In the next 37 years, Labor will spend $60,000 per Australian to change the weather

Peter Lang adds up the numbers from the Treasury and leading economic commentators, and finds that decisions the Australian Labor Government has made will cost the equivalent of about $17,000 for every man, woman and child if paid in a lump sum now, or $58,000 if paid bit by bit over the next 37 years to 2050. And that’s just for the ETS, not for the RET and other measures.

By 2019 Alan Moran estimates each year citizens would have to fork out billions for Green Schemes; Labor policies tally to $22b, Coalition policies to $7b, Greens policies to $27b.

If men-in-black-suits turned up at Australian houses forcing citizens to sign cheques for $17,000 per person in order to change the weather on Earth 100 years from now, there would be a revolt in the streets. That’s $68k per household of four. (Is this how you would spend $68 grand?) But if the government disguises those charges in electricity bills, and hidden increases in the cost of every item that has to be moved, heated or cooled, then some 30-40% of the nation sees no reason not to vote for this. In fact, some really want it. It is all a PR game.

So much so, I am surprised the fans of big-government have not managed to stop news outlets and bloggers from speaking the truth yet. To maintain the cloak of confusion, Finklestein-mark-II must be high on future big-government agendas.

All this expense, for next to no benefit even if their broken models were right. Who is going to want to be associated with this financial Titanic when it goes under? (Which could be the next few years, if temperatures follow past cycles.)

– Jo

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Guest Post by Peter Lang

The ultimate cost of Australian “carbon” policies

The emissions trading scheme (ETS) and the Renewable Energy Target (RET) if not repealed would cost:

• ETS = $1,345 billion to 2050

• RET = $30 billion to 2020

What will the ETS cost every Australian?

According to Treasury estimates, the ETS would cost Australia $1,345 billion dollars in total to 2050 [Henry Ergas[i], Gary Johns[ii], Treasury, Chart 5:13[iii], ‘Medium global action‘ minus ‘SGLP core’ ].

That is $58,000 for every person living in Australia now (assuming 23 million population).  This is what it will cost if we pay at current prices in installments over the 37 years to 2050. However, the discounted cost ¡§C i.e., for those who choose to pay a lump sum up front and ¡®no more to pay¡¡¥ (assuming no more changes to the rules) – is $17,000 per person (or $68,000 for a family of four). In return for this up front payment you hope to get $5,400 per person of benefits, as climate damages avoided, over the period to 2050.

How many are prepared to pay $17,000 per person as a lump sum now, or prepared to pay $58,000 over 37 years, in the hope of gaining an intangible benefit of $5,400 in ¡®reduced climate damages¡¡¥ over the next 37 years?

But the ETS is just part of the cost we are committed to pay to reduce ¡®carbon pollution¡¡¥.  Another is the Renewable Energy Target.

RET cost to 2020

Large Renewable Energy Target (LRET) and Small-scale Renewable Energy Scheme (SRES)

• LRET [iv] increases from 16,763 GWh in 2012 to 41,000 GWh in 2020.  Assume average price over the period will be $60 for the reasons outlined by Robert Gottliebsen [v], then the total cost for 2012 to 2020 is $13.6 billion.

• SRES [vi] is more difficult to estimate.  I haven’t found the budget forecasts for it so I have used the Clean Energy Regulator¡¡¥s ¡®Certificate modelling reports¡¡¥ [vii] to estimate the cost.  Say $1 billion total to 2020.

Total = $14.6 billion

¡®Other Support for Renewables¡¡¥ (from DIICCSRTE [viii] and Treasury)

From Treasury, 2012-13 Budget, ¡®Securing a clean energy future¡¡¥, Chapter 4 [ix]:

• Clean Energy Finance Corporation (CEFC) = $10 billion
• Australian Renewable Energy Agency (AREA) = $3.2 billion
• Clean Technology Innovation Program = $0.2 billion
• Clean Technology Investment Program = $1.2 billion (but not all for energy and not all is government money)

Total = $13.4 billion + some proportion of $1.2 billion

Other (total costs unavailable)

• Increased cost of transmission system and hidden costs transferred to dispatchable generators: I don’t know the total cost but expect it would be substantial.  For example, for solar PV alone, ESAA estimates the current cost of grid and hidden costs transferred to the dispatchable generators at $340 million per year [x]. The equivalent costs for wind power would be many times higher than for PV. These costs will increase substantially to 2020. Guess: $10 billion total to 2020.

• State based subsidies and incentive programs; I don’t know the cost but they are substantial. For example, the Queensland Solar Bonus Scheme is projected to cost Queensland tax payers $2.9 billion by 2028 (guess: $1.5 billion by 2020).  That is just one program in one state.  What would be the total cost of all programs in all states to 2020?

Total cost of Renewable Energy Target to 2020

• RET = $14.6 billion
• Other Support for Renewables (e.g. CEFC, AREA, etc) = $13.4 bn
• Extra transmission and costs transferred to dispatchable generators = unknown
• State based policies = unknown

Total = $28 bn + unknown

Cost of carbon restraint policies in 2020

IPA¡¡¥s Alan Moran[xi] explains the annual cost of policies to restrain carbon emissions and shows the difference between the Labor, Coalition and Green policies.  Excerpt:

¡¡ãThe carbon tax-emissions trading scheme is only one of four broad measures employed to abate greenhouse gas emissions. The others are the renewables program, direct government budgetary assistance, and regulations. The costs of all these measures change year by year. The best way to compare them is to take their measure at 2019-20, when most transitory arrangements are in place.¡¡À

He summarised the annual costs in this table:

Based on Treasury forecasts, the cost of the government¡¡¥s ¡®carbon¡¡¥ reduction policies will be $22 billion per year in 2020. This is about $1,000 per person per year and increasing every year thereafter.  A family of four would pay $4000 per year in 2020.

 

References

Over at Jennifer Marohasy’s site Peter Lang explains why the ETS cannot achieve anything.