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Tag Archives: carbon emissions

Current climate policies put Australian businesses and jobs at risk

Australian companies that export goods and/or services should be asking themselves whether they are happy for the Federal Government to continue to put their potential future viability at risk, writes Dr Anthony Horton.

According to a World Bank announcement on Sunday September 20, the number of carbon pricing schemes around the world has nearly doubled from 20 to 38 since 2012, and the schemes account for approximately 12% of the world’s greenhouse gas emissions.

Rachel Kyte, a Vice President and Special Envoy for Climate Change at the World Bank stated in a teleconference that a price on carbon for Governments and businesses alike is inevitable. The World Bank’s study of the current schemes showed that the price per tonne around the world ranged from less than $1 in Mexico to $130 in Sweden.

Rachel Kyte, a Vice President and Special Envoy for Climate Change at the World Bank stated in a teleconference that a price on carbon for Governments and businesses alike is inevitable. The World Bank’s study of the current schemes showed that the price per tonne around the world ranged from less than $1 in Mexico to $130 in Sweden.

In related news, the number of companies that have internal carbon pricing has tripled since last year. In setting such a price, companies essentially incentivise decreased reliance on fossil fuels, and can help to mitigate the effects of current or proposed future regulation. According to Environmental not for profit group CDP, the prices currently range from $1-$357 per metric tonne.

Special Advisor to CDP Paula DiPerna stated that companies would welcome certainty from Regulators and are therefore already planning for mandated emission limits in the future. The 435 companies named in the report include the Campbell Soup company, Black and Decker, Exxon Mobil and Nissan.

CDP North America President Lance Pierce commented that each company essentially anticipated future emissions prices and saw internal carbon pricing as an essential part of building a foundation for their future competitive advantage.

What does this mean for Australian companies?

These two reports are the latest in an increasing number that point to carbon pricing being an integral part of operating a business and one of the bases upon which companies will select and manage their suppliers of goods and/or services. It also points to a shift in the way competitiveness and corporate social responsibility will be defined and maintained going forward.

In previous blogs I have highlighted many large multinational companies that have implemented internal pricing and other measures including monitoring and reducing their carbon and greenhouse emissions, investing in renewable energy and selecting suppliers that do likewise. In response, they are decarbonising their entire operations and a number have found that their market share (and returns to shareholders) has increased, in no small part due to marketing their “greener” image compared to their competitors from a corporate social responsibility perspective.

While some may say that multinational companies have sufficient liquidity to adopt a speculative stance on Governments implementing carbon trading at national levels, it is also fair to say that Governments recognise the importance of certainty in terms of policies and legislation such that companies can maintain their competitiveness and growth which facilitates increased employment opportunities.

Given that the current Australian Government does not have mechanisms in place to incentivise domestic companies to internally price carbon, monitor and reduce their carbon and greenhouse gas emissions, invest in renewable energy or select suppliers that do likewise, it is conceivable that Australian companies will be vulnerable if they have an international competitor that incorporates each of the these into their operations and produces what is considered an identical product. Under this scenario the viability of the company and the jobs of the employees are at serious risk, especially if the international market constitutes the majority of the Australian company’s income.

Ultimately, Australian companies that export goods and/or services need to ask themselves whether they are happy for the Federal Government to continue to put their potential future viability (and the jobs of their employees) at risk or not, and if not, what they are going to do about it.

This article was first published on theclimatechangeguy.com.au.

rWdMeee6_pe About the author: Anthony Horton holds a PhD in Environmental Science, a Bachelor of Environmental Science with Honours and a Diploma of Carbon Management. He has a track record of delivering customised solutions in Academia, Government, the Mining Industry and Consulting based on the latest wisdom and his scientific background and experience in Climate/Atmospheric Science and Air Quality. Anthony’s work has been published in internationally recognised scientific journals and presented at international and national conferences, and he is currently on the Editorial Board of the Journal Nature Environment and Pollution Technology. Anthony also blogs on his own site, The Climate Change Guy.

 

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Is anybody listening about carbon pricing?

I know Tony doesn’t like advice but I feel duty bound to keep trying.

Yet another study has shown the economic benefits of carbon pricing.

This article first appeared in Climate Progress on 4 March 2014

According to a new study out of California, taxing carbon emissions at a whopping $200 per ton would create more jobs in the state than business-as-usual.

The report was commissioned by Citizens Climate Lobby and carried out by Regional Economic Models, Inc. (REMI). The latter used a model of the California economy they’ve developed and combined it with the Carbon Tax Analysis Model — an open-source, Microsoft Excel-based model of carbon emissions and tax revenues at the state level, built off data from the U.S. Energy Information Administration. The resulting simulation looked at three different tax levels: $50 per ton of carbon emissions, $100 per ton, and $200 per ton. All three started at $10 per ton in 2015, then rose $10 annually until they hit their maximum level: $50 in 2019, $100 in 2024, and $200 in 2034.

Lots of previous analyses have tried to model the economic cost of the damage climate change will impose, and $200 per ton of emissions is consistent with several of them. But it’s also way higher than anything lawmakers here or elsewhere have considered. The Canadian province of British Columbia, for example, has a carbon tax of $27.88 per ton. When the Obama Administration estimated the price of carbon, the mid-range of their numbers was around $40 per ton.

Yet not only did the $200 per ton tax create more jobs than the “do nothing” baseline in REMI’s simulation, it created more jobs than the lower taxes did. Anywhere from 236,775 to 286,475 more jobs by 2035, to be specific.

How would this happen? Shouldn’t higher taxes hurt job growth?

Well, one reason a carbon tax is friendly to the economy is that it imposes a price on greenhouse gas emissions but doesn’t specify how the cuts are to be made. As the video below shows (see original article), that turns every business into a laboratory, each one looking for the most effective and least-costly ways to cut emissions that work for them:

But the other reason is what lawmakers do with the revenue. In all its scenarios, the California study set aside the first $4 billion in revenue each year for investment in renewables. Beyond that, it modeled two options:

  • The “across-the-board” model (ATB), which uses the revenue to cut California’s sales, income and corporate taxes by a proportional amount.
  • The “fee-and-dividend” model (FAD), which returns the revenue in equal amounts per person to every household in the state.

When NPR looked into a carbon tax, economists at MIT told them that plowing the money back into the economy like that essentially eliminated any economic drag from the tax. British Columbia went with the ATB option, and their carbon tax shows no signs of harming the province’s economy.

What’s especially interesting about the California study is it breaks down the different results from the ATB and FAD options. Cutting taxes created more jobs than giving out checks: 286,475 more jobs versus 236,775 more. Both increased real disposable income for the average California household by $16,000 by 2035. But cutting taxes resulted in almost $250 billion in additional cumulative GDP by 2035, while handing out checks only added around $60 billion by 2035.

So does a bigger economy mean cutting taxes is the better option? Not necessarily. Imagine an economy with enough productivity that everyone can make enough to support their family working just 20 hours a week. They’d then have more time to spend on friends, family, hobbies, travel, leisure, etc. Or they could sacrifice all that to keep working 40 or more hours or more and make way more income, which would then show up in the GDP data. So a society in which everyone just kept working more would have a larger economy as we measure it. But it’s not obvious it would be a better society in everyday human terms. This is just one of the problems with treating GDP as a proxy for a society’s overall well-being. (Also, while both versions of the carbon tax reduced income inequality, returning the money via checks reduced inequality more.)

The FAD option is strikingly similar to what’s called a universal basic income (UBI) — a policy where everyone in the state or country gets a check for the same amount every year, no strings or conditions attached. Alyssa Battistoni recently argued in Jacobin that a UBI itself would help make society more environmentally friendly, by moving it toward less carbon-intensive work and consumption.

REMI’s study also didn’t account for the health benefits of cutting carbon emissions. Those cuts inevitably reduce other pollutants from fossil fuels life sulfur dioxides and particulate matter, which are linked to asthma and other cardiovascular problems. Reducing those makes for healthier citizens and fewer expenditures on medical care, which also rebounds to the benefit of job creation and growth. So the economic benefits of a carbon tax could conceivably be even higher than what REMI modeled.

Finally, there’s the carbon emissions themselves. According to REMI’s model, the $200 per ton tax would cut California’s emissions between 25 and 30 percent from 1990’s levels by 2035.

Back in 2010, the the National Academy of Sciences and National Academy of Engineering recommended the United States as a whole try to cut its emissions 50 to 80 percent cut below 1990 levels by 2050 — a goal the White House may eventually propose.

As Lord Deben recently said, it is indeed astonishing

“that a country should have become so selfish about this issue that it’s prepared to spoil the efforts of others and to foil what very much less rich countries are doing…

All that pollution which Australia is pushing into the atmosphere is of course changing my climate. It’s a real insult to the sovereignty of other countries…

It’s wholly contrary to the science, it’s wholly contradictory to the interests of Australia and I hope that many people in Australia will see when the rest of the world is going in the right direction what nonsense it is for them to be going backwards.”

hard-to-listen

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Fair suck of the sav, Tony

When you get all of your advice from the business sector of the community, it is hardly surprising that profit becomes your foremost goal and privatisation and deregulation the means to achieve it. But who amongst these advisers considers the greater good? Who will offer protection from corporate greed and safety to our most vulnerable? Who is courageous enough to look at the long term consequences of decisions? Who will decide what is fair?

Australia had the highest per capita CO2 emissions in 2012 at 18.8 tonnes. In the US, emissions per capita were 16.4 tonnes, and just behind came oil-rich Saudi Arabia with per capita emissions of 16.2 tonnes. The EU and China – both major emitters in absolute terms – had much smaller per capita emissions, at 7.4 and 7.1 tonnes respectively.

While Australia’s domestic greenhouse gas (GHG) emissions represent some 1.5% of the global total, its global carbon footprint – the total amount of carbon it pushes out into the global economy – is much bigger.

Australia is the world’s largest coal exporter. By adding emissions from exported coal to our domestic emissions, Australia’s carbon footprint trebles. Its coal exports alone currently contribute at least another 3.3% of global emissions.

In aggregate, therefore, Australia is at present the source of at least 4.8% of total global emissions. That’s without considering natural gas exports.

The proposed “mega coal mines” in Queensland’s Galilee Basin, producing for export, will be responsible for an estimated 705 million tonnes of CO2 per year and would turn that region alone into the world’s seventh largest contributor of emissions.

Countries such as Australia, Canada, the Russian Federation, and Saudi Arabia fail to accept any responsibility for the emissions caused by the fossil fuels they export. They also ignore the carbon footprint of manufactured goods they import from other countries like China. To say our contribution is miniscule is a deliberately contrived falsehood.

Is it fair for us to try to gain a competitive advantage in the market by ignoring action on climate change and leaving it to others?

The Abbott government is preparing Australians for an overhaul of the welfare system, with Social Services Minister Kevin Andrews indicating too many depend on the government for their incomes. Mr Andrews said the review shows that more than five million Australians, or about one in five, now receive income support payments.

In his 2009 book, Battlelines, Mr Abbott wrote that one of the Howard government’s most significant achievements was “slowing the rise in the number of people claiming the disability pension”. Mr Andrews suggests that the difference in indexation between Newstart and pensions leads to a “perverse incentive for people to get onto the DSP”.

Parenting payments and the disability support pension were two areas of welfare that “would be sensible to review again”, Mr Andrews told the ABC.

Cassandra Goldie, chief executive of the Australian Council of Social Service, whilst admitting a very small proportion of people did not do the right thing, rejected the idea that the disability support pension was an easy “rort” to sign up to. She said the previous Labor government had made it even more difficult for people to get disability pensions, and as a result more people were going on the Newstart unemployment payment of $36 a day.

“The disability support pension is now extremely hard to get on to,” she said. “It’s confined to people who are subject to rigorous testing.”

Mr Andrews flagged the idea of preventing welfare recipients from refusing to take a job on the grounds that it was more than 90 minutes travel from their home and said it was his “inclination” to consider splitting the Newstart unemployment benefit into different “tiers”, which could apply to the payment rate or the conditions attached to receiving it.

Is it fair to be targeting the poorest sector of our community whilst announcing an amnesty for wealthy tax evaders who hide their income offshore? Is it fair to reduce welfare to our most disadvantaged whilst providing billions of dollars of corporate welfare to mining companies, banks and private health insurers?

Is it fair to maintain generous tax breaks for around 16,000 wealthier Australians while cutting tax concessions for 3.6 million workers on lower incomes and scrapping the planned increase in the superannuation guarantee? The superannuation policy change announced by the Coalition costs the budget even more money – mostly via the huge concessions granted to higher income earners – while doing little to relieve the strain on the aged pension, since those most likely to require the pension in old age will receive an even smaller share of the superannuation concessions.

The continuation of the existing superannuation rules by Hockey would significantly exacerbate inequities in the superannuation system, since under the flat (15 per cent) tax an even greater share of tax concessions – a direct hit on the budget – will flow to those on higher incomes, whilst lower income earners will receive next to no tax benefit.

Is it fair to ask us to tighten our belts whilst paying for a Paid Parental leave Scheme which will see wealthy women paid almost five times as much ($2885 a week) as low income earners to stay at home for 6 months with their babies?

Is it fair to ask us to pay polluters bribes rather than them paying for the destruction they cause?

Is it fair to lock up asylum seekers and to leave the burden to other countries?

Fair suck of the sav, Tony. It’s time you got, as you are wont to say, fair dinkum!

 

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A proxy for the future

london-flood

Governmental and community denial of the fundamental truths of climate change can’t last forever.

Climate change impacts are going to operate over the long term. That’s why we can’t immediately envisage the danger and it’s why climate change isn’t regarded as being as pressing as balancing the budget or “securing our borders”. It is primarily for this reason that the world has missed opportunity after opportunity to respond appropriately, to the point that it is universally regarded as too late to prevent cascading climate change from occurring. Instead of falling rapidly, worldwide carbon emissions continue to accelerate. This does not mean that we should stop trying to save the environment; the eventual extent of the destruction can yet be ameliorated. But governments and populaces worldwide are deliberately kept in a state of confusion by entrenched interest groups, and confusion allows governments and populations to continue to operate in a state of denial.

At the moment in Australia, denial manifests itself in a “business as usual” approach. The Coalition is busily dismantling anything that conflicts with the idea of status quo – business as usual doesn’t include things like climate commissions, carbon prices or renewable energy research. (For the Coalition, “business as usual” also doesn’t include things like modern broadband, up-to-date healthcare or new ways of doing education either, but that’s another blog post.)

Despite this, there are things that we do now that operate on the same timescale as climate change effects, and these may begin to act as a proxy for the future. Whilst it is possible to take a “business as usual” approach to these things, doing so is neither prudent nor effective for the future.

Case in point: demographic and developmental planning for cities in Australia’s north. Under both Labor and the Coalition, development of the north of Australia is an expectation. Growth in population, increasing urbanisation, technological advance and infrastructure dissemination are a part of governmental planning. But whilst these plans are being laid, cold-eyed scientists are looking at the north of Australia and saying bluntly that, far from developing into a new demographic powerhouse, whole latitudes may need to be abandoned as not suitable for human habitation. The best laid plans of our politicians are likely to be sabotaged by the remorseless, uncaring forces of the unleashed beast of nature. It is only stubborn denial that allows governments to continue to plan future expansions that will simply not be viable.

This kind of planning quandary extends into every aspect of the future. Urban planning in cities needs to take into account projected rises in sea levels. Whilst

Urban planning is but one area where future expectations will need to be revised to cope with the new truths of a +4°C world. Other areas that come to mind include:

  • The future of mining and resource exploitation;
  • Food security;
  • Refugee and migration policy; and
  • National security.

The latter of these warrants a post of its own. Suffice to say here, that we live in a world where current generations of Australians are not ready for the concept of a war of defense. Since the 1940s, Australia has not been seriously under direct threat of military force, and our involvements have been remote. We send our boys off to war and welcome them home; we lament and mourn (rightfully so) at the loss of individual soldiers. But climate change carries with it the risk – the near certainty – of regional conflict, as whole countries start to starve, due to desertification and loss of arable land. Australia will have cause to be thankful for its remote location and inaccessibility. Our military is likely to be too concerned with domestic issues of food security to be able to worry too much about billions of starving people in India and China.

These areas of concern fall squarely into the remit of our national government, which has shown an unparalleled recalcitrance to accept the truth of global warming. It is unlikely that government policy under the current government will include much consideration of a world shaped by forces that the Coalition denies actually exist.

The best hope for future climate action, discounting the remote possibility of a spectacular implosion of our new government, is a change in public opinion forcing our governing bodies to reconsider their attitude to climate change science. The Coalition government is unlikely to change its mind without being dragged, kicking and screaming, into an unpalatable recognisation of the truth. There is more potential for change at other levels of government. From city planners to urban land management authorities, from companies divesting from coal and backing out of investments such as the Abbot Point port expansion to the application of new mandatory building codes, we need regulations and laws, based on empirical understandings of the future, which will impact on the everyday lives of Australians and people around the world.

If these bodies and organisations allow their agenda to be dictated to them by those with investments in the status quo, then not only will the investments made now be seen as foolhardy at best and downright negligent at worst, but the trajectory for the future will continue to deteriorate.

We can’t afford that. The push for climate action must come from the individual upwards, because it’s clearly not going to be led by the government on high. So, on an individual level, when we look to investments in property, when we consider our shareholdings and our superannuation, there are questions to ask. Have those who seek to sell you a future considered what climate change will mean for the investment they are proposing?

Tony Abbott’s “mandate” about removing the carbon price is not as strong as he wishes it to appear. There is already a large and growing force in the community that is concerned about climate change and willing to agitate for action. We can hope that it will not take a revolution in public attitude to tip the balance. Every individual who is confronted with the reality of climate change and the impact it will have on their own life – and the lives of their loved ones – is an important step closer to the critical mass needed to get Australia on the path of the righteous. So if your job involves you in any form of future planning, or if you are undertaking any investments of your own, make certain that climate change is an important part of your consideration. The outcomes of your planning depend on it. And the future of your planet depends on it.

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