Carbon Tax - post announcement

[junqbox]

Anyone got anything new to say which hasn't been raked over backwards and forwards a million times in the predecssor to this thread. I'm not even sure why a new version of the old was even needed.

[Tannin]

I am not advocating wastage, Roo, and certainly not ignoring the embodied carbon in (e.g.) a new car. This is the great thing about a carbon tax - over time, we will start to see those embodied costs accounted for in the retail price of goods we buy - and all else being equal, simply by buying the cheapest one we will be buying the lowest-carbon one too. That's a win-win!

I absolutely agree with you that it would be good to ease back on our mad over-consumption and wastage habits, and that is another way we can all improve our living standards - buy less often but buy better quality that lasts longer.

But the point is, people already buy new cars and computers and refrigerators every few years. Given that (and like it or not, it's not going to change much anytime soon), it is an absolute no-brainer to buy more efficient, cheaper-to-own goods to replace the old ones you were going to replace anyway. It is an absolute no-brainer to plan that extension so that it catches the winter sun, to chose a more efficient, economical car next time you upgrade, to replace that worn-out electric hot waters service with a costs-nothing-to-run solar one.

Dealing with climate change isn't about hardship or giving stuff up, it's about being smarter in the way we live. Over time, as we all adjust, the carbon tax will mostly be paid only by stupid and wasteful people, and who can be against taxing stupidity?

(This is not to ignore the very real transition difficulties faced by poor people who don't have the resources to, for example, install a solar HWS. These are matters that will have to be worked through over the next ten years or so.)

[Rattus79]

make bad things cost more and good things more affordable.

I'm sorry, but since nearly everything sold retail in Australia ends up on a truck at one stage or another, everything (and I mean EVERYTHING) is going to go up in price.

I know that when I ship my goods out, I'm going to pass the expense of the freight off onto my customers, I'm certain that the "big boys" will too.

[I @ M]

But the point is, people already buy new cars and computers and refrigerators every few years. Given that (and like it or not, it's not going to change much anytime soon), it is an absolute no-brainer to buy more efficient, cheaper-to-own goods to replace the old ones you were going to replace anyway.

The only problem I see with a train of thought like that on new cars etc is that without the government legislating that products must meet a certain standard of carbon emission "goodness" in their production before they are able to be sold in this country people will simply go and buy the cheapest car available and that will most likely be one imported from China made from Australian steel that is built in a factory running on electricity that was generated by Australian coal, thus feeding the demand for more steel, more coal, more electricity and more emissions in a country where the government of this country is powerless to impose any taxation.

I really think than instead of a purely based taxation regime the powers that be should have looked at more of a standards based approach before they started grabbing cash.

[Scotty72]

I don't believe a carbon tax will reduce the amount of carbon put into the atmosphere at all. What will happen is that the companies who are being charged, will increase their prices and we will all end up paying more (even if a just a small amount). Supply and demand. Consumers want/need a particular product or service, they will still want/need it, but pay more for it. I fail to see how this will reduce carbon emissions one tonne!

If these companies for some reason in a year of three develop ways to reduce their carbon output and thus are not taxed as heavily, will they reduce the price of their product/service at that time? Historically, business is not known for reducing its prices, rather keeping any extra to add to the profit margin for the shareholders.

I'm sure the already bloated tax office is looking at employing even more people now, to manage this new tax..just what this country needs, more public servants.

The political direction of this country is so far off kilter, that it isn't even funny any more!

To put this in a simple framework.

Apart from reasons of ideology, I can't understand what you don't get.

If the cost of power / fuels go up, businesses who fail to find alternatives or be more efficient will be taxed into a competitive disadvantage. Those that adapt will be at an advantage because, after the initial switch over costs, they will be more efficient. Simple!

As for the notion that no business ever passes on price reductions. Rubbish! Do flat TVs still cost $10,000 like they did < 10 years ago? Does it still cost more than an av week's wages to fly from Syd => Melb? Do you need several months wages to fly to Europe? No, because businesses in a market place are forced to pass on savings by their competitors.

Where companies do gouge is where there are monopolies or duolopolies that we allow to develop. Think Coles / Woolworths have now (because we fall for there schemes) cornered > 80% of the grocery market with similar levels in petrol and liquor.

Just like the GST, there will be some short term confusion and no doubt some will try to take advantage but, pretty quickly, we won't notice the difference.

The real question is, if we do nothing and don't start preparing for a world beyond cheap oil, how much will you have to pay then?

[Kym]

Case in point... Adelaide Brighton Cement said today that if power price go up as expected they will import rather than manufacture.

So jobs lost and no reduction in C02 - well done juliar.

[Scotty72]

And Macathur coal is being bought out in one of the largest coal mining takeovers in history -$5 billion. Oh, the coal industry in in ruin!

I cannot believe the hysteria being whipped up by a lazy idiot with no policy other than scare the crap out of people for no reason. I can't believe I used to vote for this bunch of idiots.

Scotty

[Rattus79]

I can't believe I used to vote for this bunch of idiots.

You may have to be a little more specific then this... We are talking politics after all.

[WhoDo]

It is called the law of supply and demand and it is the fundamental rule of economics. When the price of anything goes down, demand goes up; when the price goes up, demand goes down. The amount that demand goes up or down with price can vary according to circumstances (this is called "elasticity") but the fundamental fact that people buy more of cheap stuff and less of that same stuff when it is dearer is always true.

I'm sorry, Tony, but that is perhaps the grossest oversimplification of the Principle of Supply and Demand that I have ever seen! Here is the Wikipedia version for comparison and even that's greatly oversimplified:

The four basic laws of supply and demand are:

1. If demand increases and supply remains unchanged, then it leads to higher equilibrium price and quantity.
2. If demand decreases and supply remains unchanged, then it leads to lower equilibrium price and quantity.
3. If supply increases and demand remains unchanged, then it leads to lower equilibrium price and higher quantity.
4. If supply decreases and demand remains unchanged, then it leads to higher price and lower quantity.

Now, let's examine the premise you used with specific regard to the impact of the carbon tax on supply and demand and its effect on price. Consider the following:

1. There are two coal-fired power stations near Muswellbrook in the Hunter Valley. They burn more efficient black coal, not the overly moist brown stuff used in the Latrobe Valley. They are estimated to each contribute around 8 billion tonnes of carbon to the atmosphere per annum. At $23/tonne that means each will be taxed $184 billion dollars per annum. If demand for electricity remains unchanged, what happens to prices even without any consequent reduction in carbon emissions? If demand for alternative energy sources increases, what happens to prices for those sources and how are they produced?

Look up "photovoltaic cells" and try to work out how much carbon is emitted to produce a single solar panel. Add to that the carbon cost of transporting it to your home and transporting the installer and his team to fix it to your roof, then the carbon cost of manufacturing the piping and wiring as well and you just might get somewhere close to the carbon cost of that alternative energy-producing process!

A paper presented on the impact of coal quality on CO2 emissiona, and dealing with the relative efficiency of burning brown coal versus black coal to produce electricity, found that it would be possible to save in excess of 18 billion tonnes of carbon emissions per annum just by switching our power stations from brown coal to black coal! Yep, those dirty, brown coal-burning power stations are just that inefficient!

A power station requires less bituminous coal to deliver the same amount of energy as the brown coals. Brown coals are used throughout the world for power generation. The potential for very significant savings in global greenhouse gas production is possible for coal fired power plants if bituminous coals were the coals of choice.

2. There are millions of people in Africa who do not use electricity for heating or cooking. For them the only viable alternative is electricity from coal. Some African countries are trying to improve the lot of their people, AND save the forests and animals that inhabit them, by mining and burning coal to produce electricity so their people won't have to cut down trees to cook food or keep warm. That depends on mining or buying cheap steaming coal.

The government has exempted coal exports from the Carbon tax. So people in Africa will be able to access cheap electricity using our coal (probably the brown stuff we no longer use from the Latrobe Valley) but our poorer citizens will likely go back to burning wood from trees because they can't afford the price of domestic electricity from black coal and fuel oil is already overpriced! Heck, we'll probably have to start logging Tasmanian wilderness areas again to stay warm! Does that make sense to you? And just exempting the exported product is a drop in the proverbial bucket, because all locally produced materials that go to provide that product will go up in price, thereby impacting the cost of production and our export competitiveness anyway!

The whole CT deal is an exercise in boosting government funds and a waste of our money and time based on the flawed assumption that man-made carbon emissions are extraordinarily harmful to the environment. Carbon is emitted as CO2 which is essential for photosynthesis (converting energy from the sun in plants) and carbon monoxide (CO) which quickly gathers oxygen to become CO2. The greatest cause of atmospheric warming through the so-called "greenhouse effect" isn't really a gas at all; it's WATER VAPOUR!

[Scotty72]

Maybe our poorer people will go back to living in caves and hunting hairy mammoth too.

What's a tonne of coal worth these days? About $300 for the good stuff. This 'great big new tax' will about about $2 to that $300. Less than 1% - will the sky really fall down or should Chicken Little Abbott calm down?

[ving]

i like the idea of taxing pollution in order to have it reduced in the long term... however co2 is the wrong pollution to tax. as i stated in the other co2 tax thread, if us humans didnt exist there would still be 97% of the current level of co2 being produced....

sigh!
ask me again in 2020...

[Scotty72]

And, are we so mean spirited in this country that we can't help out starving (literally) Africans with a bit of subsidized coal. If so, we really should be condemned for the tight-wads we have become in our pursuit of the latest and greatest flat screen TV.

[Scotty72]

i like the idea of taxing pollution in order to have it reduced in the long term... however co2 is the wrong pollution to tax. as i stated in the other co2 tax thread, if us humans didnt exist there would still be 97% of the current level of co2 being produced....

sigh!
ask me again in 2020...

I think that 97% is also the percentage of DNA we share with a field mouse. Sometimes, 3% makes all the difference in the world.

[ving]

I think that 97% is also the percentage of DNA we share with a field mouse. Sometimes, 3% makes all the difference in the world.

squeek!

[jim]

I think that 97% is also the percentage of DNA we share with a field mouse.

Or in David's case a purple cow.

[WhoDo]

What's a tonne of coal worth these days? About $300 for the good stuff. This 'great big new tax' will about about $2 to that $300. Less than 1% - will the sky really fall down or should Chicken Little Abbott calm down?

Ummm ... looks like you've shot from the hip again, Scotty. Steaming coal (the type used to produce electricity) is around $120 per tonne at the moment. Since coal product is over 80% pure carbon, it will more likely increase the price by around $18.50 per tonne. Our nearest competitor, Indonesia, sells poorer quality, wetter steaming coal for around $60 per tonne! A price hike is going to help that mismatch as well, I'd say ... NOT!

It's important not to let the facts get in the way of a good story though, so keep "telling it like it is", eh?

[WhoDo]

And, are we so mean spirited in this country that we can't help out starving (literally) Africans with a bit of subsidized coal. If so, we really should be condemned for the tight-wads we have become in our pursuit of the latest and greatest flat screen TV.

Oh, please! Mean-spirited tightwads stopping starving Africans from cooking and keeping warm cheaply (sic)? You've missed the whole point! From an environmental perspective which is better, burning coal or chopping down trees and destroying habitat to burn wood? And how benevolent can we be as a nation when our government has legislated us out of business and into the poor house ourselves (figuratively speaking of course)?

[geoffsta]

As a gauge I suggest all do the poll the Herald Sun is running in Victoria.
The answer may suprise, or may confirm what you suspect.
http://www.heraldsun.com.au/news/ton...-1226092715231

[KevPride]

The problem is - it is not "carbon" - it is C02. Wrong from the very start with no chance of changing anything.

Our economy is the only thing that will change, and IMHO not for the better.

However saying any of this will not change anything as the current Govt. needs the Greens vote in the Upper House to pass legislation - thus we are stuck with the Greens forcing their issues on the rest of us.

[Scotty72]

Ummm ... looks like you've shot from the hip again, Scotty. Steaming coal (the type used to produce electricity) is around $120 per tonne at the moment. Since coal product is over 80% pure carbon, it will more likely increase the price by around $18.50 per tonne. Our nearest competitor, Indonesia, sells poorer quality, wetter steaming coal for around $60 per tonne! A price hike is going to help that mismatch as well, I'd say ... NOT!

It's important not to let the facts get in the way of a good story though, so keep "telling it like it is", eh?

Ummm! Looks like you're mis-quoting to make the facts sat what you want them to.

I said the good stuff (coking coal which is closer to what I said and burns more efficiently). According to the industry itself (but, maybe you know better), a tonne of that gives you about $2 worth of tax impact once everything is considered.

Of course, both sides will manipulate the facts & figures to say whatever they want them to.