Carbon Price Myths

We are spending Billions on reducing emissions!
The carbon price is not about spending Billions, it is about moving Billions from one part of our economy to another part. That money doesn’t vaporise or not become a productive part of our economy. It continues to create jobs and prosperity, but in a different sector of the economy. There is a bit of a worry about buying carbon credits offshore, as that really does move the money out of our economy – but hey that is what our globalised capitalistic economy is all about! Hopefully Australian business will step up and provide sufficient carbon credits on shore… perhaps we could even sell some as an export industry.

The Carbon Price will not reduce emissions
It is true that even with a carbon price our carbon emissions will keep increasing for years. This allows critics to say that it will not reduce emissions! But that is only because our emissions are currently increasing at an alarming rate. Before we reduce our emissions, we must first reduce the rate of increase in our emissions. So with a carbon price our emissions will increase for a while, but they will increase significantly less than if we didn’t have the price. Most importantly the rate of increase will keep reducing until it become an increasing rate of reduction.

The Carbon Price will be the death of the coal industry
Coal mines and coal power stations will not close because of a carbon price, because we need electricity and steel. All it will do is make them more expensive. If nothing else changes then we have to pay a little bit more for our electricity, for which consumers will be well compensated and export industries will be protected. These industries will only close if we find viable alternatives and all the carbon price has done is lowered the economic bar for what is a viable alternative. So if and when these industries close, it will be because we have switched to alternative power sources and materials and it will be these new industries that will provide the jobs and prosperity. If we do nothing at all, then in all likelihood, those alternatives will be invented in other countries (like China, which is investing heavily in renewable energy) and they will get the jobs and prosperity. If we just keep digging up and selling coal, what do we do when China doesn’t want to buy it anymore?

If we compensate for the carbon price, then behaviour wont change!
The carbon price is not about making consumers turn off their plasma TV’s and sell their SUVs. As much as that would be a good thing, the evidence is that consumer demand for energy is pretty inelastic. Power bills have gone up by over 10% in the last 12 months, but that is causing few to turn off the AC or sell the bar fridge. Consumers do get extra dollars in their pockets from the tax cuts funded by the carbon price and initially these will just be used to pay for the more expensive goods and services. But companies will soon realise that if they innovate and come up with low carbon goods and services, then they will not have to pay the carbon price and can sell these services cheaply. These companies will make money from taking market share from the high carbon competitors and consumers will get to save their compensation money consuming the new low carbon goods and services.

The carbon price will send jobs overseas
There are many many factors already sending Australian jobs overseas: the high Australian dollar; the improving education and facilities in countries such as China, Brasil and India; the corporate globalisation culture; our geographic remoteness. So what do we do? Do we give up and just content ourselves with being the world’s quarry and hope that they don’t switch to alternatives to coal and steel? Or do we increase costs slightly so that we can fund the R&D and transitional costs to innovate new industries which we can then export to the world. The costs of the carbon price are tiny compared to the other costs facing our export industries, so rather than considering it as the straw that breaks the camels back, we should think of it as an opportunity to innovate a better transport system than camel trains!

The carbon price won’t cool the planet
OK, so you don’t believe in climate change. It doesn’t matter, as switching away from fossil fuels is the right thing to do anyway. We will soon be paying the price of peak Oil and eventually we will have to deal with peak Coal. If we are to survive as a species, we need renewable efficient energy and those who innovate that first will be able to prosper as well as survive.

Comments are closed.