Ausbuy

Carbon Trading, Is It The Answer?

August 7th, 2008

The government has recently released their Green Paper, a plan for a possible emissions trading scheme, the method the government wishes to use to cut Australia’s greenhouse gas emissions by 60% by 2050, the figure in Labor’s election promise.

A recent article on salon.com by Joseph Romm has raised interesting questions about whether an emissions trading scheme is really the answer. It is also interesting considering some Australian states are in an energy crisis, needing new power plants to be built immediately to ensure enough energy in coming years.

The article begins ” Suppose I paid you for every pound of pollution you generated and punished you for every pound you reduced. You would probably spend most of your time trying to figure out how to generate more pollution. And suppose that if you generated enough pollution, I had to pay you to build a new plant, no matter what the cost, and no matter how much cheaper it might be to not pollute in the first place.

Well, that’s pretty much how we have run the U.S. electric grid for nearly a century. The more electricity a utility sells, the more money it makes. If it’s able to boost electricity demand enough, the utility is allowed to build a new power plant with a guaranteed profit. The only way a typical utility can lose money is if demand drops. So the last thing most utilities want to do is seriously push strategies that save energy, strategies that do not pollute in the first place.”

Romm goes on to say that 30% of America’s energy use could be saved through efficient means and if they were to improve energy efficiency across the board, then this would offset the projected demand for new power plants. He also believes the cost of making factories and homes energy efficient would be offset by the savings on building the power plants.  The author uses California as a model of this success. This state uses 40% less electricity per capita than the rest of the nation and if everyone in America was as energy efficient as Californians they would never have to build another power plant. In California there are stringent demands on better insulation, energy-efficient lighting, heating and cooling, air ducts must leak less than 6%, building roofs must be white to reflect sunlight, outdoor street lighting was overhauled and traffic lights became LED. The most important thing however was that Californian utility companies profits are not tied up in how much electricity they sell and they make money when their customers save money making energy efficient investments as sound as those in power plants.

The discussion in Australia on how to deal with our energy needs has been running hot lately with carbon permits, an emissions trading scheme, wind farms and new power plants in hot debate. Missing from this dialogue however has been the possibility that by becoming more energy efficiency we may be able to lower pollution, reduce energy needs, save protected animals and rule out new coal fired power plants. The government and private sector have recently commissioned many studies into energy efficiency in this country and the projected savings estimates for the construction industry range from 6 per cent up to 40 per cent. For the manufacturing sector they range from 6 per cent to 46 per cent. For households they range from 13 per cent up to 73 per cent! Surely then developing a sound policy on energy efficiency as a viable alternative could be political gold.

While carbon trading has been heralded as the solution to the energy dilemma, the problem with this is that it allows wealthy countries and corporations to put off developing energy efficient solutions to lower their energy use. It is much cheaper for industry to buy carbon credits than to implement the changes that would reduce emissions.

At the moment the Labor party has shown real commitment to the environment and appointing Penny Wong who seems quite committed was a good move, yet we are still without a sound, popular solution. We believe that energy efficiency should be further investigated and the Californian model analysed. It may cost multinational utilities providers but will save government owned ones overall and provide Australians with a means to have a decent source of energy without costing the planet.

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3 Comments »

1. Libertarian commentators often take the view that the market (sorry.. The Market) will sort out all problems.

   So you see, you don’t NEED to worry about the future of the planet because Economic Man - acting rationally at all times to maximise personal wealth - will make choices that lead to better and more efficient outcomes. Pesky intervention by government just stuffs everything up; so everything from building regulations, to tariffs, to environmental laws, to welfare should be scrapped.

   There are many examples of this kind of writing around, but if you have a high tolerance for boredom and nausea, anything by Ayn Rand will give you the picture.

   .

   Comment by jingelic — August 28, 2008 @ 5:02 pm

2. Free_Enterprise writes:
   “But I don’t agree that it is even necessary - there is no “peak oil” and there is no “climate change”.”

   Free_Enterprise must also believe in Santa Clause and the Tooth Fairy. He needs to return from his trip through the Looking Glass!
   It seems his ethos is: “Let’s make money now and forget about the future.”

   Comment by Serenity_Gate — August 27, 2008 @ 9:28 am

3. The passage quoted from Romm is misleading. He says that an electrical company being paid by the government to pollute, penalised for lowering pollution and paid the cost of building new power plants is the same as the company selling electricity and using the profits to build more as demand increases.

   I don’t agree with carbon credits either. One of the reasons is the one this article points out - big corporations can afford it. But I don’t agree that it is even necessary - there is no “peak oil” and there is no “climate change”.

   The consumers of electricity and gas want to save themselves money, not help their supplier to make it. The limit on how much energy the supplier sells is the amount the consumers need or want. Industry will naturally maintain energy efficiency in order to save costs, although energy efficiency may be balanced with other factors determining costs.

   The basic problem with conservationist thinking is that after a point your efforts to save resources start wasting resources themselves.

   Ausbuy can help Australian companies by throwing “sustainable development” policies in the toilet where they belong.

   Comment by free_enterprise — August 8, 2008 @ 9:00 pm

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