Nicholas Gruen must be psychic. He’s been spruiking in these pages for creative ideas for state government co-operative policy action. And lo and behold! The States themselves, led by longtime Kyoto advocate NSW Premier Bob Carr, come out with a proposal to introduce a State-based system of carbon taxes with domestic trading in carbon credits.
Predictably, the Howard government immediately opposed it, but with little or no attempt to develop any cogent argument against the proposal, just a predictable scare campaign that “families could face an average increase in their power bills of $239 under the premiers’ proposal“.
And, of course, the Business Council of Australia instantly condemned it too (as you’d expect given the extent to which its members have gotten away with “externalising” the environmental costs of their actions for years):
But the business lobby, especially in Victoria where much of Australia’s manufacturing sector is concentrated, is furious at the plan to cap – and cost – carbon emissions.
Victorian Employers’ Chamber of Commerce and Industry chief Neil Coulson said: “This decision sends the wrong signals to business.
“It creates great uncertainty in current and future investment, especially in manufacturing investment.”
Personally I think the Premiers’ plan is great news, although I’d like to see much more detail. Does anyone know of a well-written, accessible study on carbon taxes and emissions trading?
I wonder why the Premiers’ plan hasn’t attracted more attention in the blogosphere? Update – see Rex Ringschott here.
Of course, the main problem with state-based action in the absence of Howard government ratification of the Kyoto Protocol is that we won’t harvest the potentially large benefits (now Russia has ratified Kyoto and it’s come into force) of being able to trade carbon credits internationally, because it appears that international carbon credits trading will be limited to Kyoto participants.
Maybe John Quiggin (or Nicholas Gruen) could be persuaded to do some “back of the envelope” figuring on the costs and benefits of a carbon tax regime both with and without international emissions credits trading. Trouble is, we would need to know much more about exactly what’s proposed. It seems from the initial linked article that they’re going to set notional caps for each carbon-emitting industry, with taxes payable for emissions above those caps but with carbon credits trading allowed so that companies that can’t easily reduce their emissions would be able to buy credits from those who can. It’s potentially a neat, “market-based” solution to create price signals to modify behaviour that until now has been without any effective sanctions. But at what level would caps be set? Today’s emission rates? And how would they be allocated between individual enterprises? And at what rate/s would carbon emissions in excess of the cap be taxed?