LDP on GW

cap-n-trade-maze-500 A light hearted look at the route to cap and tax measures that should be taken. From Carbon Sense.

The LDP does not have a policy on global warming and it would be rather silly to adopt one given that it is still being argued in the scientific community and both sides seem polarised to the degree where any sort of consensus is unlikely. Whenever the issue is raised on Thoughts on Freedom or elsewhere we seem to have the same protagonists making the same arguments, thus it is reasonable to assume that neither side will budge unless there is a massive cooling or warming in the near future in which one side will argue that they were right all along, and the other will argue that it is a short term trend and they were right all along.

It is necessary however to have policies on the likely imposition of punitive measures for carbon emissions.

John Humphreys has made a case for a revenue neutral carbon tax: that is a tax based on carbon emissions but mitigated by equal reductions in other taxes. If measures are forced on the Australian people this would be my preferred option, although I seriously question whether we should be in any way advocating another tax, especially one which I tend to see as social engineering.

The current international fetish among governments is a cap and trade system, which is at best, not really thought all the way through. The Waxman-Markey carbon-cap bill, which narrowly made it through the US Congress, had 300 pages of amendments, which were at the time not even integrated into the bill; i.e. the bill they voted on was not complete.

A number of references have been made lately as to the mitigating effect of “Green Jobs,” which are supposed to be the cure all for the deleterious effects, massive social and economic disruption caused by such a policy. The government here without going into any real details has echoed this. The recent questioning by Barnaby Joyce of Meghan Quinn, Manager, Climate Change Modeling Division, Department of the Treasury, has highlighted the paucity of understanding on this issue even among senior advisors.

Green jobs are being likened to Fredrick Bastiats ‘broken window’ analogy, where a vandal breaks a window and it is seen as a positive factor for the economy given the work provided in replacing it. Bastiat made the point that the negatives are unseen in this, being the work that would have been provided to others by the window owner in pursuing his own desires had he not had the cost of repairing the damage to his property.

John Humphries posted on TOF a reference to the situation in Spain where a study by a leading economist has concluded that each green job created there has in fact cost 2.2 jobs elsewhere.

The Carbon Sense chart seems to be the way to go.

This entry was posted on Tuesday, June 30th, 2009 at 12:36 am and is filed under Economics, Environment. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

13 Responses to “LDP on GW”

  1. John Humphreys Says:
    June 30, 2009 at 10:36 am | Reply

    You spelt my name wrong. :(

    At this stage, my first preference is that the government does nothing. If they insist on doing something, I think the revenue-neutral carbon tax is the least costly. Or, even better, a revenue negative carbon tax (where the tax cuts exceed the size of the new tax). This could be paid for by reducing government subsidies.

    It is true that some areas of the science debate is ongoing. However, it’s important to distinguish between what areas of science are still being actively debated and which areas already have a broad level of support.

    I think it is fairly uncontroversial to say that humans have increased the concentration of greenhouse gases in the atmosphere, or that greenhouse gases result in the greenhouse effect. It’s also fairly uncontroversial to note that the warming between 1970 and 2000 show signs that they were caused by a greenhouse effect. This is accepted by the majority of alarmist, mainstream and ’skeptical’ scientists.

    The main areas of science controversy is about much more warming we will see, and how this will impact on natural disasters, water levels, etc. While some green groups are keen to promote an “end-of-the-world” narrative, the science is quite unclear and there is little evidence to suggest that we should be scared.

    The “green jobs” argument is very poor, and is mostly promoted by politicians, not serious economists.

  2. DavidLeyonhjelm Says:
    July 1, 2009 at 9:57 am | Reply

    The LDP does have a policy on global warming. It is for the government to do nothing: http://www.ldp.org.au/federal/policies/energy.html

    I agree it is uncontroversial to say humans have increased the concentration of greenhouse gases (carbon dioxide, at least). It is less settled that these gases actually contribute to warming. One school of thought, for which there is scientific support, is that they might mitigate warming caused by other factors. If indeed warming is occurring.

    I don’t know all the answers but, in the circumstances, the LDP’s policy seems entirely appropriate.

  3. Jim Fryar Says:
    July 15, 2009 at 12:04 pm | Reply

    Apologies John, its fixed now.

  4. TerjeP (say tay-a) Says:
    July 17, 2009 at 1:39 am | Reply

    I think we should remove the Global Warming section from the Energy policy and have a separate policy with the title “Climate Change”. In my view it should say the following:-

    The LDP acknowledges that there is a body of scientific evidence to indicate a global warming trend. The extent of human influence, likely consequences and what we can effectively do about it are subject to some uncertainty. The LDP will work constructively with other parties to address climate change risks via cost effective mitigation or adaptation strategies. However the LDP will oppose any climate change strategy that increases government revenues.

  5. Jarrah Says:
    July 22, 2009 at 8:33 am | Reply

    “It is less settled that these gases actually contribute to warming.”

    I’m sorry, David, but JohnH is right – there is little in science more soundly established than the basic chemistry and physics that say greenhouse gases contribute to warming. If you want to appear reasonable, concentrate on the areas where there actually IS some controversy – the policy responses to the warming and its established causes.

    I agree with Terje that LDP policy on energy and climate change needs modification. A long time ago I suggested the policy be slightly changed to the following, but heard nothing.

    Energy

    Energy is crucial to our modern way of life. Indeed, the availability of energy at affordable prices is one of the key driving forces behind our modern standard of living.

    Over time, energy has originated from different sources. Prior to the discovery of electricity the main sources of energy for heat and cooking were timber and coal. The first electricity generators were based on the same fuels.

    However, like most good things in life, energy comes with a cost. The use of coal generates air pollutants and is hazardous to extract, hydro power requires the flooding of large areas, nuclear power results in dangerous waste materials, solar, wind and wave power are inefficient and intermittent, geo-thermal power is very location-dependent, and bio-fuels are highly resource-intensive.

    For governments, the issue is not how to remove these costs. Its role is to ensure there is an open, competitive environment in which people can do business and all players are responsible for the full cost of their activities.

    The LDP does not support or oppose any form of energy supply. The final make-up of the market – both the source of energy and the quantity of energy supplied – should occur in an open and free market, guided by limited regulation. It is not the role of government to excessively tax, regulate or subsidise particular areas of the industry, nor to try to pick winners.

    Global Warming

    The LDP acknowledges that there is scientific evidence to indicate a trend towards global warming, and that human influence is the main driver of that warming. However, the likely consequences and what we can effectively do about it are uncertain.
    The important issue is whether governments are capable of introducing policies that produce a net benefit over and above action by individuals, communities and organisations. Given the uncertainty and the likely impact of any government interventions, the LDP supports harnessing market forces instead of top-down regulation to reduce greenhouse gas emissions and mitigate any detrimental consequences of global warming. We can already see such forces at work in the increase in energy-efficient lighting and housing demanded by consumers, the increase in ‘green’ energy being sold, and many other examples.

    The LDP believes the use of public funds to subsidise particular types of energy, or the imposition of additional taxes on particular types of energy, stand in the way of these market forces and should be abolished.

    The LDP does not support intergovernmental treaties that seek to impose arbitrary limits on economic activity like the Kyoto Protocol or its successors. The emphasis in such treaties on the ‘cap-and-trade’ of CO2 emissions is prone to errors in the initial set-up, open to corruption, hampered by domestic political considerations, and provides no guarantee of success.

    Instead, the LDP suggests a better approach – a revenue-neutral carbon tax. It is more efficient, effective, simple, flexible and transparent. A carbon tax would act as a straightforward negative externality charge for CO2 emissions, placing a cost on environmental impact and thus reducing that impact. Since it would replace other taxes such as fuel tax, or reduce income tax, the overall tax burden would stay the same but be less distorting of economic behaviour. A carbon tax also makes alternative energy sources more appealing by lowering their relative cost, accelerating the transition to cleaner, greener technology.

    LDP policy is directed at the following:

    * A competitive market
    An energy market must operate in which different sources of energy can compete on the basis of price, supply and other factors (including perceived environmental impact). A vigorous, competitive market is the best way of ensuring an economically and environmentally sustainable supply. The LDP anticipates that a competitive energy environment would lead to a variety of energy suppliers and that there are strategic, environmental and economic benefits to such diversity.
     
    * Full cost accounting
    The cost of each energy supply must take account of its ‘whole-of-life’ costs and not be subject to subsidies, bonuses or penalties based on non-scientific evaluation. Moreover, it must not transfer any of its costs to society by any means other than through price.
     
    * A revenue-neutral carbon tax
    In accordance with the above full accounting of costs, a carbon tax on the order of $15-$50 per tonne of CO2e (carbon dioxide equivalent) emissions, to be introduced incrementally over several years.
     
    * The benefits as well as the costs of energy use must be considered
    The proper role of government is to establish consistent, objective rules for environmental impact consistent with community values. This includes the emission of pollutants by coal-fired power plants, the storage of waste by nuclear power plants, and noise pollution by wind farms. The application of these rules must not be subject to political whim or excessive bureaucratic discretion, and should be subject to legal review. All decisions regarding environmental impacts must only be made after careful consideration of the benefits of the impacting activity, not just the costs.
     
    * An efficient distribution system
    The LDP considers that energy distribution needs to be supported by a National Grid Authority. Although a competitive electricity distribution market would produce economic benefits and is to be encouraged, there is potential for inefficiency if the market is not well informed. The role of the Authority would be to promote a well-informed market so that decisions to invest in distribution facilities were based on a thorough understanding of supply and demand, ensuring the security of supply of energy to enable industry and consumers to undertake long-term planning.

  6. Mark Hill Says:
    July 22, 2009 at 5:59 pm | Reply

    Just for the benefit of the discussion:

    http://blog.libertarian.org.au/2009/07/21/roger-douglas-carbon-tax-is-better/#comment-71093

    A note I made on the catallaxy open forum [and the ALS discussion/open forum thread]:

    ——————————

    Pissing off climate change denialists and alarmists:

    http://www.holisticmanagement.org/n9/about/carbon.php

    Apparently all we have to do is let money hungry farmers run farms with little subsidy and we might avoid disaster.

    “The fabulous thing about sequestering carbon in grasslands is that you can keep on doing it forever – you can keep building soil on soil on soil… perennial grasses can outlive their owners; they’re longer-lived than a lot of trees, so the carbon sequestration is more permanent than it is in trees: the carbon’s not going to re-cycle back into the atmosphere if we maintain that soil management… and there’s no limit to how much soil you can build… for example, we would only have to improve the stored carbon percentage by one percent on the 415 million hectares (1,025,487,333 acres) of agricultural soil in Australia and we could sequester all of the planet’s legacy load of carbon. It’s quite a stunning figure.”

  7. TerjeP (say tay-a) Says:
    July 23, 2009 at 10:17 am | Reply

    Jarrah – I don’t think a carbon tax should be LDP policy. It would piss off to many members. I think we should discuss a carbon tax on it’s merits if a major party puts a proposal on the table and if it looks like a worthy tax reform in totality.

  8. Mick Sutcliffe Says:
    July 23, 2009 at 8:44 pm | Reply

    Terje, I think the carbon tax should definitely be LDP policy – one that’s cost neutral and offset by reductions in other taxes. This is the perfect platform for a political party – you’ve got the ‘insurance’ and taken first shift towards non-carbon solutions, but you haven’t compromised human quality of life (much) or bought into the AGW religion. Couple that with a bit of money towards pursuing objective research to find out the truth to further hit those that question your committment. It’s completely defendable, the best solution if there turns out to be a problem, and it’s going to cost a whole lot less than any ETS, cap & trade, CPRS etc. It’s the perfect position to go public with.

  9. David McAlary Says:
    July 24, 2009 at 10:11 pm | Reply

    Jarrah

    I like your policy suggestion. I too believe a carbon tax is the best way to move forward on this issue.

    In your suggested policy you state that;

    The cost of each energy supply must take account of its ‘whole-of-life’ costs and not be subject to subsidies, bonuses or penalties based on non-scientific evaluation. Moreover, it must not transfer any of its costs to society by any means other than through price.

    How would we “price” nuclear energy then?

  10. Jarrah Says:
    July 28, 2009 at 4:42 pm | Reply

    David, the sellers of nuclear energy would price it according to their needs and market conditions, how else?

    And thanks, Mick.

  11. TerjeP (say tay-a) Says:
    July 30, 2009 at 8:01 am | Reply

    Mick – I’d vote for it. I’m just not sure it’s the best position for the party to adopt.

  12. Todd Craig Says:
    August 17, 2009 at 11:02 am | Reply

    I have my concerns about the climate change ‘debate’. I dont think that the problem has been approached with the proper spirit. There has been an observed trend towards increasing global temperatures, and there has been an increase in human-produced greenhouse gases. Ergo, humans are causing the warming. Im aware that it is a gross oversimplification of a very complex science, but I dont think it misses the mark by too much.

    The problem I have with this approach is this: the earth’s climate has been in a constant state of flux for it’s entire life. The geological and archaeological record abounds with evidence that temperatures have been periodically warmer and colder than today. If we disregard all the earlier information and focus solely on the Holocene (~last 10,000 years(after all, the weather in the Jurassic is meaningless)), there is still ample evidence of climatic fluctations independent of human agents, such as the little ice age in the medieval period, and the mid-holocene climatic optimum that saw coral reefs and dugongs in Sydney harbour.

    These fluctations show that something other than anthropogenic greenhouse gas emissions has affect global temperatures in the recent past. The question is what, and what does that mean for today? The approach that I feel is appropriate to establishing whether climatic changes are induced by humans would be this:

    1. Are we experiencing changes in global temperatures today?
    2. If yes, what caused climatic fluctations in our recent past?
    3. Are causal factors at work today?
    4. If no, what other factors (including human) are causing changes in present day climates?

    We really dont understand what drove these climatic changes in our recent past. If we dont understand what has historically caused climate change, how can we hope to rule them out as causal factors today? An unfortunate habit that humans have is to believe that we are responsible for things that are vast and beyond our control. We are keen to conclude that we are responsible for global climatic fluctations because on one level it flatters us and our own sense of importance.

    Moving beyond my opinions on climate science, there is a need for practical policy. Irregardless of the ‘truth’, it seems that the politics of climate change are upon us. All sides of politics seem intent, in one way or another, of establishing a system to regulate carbon and other emissions. Put another way, they are all intent on creating more government, more bureaucracy, and, of course, less liberty.

    Before we libertarians submit to pragmatism about the need to ‘follow the trend’ on this one and consider the most agreeable way to inflict a tax, first consider this: what can we do to reduce carbon emissions with LESS government?

    It seems that there are several practical things that could be done almost immediately that both satisfy libertarian philosophy AND reduce carbon emissions, specifically removing subsidies.

    Getting rid of coal (and other fossil fuel) industry subsidies would change the economics of extracting coal and using it to generate electricity. Consequently, the amount of coal extracted will decline, and the cost advantage of coal-generated power to other sources will be reduced.

    Similarly, removing the subsidies on coal-fired power generators (that remain largely state owned, and were built using taxpayer money) will shift the balance in favour of ‘cleaner, greener’ alternatives.

    Third, remove the subsidisation of disfunctional agricultural businesses. Many farms in Australia are marginal at best, and only survive in the long-term through drought subsidies. If these subsidies were removed, the marginal nature of these businesses would be recognised, and they would be replaced lower capital, lower intensity, lower emission enterprises.

    A final subsidy to consider – perhaps not as clear-cut – is road transport. The road transport industry enjoys massive subsidies simply because the government foots the infrastructure bill for the industry by building and maintaining highways. Without this subsidy, road transport would be much more expensive, and other lower-carbon forms of transport (e.g. rail and coastal freight) would be at a lesser disadvantage than today.

    Before we ask ‘how much more do we need?’, we need to ask ‘what can we do with less?’.

  13. Sun-Yong Kim Says:
    September 3, 2009 at 10:12 pm | Reply

    Whilst there is no doubt that climate change is an existing problem that must be dealt with accordingly, we must discover the most appropriate way in which to deal with it. The bureaucrat favoring Labour Party and the socially liberal faction of the Liberal Party would tell you that the government is the only viable means through which to deal with it. But as we know with any form of government intervention (nationalisation, banks, railways, etc) they are never efficient. Are we truly going to let an inefficient and incompetent body determine climate change policy, something which may well determine environmental quality for the next few generations? No I don’t think so. I think that the best solution are market based solution. If the market sees the benefits in this, it would create the foundations in which to develop green technology to solve this. THrough this way, we are advocated an innovative solution which will boost economic growth, and jobs and not reduce them and tamper with economic growth like the Emissions Trading Scheme is. Time to set our priorities straight. The Market is a better solver of social problems then the government

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