Will carob Become The Money Tree?

It is the voters not accepting another tax that’s causing Julia some problems. The Carbon Tax is actually the beginning of a three year run up to an Emissions Trading Scheme (ETS) which will fully emerge in 2015, not so much as a stand alone tax ending then, as an ETS starting up from scratch.

There are unanswered questions about the tax- the more immediate worries are:

Flexible tax rate. The initial tax rates will be capped at $23 per tonne of CO², rise to $24.15 then to $25.40 by 2015. The quantity of permits issued y the government will be uncapped during this phase and some will be auctioned in 2013-2014. We are told what the ‘starting rates’ are but not the ‘end’ rate.

An ETS 2015. As stated, the tax will evolve into an ETS with its trading mechanism to buy permits. This will make traders a lot of money but will it cause a reduction in carbon use? Any self-regulating scheme that lets industry buy licenses to continue to pollute and is propping up the trading brokers, will inevitably be a drawn out affair.

Who pays the tax? We have been told some 500 corporations will pay the tax, being the following sectors: energy and industrial processors, rail, shipping, off-road users, non-transport users and aviation. Heavy transport will come under the tax in 2014 and no doubt be passed down too. What will the real effects be on mining and our export competitiveness?

Cost pass-throughs. We know that the tax costs will be passed through to the general public at around $10 per week per household early on. However, his is an unregulated pass-through, so how much will the 500 companies pass through and when remains unknown.

Compensation. Given the strong possibility of high pass-through and increases in traded permit rates, what guarantee is there the package of compensation will continue and be maintained at an adequate level? If the whole idea is to tax corporations to make them alter their ways why aren’t all households compensated (another way of taxing the rich?). Why discriminate against some households when there appears to be no need….. or is there?

I think the Government wants the revenue on the books although ome of the funding will go towards carbon cleaning, environmental issues, research and assistance for particular industries. That’s commendable but it begs the question of why not incentivise polluters directly to change their ways, which given the scale of global change required, is what we should have been doing already. Hindsight is a wonderful thing but the wasted billions lost under this government could have been better used!

The philosophical questions

Given the state of play with climate warming i.e. the need to be doing more, shouldn’t the worst polluters be assisted to change more quickly rather than be taxed and do it the slow way? Instead of plodding down the road of taxes, ETS and whatever else comes along – why not move quickly to mitigate the present pollution and crank up alternative energies. It’s obvious the old technologies must be made redundant but how to change hundreds of millions of cars, convert energy generation from coal and oil and implement substitutes for conventional fuels? One mitigating step could be the greater use of natural gas which is a lower pollutant of carbon monoxide (CO by 40%) and carbon dioxide (CO² by 25%) plus other harmful emissions such as sulphurs.

There is a vast quantity of gas available i.e. over several hundred years’ and it is one of the few energies that can be adapted to today’s distribution systems. However, what’s the urgency when fortunes are still being made from the mining and drilling of oil and coal deposits? These are the hard questions needinganswers other than an ETS and the taxing of polluters who at best are users of what energies are practically available to them at this stage of evolution.