Your knowledge of this subject comes through clearly in this article. I love to read this kind of articles, I hope you will update it. Thank you for sharing it with me. Steven

This article has some great and useful information about this subject. Thank you for sharing it in an easy to read and understandable format. Denison pump

I recall Ms Gillard using the term "carbon tax" in February, back before Tony Abbott set the outrage dogs running on the pre-election "no-carbon-tax" quote.  

[There is a certain irony in Mr Abbott's demand of Howardesque care with language from Ms Gillard, having prefaced his leadership by stating that we may not be able to believe what he says.]

Meanwhle, Ms Gillard's Cabinet colleagues have no qualms describing the Clean Energy Futures programme as a carbon tax; they're in the ALP.  Mr Swan used the term "carbon tax" only a couple of weeks ago.

That's a side issue.  You write that returning money to lower income households seems perfectly reasonable to you.  Good, it seems reasonable to me as well.  You'll note that I specifically state that offsetting tax cuts are to be implemented as part of my proposal.

I agree that public sector funding of renewable technology may be necessary.  Governments could set up Electricity Commissions, to supply non-fossil power (thereby creating assets for future governments to flog to their ma-ates.  

Special arrangements for 500 biggest polluters is code for rent-seeking and deal-making.  

Impracticalities of 'cap-and-trade' schemes are discussed at "Do we really understand how carbon trading works?", http://www.abc.net.au/unleashed/2800090.html 

First of all - can you please give me a single example of Julia Gillard ever using the phrase "carbon tax".  Unless you can, then please refrain from suggesting that the ALP call it a carbon tax.  That is purely an invention of the tabloid press, a few radio personalities, and the opposition.

If the GST was meant to be simple and efficient, then there would be one rate on everything.  It isn't simple because we have different rates on different things.

Your suggestion would just compound the problems the GST already has.

The idea of making the 500 biggest carbon consumers purchase permits seems simple to me.  It is also the arrangement made elsewhere around the world, so our scheme can eventually dovetail into theirs, as part of an international trade in such permits.

The compensation arrangements are unrelated to the purchase of permits.

The industry compensation components are there to make the whole thing more palatable.  Some are necessary as part of a transition strategy, some are there to address the reality that the opposition will make much political capital from any industry adversely affected.

Returning money to lower income households seems perfectly reasonable to me.

Spending the rest on alternate power research and development also seems perfectly reasonable to me.

Even if we perverted the GST system, all these compensation arrangements would still have been necessary.

So, no, I see no advantage made by your proposal.

You're quite right, Tony Abbott also refers to the 'Clean Energy Future' package as a tax.  Since Abbott's modus operandi is to just keep making noise (look at moy, look at MOY), I don't bother listening to him.

While I've got your attention, please comment on my argument for a revenue-neutral carbon consumption tax thatis steadily increased until the requisite emission reductions are effected, implemented as a surcharge on the GST.

* Administratively efficient, and inexpensive: minor modification to an existing tax (GST), for which administrative procedures are in place.

* Revenue-neutrality: using the revenue from this GST surcharge to cut other taxes allows each carbon emitter to choose what investment to make in low/zero emission technology and equipment, and when. 

* No need to 'compensate' trade-exposed industries:

** Carbon taxation of imports: Border Adjustment Tax can include the fossil fuel used to ship imported goods (and foodstuffs) to Australia.

** ZERO RATE EXPORTS, including coal.

* Minimal requirement for regulation, no need for administration of emission permits.  If new science tells us to cut emissions further, keep increasing the tax rate.

* Targetted: would not be imposed on biofuels because they are not fossil fuels.  

In response to David Arthur:

"only you and the spinmeisters of the ALP are pretending that it is a tax".

What are you?  A murdoch tabloid journo?  Piers Ackermann in disguise?

It is the Coalition, and in particular Tony Abbott, who keep referring to this proposed permit system as a tax.  The usual phrase is something like "a toxic tax on a colourless and odorless gas completely necessary for life on earth.."

What is it with this incessant need to blame the ALP for everything?

Peter goes on to write: "The C Tax is a bad government intervention in the market.  It is not a market mechanism.  It is the opposite.  There is nothing rational about it."

I agree, the government's proposed C pricing scheme is not optimum (and only you and the spinmeisters of the ALP are pretending that it is a TAX).  However, it is a market mechanism, and it is moderately rational.

I note that you are yet to comment on the carbon tax that I have proposed in these pages several times over.  Your considered view would add to the discussion.

Peter Lang reckons renewable energy is not yet at grid parity.

Giles Parkinson advises that it will be within the decade, to which Peter Lang restates that renewable is not yet at grid price parity.  Peter goes on to advocate nuclear power.

Peter, with all due respect, is nuclear power really that much LESS expensive than renewable power?  I thought not.  Is nuclear power [or more coal power, for that matter] going to come down in price, as will renewable power?  I thought not.  

I've already set out my proposal for a trans-continental HV DC transmission line, connecting Nullarbor solar thermal and Bight Coast wind power stations to Eastern State and WA grids.  Surely this would please Peter, because it makes available the Nullarbor coast, west of Ceduna, for his beloved nuclear power station.

from: Nuclear Power in the Dock, by Jerry Taylor and Peter Van Doren

https://store.cato.org/pub_display.php?pub_id=12947

This article appeared on Forbes.com on April 5, 2011.

"...that nuclear power can't come within light-years of passing a market test is painfully obvious to all who wish to see. Consider the feds are presently telling banks that if they loan money to a utility company to build a nuclear power plant and the loan subsequently goes bad, the U.S. Treasury (that is, you) will compensate the bank for up to 90% of its losses. And yet the banks still refuse to loan. For principled supporters of a free market, that should be information enough about the merits of this commercial enterprise."

Peter, the fact that the cost of these technologies is trending down over time contradicts your earlier argument where you said renewables "are not making any progress". They are making progress as you have ably demonstrated.

In fact they are incredibly competitive if we factor in those pesky "externalities" of fossil fuels and (I'm sorry to keep reminding you) nuclear that you would prefer to ignore by just focussing on the current $/MW price. That is economic folly. 

Remember there is even a price on carbon at which your beloved Nuclear starts to make sense and without it you will never see a N power station built in this country. You cannot just wish that those costs will go away.

Greg Johnston,

RE advocates really do chat some utter nonsense.  You say: “ [renewables] are $1.20 - $1.50/watt currently”

Wind is about $3/W and generates for about 1/3 of the time.  On an equivalent basis it is about $9/Watt.

The recently commissioned, state of the art solar PV power station at Windora, Queensland cost $35/W, and generates for about 1/3 of the time.  The cost of electricity is about $1400/MWh.  The CO2 abatement cost using this plant is about $6,000 tonne CO2 avoided – i.e., 240 times the starting CO2 tax rate.

You say "we should level the playing field to give renewables a better chance".

I'd say we should level the playing field so the least cost alternative that achieves our objectives will be allowed to do the job.  If you do that it will be nuclear by a country mile; wind, solar and non-hydro renewables will have no part to play, except off grid.

You quoted cost per watt for part of the technology.  That is not the whole cost.  You need to compare on the basis of cost of electricity (ie per MWh) that is available on demand.  I've given figures previously.  Google "Emission Cuts Realities".

David Arthur,

You ask:

“Well, it would be a direct carbon tax of about 43c per kWh of coal-fired power.  Would renewable energy still be not viable with that level of carbon tax?"

No.  RE would not be close to being viable in the absence of it being mandated. It must be mandated or it will not be built.  Even the Green’s acknowledge it would need $100/tonne to make wind power viable and much higher for solar.  But that is now, as the penetration increases the subsidy must increase because they become less effective at higher penetration.  Renewables are an emotional, irrational dream.

The other effects of a carbon tax is to make Australia’s businesses and industries less internationally competitive.   There are many consequences of this, including we are less able to afford to take appropriate polices in the future.

Another effect is it does not help to remove the impediments to low cost clean electricity.  It maintains the bad policies already in place.

Everyway you look at it, the C Tax is a bad government intervention in the market.  It is not a market mechanism.  It is the opposite.  There is nothing rational about it.

Peter Lang,

I presume by no progress on the cost of renewables you mean from $100's/watt in the 1970's to between $1.20 - $1.50/watt currently.

I also presume by removing impediments that we will remove the $15bn in subsidies that were paid to the fossil fuel industry in 2008 (AI Group report - Energy Shock: Confronting higher prices) forecast to grow to $38bn in subsidies by 2015. Refer to the link:

http://www.aigroup.com.au/portal/binary/com.epicentric.contentmanagement.servlet.ContentDeliveryServlet/LIVE_CONTENT/Publications/Reports/2011/Energy_shock_confronting_higher_prices.pdf

I guess we could also make the coal industry pay back the billions of dollars the government paid in establishing them.

In the meantime the new office AREnA will have $3.2bn in subsidies through to 2020 including, what has been allocated in the first round of Solar Flagships.  The proposed Clean Energy Finance Corporation will have $10bn.

Yes Peter perhaps we should levelise the playing field to give the renewables a realistic chance.

Peter Lang writes that we've been trying to make renewables viable for decades, but making little (if any) progress.  Peter concludes that they (renewables) are not viable and never likely to be.

Suppose, Peter, that a fossil carbon consumption tax is introduced at the same effective rate as petrol excise is presently applied.  38.14 c/L works out to about $630/tonne of fossil carbon (this piddling little $23/tonne CO2 that the government suggests is somewhat underwhelming).  Would this affect the price of electricity?

Well, it would be a direct carbon tax of about 43c per kWh of coal-fired power.  Would renewable energy still be not viable with that level of carbon tax?

My estimate is that with that level of carbon tax, carbon tax revenues would amount to about 22% of total government outlays.  With fuel excise abolished (replaced with the carbon tax, and all fuel subsidies abolished), and a border adjustment tax on carbon embodied in imported goods (both their manufacture and their shipment to Australian ports), the government would be on track to get rid of the deficit any time it liked.

Matter of fact, the government would be able to give great big across-the-board tax cuts to all of us.

Peter I am sorry that it seems I am chasing you around the pages of this blog but really.... your response to Adam Bold is another case of the lack of coherency in the argumants that you profer on these pages.

Firstly, if you really do want to reduce CO2e in an economically rational way the most economically rational way is to put a price on the pollution you are trying to stop. Preferably that price should be equal to the TRUE cost of that pollution as it impacts our common wealth. Economists describe these costs as externailities.

If all you do is "remove obstacles" from other clean technologies without increasing the price of the polluting technologies you will allow our common wealth to be destroyed until the costs of the non-polluting technologies are competitive and who knows when that will be - that is just plain dumb and results in a massive transfer of wealth to polluters from future generations.

Your statement that "therefore the carbon tax is the wrong policy" has no basis in logic. A price on CO2e is exectly the right policy - be it a tax, an ETS, etc. This is economics 101 - we apply these principles in just about every other part of our economy yet you seem to think they do not apply here.

Please, stop and think before you keep coming up with this rubbish!

It does not matter if it is peer reviewed climate scientists or treasury economists Peter Lang will never accept the advice of experts in a field (unless they agree with him of course). He knows better! Unfortunately the true "alarmists", like Peter and Tony Abbott, keep sprouting this Carbon Tax "will seriously damage our economy" rubbish! In the long term they will do more damage to our economy than any tax ever will.

Adam Bold,

You say: "While I may not agree with the mooted cause of increased atmospheric CO2, I could bring myself to support actions solely focused at reducing CO2.  Actions like developing the best photo voltaic cells, building better radiogenic electrical generation, commercializing geothermal power, ..."

I agree with your objective but not with your prescribed approach.  We've been trying to make renewables viable for decades.  But making lirtttle if aany progress.  they are not viable and never likely to be.

I want to reduce CO2-e emisisons, but I want an economically rational approach.  No picking winnners.  No subsidies.  No mandating certain picturesque technologies.

Instead, we should rmove all the impediments that prevent technolgies competing to provide least cost, clean power.

Once we have low cost clean electricity, then clean electricity will begin to displace fossil fuels for heating and transport.  The cheaper electricity is, the faster it will displace fossil fuels in these other energy uses.

Therefore, carbon tax is the wrong policy.  It is another symbolic gesture, like Kyoto.  It will be no more effective and probably do a lot more damage.

Any plan with integrity for carbon cuts needs to focus its action on just that, cut carbon.  The Gillard government’s plan is a plan to redistribute taxes collected masked with the nobility of the cause d’jour.  How can we ever promote individual low carbon behavior when we (well 90% of us) are personally insulated from the impact of a high carbon lifestyle?  Meanwhile we will see any impacted industry not receiving Julia’s largesse disabled and an infinitesimally small amount of atmospheric CO2 reduced.  Of course we will be able conduct political grandstanding on the high moral ground. 

While I may not agree with the mooted cause of increased atmospheric CO2, I could bring myself to support actions solely focused at reducing CO2.  Actions like developing the best photo voltaic cells, building better radiogenic electrical generation, commercializing geothermal power, developing low energy building processes and the like.

At present Australian government focus is to increase the benefits paid to a majority of the dependency classes and secure re election.

Is Spectator contemplating a sideline in clever t-shirts?

The government should dump its proposed CO2 tax and ETS irrespective of the looming recession and decade of high inflation.

The CO2 tax will not cut world emissions, will not change the climate, will not change the sea level and will not effect the ecology of Kakadu or the Great Barrier Reef.

But it will seriously damage our economy.  Much more than is being admitted by Treasury.  Treasury has not released its modeling or its assumptions.  But what it has admitted reveals the assumptions are highly optimistic and unrealsitic.  And the analysis was based on a CO2 tax 15% lower than announced by the government.  And they did not accept the modelling by McKibbin.  Instead, they accepted modeeling by groups inside the Alarmist's tent.

Global market fear European and North American economies will contract, due to the need to repay extreme government debt loads i.e. they will not be buying goods and services as much as they did. Profits, employment and taxes are going to shrink. Share prices are forecast to fall. Hence the falls of the past week.

To apply a carbon tax to Australia when the global economy is rated high risk, is to risk a severe economic downturn in Australia. Hard-headed senior Australian business men and women have been imploring the government to change the timing of the tax to avoid such downturn. Sadly our PM has no refinement of judgment on such matters, having never been Treasurer. Nor has the Editor of Climate Spectator.

If Julia was the CEO of Australia Ltd, the Board would have to dismiss her for putting the Co at extreme risk.