Australia's carbon tax

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Details: Parent Category: Economy Category: Energy | Published: 05 March 2011 | Hits: 9481

Well, the Gillard government has done it; they have announced the long awaited price on carbon. But this time it's not the highly compromised CPRS previously announced by Kevin Rudd.

Accusations of lying and broken promises aside, the problem of using a tax rather than the earlier proposed cap-and-trade mechanism is devising a means by which the revenue raised will be returned to stimulate investment in new non-carbon based energy.

Taxation always boils down to 'robbing Peter to pay Paul'. In this case the Government knows who Peter is but they apparently have no idea, or too many, about Paul.

It is the very definition of administrative inefficiency to rob Peter to pay Peter. Thus any tax that requires offsetting payments to those taxed is poorly designed; administratively cumbersome and likely to be extremely inefficient; a bad tax.

The CPRS in its pure form, as originally conceived by officials of the Commonwealth Treasury and Ross Garnaut, achieved this redistribution through market mechanisms. Little intervention by government or the bureaucracy was required beyond defining the sectors covered by the scheme; setting the overall quantum (cap on carbon); and issuing permits equivalent to the cap.

For example (according to the Department of Climate Change): 'if the cap were to limit emissions to 100 million tonnes of CO₂-e in a particular year, 100 million 'permits' would be issued that year.' Thus each tonne of CO₂ emitted, by a firm responsible for emissions under the Carbon Pollution Reduction Scheme, would require them to acquire a 'permit' from the market and surrender it.

Tradable carbon 'permits' would be bought and sold between investors in 'covered' sectors (as defined by the scheme) and would be priced according to the supply and demand. The CPRS would, in effect, be a widened version the of the existing tradable Renewable Energy Certificates scheme, this time based on carbon oxidised and released as CO₂ rather than on 'renewable energy' generated.

But of course the economic and market purity of this scheme was immediately compromised by special pleading and the realisation that it would be at the cost of economic growth and present jobs; with any future jobs generated by the changes difficult to identify and hypothetical.

Thus trade exposed industry as well as little old ladies with air conditioners, struggling families and the disabled would be protected from its impacts.

Very soon Garnaut's pure and simple cap-and-trade mechanism was looking like a pakapoo ticket and 'CPRS' was an acronym for something obscene. It was quickly renamed the ETS (Emissions Trading Scheme).

Although Australia's contribution to world carbon is very largely due to our exports of coal, natural gas and aluminium, with domestic production of carbon infinitesimal in the total picture, we, like other developed countries can't to go to World forums and demand that other countries clean up their act unless we clean up our own.

Australians are already paying a high price for alternative electrical energy from wind and solar (and potentially, other renewable energy sources) through the Renewable Energy Certificates (RECs) mechanism described in detail elsewhere on this website.

It was expected that the CPRS would replace this mechanism.

But it seems that Australian governments are incapable of implementing a straightforward scheme. With the CPRS we immediately saw a repeat of the goods and services tax (GST) farce, when special pleading had food and some other items removed from the impacts of the tax, creating distortions, favouring large food retailer concentration, and adding unnecessary complexity and cost.

Fundamental to any carbon reduction scheme is the need to increase the price of carbon based energy relative to alternative energy sources; thus encouraging investors to make the transition to lower polluting alternatives and households to implement economies and reduce their consumption of carbon sourced energy. There is an immediate problem if certain kinds of carbon sourced energy and certain types of consumer are exempted from these cost increases.

It is certain that any such exemptions will be highly economically distorting and might even lead to cheating (eg concerning eligibility for compensation) and black markets, as well as more serious criminal activity.

The correct way to deal with the negative impacts on the poor is to increase existing, already refined and tested, transfer payment methods, such as pensions, to compensate for the higher cost of living. Everyone, including the poor, needs to feel the impact of the higher prices as this is the very mechanism intended to encourage them to find alternatives to consuming, directly or indirectly, fossil based energy.

There should be no exemptions. But what is likely to be achieved?

Commentators tend to focus on electricity. But electricity production represents only about a fifth of our total energy consumption. Direct consumption of carbon in industry together with the consumption of oil and gas for transportation and agriculture are the principal contributors to our combustion-sourced greenhouse gas emissions. In addition, land clearing, fires and the agricultural release of methane are significant contributors.

The only practical ways, at present, of providing petroleum-free transportation are electricity or hydrogen based. But in Australia around 90% of electricity comes from fossil fuels; and hydrogen used today is a by-product of the petroleum industry. Inefficiencies in generation, distribution, conversion and storage mean that converting transport to electricity in this country generally increases our greenhouse gas emissions. For electric transport to make a contribution to reducing our greenhouse emissions we need to obtain a much higher proportion of our electricity from non-fossil sources. Several European countries obtain up to 90% of their electricity from non-fossil sources and even the UK and US do a lot better than Australia.

Some suggest a solution rests in increased wind and solar generated electricity. For practical reasons, set out in the article on wind energy on this website, once equilibrium is reached, each new increment of wind energy requires three to four additional increments of base load and energy. In the case of solar at least five increments of additional base load energy are required for each increment. This is irrespective of the generation and delivery costs of wind and solar. At the present time this means a substantial ongoing investment in coal and gas in a ratio of at least four fossil fuel sourced electricity MWh to each renewable energy MWh.

This idealised case is further compromised in Australia due to the distances involved, our concentration in urban centres and the wide distribution of energy resources.

In the future advanced electricity storage mechanisms such as super-capacitors, batteries or flywheels or alternatively, heat or pressure storage mechanisms, might smooth the present mismatch between renewable energy production and consumer demand.

But at the present time there is no large scale energy storage solution with the exception of water pumped-storage, commonly used as a component of more sophisticated hydroelectricity generation schemes involving multiple linked storages like the Snowy Mountains Scheme. In relative terms these storages account for a tiny proportion of all energy delivered.

Worldwide hydroelectricity is by far the largest source of renewable electricity. Many countries are continuing to expand their hydroelectric generation with the construction of new dams and river diversions. But in Australia environmental and local interests have aligned to block large scale hydro electric generation since the completion of the Snowy Mountains Scheme. The present Greens leader, Bob Brown made his reputation subverting the last great hydroelectricity scheme in Tasmania.

But electricity production is already being addressed by a scheme designed to increase the utilisation of renewable energy; of which renewables, mainly hydroelectricity, already contribute 9%.

A carbon tax could well exempt electricity altogether on these grounds.

The following graphic shows the relative scale of energy flows in Australia.

Click the image to follow the link

To make a significant impact on World carbon dioxide production a tax could be applied to exported carbon. But there are many political, economic and practical reasons for NOT doing this.

Thus such a tax would apply only to the combustion (by oxidisation) of carbon in transport and industry.

In order to apply competitive neutrality and prevent the immediate demise of the basic metals, oil refining and chemicals industries, imported energy intensive goods and services would need to be caught to the same degree as domestically produced ones. Thus a low impact tax would most conveniently be applied in the same way as the GST to the final point of sale prior to consumption.

Again to what end?

As will be seen elsewhere on this website I believe that the only practical medium term alternative to burning coal and gas is a large and immediate investment in nuclear power to bring its contribution to our total energy mix to say, the European average, within two or three decades.

It is probable that the original cap-and-trade CPRS would have applied almost immediate economic incentives in this direction.

But for political reasons it is extremely unlikely that any Australian government will move in this direction under a carbon tax regime in which they can choose where to spend the revenue. Instead we are likely to see grants funded by a carbon tax to such things as electric cars, wind turbines, geothermal projects and solar panels; achieving nothing additional except further inefficiencies and waste.

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Travel

Thailand

In October 2012 flew to India and Nepal with Thai International and so had stopovers in Bangkok in both directions. On our way we had a few days to have a look around.

Fiction, Recollections & News

Peter Storey McKie

My brother, Peter, is dead.

One of his body's cells turned rogue and multiplied, bypassing his body's defences. The tumour grew and began to spread to other organs. Radiation stabilised the tumour's growth but by then he was too weak for chemo-therapy, which might have stemmed the spreading cells.

He was 'made comfortable' thanks to a poppy grown in Tasmania, and thus his unique intelligence faded away when his brain ceased to function on Sunday, 22nd May 2022.

I visited him in the hospital before he died. Over the past decade we had seldom spoken. Yet he now told me that he often visited my website. I had suspected this because from time to time he would send e-mail messages, critical of things I had said. That was about the only way we kept in touch since the death of his daughter Kate (Catherine). That poppy again.

I suppose that one of the reasons for not talking very often was that there were few things that we disagreed about. So, our last conversation, which amongst other things, encompassed the inevitability of death for all of us, was uncontroversial, even comfortable. We were brought-up to sort out our metaphysical leanings for ourselves. Both of us came to believe, like our parents, that there could be no continued 'life' after death. So, a dead body has no particular value, except, perhaps, as a memento for the still-living, our descendants and maybe historians to come.

Yet, as I have repeatedly asserted on this website, while we are alive, we all, continually change the present - and therefore, the future. As a result, after death we continue to exist in another way: through the affects of those changes, that we made, in the fabric of what is now - and thus: what will be.

Not only do we persist through our children and grandchildren, who but for us and the specific circumstances of their conception would not exist, but also through our works and influence on others.

Our father, Stephen; Peter and son Daniel; our mother, Vera; me and daughter Emily (circa 1980)

Yet, it's as much about those things from which we abstained, despite the opportunity, and our impact on the present through those decisions. For example: "I won't hire that person;" or: "Not tonight, Josephine."

Thus, Peter always had a significant impact on the 'now' - and so - on the future.

In particular, he was an industrial designer by profession and had an instinctive grasp of how things worked and how they might be improved. He was a consummate creator of things, and ideas about how to do things, that will be used, and built upon by others, into the distant future.

Amongst other things he was heavily involved in the film industry, in particular providing special effects for movies and television commercials. One of the many names that appear in the credits after any major motion picture.

Our Shared Youth

Since Peter's death, I've thought about him a lot. As children and young adults, we shared a bedroom and had a sometimes strained relationship but we could work together harmoniously on many projects of a practical nature, like restoring his first car, an ancient Austin Seven.

Elsewhere I've recalled growing up in the years before television or social media when, as children, we were encouraged to be more 'hands-on' than similar aged children in today's Australia:

From

The McKie Family

Stephen McKie's sons were encouraged to use tools and their brains as he had been by his father. It wasn't so we could become inventors or mechanics or even engineers. It was so we could experience the satisfaction of making things; of understanding how things work; and discovering something new. The joy of creation.

That was why, one very early Christmas, Santa Clause left a tent in the room with the tree and in it was a big black wooden tool box with RSM written on the top and real tools inside - not plastic toys. Anyway, we didn't have much plastic then, except Bakelite and Perspex.

I had those tools well into adulthood. The Tool Box eventually became our combined Meccano box when Peter and I had stopped fighting over such things...

Cars were another thing we needed to know about.

On paper it looks like a miracle that Peter and I were not injured in some way. There were a lot of dangerous things around. But the thing was, we knew they were very dangerous so we were extra cautious.

We grew up with cautionary tales. Like the one when a fellow at CA Parsons research attempted to make some nitro-glycerine but unsure if he had succeeded dropped his test-tube-full out of the second storey window. He blew-out all the downstairs windows and terminated his employment. We were invited to consider what he should have done instead, like putting a drop on an anvil and remotely dropping a suspended weight on it. It was assumed that, at some point, we might face this dilemma.

So, we never attempted to set-off suspected explosives, or a home-made rocket, without a long wick or wire around the corner of the house. On more than one occasion this turned out to be very good practice. Similar stories related to poisons (most of the chemicals in the house) and potential carcinogens (like any chemical with a benzene ring), high voltages, unstable loads and structures and shonky car supports (jacks, stands and so on).

I was recently telling someone of the cautionary experiment when Stephen put a little ether on a saucer on our kitchen floor to show it spontaneously catch fire - careful the flames are hard to see. This was because we had a gas refrigerator in our kitchen then. As soon as the vapour from the saucer rose high enough, the gas pilot light caused the fame to flash back to the saucer. To this day I consider nearby flames when using solvents and was amused years later when a friend's petrol-soaked overalls blew-up his parent's laundry.

As a result, we were generally more cautious than most when it came to these things.

And so one generation sets the scene for the next. But there are some traditions that do get broken.

Looking back over this partial list, I wonder why I've not followed directly in my father's footsteps. Sure, I've always wanted to know how things work and have enjoyed making my version of some of them. After all they are made by other human beings and must be comprehensible, even, as Pooh would say: 'to a bear of very little brain'.

But my brother Peter has been more like our father and perhaps his grandfather. He's always designed and built and invented.

Peter has half a dozen patents in the US and has successfully defended at least one patent there...

Some decades after we were both adults, we worked together converting a small petrol engine to drive an electrical generator on his farm, near Jindabyne, and I experienced the same satisfaction of mutual creativity we had enjoyed as teenagers.

There are many other references to Peter on my website like this one:

From:

Cars, Radios, TV and other Pastimes

As kids we, like many of my friends, were encouraged to make things and try things out. Peter liked to build forts and tree houses; dig giant holes; and play with old compressors and other dangerous motorised devices, like model aircraft engines and lawnmowers; until his car came along...

When he was around fifteen years old Peter bought an Austin Seven; in pieces; for £10; plus, some more pounds, to a final total something less than £70 'on the road'.

Actually, there were eventually parts for about three Austin Sevens. We assembled an engine, chassis and drive chain, it had a fabric universal joint, and he put a seat in place on the chassis so he could drive it.

And drive he did; around and around the house; to the detriment of the sandstone side steps, and the back lawn and terracing.

By the time he was old enough to have his licence he had restored the Austin Seven sufficiently to get it registered. It had, on occasion, been taken out on clandestine test runs, up and down Pennant Hills Road and around adjoining streets; but not very surreptitiously; as it initially had a defective muffler, when fitted at all, and until Peter re-ringed it, it blew clouds of smoke.

At first the battery was the most expensive individual component in the entire car, in due course surpassed by a new windscreen. The electric self-starter, to replace hand cranking, was an add-on that sat over the flywheel near the passenger's feet...

My father taught me, and later my brother, to drive although Peter didn't require much teaching for obvious reasons.

My father had taught Australians, Canadians, South Africans and Poles, amongst others, to fly fighters and fighter bombers in the Empire Air Training Scheme in Canada, in the latter part of the war (WW2). That's how we ended up in Australia.

As a result, we learnt to drive like fighter pilots. We were shown how to get into and out of skids. Independently we discovered 180s and 360s.

Peter even showed a hapless hitch-hiker his roll-over technique. He subsequently denied this; claiming instead, and I quote, that he demonstrated: 'his clean off the suspension on the curbing technique'. The hitch-hiker may not have appreciated the subtleties.

Much earlier there was the night of the unlit highway:

Also, from:

Cars, Radios, TV and other Pastimes

We both liked homemade rockets and explosives; but our early efforts, before the benefits of high school chemistry, generally resulted in the rockets exploding and the explosives fizzing. You can read more about this in the article Cracker Night (click here).

Commercial firecrackers and gunpowder were generally more successful; although home-made nitrogen triiodide was always easy, and zinc dust and sulphur, sifted together, make a pretty good rocket fuel. We also had some fun with large gas filled balloons; and various means of firing marbles and other projectiles.

Fortunately, we had 'the sheep paddock', forming part of the property, for such experiments. We only set fire to it once or twice when the grass was particularly long and dry.

There was never any suggestion from parents that we should not be wiring up electric motors or installing flood lighting to repair cars under. We both had a healthy respect for high voltages and seldom got a 'shock'.

We were never injured by one of our experiments (by other things occasionally). The parental policy was that we were warned and asked what safety precautions we were taking. After all, we had seen first-hand what happens when a length of copper wire falls across the 33KV local distribution grid and shorts it to the street lighting; talk about loud; and dark that night!

The thirty-three thousand volt explosion

This resulted from a balloon experiment.

Peter had saved up to buy a very large rubber balloon which he had filled with town (producer) gas from an outlet the laundry using a pump. This gas still had a considerable hydrogen component, along with carbon monoxide, unlike today's heavier natural gas. But having no suitable string he decided to use the copper wire from an old radio transformer that I had previously broken open.

I had quite a number of these and every now and then took one apart as a source of wire of various gauges; particularly for our homemade telephone system to Colin next door; for radio aerials; for winding coils for buzzers; rewinding my burnt-out Meccano motor and so on.

Copper wire of a gauge thick enough to restrain a large balloon comes from the low voltage windings on such a transformer. It's quite heavy and the balloon hadn't risen a lot higher than the trees, maybe 60 feet (20m) or so, when it wouldn't go higher.

That's when I discovered my little brother repeating Benjamin Franklin's famous lightening experiment; holding the end of a 60-foot lightening-conductor in the back garden. Several people have been killed trying to repeat this experiment.

I claim to protect him from being fried; he claimed out of sibling maliciousness; I reached above his head and rapidly bending and straightening the wire (as one does) broke it.

The balloon then rose ponderously; higher and higher; at the same time being carried by a light breeze in the direction of Pennant Hills Road and the railway cutting.

The trailing wire cleared the house; then hovered over the cars and trucks on the main road. But continuing to drift westwards there was no chance that it would clear the high voltage power lines running between the road and the railway.

A spectacular two second display of sputtering sparks and sheets of blue green flame ensued, as the dangling copper wire first struck, then fell across the high voltage lines; was vaporised; and became plasma.

The noise was remarkable too; very loud. Then everything electrical stopped.

The local grid protection breakers kicked-in and the power went off for a minute or two. Then just as quickly everything returned to normal.

Householders called out by the noise returned indoors to continue whatever they had been doing. All except our father, who was working from home. He circled the house and finding us acting nonchalantly; in other words, suspiciously; demanded to know: 'what have you two done this time!' Why immediately assume it was us?

Remarkably he was then more concerned about possible subsequent safety issues: remnants of wire dangling from power-lines; or the ongoing path of a balloon trailing copper wire. But everything had gone; the balloon exploded and the wire vaporised! I don't recall any punishment at all.

That night all the mercury arc street lights on the main road were off. The 33kV had been shorted down to the adjacent street wiring and the fuses protecting every lighting ballast in that section had blown.

Innocent little Peter asked the team that came to replace them what might have caused it? One bloke said: 'could've been a tree branch or lightening...' Peter said: 'what are you doing with the broken ones - can I have one' The bloke said: 'Go for it!' So, we took several bulbs and at least one ballast.

So, that's how for many years later, we had a brilliant bluish street light high on the side of our house (we just replaced the fuse); enabling us to work on our cars in the garden after dark.

***

Those 33kV wires are still there the same as ever - but the streetlights have changed.
Now the road is four times as wide and our old house has been consumed - just a brief flash in the flow of time.

Now my world has changed again, in a much more profound way.

***

For more photographs (including Dan and Emily a bit older than in the photo above) Click Here...

Opinions and Philosophy

Losing my religion

In order to be elected every President of the United States must be a Christian†. Yet the present incumbent matches his predecessor in the ambiguities around his faith. According to The Holloverse, President Trump is reported to have been: 'a Catholic, a member of the Dutch Reformed Church, a Presbyterian and he married his third wife in an Episcopalian church.'

He is quoted as saying: "I’ve had a good relationship with the church over the years. I think religion is a wonderful thing. I think my religion is a wonderful religion..."

And whatever it is, it's the greatest.

Not like those Muslims: "There‘s a lot of hatred there that’s someplace. Now I don‘t know if that’s from the Koran. I don‘t know if that’s from someplace else but there‘s tremendous hatred out there that I’ve never seen anything like it."

And, as we've been told repeatedly during the recent campaign, both of President Obama's fathers were, at least nominally, Muslim. Is he a real Christian? He's done a bit of church hopping himself.

In 2009 one time United States President Jimmy Carter went out on a limb in an article titled: 'Losing my religion for equality' explaining why he had severed his ties with the Southern Baptist Convention after six decades, incensed by fundamentalist Christian teaching on the role of women in society

I had not seen this article at the time but it recently reappeared on Facebook and a friend sent me this link: Losing my religion for equality...