Australians Say "No" to Carbon Tax

Australia’s prime minister, Julia Gillard, has found her plans to introduce a carbon tax quite unpopular with her constituents. One of the reasons Gilliard was elected in the first place was her promise, made on the eve of the election (August 20, 2010), that there would be no carbon tax while she was prime minister. "There will be no carbon tax under the government I lead," she said.

In fact, the idea of a carbon tax is so repugnant to Australians that her approval ratings, based on a recent Nielson poll, have sunk to the lowest point since she took office late last summer. "The new carbon tax is the most likely explanation for the change in attitudes towards her," said John Stirton from Nielsen polling. "It’s being portrayed very much as something [that] will hit the hip pocket and also as a broken promise, so it’s a double negative."

The promise of no carbon tax lasted mere months before being publicly broken, and Australians are justifiably upset with their leader. In February, Gillard formed a multi-party climate change committee that has published a framework for pricing carbon: a fixed price per metric ton, starting in 2012 for three to five years, followed by an emissions trading scheme where a market price would be set by a carbon market. The Nielsen poll, published in early March, found that only 35% of Australians support the carbon tax, a drop of 11% in a single month.

Gillard’s interest in a carbon tax is surely related to her Faustian bargain with the Greens, a party that has key players in Gillard’s minority government. Recall that former Labor Prime Minister Kevin Rudd’s 2007 election victory was due in part to his support for signing the Kyoto Protocol and the promise of climate change legislation. Once elected, Rudd did cause the Kyoto Protocol to be ratified, but he delivered little more during his four-year tenure. Rudd was denied support for more legislation because Australians, much like their American cousins, learned about the high costs and nebulous benefits that result from regulating carbon. The Aussies are also up in arms about a government plan to spend millions of their tax dollars on a marketing campaign to "inform" them about the scheme.

Epic Interview Flop

The same week as Gillard’s slumping poll numbers were announced, Jill Duggan, of the European Commission Directorate General of Climate Action and the UK government’s head of international emissions trading, consented to a radio interview during a visit to Australia. Her visit to Australia was a thinly veiled attempt to inject some life into Gillard’s carbon tax agenda and marketing project, principally by Duggan bragging about her successes in the UK and EU carbon market. Duggan is also one of the authors of the UK emission trading scheme that requires CO2 emissions cuts of 20% by 2020.

Duggan sat for the live interview on Melbourne Talk Radio, on the Steve Price Breakfast Show, on March 9, 2011. Andrew Bolt (AB)-an Australian journalist with the Herald Sun who has written much about the Australian government’s inability to define the specific costs and benefits of regulating carbon-predictably put the same questions to Duggan (JD). As you will read in the transcript that follows, Duggan’s performance was, in the words of Bolt, "truly catastrophic." Bolt went on to say on his blog that, "[O]ur the woman from Whitehall [is] apparently unable to quantify either the costs or the benefits of the scheme she runs. It’s hilarious, toe-curling and utterly compelling. These, ladies and gentlemen, are the Rolls Royce minds that run the UK these days."

A recording of the entire interview is available here.

Steve Price: There are many experts on both sides of this argument [climate change], Andrew.

Andrew Bolt: Yes.

SP: One of them is Jill Duggan. She’s with the European Union. She has managed Britain’s initial emissions trading scheme. She’s in this country to talk at a series of lectures and she’s been good enough to join us on the line. Thanks for your time.

Jill Duggan: Good morning.

SP: The debate we’re having which I’m sure you’ve heard resonating around the country since you’ve been here. Did Britain go through a similar spirited and vocal debate?

JD: Well, there’s a couple of differences. Clearly industry in the UK were worried, in the same way that Australian industry is worried, because before the start of any new regulation or scheme . . . But it didn’t have the same level of public recognition, I don’t think. And I think that the public in Europe still don’t really know that they’ve got an emissions trading scheme.

AB: In part isn’t it the case, Jill, that the emissions trading scheme was set so low—the prices—that people haven’t quite noticed it yet and that it hasn’t actually stimulated the investment in green energy that is needed? And, in fact, Britain next year—apparently—is going to go to a Carbon tax of its own?

JD: Well it’s already got a carbon tax, I mean, it’s not been a one-size-fit-all. It’s not just been emissions trading in Europe—it’s been a variety of policies. Actually the price of Carbon-the Carbon price in the Emissions trading scheme in Europe is about €15 or €16 a tonne. I’m not sure what that is in Australian Dollars—it’s probably about $20 a tonne?

SP: A touch more. Probably almost $25.

JD: So that’s the price and that’s been the price for the last couple of years. I mean, we did get some things wrong in the very beginning and we’ve learned from those. I fully admit that one of the things that we didn’t do was we didn’t get companies to monitor and report their emissions prior to the start of the scheme. So when it was set up we did get the figures wrong in that first learning phase back in 2005.

AB: Can I just ask; your target is to cut Europe’s emissions by 20% by 2020?

JD: Yes.

AB: Can you tell me how much—to the nearest billions—is that going to cost Europe do you think?

JD: No, I can’t tell you but I do know that the modelling shows that it’s cheaper to start earlier rather than later, so it’s cheaper to do it now rather than put off action.

AB: Right. You wouldn’t quarrel with Professor Richard Tol—who’s not a climate sceptic—but is professor at the Economic and Social Research Institute in Dublin? He values it at about $250 billion. You wouldn’t quarrel with that?

JD: I probably would actually. I mean, I don’t know. It’s very, very difficult to quantify. You get different changes, don’t you? And one of the things that’s happening in Europe now is that many governments—such as the UK government and the German government—would like the targets to be tougher because they see it as a real stimulus to the economy.

AB: Right. Well you don’t know but you think it isn’t $250 billion.

JD: I think you could get lots of different academics coming up with lots of different figures.

AB: That’s right. You don’t know but that’s the figure that I’ve got in front of me. For that investment. Or for whatever the investment is. What’s your estimation of how much—because the object ultimately of course is to lower the world’s temperatures—what sort of temperature reduction do you imagine from that kind of investment?

JD: Well, what we do know is that to have an evens chance of keeping temperature increases globally to 2 degrees C—so that’s increases—you’ve got to reduce emissions globally by 50% by 2050.

AB: Yes, I accept that, but from the $250 billion—or whatever you think the figure is—what do you think Europe can achieve with this 20% reduction in terms of cutting the world’s temperature? Because that’s, in fact, what’s necessary. What do you think the temperature reduction will be?

JD: Well, obviously, Europe accounts for 14% of global emissions. It’s 500 or 550 million people. On its own it cannot do that. That is absolutely clear.

AB: Have you got a figure in your mind? You don’t know the cost. Do you know the result?

JD: I don’t have a cost figure in my mind. Nor, one thing I do know, obviously, is that Europe acting alone will not solve this problem alone.

AB: So if I put a figure to you—I find it odd that you don’t know the cost and you don’t know the outcome—would you quarrel with this assessment: that by 2100—if you go your way and if you’re successful—the world’s temperatures will fall by 0.05 degrees C? Would you agree with that?

JD: Sorry, can you just pass that by me again? You’re saying that if Europe acts alone?

AB: If just Europe alone—for this massive investment—will lower the world’s temperature with this 20% target (if it sustains that until the end of this century) by 0.05 degrees C. Would you quarrel with that?

JD: Well, I think the climate science would not be that precise. Would it?

AB: Ah, no, actually it is, Jill. You see this is what I’m curious about; that you’re in charge of a massive program to re-jig an economy. You don’t know what it costs. And you don’t know what it’ll achieve.

JD: Well, I think you can look at lots of modeling which will come up with lots of different costs.

AB: Well what’s your modeling? That’s the one that everyone’s quoting. What’s your modeling?

JD: Well, ah, ah. Let me talk about what we have done in Europe and what we have seen as the benefits. In Europe, in Germany you could look at, there’s over a million new jobs that have been created by tackling climate change, by putting in place climate policies. In the UK there’s many hundreds of thousands of jobs.

AB: Actually, that’s not right, is it? I just saw research. Did you see this? It came last week. Verso Economics saying that, for example, in Scotland the investment in green power has cost 3.7 jobs for every one green job created. And there are similar figures; I’m looking at Italy here, Germany, Spain. They’re all the same figures.

JD: They’re not all the same figures. You can pick figures to support any argument. What I’m saying is that the experience in Europe is we’ve done things well and we’ve had some things which we wish we’d done differently at the start. The impact on the economy has been that it has stimulated growth in jobs that will last. It’s not been noticeable in the impact on households. Not compared to gas and oil prices and the impact that they have on households. And that we actually have governments in Europe including the UK, Germany and France who are asking for tougher targets now. Now governments aren’t in the business of trying to undermine their economies. They want their economies to grow. If the UK, Germany and France did not believe that this was good for their economies and good for the planet they would not be asking for tougher targets.

AB: I wish I could believe that. We’re talking about a region—Europe—that has unemployment at 10% and a growth forecast this year of 1.6%. I don’t know what we could learn from Europe actually.

JD: Well. Europe is not all the same. Different bits of Europe have different experiences, clearly, and different economies. Germany is an economy that’s a coal state like Australia and there may be things that you can learn from Germany. I would not pretend that the UK is the same as Australia. I recognize that Australia has its own special circumstances. But I think if you look at how you want an economy to grow over the next 40, 50 years then you can either embrace what is going to be the way forward—and what the rest of the world is looking towards doing (including China and India)—or you can say "No, I’m not going to look at this, I’m going to stick with the same old ways of doing things". Now, actually, it takes time to change and it takes a lot of creativity and thought and I’m not saying that every country in the world should change at the same rate. But this is a serious issue. I realize that I’m talking to climate skeptics here.

AB: Ah, look, economic skeptics as well, Jill. Because, really, when you say for example that China and India will do something: they won’t. China will, in fact, be responsible for more than three quarters of the world’s growth of emission in the next 20 years. But look, I know we are not going to agree on this…

JD: That’s right. There are 1.3 billion people in China who would probably like the same standard of living that Australians enjoy.

AB: Precisely my point. Exactly my point.

JD: But they are also investing very heavily in wind. They’re the largest manufacturers of wind turbines in the world now.

AB: We won’t get into an argument because they’re building a coal-fired power station every week. Thank you for joining us.

SP: Jill, thank you.

AB: I’m not persuaded I’m afraid and Steven I’m just astonished that someone selling a carbon emissions programme here, saying that Europe works, cannot tell us how much Europe’s costs and what it will actually achieve in lowering the world’s temperature.

SP: And she did say that 550 million people in Europe, acting alone, would not have any impact on global climate.

AB: So what does that say about Australia?

SP: So what are we doing?

—Dr. Robert Peltier, PE is COAL POWER’s editor-in-chief.

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