Is direct action on carbon no action?
04 Nov, 2013 04:00 AM
PETER MARTIN

Ask 35 leading economists whether they would prefer Labor's carbon price or the Coalition's ''direct action'' and only two will opt for direct action.

And one of them does it as a sort of joke. Queensland University's Professor Paul Frijters told Fairfax Media last week he believed ''direct action'' meant ''no action''. On that basis, he thought it was exactly the right policy ''for a small country like Australia''.

Economists love prices, for the very good reason that they work. In July 2012 electricity prices jumped 15.3 per cent. Much of the jump was due to the carbon price. (By way of comparison, the same time a year earlier they had jumped 7.7 per cent; the same time this year they rose only 4.4 per cent, the lowest such rise in six years.)

Household electricity use per person dived 3 per cent. Demand for electricity, like demand for nearly everything else, responds to price. If it didn't, the alcopops industry wouldn't have fought so hard against moves to double the alcopops tax in 2008. Alcopops sales wouldn't have slid 30 per cent as a result.

And yet there's a wariness in economists' embrace of prices when it comes to cutting emissions. Of course they are the cheapest way of changing behaviour. The Grattan Institute and the Productivity Commission have each examined the cost of command and control programs such as planting trees or paying households to install solar panels (two of the Coalition's favourites) and found them enormously costly per unit of emissions saved - far more costly than the present carbon price of $24.15 a tonne.

And yet … Nobel prize-winning economist Paul Krugman puts it this way in an article in the New York Review of Books due out this week: ''Why is putting a price on carbon better than direct regulation of emissions? Every economist knows the arguments: efforts to reduce emissions can take place along many 'margins', and we should give people an incentive to exploit all of those margins. Should consumers try to use less energy themselves? Should they shift their consumption towards products that use relatively less energy to produce? Should we try to produce energy from low-emission sources or non-emission sources such as wind? Should we try to remove CO2 after the carbon is burned? The answer is, all of the above. And putting a price on carbon does, in fact, give people an incentive to do all of the above.''

Economists overwhelmingly agree that a carbon price is the best way to move all the relevant markets at once, cutting emissions for the cheapest possible price. ''And I, of course, agree - they'd probably revoke my economist card if I didn't,'' Krugman says.

And yet: ''Studies attempting to analyse how we might most efficiently reduce carbon emissions strongly suggest that just one of these margins should account for the bulk of any improvement - namely, we have to sharply reduce emissions from coal-fired electricity generation.

''Certainly it would be good to operate on other margins, especially because these studies might be wrong. Nonetheless … direct action to regulate emissions from electricity generation would be a surprisingly good substitute for carbon pricing - not as good, but not bad.''

It's as unlikely an endorsement as you'll find. And behind the scenes, the people who drew up Labor's carbon pricing scheme were thinking along similar lines. Quietly, alongside the planned carbon price, in 2011 they set aside up to $2 billion to buy and close as many as five of Australia's dirtiest coal-fired power stations.

Called ''Contract for Closure'', the companion scheme was direct action of the most direct kind. The closure of just two of those stations - Hazelwood in Victoria and Playford in South Australia - might have cut emissions by 20 million tonnes.

Labor wouldn't have developed the scheme if it didn't see a role for direct action. Later, minister Martin Ferguson abandoned the negotiations after none of the owners would accept his price.

(As it happens the carbon price, the rapid growth of wind farms and the lower demand for electricity generally has done much of what Labor's Contract for Closure program would have anyway. Hazelwood is operating below capacity and Playford has been mothballed. Wind farms now provide a quarter of SA's power.)

The Climate Change Authority in a report released last week also went out of its way to say there was more than one way to skin a cat. It was advising on ''ends, not means''. Australia would need to ramp up its target for emissions reductions from 5 per cent to 15 or 25 per cent below 2000 levels by 2020.

The Coalition wants to buy emissions reductions through a tender process just as Labor did with Contract for Closure. The authority reckons the Coalition's fund could ''mobilise similar emission reductions opportunities'' to Labor's emissions trading scheme. The important thing is to get there. It's how the minister Greg Hunt will be judged. Some goals are too important to quibble over the means of achieving them.

I think the jury is out on that. There was a very interesting interview in April this year.  I didn't watch the original, but what Greg Hunt said was interesting.  The coalition are obviously distancing themselves from the denialist loonies like Andrew Bolt.

The ALP were obviously ineffective in their climate policy among other things, and to me, this offered a spark of hope. Maybe this government will come up with an ambitious and practical emissions reduction and mitigation scheme. At this stage, I give them the benefit of the doubt.


Quote:

April 22, 2013 Transcript, Bolt Report, Interview with Andrew Bolt TRANSCRIPT BOLT REPORT INTERVIEW WITH ANDREW BOLT 21 APRIL 2013 E&OE…. Topics: EU carbon price crash, Carbon Ta, climate change, Boston bombing ANDREW BOLT: So why are we spending billions we don’t have to make no difference to global warming which paused 16 years ago anway. Joining me is the Opposition’s spokesman for Climate Action, Greg Hunt. What is the answer Greg? GREG HUNT: Well the answer is that we now have the highest Carbon Tax in the world. We are five and a half to six times higher than the European tax. That means we are paying massively higher electricity prices, jobs are being exported and Australia’s emissions are going up, not down. So there’s no purpose to the way this tax is operating because it’s not doing its job and it’s completely out of kilter with the rest of the world. And then in two and a half years’ time there is likely to be a massive budget black hole, the size of the grand canyon. ANDREW BOLT: How big? GREG HUNT: We think six to seven billion dollars. ANDREW BOLT: A year? GREG HUNT: A year. ANDREW BOLT: Unbelievable. Now that wasn’t actually the answer to my question. Why are we spending billions to make no difference to global temperatures which have paused for sixteen years anyway? GREG HUNT: The 1990’s had the highest of any of the years. The last decade has been the highest decade on record. So people… ANDREW BOLT: But it hasn’t risen, that’s my point, and it won’t make a difference. Why are we spending billions that make no difference? GREG HUNT: Well the first thing here is that, as Rupert Murdoch said, we think we should give the planet the benefit of the doubt. But the system the Government has chosen is the worst of all possible worlds. It simply sends our jobs and emissions offshore, it increases the price of electricity and it doesn’t even do the job. So where ever you stand on the issue of climate change you can look at the Government’s policy and say that’s a dud. And it’s all based on dodgy figures. ANDREW BOLT: Well talking about figures, I’m still wondering what it’s all for. Professor Roger Jones, right, he’s an Australian and he’s a warmist, he reckons the cut in emissions that you and Labor both plan work out best at a cut in temperature of four thousandth of one degree by 2100, four thousandth of one degree, he is right isn’t he? GREG HUNT: Let’s be honest here. Any country just acts alone will have minimal impact… ANDREW BOLT: But the quantum is about right. About four thousandth of one degree. GREG HUNT: I will let others make that judgement… ANDREW BOLT: But you must have, your own plan is three billion over four years, you must have thought what am I getting as a consequence of that about four thousandth of one degree? GREG HUNT: If we act with China, the United States, India and the EU, that can be a positive. But acting alone, and at the moment, the Government is acting alone in a way where we have a higher tax than anybody else in the world is ultimately not effective, particularly when you are simply sending the emissions and the jobs to China, to India and to Indonesia. ANDREW BOLT: Can you explain to me why, and I always ask the question of you whenever I see you as you know… GREG HUNT: You do. ANDREW BOLT: And I always try to ask that of the Government when they don’t come into the studio anyway. But why is that I don’t get an answer anyway on that? I mean it’s quite a, scientists have got the figure, and they put it out there, this is the difference you will make and you guys never tell us, yes or no. GREG HUNT: The answer is we will make a difference of 155 million tonnes… ANDREW BOLT: No in temperature. GREG HUNT: Acting alone the difference is minimal but… ANDREW BOLT: Everyone watching us now has just seen me asking you the question a couple of times and everyone watching this now has seen you dodge it and they will say he’s not answering it. That’s what really strikes me, why do politicians never answer the very basic question. For all this pain what is the gain in temperature? GREG HUNT: There are different views on the impact.

Crack smoking liberal voters, especially the ones taking over dads real estate shill, will have a hard time looking themselves in the mirror: OH, now i get what the moustache is 4  :-? :-? ;D

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muso wrote on Nov 4^th, 2013 at 11:02am:

I think the jury is out on that. There was a very interesting interview in April this year.  I didn't watch the original, but what Greg Hunt said was interesting.  The coalition are obviously distancing themselves from the denialist loonies like Andrew Bolt. The ALP were obviously ineffective in their climate policy among other things, and to me, this offered a spark of hope. Maybe this government will come up with an ambitious and practical emissions reduction and mitigation scheme. At this stage, I give them the benefit of the doubt.

Yeah right the jury's still out on weather setting up "a green army" to clean up Australia on weekends and weather more handouts to Abbott's business mates is going to be effective in reducing emissions. I think direct action is just a croc to pretend that were doing something when were not. Its ideological politics over the environment; thats all it is.      

At this stage, it's lip service. The ALP was good at lip service too.