Regular guest contributer James Glover (@zebra) takes a closer look at the Coalitions climate change policy.
Malcolm Turnbull, an Australian MP, did a rare and risky thing last week. He actually broke away from the political spin-cycle and explained some figures underlying the cost of the Coalition’s “Real Action on Climate Change” policy. Naturally he was attacked by both the Labor government, who are having trouble selling their own Carbon Tax policy, and his own party colleagues who were horrified that he didn’t stay “on message”. The Coalition quickly bunkered down under orders from the top to avoid discussing Turnbull’s “outburst”. So what was he saying anyway and why was it so controversial?
To see why we need to explain the difference between the Labor Party and conservative Coalition’s policies. There are really only two broad differences. Both policies recognise that anthropogenic climate change is scientific fact, not speculative political fiction. Both recognise the need for action (ie. spending money) on combating climate change. But where they differ is in how global warming should be reversed and how to raise the money to do so. It is not commonly understood but the real difference between the policies is the former.
The Carbon Tax (or its close relative the CPRS) aims to reduce carbon emissions by making carbon pollution relatively more expensive than cleaner, alternate sources of power (and really it’s all about power generation). In order to do this they need to raise the price of carbon powered energy sufficiently to tip the balance in favour of wind, wave, geothermal, biofuels or solar energy (as explained in a recent post here on the Mule). Of the money raised by the Carbon Tax, about half goes back to subsidising the increased power bills of the less well-off. Of the remainder, most goes to developing cleaner sources of energy at lower cost. As explained in the earlier post, when there is no more carbon pollution then there is no more carbon tax to distribute. So ultimately, unless the cost of alternate energy comes down to the levels currently enjoyed by coal, gas or oil based power, in the long run the less well off will be much less well off.
While the Coalition’s “Real Action on Climate Change” has more than a whiff of policy-on-the-run, it can be presented as a respectable alternative. It says that we should ignore the fruitless and expensive attempt to cheapen alternative power and accept carbon pollution as a fact of life. In order to mitigate the effects of carbon pollution, though, we need to remove it from the atmosphere after the pollution has occurred, not at the source. This will cost money. A lot of money. Australia alone currently produces about 0.2 billion tonnes of carbon (not C02) each year. That’s a cubic block of carbon approximately 500m x 500m x 500m*. Each year. Anybody who thinks sequestration is the answer has to find somewhere to put all that carbon for a start. Or plant several million trees a year. The only hope for this reactive approach to reducing carbon is that some method is found which removes large amounts of carbon from the atmosphere at a relatively small cost: and much smaller than the likely Carbon Tax price of $20-40 per tonne. While such methods are conjectured, for example spreading iron filings in the ocean to increase carbon uptake by marine organisms, to say they are untested is an understatement. Equally we could allow carbon to increase in the atmosphere but mitigate the effects of global warming by using giant sunlight reflecting shields. Or paint the Sahara Desert white. Hey, stranger things have happened. But at the moment all these methods remain firmly in the province of science fiction.
So what did Malcolm Turnbull actually say that was so exciting to friend and foe alike? Well, using Treasury forecasts of population and economic growth, that 500m carbon cube will have grown to 850m wide by 2050 (650m tonnes) if we do nothing. Assuming we can mitigate the effects of carbon pollution, or pay someone else to do it for us, the cost could be as low as $15 per tonne or $18bn per year. Assuming the population has doubled by 2050 that’s about $500 per person, or an extra $50 per week on the average household tax bill. Given the extreme rubberiness (definitely not vulcanised rubber) of these figures, that’s pretty much what the Carbon Tax will cost as well. If the initial price of the Carbon Tax is set at $30 per tonne, then over time this should come down as alternate energy becomes actually cheaper due to technology improvements and economies of scale, not just relatively cheaper. Indeed if the Real Action plan involves buying permits from other countries who have set up some sort of CPRS and use alternate energy sources, then the equilibrium cost of both plans is probably pretty much the same, i.e. $15 per tonne. The real action policy really only comes out ahead if one of the fanciful ideas for removing carbon en masse, post production, pays off.
Of course the Coalition’s policy has to be funded somehow, and herein lies the second difference between the two. The Coalition’s policy will involve raising taxes, and probably income taxes as opposed to the Carbon Tax favoured by Labor. So any claim on the Coalition’s part (a point made by Mr Turnbull) that the major benefit of their policy is that it won’t raise electricity prices is totally spurious. Both policies will lessen household discretional spending. By the same amount. That’s all voters ultimately care about. Turnbull also claimed that their policy had the advantage that if “climate change is crap” as Tony Abbot famously is purported to have said, then it can all be dismantled without much cost. For that statement alone, sending a dog-whistle to his party’s climate skeptic supporters, Mr Turnbull deserved the public flaying he got, if not for the right reason.
*Note: in the above I have assumed that 1m cubed of carbon weighs 2 tonnes which is the density of graphite. It obviously depends on the form of carbon used. It is intended as an indicative figure only. Though I wish someone would actually build a structure of that size and point out to everyone this is how much carbon a year we are producing