Sunday, April 3, 2011

Eight Myths of a Carbon Tax

Yesterday I posted the shocking news about Julia Gillard's Labor Government's strong willingness to push a Carbon Tax on Australian businesses thereby negatively affecting all Australians with a sharp rise in the cost of essential goods and services. Today I hope to clarify for the uninformed why the Carbon Tax is punitive and impractical.

Firstly, the greatest Myth, constantly reiterated by Gillard, is that if we lead the world in carbon pricing the rest of the world will follow. Julia's kidding herself. Australia produces 1.5% of the world's CO2, China and America account for 40%. A 5% reduction (as proposed) would be cancelled out by as little as a 0.3% increase in China's emissions.

Secondly, the Myth that we have to lead the world because we are a carbon-based economy and will be more affected when the world introduces carbon pricing. The reality is that our carbon-based economy is one of our main competitive advantages. To lead on a carbon tax puts our industry at a serious disadvantage against our competitors. Besides a carbon tax on imports from countries without CO2 pricing is unworkable.

Another Myth says if we introduce the tax now it will give industry time to adapt. Industry needs years to make the investment to meet the new environmental constraints. Planning approval alone can take four or more years. The logic of starting a carbon tax in barely 12 month's time has not been thought through; five years would barely be enough.

Myth Number 4 is that Big Business should have known a carbon tax was coming and should've been prepared. Well...most of our coal-fired power stations were built and owned by state governments. The taxpayer is the largest single owner with 36% in Victoria, 54% in NSW and 67% in Queensland. The taxpayers and foreign investors virtually will lose equity without substantial compensation. Indeed, CO2 trading in Europe, the obvious precedent scheme, was accompanied by the issue of close to 100% free permits to the power generators for the first decade. Without compensation there will be a dangerous level of risk for long-term investment in Australia. Good-bye economic growth and stability.

Here's Myth Number 5: it says we are morally obligated to lead the way because we generate a larger proportion of CO2 a head of population. Yes...we do, but there are good reasons for this. We have a significant agricultural sector and are a large exporter of beef and lamb, which are CO2 emitters. Given the size of the country, our transport consumption is higher than most of the densely settled economies we ship to. Exports contribute to more than 30% of Australia's carbon emissions. If we want to cut emissions sharply, should we stop exporting?

The sixth Myth that the carbon tax will hit the so called 1000 BIG POLLUTERS and consumers will be protected. In the end the consumer will always pay. The four Bullshit-Artists in the photo above know that if the cost is not passed on, trade exposed industry in particular will either fail to survive (and jobs lost), or move elsewhere (loss of jobs again). The concept of charging the big emitters and passing the proceeds back to the consumer is fatally flawed.

Then there is the Myth #7 that renewable energy can replace coal and gas-fired energy production without substantial cost to the home consumer or businesses. Putting aside the serious issues of reliability, availability and transmission, the cost of all the available renewables, such as wind and solar is far higher than coal. And still nuclear energy is stupidly ignored. I plan on exposing the renewable fairytale in future postings.

And last but not least, Myth Number 8 says that a carbon tax or ETS will force the same BIG POLLUTERS to invest in alternative technologies that will create jobs. The naive expectation that investors who have seen their investment seriously impaired by a carbon tax will race to invest in new high-cost technologies is illogical. Banks won't lend to these impaired incumbents as they have seen a number of European countries enthusiastically embrace renewable installations and found they didn't create the volume of new jobs their millions of Euros were buying. Spain is one example of the false promise of Green technology that lead to bankrupting the country.

The Way I See It....Julia Gillard and her gang-of-four know full well the consequences of allowing the Climate Change fraud to be perpetrated on the Australian people. The general public are beginning to see that with Australia's meager contribution to the so-called rise in "dangerous" CO2 world-wide, any showing off to the world what "good scouts" we are to sacrifice our economic wellbeing and lifestyle is too costly. No...if the Vikings in 900AD could cope with being 3 degrees hotter than we are today I'm sure we and our air conditioning can make a good go of it as well.

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