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Australia’s new NEG National Energy Plan hides a carbon tax, international carbon credits

Carbon markets, carbon trading, climate money, burning carbon credit image. Jo Nova.Graham Lloyd points out we are back where started — a national plan involving international carbon credits:

RepuTex analyst Hugh Grossman says the NEG, in effect, ­will establish a de facto price on greenhouse gas emissions from the power sector.

The government already has indicated that the electricity companies may be able to purchase international or domestic carbon credits to cover any overruns. This remains dangerous political territory for the federal government, which was forced to rule out unequivocally a carbon tax or market-based trading scheme when the ­review was first announced. A crucial decision will be how to manage the safeguards mechanism under which big emitter companies will be curtailed in growing their emissions.

This was the point that played a part in destroying two Prime Ministers here, and one opposition leader –  Turnbull got tossed out in 2009 for Abbott over his support for the emissions trading scheme. Abbott pandered in too many respects to the carbonistas, but he always said emphatically “no” to international carbon credits. If we funnel money offshore for atmospheric nullities over China, we truly get nothing at all in return, and worse, we feed the crony crooks, the financial sharks, the deep UN state. Let’s have more of those!

No job gets created here, no soil gets improved, and no weather gets changed.

Part of this bomb was already in the works Australia already has an ETS – a carbon tax – which started on July 1, 2016. The “safeguard” mechanism isn’t doing a lot because it is set so low, but it is legislated, “ticking”, and can be turned on, ramped up, at any time.

The triple-cleverness of Abbott’s reverse-auction plan

Credit where it is due — the reverse auction idea that Lloyd writes about was an Abbott creation — and it succeeded in three ways.

  1. Was a truly cheap effective and free market way to reduce CO2 emissions.
  2. As a byproduct it improves Australian soils.
  3. It calls the greenie’s bluff — achieving what they said they wanted, which they didn’t like at all: thus showing that they are renewables-industry lobbyists in disguise and don’t care less about the environment. How many greens/conservationists/climate activists spoke up to say they liked the Abbott plan?

Reverse Auctions work: they achieved a carbon price of around $12 a ton. It’s pointless, but much cheaper and more effective than any of the other “Carbon taxes”:

The Emissions Reduction Fund provides incentives for emissions reduction activities across the Australian economy. The government buys credits through a ­reverse auction system. The first four auctions have contracted 178 million tonnes of emissions ­reductions at an average price of $11.83 a tonne.

To date, the environmental lobby largely has failed to embrace the Emissions Reduction Fund scheme, preferring to concentrate on blocking fossil fuel development and lobbying in support of renewable energy.

The reason the enviromental lobby never liked Abbott’s plan is because it reduces CO2 emissions cheaply without intermittent renewables. It cuts support for wind and solar industries because they can’t compete in this auction — they are far too expensive at reducing CO2. Some estimates of the cost of abating carbon with wind were about $60 AUD per ton, and the cost of solar was $700 AUD per ton. (Marcantonini, 2013). The price of carbon reduction at South Australian windfarms was something like $1500 per ton. Perhaps wind and solar have improved a bit since then, but no one can pretend that they are cheaper than the solutions that win the reverse auction. Gillard’s carbon tax was $24/ton and rising, but because it was economy wide, it had all kinds of bad side effects. It was the price of emitting “carbon”, but because it applied to many industries which were already efficient, and couldn’t improve a lot, it took $15 billion from Australians and only abated 2.9 million tons of emissions. So Labor’s carbon price ended up being $5310 per ton.

The plan was an Abbott-the-skeptic compromise: greener than the greens but at the same time, used an actual free market solution, and had some useful outcomes beyond the irrelevant reduction  of CO2.

It was more environmentally friendly than all the Green and Labor proposals because it achieved what they said they wanted to achieve in a more cost effective manner. In theory we could improve the environment more with every dollar spent. The auction is largely a waste of money — because CO2 is beneficial, not pollution and doesn’t control the climate except in minor ways — but as Abbott saw, and Lloyd’s article focusses on, getting carbon into the soil is a Net Good Thing. So the byproduct of the auction claws back some of the money wasted. Australia needs more carbon in our soils.

REFERENCES

Marcantonini and Ellerman (2013)  The cost of abating CO2 emissions by renewable energy incentives in Germany. MIT Centre for Energy and Environmental Policy Research, CEEPR WP 2013-005

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Australia's new NEG National Energy Plan hides a carbon tax, international carbon credits, 9.8 out of 10 based on 54 ratings

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34 comments to Australia’s new NEG National Energy Plan hides a carbon tax, international carbon credits

  • #
    David Maddison

    This is not going to end well for Australia.

    92

  • #
    popeye26

    Looks like it’s about to destroy Turnbull for the second time – only this time as prime minister not opposition leader.

    When will the “elites” ever learn that us “commoners” have a lot more common sense and can smell a rat much sooner and easier than they give us credit for?

    Cheers,

    260

    • #
      Yonniestone

      Turnbull doesn’t care one single iota!, all hes doing is what he was put there to do which is to serve globalists invested interests at the expense of Australia and its people, as long as the free money is “legally” filtered out via various ideas/schemes they’re all happy.

      I wonder how Canberra parliament’s new fortifications will hold up against 20+ million livid Australians when the penny finally drops?

      170

      • #
        Sceptical Sam

        Nah!

        She’ll be right mate.

        Half of them voted for them.

        The other half are millenials and don’t know mud from a brick.

        20

  • #
    LevelGaze

    I posted here some few years ago that Turnbull was a snake in the grass, forever guaranteed to betray.
    The Member For Goldman-Sachs comes out this week true to form.

    I doubt very much that his Quisling party supporters even understood what he was proposing with this – they’re far too thick.

    Oh, and by the way, I don’t like him very much.

    220

  • #
    mmxx

    Nearly every time a Greens politician opens his/her/gender-undefined mouth, it is to replace one foot with the other.

    At the next election, it is not impossible that 97% of Australian voters will show they believe that the Greens are detrimental to the future prosperity of the people and environment of this country.

    100

  • #
    Geoffrey Williams

    Australians are being led down the garden path like lambs to the slaughter. For years we have been repeatedly lied to and fooled by successive governments. All in the foolish belief in the false claims of man-made climate change. Even now after 20 years or more when it should be clear to all that dangerous climate change is simply not occurring, they persist in destroying our economy by sabotaging our national electricity grid.
    The silence of the lambs is staggering.
    Regards GeoffW

    81

  • #
    RobertR

    Under instruction from Al Gore, the lefties in our Gov strike again.
    -a carbon tax “when you are not having a carbon tax”
    -renewable energy subsidies “when you are not having renewable energy subsidies”
    -$100 decrease in power bills when you are having a $900 increase in power bills.
    - the list goes on and on
    - the Emperor has another set of new clothes.

    70

  • #
    pat

    no other detail, as far as I can see!

    19 Oct: ABC: Politics Live: Labor’s Mark Butler ridiculed by Malcolm Turnbull over carbon price claim
    By political reporter Matthew Doran
    Mark Butler has been ridiculed by Prime Minister Malcolm Turnbull in Question Time after Labor’s energy spokesman questioned whether the Government’s new National Energy Guarantee would effectively put a price on carbon.
    http://www.abc.net.au/news/2017-10-19/politics-live-october-19/9064724

    18 Oct: SMH: Peter Hannam: Malcolm Turnbull’s national energy guarantee plan masks a carbon price
    Buried in the detail of advice presented by the new Energy Security Board to state and federal governments is a mechanism to be added to the National Electricity Market in two stages in 2019 and 2020 that could produce a default carbon price.
    “Some electricity retailers will not be able to meet the required emissions profile, while others will overachieve,” it reads. “Therefore a secondary exchange will occur between retailers to balance their portfolios.”
    That “exchange’ will also be open to those underachieving retailers to buy a yet-to-be-determined portion of any “emissions guarantee” shortfall using Australian carbon credit units or international units, the briefing note says.
    Hugh Grossman, Executive Director of advisory group RepuTex, said that mechanism creates a de facto carbon price, even if its level may be hard to pin down.
    “It’s not a transparent price,” Mr Grossman said. “Certainly from a structural design point of factoring in that cost of carbon, [it's] a very good step.”
    Since Australian carbon credit units (ACCUs) already float and would be available for purchase by retailers, “the effective carbon price for the market would be the price of those ACCUs”, he said…

    Josh Frydenberg, the Environment and Energy minister, though, downplayed the prospect, telling Fairfax Media there would be no explicit carbon price.
    “Under the new initiative, the commonwealth will legislate the target and retailers will be required to have an average emissions level across their portfolio,” he said. “They can use existing contracts to meet this obligation, potentially including international permits and domestic credits.”
    At least one state government, though, interpreted the advice to mean Canberra was backing linkage to carbon markets.
    Craig Kelly, chair of the Coalition’s backbench energy committee, took a similar view, saying: “there is a potential price but what that price will be is an unknown factor”…
    Mr Kelly said it is possible the price could be zero, depending on what trajectory for emissions is set by the Australian Energy Market Operator…

    RepuTex’s Mr Grossman said access to international markets may also be one way to link whatever carbon market emerges in Australia to efforts in Europe, China or elsewhere to price carbon.
    While international prices of carbon credits have been cheap in the past, those prices are likely to increase in the future, he said.

    Given the large opportunities for carbon sequestration and other projects in Australia that could supply low-cost carbon credits, this country may even become an exporter of such market instruments to the benefit of land users and other ventures here, Mr Grossman said.
    http://www.smh.com.au/federal-politics/political-news/malcolm-turnbulls-national-energy-guarantee-plan-masks-a-carbon-price-20171017-gz32lb.html

    40

    • #
      Graeme No.3

      The rush into highly profitable renewables, especially wind farms will come to an abrupt end when a new Parliament stops all subsidies.
      If this Parliament can change the rules so can a future government, and we must hope that such a government is elected ASAP.

      60

  • #
    David Maddison

    Green Labor takes its instructions from Al Gore.
    http://www.sbs.com.au/news/article/2017/07/13/labor-energy-ministers-meet-al-gore-sign-zero-emissions-pact

    AGL takes its instructions from Al Gore.
    http://www.theaustralian.com.au/business/mining-energy/gore-climate-graduate-and-agent-of-change-now-agls-point-man/news-story/b617c1187ded24b4adf1874f1deca398

    Genius Al Gore explains how the interior of the earth is at a temperature of “several million degrees”.
    https://youtu.be/kGV7Dr2iDvU

    62

  • #
    pat

    18 Oct: CarbonPulse: Australian energy plan could form basis for steady offset trade
    Australia’s new energy plan could provide the foundation for healthy demand for domestic and foreign carbon credits from Australian utilities if the government heeds advice from the Energy Security Board.

    19 Oct: ABC: Small town of Glen Innes to become renewable energy hub scattered with wind turbines
    By Philippa McDonald
    A small town in northern New South Wales has become an epicentre for renewable energy, with hundreds of millions of dollars being invested in wind and solar farms.
    Perched on the Great Dividing Range, Glen Innes gets wind from all directions and as turbines fill the skies, the local economy is reaping significant gains.
    For up to 30 landowners, having turbines on their land is an opportunity to “drought-proof” their income…READ ALL
    http://www.abc.net.au/news/2017-10-19/record-investment-in-renewable-power-near-glen-innes/9063854

    ABC’s Babs in in WA, but gets quotes from Uni of Qld, who have a promoted tweet in reply to her tweet on the following ABC piece:

    Twitter: Babs Mchugh, ABC, Perth, WA: Tweet: Battery storage could be hard hit by new energy policy (LINK)
    Promoted Tweet: UQ News: Planning to start at UQ in 2018? Apply by 31 October for scholarships.

    since the original announcement, ABC has been referring to “so-called dispatchable” – now note***

    19 Oct: ABC: Battery storage proponents despondent about future under National Energy Guarantee
    ABC Rural By Babs McHugh, Perth WA
    Some in the fledgling tech-metals mining and processing industry are dismayed that the Federal Government’s new energy policy does not appear to support renewable energy storage such as batteries.
    Australian Vanadium chief executive Vincent Algar said the National Energy Guarantee (NEG) unfairly pitted the batteries and renewable energy storage sector against fossil fuel electricity producers such as oil and gas.
    ***”With coal and gas considered a dispatchable energy source under the NEG, what incentive will there be to source dispatchable energy from a battery?” he said…

    The release of the NEG also lacks clarity, according to some.
    University of Queensland economics professor John Quiggin said the lack of policy specifics so far had left the renewable energy and storage sector up in the air…
    “So far it appears to suggest the policy is about rescuing coal, ***which has now been classed dispatchable, and protecting it against genuinely dispatchable energy technologies such as batteries”…

    While he confesses he is not very optimistic about the likelihood of a battery-friendly policy, professor Tony Vassallo said it was possible.
    The Delta Electricity chairman in sustainable development at the University of Queensland backed up concerns that the NEG was currently too opaque to know what the full impact could be on batteries…
    http://www.abc.net.au/news/rural/2017-10-19/concern-energy-policy-will-stymie-growth-in-battery-storage/9061948

    another ABC dispatchable sceptic:

    19 Oct: ABC: Malcolm Turnbull wants us to bet on the National Energy Guarantee trifecta without seeing the detail
    Analysis By Stephen Long
    ***The term “dispatchable energy” isn’t defined in the documents from the Energy Security Board but it generally refers to energy that can be turned on and off to meet the demands of electricity grid operators.
    Various sources can do this — including hydro-electricity — but in practice, the main source of “dispatchable energy” is gas. And gas is expensive — very expensive, thanks to policies that opened Australia’s gas reserves for export.
    ***There’s a debate about whether coal-fired power plants are “dispatchable” energy — they take a long time to fire up and are engineered to run constantly once operating — yet the policy’s requirement to contract for supply from “dispatchable” sources seems to include coal…READ ALL
    http://www.abc.net.au/news/2017-10-19/national-energy-guarantee-trifecta-missing-detail/9063500

    30

    • #
      Graeme No.3

      “what incentive will there be to source dispatchable energy from a battery?” Zero incentive considering what they cost. I have been looking at that recently and the best comment I saw was “a Battery would pay for itself in 15 years, if you didn’t have to replace it after 10 years”.

      70

  • #
    robert rosicka

    Quite frankly .00001 cent per ton of Co2 is still too much to pay but if we must I’m okay with that price .

    10

  • #
    Another Ian

    Next move from the other live laboratory study of renewables in Canada

    http://www.smalldeadanimals.com/2017/10/wynneing-66.html

    And the link.

    Also note the duck shove to reduce apparent electricity prices while hiding the debt incurred (in comments)

    10

  • #
    pat

    o/t

    19 Oct: ABC: New Zealand election: Jacinda Ardern becomes prime minister after Winston Peters forms coalition with Labour
    New Zealand First holds the balance of power with nine seats, a Labour-Green bloc controls 54 seats, and the National Party 56 seats.

    During the campaign Ms Ardern said she wanted to build thousands of affordable homes to combat runaway house prices, spend more money on health care and education, and clean up polluted waterways.

    Mr Peters said his party’s negotiations were heavily influenced by changing the way capitalism was perceived in the country.

    “Far too many New Zealanders have come to view today’s capitalism not as their friend but as their foe, and they are not all wrong,” he said…
    http://www.abc.net.au/news/2017-10-19/new-zealand-first-forms-coaltion-with-labour-jacinda-ardern/9067264

    10

  • #
  • #
    Peter C

    Australia needs more carbon in our soils.

    Can anyone explain what Carbon does for soil?

    I am familiar with adding nitrogen and phosphate to soil to improve grass and crop growth. These substances are drawn up into the plant from the roots.

    Crops get their carbon from the air, so what is the use of extra carbon in the soil?

    10

    • #

      A good question you ask and the answer is mostly not a lot in many places it occurs and adding more can mean little more than there is more.

      Some of what it does is assist in soil structure and microenvironmenal conditioning that promotes soil health (ie microbial activity) and access for plants to other nutrients. I’m not sure what has been done to analyze the effect of adding more and in what form (we are not talking diamonds or graphite) but it is known that organic related nutrients are important sources for plant (think poo). This is not bad but a bit light weight https://en.wikipedia.org/wiki/Soil_carbon

      Carbon soil storage is all about putting carbon into soil in such a way that it does not just cycle back into the atmosphere. The aim, apart from sequestering carbon, is that it either does no harm and just stores it or that it assists that soil to be more useful for food production. See the “soil amendment” section of this https://en.wikipedia.org/wiki/Biochar

      10

      • #
        AndyG55

        Organic matter, (as opposed to black carbon), in the soil, and plenty CO2 in the air, will ALWAYS be more useful for food production.

        Putting black carbon in the soil is a pointless, expensive, wasteful exercise.

        No wonder the greens love the idea.

        10

  • #
    JohnM

    Don’t just tell readers here but let the Minister for Energy and the Environment know by using the contact form at https://onlineservices.environment.gov.au/contact-your-minister.

    - Keep it polite and not abusive
    - Keep it short and to the point

    Let him know what you think of pandering to the Paris Climate Agreement and putting other countries wishes first and providing for Australian citizens a distant last. Point out if you wish to, that Donald Trump’s Administration has been far smarter than the Australian government and that the government should swallow its pride and follow Trump’s lead.

    10

  • #
    Will Janoschka

    “A good question you ask and the answer is mostly not a lot in many places it occurs and adding more can mean little more than there is more.”

    Troll GA,
    Interesting question, but all you have is Climate Scam drivel! Lots of surface soil carbon forms, carbonates, that cannot be converted by plant life to carbohydrates (food) for all else! Plants plus sunlight plus water reduce atmospheric CO2 to food at terrific expense (entropy) that can only be dispatched space via EMR by the entire volume of Earth’s atmosphere. Surface EMR exitance remains negligible. Your Climate Clowns have everything back-assward as can be expected from academic ignorants that can never ‘do’, but only profess their religious nonsense!

    21

  • #
    Graham Richards

    Nobody seems to get it!
    The system includes carbon credits (international) + carbon taxes.
    This is why Turnbull was helped into position of PM! Banking/Goldman Sachs, carbon traders, Turnbull owes them big time! Need more explanations give Christopher Moncton a call,
    This what everybody whom has even an inkling of what’s going on in today’s world has been saying.
    This why the left hate Trump. He’s undoing the things that Turnbull is doing to us & the electorate are too bloody stupid to see it.
    And still everybody argues about that he science of it all & miss the real agenda!

    30