This week in Australia the carbon pricing mechanism (no, it isn’t a tax, despite some similarities) is back in the news as the government releases it’s budget for the coming fiscal period. The fixed price period of $23 per tonne (and rising) represents a significant new source of income for the government, although when the mechanism was announced so too were a number of cost offset measures for the consumer and trade exposed industries. As such, the system is largely revenue neutral, but this has done little to quell the noisy opposition to the policy package. On Wednesday, the day after the Budget was released, many newspapers again raised the issue of increasing prices related to the carbon pricing scheme and therefore falling living standards, despite statements by the government over recent months that the system recycles its revenue back through the economy. Unfortunately, public perception appears to be on the side of those who argue that this is a new and unnecessary cost burden.
This isn’t the only negative view that the public have of climate change policy. The other is that energy austerity is the mechanism we must adopt to reduce emissions. The source of this is many and various, including the government itself, some NGOs and even a few business organisations. “Turn out the lights to save the planet” has become a common rallying cry and is amplified by campaigns such as Earth Hour which calls for cities to be blacked out for one hour a year to highlight the issue of energy use and climate change.
So the public are left with the view that energy austerity and extra cost are the two routes to follow if climate change is to be robustly addressed. Little wonder it is an uphill battle gaining political traction on this issue. Perhaps some new and more accurate messaging should be formulated to help sell the need for policy action.
The energy austerity issue is one that can and should be tackled. Reducing energy use and improving energy efficiency are both good things to do, but should be advocated for on the basis of managing energy costs, not attempting to address climate change. For reasons discussed in an earlier posting, local energy austerity may not even be an effective emissions reduction strategy at all. At issue with energy is the emissions from our current sources, not necessarily how much we use. After all, energy availability is almost unlimited, it’s just harnessing it economically that is the challenge.
The austerity message has its roots in various social agendas, but has kept into the environmental agenda as well. It is easy to see why this has happened, given the clear link between ecosystem welfare and overuse (e.g. logging in tropical rain forests), but for the climate change debate this particular approach may not be helping the issue at all.
The climate change issue needs to return to its roots, which is managing, reducing and ultimately eliminating anthropogenic CO2 emissions. This is done by changing the primary energy mix, implementing upstream CCS and shifting final energy use in homes and transport (where emissions are very to capture) to carriers such as electricity, hydrogen and bio.
Such a change won’t come at no cost, but elements of it can be conveyed to the public more easily. For example, running a home entirely on electricity is very doable today, both in hot and cold climates. The option of electric, hydrogen fuel cell or bio mobility is also becoming a reality – and potentially an attractive one as oil prices remain in the realms of $100 per barrel. These are very different value propositions to the austerity message.
The emphasis then shifts to the upstream and the use of renewable energy in the electricity sector together with technologies such as CCS in combination with natural gas. Here costs can be managed and change implemented over time as the grid is renewed and expanded. This can be achieved through carbon pricing, either directly in a cap and trade system or indirectly through emission performance standards. Although the scale of change is less, over the last thirty years many countries have managed to almost eliminate sulphur emissions from both the electricity and transport sectors and have done so without great public rancour. Costs have dropped and the job has just been done.
Getting the message right is essential if we want to make progress on this issue. Pedalling austerity and high cost is neither helpful or even correct.
There is no doubt, absent some major technical breakthrough, that carbon-free sources of energy will be more expensive for the foreseeable future. That means that consumers will be required either to pay more for the same quantity of energy or use less energy to keep the costs of the energy they use affordable. Messaging will not affect that reality, though clearly it might be used to distort the perception of the reality.
Regarding the situation in Australia, I am not aware of any instance in which government at any level collected “x” dollars through one mechanism and delivered that same “x” dollars through some different mechanism back to the same individuals from whom the original funds were extracted. Even if it were possible to envision such a highly unlikely situation, if government makes my energy consumption “x” dollars more expensive, but makes some basket of other goods and services I consume “x” dollars less expensive, does anyone really believe that I cannot reallocate the “x” dollars within my budget to continue doing exactly what I was doing before? Does anyone believe that most would not?
“Enquiring minds want to know.”
The money collected in Australia hasn’t gone directly back to those who have paid out, but the amount collected has largeley passed through the treasury and back into the economy, at least for now.
Not posting comments for 10 days is a sure way to avoid any interchange between commenters, as I suspect you are aware.
Apologies – I have been on vacation.
Ah, the wonders of redistribution.
This is called socialism. The dream of every government to collect and redistribute as much as possible. No wonder that anthropogenic global warming is forgotten. It doesn’t matter any more.
The bad thing about socialism is that it hinders development. Why Europe needs to grow economically? Japan also doesn’t grow and it is unlikely to grow again. All we need to accept is that others will take the lead. We can certainly build non carbon economy. It will cost a lot and we sacrify economic growth but so what? People involved in energy industry will profit and others don’t seem to mind too much. The outcome of current economy crisis could be more socialism in Europe, more regulations and more stagnation. Will AGW and crusade against carbon emissions remain favourite topic of intelectuals and lefties? Will see.