is not aimed at achieving equal per capita consumption or emissions, it is to use per capita emissions as a key variable in determining which countries should pay to the international community and by how much for each and which countries should be paid and by how much for each.


This approach will focus on the current consumptions/emissions and will not look back at histories of emissions.

It should be based on the user pay concept on a global scale.

Kyoto is both a success and a failure

Comments on Tim Wilson "Failure to extend Kyoto agenda will mean pain at home", 3/12/2012, http://www.theaustralian.com.au/national-affairs/opinion/failure-to-extend-kyoto-agenda-will-mean-pain-at-home/comments-e6frgd0x-1226528457765

The Kyoto Protocol is both a failure and success. That it is a failre is not because 'The journal, Nature, recently argued: "In practice, the 1997 treaty did little to curb emissions of greenhouse gases". The failure came mainly because of the US did not keep its government bargained for and did not do its part. Without the US to demonstrate its committment as the largest emitter at the time, it would always doomed to be a failure. How can the US ask other countries to commit given its per capita emissions is still among the highest and is much higher than those in developing countries including large developing countries such as China and India. That it is a success is because many industrialised countries participated and made a real committment. Rich and high per capita emission countries must demonstrate any deal must be fair on per capita basis.

Alternative ways for CO2 capturing?

Comments on Fron Jackson-Webb "Clue to carbon storage in the Southern Ocean" 30/07/2012 https://theconversation.edu.au/clue-to-carbon-storage-in-the-southern-ocean-8490

If ocean can absorb CO2 in that way, then instead of the current research on much more costly CO2 capturing and storing underground technologies, perhaps studies should be undertaken to explore how make the CO2 (from power generations or large concentrations of some other CO2 producing processes) pass through water to be captured and and stored in water to be either put into the ocean or used in irrigation.

Would that be a feasible project or idea to deal with CO2 emissions?

Do we really need a new climate change paradigm?

Comments on Mutsuyoshi Nishimura "In search of a new climate change paradigm" June 15th, 2012, http://www.eastasiaforum.org/2012/06/15/in-search-of-a-new-climate-change-paradigm-2/

Nishimura asks the following question: “what kind of carbon market is needed?”
The answer is quite simple, yet the world at large seems unable to get it.
If it is true that “there is a strong consensus that imposing a price on CO2 emissions is the most cost-effective way to motivate all players to use less fossil fuels and move to low-carbon or non-carbon economic systems”, as Nishimura states, then isn’t a global price for carbon emissions and an equal per capita distribution of the revenue from pricing revenue simply enough to do the job?
Isn’t what is taught in economics to deal with pollution issues?
Most economists in the developed world including many of its national leaders and politicians should understand this, but few of them advocate this simple, efficient and effective method/policy. Why?
The answer is also simple, but I leave that to the readers.

The US has been the main obstacle in climate change

Comments on Judith Sloan “Doha is dead and there's no case for reviving it”, 27/01/2011, http://www.theaustralian.com.au/news/opinion/doha-is-dead-and-theres-no-case-for-reviving-it/story-fnbkvnk7-1226254691086

The US has been the worst international culprit in terms of international climate change responsibility and agreement, typified by its refusal to join the Kyoto agreement. So there is no credibility in any of its arguments in this area and there is no persuasion for citing that against demand and arguments of the developing countries.

The US stance and the fact that no other countries could do anything about it was the main reason why Canada, Japan and Russia have taken their recent stances.

It is only fair and legitimate that developing countries argue for what they have been argued for.

The fundamental issue of the difficulties in reaching an binding international agreement on this issue has been that the developed countries, especially the US, have all failed to adopt the simplest and fairest approach, that is, equal per capita right of emissions and the user pay principle.

Had that been adopted, developing countries with low emissions are entitled for payments for below average emissions.

Sloan should be able to acknowledge this without too much difficulty, given her strong economic background.

Two different issues in emissions

Comments on a comment on Amritha Thiyagarajan “Global climate financing must face greater scrutiny”, 13/12/2011, http://www.eastasiaforum.org/2011/12/13/global-climate-financing-must-face-greater-scrutiny/

Although what you said is true, there is, however, a clear and big difference between the visible part and the less visible part of emissions.
What you said is probably and largely the visible part of population like air quality and what quality. Those problems have largely been resolved in most developed countries.
The current issue that both Kyoto and ever since has been more focused on the less visible part of carbon dioxide that is said to cause global warming.

So, for China and many developing countries there are "double" tasks, one is to deal with the visible and local part, as sometimes shown on TV reports even by developed world such as in Australia about the air population in China, and the other is for the carbon dioxide.
Arguably, the first task has more rapid and localised effect on their people and countries.

It is useful to understand the differences.

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.

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.

Greg Combet is disappointing too

Comments on Joe Kelly “The Greens say the carbon tax will need to be far above $40 a tonne, while the Government says it will be 'well south'”, 17/05/2011, http://www.theaustralian.com.au/national-affairs/the-greens-say-the-carbon-tax-will-need-to-be-far-above-40-a-tonne-while-the-government-says-it-will-be-well-south/story-fn59niix-1226057359647

Greg Combet is becoming less and less competent in his role as the climate change minister which has the key role in setting the policy for the proposed carbon tax, although his job is inherently and undoubtedly very difficult.

All the time he has been saying that the carbon price has not been set, yet now he is also saying that the tax will be well south of $40 per ton.

Does he know or not know the likely tax?

If what he is now saying is correct, then he has been misled the public all the time.

If he has been right all the time in terms of the tax, then he is kidding himself now.

Such a display of politics by a minister is unhelpful to the debate on climate change and the carbon tax and very disappointing.

The public had high hopes for Combet to advance or at least to resolve the issue of ETS or a carbon tax. He appeared to be more flexible than his predecessor, Senator Wong, in terms of dealing with other parties in the failed negotiations for the Rudd/Wong ETS.

But it seems those have been misplaced.

Moran may add more confusion to climate debate

Comments on Alan Moran “We emit less carbon than Combet gives us credit for”, 17/05/2011, http://www.theaustralian.com.au/national-affairs/commentary/we-emit-less-carbon-than-combet-gives-us-credit-for/story-e6frgd0x-1226057027444

This post appears to add more confusion to the debate rather than make it clearer, by introducing this nonsensical and unclear emissions imbedded in trade into the picture.

It is not too different from using whatever arguments available to suit own statement irrespective its logic and soundness.

So what implications for climate change policies would Mr Moran want to draw from the introduction of this issue?

PS: Mr Moran quoted a statement from a chapter of a recently published anthology, Energy, Sustainability and the Environment, edited by F.P. Sioshansi and says ‘I observed: "International trade means countries that export energy-intensive products incur emissions on behalf of other countries.’


“This tends to reduce the national emission levels of many developed countries, while exaggerating those of some developing countries and resource rich countries like Australia.”

What does that mean? It means that the developed countries as a whole emit more than the current country statistics show. It points to more responsibility for the developed countries including Australia to reduce emissions and to pay for their above world average emissions they have.

Canada not necessarily a good carbon copy for Australia

Comments on Gerard Henderson “Look to Canada for a good carbon copy”, 10/05/2011, http://www.smh.com.au/opinion/politics/look-to-canada-for-a-good-carbon-copy-20110509-1efp1.html

While Canada might be an example to look at, it is unwise to set the lowest denominator and to race to the bottom in terms of the order of international citizenship.

There are better examples, there are worse examples than Canada in terms of climate change policies.

Arguably Australia should aim at an effective and efficient climate change policy that not only fulfil its international obligations as one of the heaviest emitters to contribute to the reductions of carbon greenhouse gases emissions, but also do so that does not unnecessarily disadvantage its own economy much in the process.

It is not an unattainable goal or an unachievable task.

For example, to have a broad based, simple, broadly trade neutral and explicit carbon tax, and also to have it revenue neutral by returning all the revenue from the carbon tax to residents who have the rights to better environment in terms of collective ownership to the environment.

Of course, to be fair internationally, the trade neutrality principle should be supplemented with appropriate regime of international compensation or reimbursement by country (as opposed to individual firms) according to the level of their emissions per capita.

To conclude, I would urge our commentators to think more broadly and strategically than just simply seek an easy solution of non-actions. Non-action is unlikely to be in Australia’s own interest, given that even the Kyoto allowed Australia to have an increase in emission levels while most other OECD countries had a target of reduction in emissions. Australia should recognise the international goodwill shown to it at Kyoto and don’t spoil it by unwiseness.

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.

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.