Tuesday, May 17, 2011

We emit less CO2 than Combet gives us credit for

On April 13, Climate Change Minister Greg Combet's spin for a carbon tax pushed new frontiers in the art of being economical with the truth.

He said:  ''Australia release[s] more pollution per person than any other country in the developed world, more than the US.''

In a chapter of a recently published anthology, Energy, Sustainability and the Environment, edited by F.P. Sioshansi, I observed:

''International trade means countries that export energy-intensive products incur emissions on behalf of other countries.  This tends to reduce the national emission levels of many developed countries, while exaggerating those of some developing countries and resource rich countries like Australia.''

Recently released UN data confirms and quantifies this.  It shows that about 11 per cent of the US's carbon dioxide emissions are outsourced; that is, they are incorporated within imports.  In Japan it is 18 per cent and for Switzerland more than 50 per cent.

By the same token, Australia's emission levels are overstated because we are a net exporter of goods that incorporate carbon dioxide.  While on the basis of production our carbon dioxide emission levels are 16 tonnes per capita, on the basis of consumption they are only 13.5 tonnes.  This means Australia's per capita emissions are lower than those in nine of the 35 developed countries.

The vastness of Australia is one reason we use more energy and hence have higher carbon dioxide emissions than many other countries.  But Australia's sheer size also means the continent is a significant natural sink for carbon dioxide emissions.

If Australia is credited with these natural sequestrations, this markedly changes the comparison with other countries.

Australia's land mass naturally absorbs about 137 million tonnes of carbon dioxide a year.  If this is subtracted from the 550 million tonnes of carbon dioxide (or its equivalent) that is actually emitted, Australia would be average among the developed countries.

There are further reasons Australia's emission levels are swollen relative to those of other countries.  Among these is the relative saturation of hydro power availability (although additional capacity would be available in Tasmania if the ALP-Greens alliance lifted its veto).  Similarly, we have no nuclear power, again in part because of politics.

These two emission-free power sources account for nearly 20 per cent of the electricity generated by developed countries but less than 5 per cent for Australia.

In reality, all these numbers are simply propaganda tools.  Every country emits carbon dioxide levels consistent with its stage of development, costs of different energy and raw material sources and economic structures.  And although some countries have introduced regulations that force reductions in carbon dioxide emissions more aggressively, aside from the European Union, Australia appears to have been as willing as any other country to impose the costs these entail.

Contrary to this view, Combet suggests we are not pulling our weight.  To craft evidence for this, he decided to prejudge the Productivity Commission report his government commissioned to obtain information on different countries' effective carbon tax rates.  Instead he drew from material assembled by London-based Vivid Economics that his department commissioned.

As Gary Johns showed in The Australian on April 28 (''Dodgy figures and wrong questions plague the carbon debate''), the material contains some howlers.  Among these is a claim that China has a carbon price of $8 a tonne.  This was arrived at by assigning, as a carbon tax, China's policy of ceasing to favour small (and carbon-intensive) electricity producers.  Australia implemented that measure with the electricity market reform introduced by the Kennett government in Victoria and supported by the Keating federal government's competition policy reforms.  Needless to say, nobody here claims this to be a form of carbon tax.

Combet also used the Vivid Economics report to claim falsely that the US and India were acting to introduce such taxes and that, based on the report, we were delinquent in our own levels of carbon tax.  But for Australia the Vivid Economics material failed to acknowledge the commonwealth's requirement that 20 per cent of electricity by 2020 must be sourced from exotic forms of renewable energy.

This scheme is L.A.W. law.  It imposes high-cost wind and solar on the consumer and has a carbon price effect that grows year by year, reaching $13 a tonne by 2020.  The commonwealth's proposed carbon tax at $20-$30 a tonne would be on top of this.

Laughably, Combet added that acting to introduce a tax was also in our national interest.

What we are in fact finding is that some businesses think it is in their interest to introduce a ''carbon price'', with all the potential this offers them for creating new trading markets.  Some other businesses, now joined by BHP Billiton, think it is a good idea as long as they are immune.  Others realise there can be no winners and courageously say so despite government pressures on them.

More significantly, opinion polls show a rising majority of people do not think it is in our national interest to introduce a carbon tax.

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