My comments about the Carbon Tax

A heated debate began when the Australian Government announced an initial carbon tax with a move within a few years to a full emissions trading scheme (ETS). Like others I have political views but I think that this issue is of such importance to Australia and indeed the world that it transcends political party loyalties. The evidence shows that:

There is a carbon problem: - The overwhelming weight of reputable scientific opinion is that the planet is warming and that emissions of CO2 and other gasses caused by human activity, is likely to have caused it. The affects of warming on people’s lives are predicted to fall within the range dangerous to catastrophic depending on the extent of warming. To minimize damage the world has to limit warming to acceptable levels. To do this the world needs to initially stabilize then reduce emissions as much and as quickly, as possible.

There is a solution: - Nearly 70% of Australian economists consider that the most effective way to reduce human activity generated carbon emissions is to put a price on carbon. This can be achieved either by means of carbon tax where the Government sets the carbon price and the market effectively sets the allowed quantity of carbon emissions or, by means of an ETS (Emissions Trading Scheme) where the Government sets the levels of carbon emissions permitted and the market sets the price. In both of these approaches the market does the heavy lifting.

Putting a price on carbon is clearly the way to deal with the problem provided that it is backed with other carbon reduction strategies and policies that, encourage and support, innovation, clean energy, other carbon mitigation schemes, our trade exposed industries and Australians during the transition to a cleaner sustainable life. For those Australians who genuinely have doubts about whether global warming is occurring, the safest way to go is to adopt the precautionary principle. That is is to assume the worst and act accordingly.

Vested interests supported by some sections of the media have been bagging the carbon tax with a combination half truths and misrepresentation mixed in with some truths to give their comments some credibility. Take these examples:

• "The carbon tax will destroy the Australian steel industry."

This message is powerful but inherently misleading. The industry is suffering but this is because of the mining boom. The boom has substantially increased the cost of the industry’s raw materials while the rising $A has reduced annual export income by 30% over a recent period, severely eroding the industry’s profitability. The affect of a carbon tax will be mild. When applied, a carbon tax of $A23 ton/CO2 net of Government assistance, will increase steelmaking costs by less than 1% and this can be reduced by introducing clean energy technology in the steelmaking process. It is noted in passing that large mining projects in Australia use a low proportion of Australian steel.

• "The carbon tax will destroy our coal industry and many jobs."

As intended, a carbon tax will reduce the demand for the industry’s products in Australia and is likely to also do so internationally when high coal consuming countries introduce carbon pricing. This is likely to cost jobs in the long run unless the industry innovates towards cleaner coal. What is conveniently ignored is that up to now the industry has had an inside run because the costs of coal generated pollution have been borne by communities, giving the industry's products a pricing advantage over non polluting competitive products that do not cause such costs. Putting a price on carbon will do no more than level the playing field. It should also encourage coal producers to innovate towards cleaner coal.

• "The tax will reduce people’s living standards."

The proportion of GDP paid by Australians in taxes is already one of the lowest in the developed world. Even so the Government has advised that the majority of revenue from the tax will be used to offset the ongoing affects of the pricing of carbon, on the COL for Low and middle income earners and to help specified industries. There is an equity case for not giving such assistance to higher income earners. As well this group have, and are still benefiting disproportionately from, significant taxation concessions and lower tax rates legislated in earlier periods.

• "Australia’s pollution is a miniscule proportion of world emissions so why worry."

Australia’s aggregate share of world CO2 emissions at < 2% is small on a global basis. As polluters in this category account for 26% of CO2 emissions worldwide this argument is asserting that the world should not worry about one quarter of its emissions. The argument implies that we should continue with technology that is now known to be dirty and obsolete, and that this should be at the expense of a cleaner future and the economic opportunities that this will present. The argument ignores the effect that leadership by Australia can have on countries vacillating on the carbon issue. It also ignores the damage that a changing climate can wreak on our country's economy and the agricultural sector in particular.

• "We should wait until the US moves."

The US is a large emitter by any measure but its political and economic power is carbon dependent and the carbon lobby is powerful. The country is confronted by economic, political and social problems that work against rocking the carbon boat. The US Federal government might never embrace a price on carbon or, may do so only when it is too late. Given the potential immensity of what is at stake, just waiting for something that might never happen is not strategically sensible.

• "Whatever CO2 we save in a year will be overwhelmed by China in days, so why bother."

If that argument is followed most countries would not bother to take any action. China is the largest polluter in aggregate and it's pollution is anticipated to grow. It has the largest population and wants to achieve living standards perhaps like that enjoyed in developed countries. Who can deny the chinese people that aspiration? Even so China is a world leader in developing and manufacturing clean technology. Reports indicate that it is investing more in clean energy than anyone else in the world and has the largest reforestation programme in the world.  It should not be forgotten that a large part of China’s emissions has been caused by demand from the west which has transferred many of its manufacturing and hence pollution problems to China. This follows 150 years of industrial activity during which time the west pumped large amounts of emissions into the atmosphere thereby creating the basis for the climate problem in the first place. We, as the largest polluter in the world on a per capita basis, encourage China to reduce its levels of pollution, so it would be nothing less than base hypocracy not to take robust action to reduce our own. Europe has shown leadership by putting a price on carbon and we should do the same.

• "A volcano pushes out in a day more CO2 than people push out in a year so the problem is all hype."

This comment is clearly aimed to mislead. Volcanoes typically emit around 350m/tpa. This compares with annual human emissions of CO2 currently estimated at >30b/tpa and growing.

There are genuine anxieties in communities about how the introduction of a price on carbon will affect their ways of life. Peddling misinformation for whatever reason, will only accentuate those anxieties without providing real solutions, so those involved in doing so should think again. We Australians need a vision to bring us together after considering this question "Do we want to bequeath our kids and successors a clean, bright, sustainable future or do we want to bequeath them a continuation of our dirty, detructive, unsustainable past?"

Brian Harrisson