Carbon tax in Australia

Which will be followed by the Australian right claiming that those people pay no taxes.

@ straightwood:

The hope, of course, is that the West best makes it’s case to Asia for a global policy by demonstrating that a local policy is locally workable and that the West has already committed itself to reductions in pollution. Perhaps more importantly, an industrial culture of energy conservation can spread from CO2 savers to wasters independently of a formal international policy regime.

The template here would be international standards for labour conditions, not that this is necessarily encouraging.

Of all the positive effects of this bill, I have to say I think that pushing little Jimmy Delingpole into spasms of spittle-flecked rage that are insane even by his standards ranks among the Top Three. Top Five at least.

Will this affect coal exports, or only coal burned in-country? (As Australia is the largest coal exporter in the world, taxing coal exports would have a huge impact.)

A world politically divided into nation states (some failed), each one of which sets its own environmental policy, cannot prevent a global warming catastrophe. Politicians are pretending that global environmental crises can be averted without creating the regulatory apparatus of a world government. Those who declare the formation of a globally enforced environmental policy to be impossible need to grasp that the penalty for failing to achieve the “impossible” is massive economic disruption and political strife. We confuse physics with politics at our peril.

Just as unfettered Capitalism is literally running out of gas, the political construct of the nation state is proving unsuited to addressing critical global problems of climate change and resource depletion. Clinging to ideologies that no longer promote prosperity or survival will magnify the destructive consequences of ignoring inconvenient truths.

Whether the gov can survive this politically may be the most important object lesson to others. The recent troubles of the Murdoctopus can only help.

So if they charge for burning the stuff domestically, but exports get a free ride, what do you think will happen? I’m betting a ton of coal not burned domestically, will b just add to the exports. Now maybe the marginal lignite, isn’t worth exporting (we can hope).

(10 straightwood) With no prospects for global governance -or globally binding agreements, we have no hope other than to go at it piecemeal. To say we should wait for a global deal is really just to propose waiting until fossil fuel supplies run out. There is no quarantee, that the piecemeal approach will work -i.e. cow the unrepentant nations into complying. But, its the only chance we got, short of a miracle (cheap ubiquitous cold fusion or some other sort of free ponies for everyone). At least the fossil fuels of compliant countries will stay in the ground, so the longterm total atmospheric inventory of CO2 won’t be quite as high. And speaking of free ponies-style technology hopes, it should improve the global market for wind and solar, as the price of the fossil-fueled alternatives has risen in at least some locations.

“Brown coal produces about 50 per cent more emissions per unit of energy than anthracite (black coal).”

What’s your source for that? According to http://205.254.135.24/cneaf/coal/quarterly/co2_article/co2.html table FE4, based on data from U.S. coals, anthracite actually has higher CO2 emissions per unit of energy than lignite, confirming a “long-recognized finding.”

Lignite does have higher sulfur emissions than harder coals, but that’s a separate issue.

I think the tax should be on production and imports. If the only way to evade the tax is to make a giant hole in the ground that’s probably going to get noticed. I don’t think the ultimate distribution of the tax is dependent on where it is levied, and point of production seems to me easier to enforce because there are fewer of those points then consumption points.

@20

Current probabilities for legislating carbon caps in the USA and China are near zero.

FYI, the total world CO2 contribution of China, the USA, and the EU is 55%.

“It was my impression that taxing imported manufactures would be very difficult due to the international free trade treaties.”

It is, which is why domestic Aussie steel production (which is relatively clean from a total pollution standpoint) will be shrinking, replaced by dirtier steel produced in China and Korea. In the US, it would be called “environmental racism” to put all the polluting plants in a poor, non-white community, in Australia, it is “green” …

straightwood wrote:

“Current probabilities for legislating carbon caps in the USA and China are near zero.”

as opposed to the bright prospects for World Government in the necessary timeframe. Look, you can advocate for what you consider the ideal approach or you can advocate what you think is most pragmatically possible. But it is ridiculous to argue that a pie-in-the-sky approach is necessary because difficult but certainly more achievable are, well, too difficult.

I think that imposing trade penalties on shirking countries will be essential to pulling this off globally. First, it is essential to ensure that domestic industries, once subject to a carbon penalty, will not be undermined by free-riding foreign competitors. It is both economic and political suicide not to address that problem. Sarkozy has advocated carbon tariffs repeatedly for this reason. Second, it is the only way to get holdout nations to comply. As their trade partners adopt stricter carbon restrictions, the cost advantage to free-riders increases, giving them a huge economic incentive to continue shirking their responsibility. Putting a trade penalty on the carbon content of their exports wipes out that incentive.

That still does not penalize excessive carbon emissions involved in their domestic consumption. Many developing countries, such as China, are still happy to trade away the global climate for local development. Therefore, we could take things a step further, and impose broad additional tariffs as penalties for excessive domestic-oriented emissions, including emissions that are not connected to the good in question. In that case holdout countries would have to choose between adopting some pollution controls, or giving up their trade with compliant nations (requiring a near-autarkic economy). For an export-oriented country like China, or a small developing country, autarky would mean economic ruin, so that’s not much of a choice. Meanwhile, the US and EU have the credibility to make that threat: cutting the cord to China all at once would be disruptive, but beyond the short term they do not provide anything which we cannot get elsewhere. This is a huge point of leverage which we have over China, and we really don’t have any others.

We should not be deterred by the existing trade agreements. Those agreements can and will be revised if necessary. The WTO already has provisions to allow tariffs in some cases of “unfair” trade practices. If the US and EU demand amendments to add insufficient greenhouse gas restrictions (or excessive aggregate output) to the list of violations, it will get done. The US and the EU easily have enough leverage to accomplish that; if some nations were utterly intransigent and scuttled the deal, we could just kill the WTO entirely. Then the US and EU can start WTO2 with the appropriate new rules, and invite everyone to join all over again. And every country who wants to trade with the US and EU (that is, every country) would sign up.

Of course, before the US does this we’ll need to put restrictions in place ourselves!

Chaz @98.
I’ve been more than half expecting some sort of consumer boycott of developed countries that refuse to deal with carbon emissions. That doesn’t have the same sort of legal restrictions as trade action. And could could still create pressure, as when the CEOs of affected corporations start contacting their lobbyists. Of course I expect the first target to be the US (maybe including Canada if they keep developing tar sands). Do you think this is likely/feasible?

The Australians now believe that they have addressed a global problem.

…I guess? The verb ‘address’ is very slippery. It’s fair to say it “addresses” hunger every time I go raid a grocery store ‘football game day’ sale and drop a few sacks of bread and canned goods at the food bank. (Pro tip: managers will happily help you bypass the maximum item limit if you inform them that this is what you’re doing.) Someones are going less hungry, and that’s awesome. But at the same time if you suggested I believe myself to have “addressed a global problem” (of hunger/poverty) …I’d probably just look at you funny?

Maybe food banks are a placebo getting in the way of real change, and if we all just let people go without food then real change would happen, like a riot. S’ok. I support ‘placebos’ that leave hungry people less hungry, or air-breathers less congested, or one million low-income people less oppressed. And if you don’t, out of a sense of ideological purity, that’s okay. (It’s not like you’re taking action to stop them. In fact, when I see you throw your weight behind some particular initiative, you can bet I’ll be inclined to throw in with you.)

In the U.S. Medicare is, and was when created, basically a sickeningly paltry bandaid on the desperate national need for access to health care. It doesn’t hardly begin to “address” the problem that nearly every single desperate suffering household in America faces in some form or another — access to sufficient health care and maintenance to avoid easily preventable suffering. But Medicare is also awesome.

The Australians now believe that they have done something awesome. They have!

“Looking at your link, it appears as if the analysis of chemical constituents may not have taken account of moisture content. The conclusion is the opposite of everything I’ve read.”

Well… read more :).

See Quick and Glick, “Carbon dioxide from coal combustion: variation with rank of US coal”, Fuel 79 (2000) 803–812. They explicitly account for moisture content, and conclude that lignite and anthracite emission factors are about the same, around 100 kg CO2 / net GJ.

See Quick and Brill, “Provincial variation of carbon emissions from bituminous coal: influence of inertinite and other factors”, Int. J. Coal Geology 49 (2002) 263-275, which observes that if you were to ignore water content in the analysis, it would change the results for lignite by at most 10%.

Now, lignites have about 10% worse CO2 emissions per unit energy than bituminous coals, and that’s a more relevant comparison, since anthracite is too expensive to burn in power plants. But 50% worse? Still wondering where you get that.

…which is why domestic Aussie steel production (which is relatively clean from a total pollution standpoint) will be shrinking, replaced by dirtier steel produced in China and Korea. In the US, it would be called “environmental racism” to put all the polluting plants in a poor, non-white community, in Australia, it is “green” …

dude, the australian steel industry is already shrinking, and has been for as long as i’ve been alive (i’m 31). it’s death (which is already happening) has nothing to do with the carbon tax.

Is this the same deal as Nick Clegg’s much-trumpeted ‘progressive’ move to ‘take low-earners out of the tax system’? So in effect anyone who earns over $20 000 has been given an extra $14 000 of tax free income, anyone who earns between $6 000 amd $20 000 has been given something less than that, and anyone who earns less than $6 000 has been given nothing at all. And this is something to be pleased with… why, exactly?

it’s something to be pleased with precisely because it is not the same as nick clegg’s proposal. for 2 reasons: 1) there will be changes to the other tax brackets too, meaning that total tax cuts received decline as income increases, such that pre-tax incomes of $80,000 per year (and any number above that) receive only a tax cut of three (3) dollars per year. and 2) it is combined with increases to various pensions.

JQ 40: The carbon emissions per unit of electricity of a power plant depend on the conversion efficiency of the plant, as well as on the carbon intensity of the fuel. So it could be that these power plants are simply old and less efficient than more modern ones. I have found a source in German that reports a 30% advantage for black coal over brown coal during operation. Interestingly, this source states that black coal extraction involves methane emissions which need to be accounted for in a life cycle analysis and significantly reduce the advantage of black coal.

http://www.vdi.de/fileadmin/vdi_de/redakteur_dateien/geu_dateien/FB4-Internetseiten/CO2-Emissionen%20der%20Stromerzeugung_01.pdf

Maybe food banks are a placebo getting in the way of real change, and if we all just let people go without food then real change would happen, like a riot.

If this thing you do really does get in the way of real change (which seems plausible, in the case of charity), then it’s nothing like a placebo. It’s counterproductive and harmful.

It’s a small point but what I meant was if Engels and Snuh are earning E and S, where 0 < E < S < 20 000, then Engels is going to get less back than Snuh, so it doesn't seem to me to be true to say that 'total tax cuts received decline as income decreases'.

Overall, it sounds a lot better than Clegg but it still disadvantages the very lowest earners, in relative terms, it seems to me. (But perhaps I'm still missing more details.)

How about, “total tax cuts received decline as income increases above the new cut-off, phasing out entirely above $80,000”? Since its immediate purpose is to make the carbon tax more palatable to the public, I think it’s impressive that it manages to retain as much progressivity as it does. As I implied way back in 13, I wouldn’t have been surprised if it had been a Cleggian or US-style tax giveaway, especially since in the US mental incompetence and mendacity are rife when it comes to marginal tax brackets. So although it would not be the optimum egalitarian approach if the bill were primarily concerned with income tax reform (which, by the way, it is not), as a bribe an indirect carbon tax rebate to members of the electorate making $80,000 or less it actually comes off looking pretty good.

Thanks very much.

One more question, once it transitions to a full blown ETS, will the tax base still be limited to the 500 or so big polluters, or will it expand?

“I don’t have immediate access to your sources.”

Here you go:

Quick and Glick (2000): http://www.sciencedirect.com/science/article/pii/S0016236199001970

Quick and Brill (2002): http://www.sciencedirect.com/science/article/pii/S0166516201000684

But really there are lots of studies of these kinds looking at various kinds of U.S., Australian (Quick and Brill look at data from 52 Australian samples), and European coals. In terms of carbon emissions per unit energy, there’s not much difference among them.

“Again, here’s Wikipedia’s list of the highest emission stations in the world, nearly all fuelled by lignite… I’ve never seen any dispute in Australia over the proposition that Hazelwood is (as stated by Wikipedia) the worst in Australia and one of the worst in the world.”

In Wiki’s tables, the two worst plants are Hazelwood (1.58 Mt/TWh) and Edwardsport, Indiana (1.56 Mt/TWh). Hazelwood is lignite, but Edwardsport is a bituminous coal plant. I’d guess that if you converted Hazelwood to bituminous its carbon output per watt-hour might improve by about 10% and… it would become the second worst plant in the Wiki tables.

“At this point, I’m going to turn it back to you. If you can find a source showing that the Australian estimates of emissions from Australian power stations are wrong please present it.”

I don’t doubt that Australian plants are terrible, and I’m glad you’re getting around to internalizing their carbon cost. However, I do doubt you can improve them as much as you seem to think you can just by running them on black instead of brown coal.