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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.


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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