Australian Federal Government in abject partial back-down on their Carbon Tax

I wonder what readers think about this developing shambles.
Combet ditches carbon floor price in deal with Europe
Whatever GreenLabor does – the main-stream-media will make it easy for them – give them nice favourable coverage – put the best spin on it – blame everything on Tony Abbott.

9 comments to Australian Federal Government in abject partial back-down on their Carbon Tax

  • Graeme Inkster

    I think the quote from the EU sums it up;
    “provides investors with long-term certainty on the price of carbon pollution”.

    Since the “price” in Europe has fluctuated between $6 and $53 in recent years, you can only wonder what their definition of instability is.
    The price has trended “down, down and staying down” and who would bet on what it is, or even if the scheme exists, in 3 years. The attraction for the EU is that it seems to add credibility to their failing scheme.

    Also as noted by a “defender” of the Oz scheme, the price is too low to encourage any action on carbon reduction. Hardly surprising as the whole thing was set up by economic illiterates, unable or unwilling to work out that the lowest “sustainable” cost of wind electricity at $110 is much more than $39 + 23.

    I am not sure that all the mainstream media will give this such favourable coverage. Tony Abbott’s gibe about “the perfect scheme..needing changes after 2 months” won’t go unmentioned.

  • Graeme Inkster

    Germany started a new power source this month, Wind farm? PV farm? No, a 2200MW brown coal fired power station near Cologne. (Equivalent to 5400 typical wind turbines). They have given the go-ahead for 23 new coal fired stations.

    Reasons given are replacing nuclear capacity, poor reliability of alternative electricity generation, and concern about the cost of electricity from those alternative sources. The latter would loom large in political circles with up to 15% of Germans having trouble paying their electricity bills.

    The demand from these new stations for carbon credits would push up their price, hence cost of electricity where it not for German politicians deciding that their brown coal industry is exempt from the carbon scheme. Given that they bankroll half Europe, they may get away with that. They will be backed up by Poland, which has been quite vocal about its own brown coal power; not wanting it disrupted by the newer wind farms in the Baltic etc.

    The poor performance of alternative sources has been much discussed in the MSM in Germany recently. Those Baltic wind farms are hoped to give 18% capacity factor. The Brits claimed they would get 32%, although since they’ve started working the actual figure seems to be 27%. Still better than the falling figure for on-shore in the UK.

    The latest Grand Scheme in the UK is the Severn Barrage, being pushed by a former Tory Minister, to a current Tory (conveniently formerly his junior Minister) who makes $300,000 (on the side) from alternative energy. It will “only” cost 30 billion, cause considerable environmental damage, and generate as much electricity as a 1 billion dollar nuclear power station. But to make the supply more reliable, there is a plan to run a cable through the Chunnel to bring (more) nuclear energy from France. That scheme makes more sense that the current UK scheme of building wind turbines everywhere. I noticed that one day during the Olympics the entire UK wind turbine output was less than 0.3% of capacity, and they are less reliable in winter!!!

    None of this leads me to believe that in 3 years time the EU carbon credits will be more valuable than Zimbabwean billion dollar notes.

  • Beachgirl

    This article by Bloomfield reveals the multiple contradictions in German energy policy and talks about that new coal fired generator near Cologne.
    I suppose the unwritten and unspoken “Merkels Law” is, “…do not have voters experiencing blackouts…”

  • Philip Bradley

    Re: the Severn Barrage

    Tidal power has a huge advantage over wind and solar, because tides are predictable, you know ahead of time how much electricity you will get.

    The downsides are a limited number of suitable locations and large capital costs.

    There are currently 3 tidal power projects under construction in Wales and Ireland has a number of suitable locations.

    WA’s Kimberly coast has large tidal ranges and suitable locations, but doubtless the Greenies will go apesh1t at the mere suggestion.

  • Years ago, tidal power was touted for Derby, a small station for a small town, opposed strongly by environmentalists, and Derby locals. They now have a new gas fired power station like Broome’s I believe. Our gas is trucked from the Pilbara.

  • David Brewer

    Before the last election, the Prime Minister and Treasurer promised not to introduce a carbon tax. The Treasurer Wayne Swan, said he “rejected this hysterical allegation that we are moving towards a carbon tax“.

    After the election, they introduced a carbon tax.

    A floor price of $15 after 2015 has been a key part of the plan, since the beginning of the tax, to turn it into an emissions trading scheme. This floor price has been reasserted and defended by the government many times. As recently as 12 July the
    Australian Financial Review reported:

    Despite widespread opposition to the $15 floor price from the energy industry and carbon traders, Climate Change Minister Greg Combet ­yesterday denied the government was preparing to dump the commitment to a floor price that was made to win the support of Greens senators….

    Senior government sources said it would be “very difficult politically” to walk away from the commitment to the minimum price and it could have implications for the budget.

    Six weeks later Combet dumps the floor price. But don’t worry, now he says it won’t affect the budget.

    Yet the budget is built on a price of $29 in 2015, triple the current price of permits on the European market, to which ours is linked, now the floor price has been dropped.

    I really do not understand why the government has done this. It provides no relief or certainty for business, as the decision is not even operative until 2015. It reinforces the impression that the government is untrustworthy, not credible, and not competent. Why didn’t they just leave this alone, at least until after the next election? …Really don’t get it.

  • WSH

    Dave – I suppose one answer to the question – “Why did they do it” –
    must be that internal Labor polling and/or their spin-doctors advised them to make a gesture softening the Carbon Tax. I agree it seemed strange at a time when Labor was inching up a tad in the polls.

    Alan Moran has an interesting commentary at Catallaxy Files.
    Somersaults and a belly-flop: carbon tax fails on all counts
    Andrew Bolt also picks this up.
    Alan says one certain result is that we will be paying a $Bn a year to Europe.
    While Germany builds more power stations burning lignite coal – a low grade coal similar to Victorian brown coal so derided by the warmists. And the Germans exclude their lignite from emission rules.
    And of course GreenLabors emission reduction targets for 20whatever are shot down in flames.
    Nobody could have made this up.
    Maybe the real world is getting too complex for our political processes – too much for our pollies to manage.
    What can ordinary folk do – IMHO the first rule is –
    never vote Green – then –
    where possible put the Greens last – then –
    never vote for a candidate who is sympathetic to Green policies.

  • Philip Bradley

    The $1 billion a year to Europe is in practice $1 billion a year to dodgy carbon credit schemes mostly in China that have nothing to do with CO2. There are companies in China whose entire business is manufacturing CFCs, collecting the carbon credits, destroying the CFCs, then manufacturing another batch of CFCs, etc.

  • David Brewer

    The EU scheme is bordering on a joke.

    First the emissions themselves are subject to all sorts of rorts like the one Philip Bradley describes. And even if everyone was honest, how exactly can you “verify” the non-emission of something, especially an invisible and ubiquitous gas that.

    Then there was the “hacking” disaster when $40 million of permits were stolen and the whole market had to be closed down.

    Then there are the ridiculous exemptions like German lignite.

    Then there is the fact that it just doesn’t work. Phase 1 of the scheme was 2005 to 2007. Emissions ROSE 1.9 per cent in phase 1, even though at times prices reached 30 euros a tonne ($50 at the time).

    Sure, emissions have fallen since then, but that is because of the European recession and the continuing outsourcing of manufacturing to China. It can’t be because of the price of the permits, which crashed in 2009 and has been stuck around $10-$15 ever since.

    Recent studies have said the whole scheme has cost several hundred billion dollars and had no discernible impact in reducing emissions. In theory a tax on anything should reduce it, but the European ETS’s design, exemptions, and incentives are just too distorted to do the job.

    Even the warmist Conversation has a couple of articles panning Combet’s decision, so again, you have to wonder why. Warwick you are probably onto something when you call it a gesture to soften the tax, presumably to get business off their tails. It reminds me of the way Howard used to back off on unpopular policies (often good ones) to prepare for an election, and I notice several journalists are speculating that Gillard might call an election before things get any worse. Wouldn’t surprise me. If she rises to 48/52 in Newspoll, I’d say it’s on.

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