PC: unilateral carbon plan doesn’t add up …

The Productivity Commission’s submission to PM Howard’s task group on emissions trading had the following to say about going it alone on greenhouse gas abatement:

“Independent action by Australia to substantially reduce GHG emissions, in itself, would deliver barely discernible climate benefits, but could be nationally very costly. Such action would therefore need to rest on other rationales.

– Facilitating transition to an impending lower emissions economy is the strongest rationale for independent action, but it is contingent on the imminent emergence of an extensive international response” (p. viii)

The theme is picked up in more detail on pages 8-9

“Non-consensus scenarios, including independent action, which do not involve burden sharing, inevitably bring some competitive fundamentals into focus. In  Australia’s case:

• independent action would not, in itself, achieve discernible climate benefits because, despite its relatively high per capita emissions, Australia contributes only around 1.4 per cent of global GHG emissions.4 To put this in perspective, Australia’s total annual GHG emissions constitute less than the United States and China each emit in a month (table 1.1);

• Australia’s high living standards derive in part from the largely efficient use of an abundance of low cost fossil fuels, reflected in relatively high per capita emission levels. As a result, substantially reducing GHG emissions would be costly for the Australian community, with costs borne mainly by consumers and the owners (and employees) of businesses that directly or indirectly rely on the intensive use of GHG producing energy sources.”

The PC helpfully provided the following table of global CO2 emissions shares – note how trivial is Australia’s share of global emissions.

Finally, the PC thinks that the moral suasion argument is weak –

“Overall, the Commission’s view is that it is unlikely that major new initiatives could be justified solely on the grounds that this would enhance Australia’s  standing as a good world citizen, or be influential in persuading other countries to take similar measures.” (p. 31)

As a key player in the tariff debate over the past fifty years, I think the PC is uniquely placed to make this assessment.

I think we should follow Canada and shelve our plans until there is some progress toward agreement between the major global emitters.

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9 Responses to PC: unilateral carbon plan doesn’t add up …

  1. Manny C says:

    A nugget find that I have forwarded to some well known commentators.

    • Ricardo says:

      it is surprising how much ground has already been covered – and now been covered up. the PC report also has a discussion of the Stern report’s discount rate fudge.

  2. The Lorax says:

    Independent action by Australia to substantially reduce GHG emissions, in itself, would deliver barely discernible climate benefits

    Well that’s stating the bleeding obvious.

    If Australia acts, or is seen to be acting, it increases the chance the rest of the world will. That what this is about.

    You admit this yourself with this statement….

    I think we should follow Canada and shelve our plans until there is some progress toward agreement between the major global emitters.

    By Canada not acting, it makes it easier for Australia not to.

    As a key player in the tariff debate over the past fifty years, I think the PC is uniquely placed to make this assessment.

    This isn’t like a tariff debate. If you get trade policies wrong, you get sub-optimal economic performance, You get climate policy wrong, you get Venus. They cannot be compared.

  3. Manny C says:

    @Lorax: “You get climate policy wrong, you get Venus.” you got to be kidding. Hyperbole much?

    • The Lorax says:

      Runaway climate change Is within the range of possibilities. My point is, this isn’t a purely economic issue like the tariff debate. We can’t just weigh up the costs of abatement vs adaption and choose the lowest cost option. If we choose adaption and the climate goes haywire we’re screwed. If we choose abatement and the climate does nothing unusual we get lose a bit of economic growth, and move to sustainable energy sources a few decades earlier than we otherwise would have.

      Civilisation is only 8,000 years old. We only settled down and started growing crops when the climate stabilised at the end of the last ice age. Agriculture didn’t exist the last time the climate changed this rapidly. If by mid-century we have 9 or 10 billion mouths to feed and a rapidly shifting climate, we’ll be in some serious shit.

      If I’m wrong I’ll tell my kids we were dudded by the climate scientists and should have listened to the great prophet Andrew Bolt, but hey, we have fusion-powered cars now.

      If you’re wrong what do you tell your kids?

      • Ricardo says:

        Lorax, you make the correct argument in my view — we should view this as purchasing insurance, under uncertainty, and be open that this is what we are doing. We should not pretend that things are settled.

        Where we part is that I think there is zero change of meaningful global action, and as such I think that the best social and economic outcomes will come from maximizing money GDP so we can buy the best possible adaption — IF it is required. I also think it is higher cost than you suggest – the lower real wages are income lost forever.

        I would prefer it if the scientists were right, but mostly for social reasons. The last hundred years have seen so many institutions lose credibility – it would be a shame for them, and an ontological blow to the west, if scientists were wrong and we were 40tn in the hole for their mistakes.

        Being generally pessimistic about human nature, I suspect this is exactly what is going to occur.

        Sent from my iPad

  4. The Lorax says:

    We should not pretend that things are settled.

    Of course anything that attempts to predict the future will never be 100% guaranteed, but this should not be presented as a 50-50 debate either, where the evidence for and against AGW is roughly equal. Sadly, that is the impression that most of public has.

    The reality is that 99% of climate scientists accept AGW, and a tiny (but vocal) fringe element don’t. All major scientific institutions accept AGW, and a scientific paper that seriously calls into question the evidence for AGW has never been published in a major scientific institution.

    If you were diagnosed with cancer, would you go with the treatment that 99% of doctors believe is best, or go with the treatment that a few quacks believe in?

    FWIW, I believe either course of action will be incredibly expensive, but only one involves an existential threat to civilisation. But I agree there is a vanishingly small chance of meaningful global action in the near term. It will take a catastrophe of epic proportions to move the process forward. Lets hope its something we can recover from.

    The endless attack on science is downright depressing, especially in the US where reason has completely lost out to the denialists and creationists … who are generally the same people. Thinking about it, how many “alarmists” are also creationists? Very few. How many denialists are also creationists? A much larger number I would suggest.

    • Ricardo says:

      You reduce your argument by implying that religious people are stupid.

      Sent from my iPad

      • The Lorax says:

        If they believe in the literal creation story, then yes, they are stupid.

        Religious people come in a flavours. Some are fundamentalist and anti-science, some are deeply concerned about the environment, and don’t take creation stories literally. I have no problem with that latter.

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