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Dear All,
A local boffin has come up with a magic solution to green house gas problems.
I think you will like his idea – it is a free market concept with Govt’s setting taxes that disadvantage countries with poor work practices.
Geoff Carmody, the co-founder of Access Economics
http://www.abc.net.au/rn/saturdayextra/stories/2008/2329204.htm The complete transcript of a radio interview is here, along with a link to his report at the bottom.
Here is an extract starting from why current plans will not work:
Geraldine Doogue: You mean fail in reducing greenhouse gas emissions?
Geoff Carmody: It will fail in at least three senses. It will fail significantly to reduce greenhouse gas emissions, it will fail in terms of imposing unnecessary adjustment costs on economies; the necessary ones are high enough but the unnecessary ones should not exist. And finally, it will actually generate ultimately, a community backlash against what''s going on, because if an individual country acts on the production model, loses competitiveness, that leads to jobs being shifted offshore, we actually import that law of greenhouse gas emissions by increasing our imports. Our employment goes down and the world''s climate doesn''t get affected. What''s the point?
Geraldine Doogue: So if you did do an emphasis on consumption rather than production, how would that work?
Geoff Carmody: The detail of that is going to be the subject of my next paper but to explain it in terms of consumption and production, let me note that production includes for Australia, Australia''s exports, plus production used locally. Consumption includes Australia''s imports plus production used locally. Now at the moment, because we''re focusing on the production model, we can already see the target for the policy being corrupted. We''re seeing industries on the export side being carved out at least for a time, we''re seeing...
Geraldine Doogue: ...concessions, you mean?
Geoff Carmody: That''s right. There are similar pressures building on the import side. We haven''t yet seen the full pressure that will build on the import side. So we might lose 40% to 50% of the base right there. Then it gets worse, because under the Green Paper, we''re going to provide compensation for various groups in the community which will further cut back the base on which this policy has to work.
Geraldine Doogue: So in other words, everybody, like when I pay my energy bill sort of thing, I''m a consumer of energy, so the pressure comes on me, does it? Is that what you''re saying? And then I would kick back, obviously I''d hopefully reduce my use, but I''d also kick back at the people supplying me. Is that how it''s supposed to work?
Geoff Carmody: Well ultimately, in a competitive world, these policies, whether we''re talking about an emissions trading system or a formal carbon tax, work by sending a price signal through the economy, and ultimately that price signal must pass all the way through to the final consumer. And so that way, everybody in the economy sees the signal, but if they can move their activities or their production technology, or if they can move their consumption away from products that attract a high tax or a high price for carbon, towards products that attract a low tax or a low price for carbon, they will be better off. And that''s the mechanism through which these broad-based policies are supposed to work.
Geraldine Doogue: But if you were exporting coal, for the sake of argument, or iron ore, which is what we''re really—are you saying you wouldn''t ask them to pay any price because it''s going offshore?
Geoff Carmody: Well let me explain. I''m saying that we should not ask them to pay our carbon price because, point one, if we do, at least at the margin, their prices will be increased to a point where the buyers of those products will shift to other sources of supply, thus corrupting the intent of the policy. And secondly, if you can cut a global deal, our exports will indeed attract a carbon price as imports in the country importing them.
A local boffin has come up with a magic solution to green house gas problems.
I think you will like his idea – it is a free market concept with Govt’s setting taxes that disadvantage countries with poor work practices.
Geoff Carmody, the co-founder of Access Economics
http://www.abc.net.au/rn/saturdayextra/stories/2008/2329204.htm The complete transcript of a radio interview is here, along with a link to his report at the bottom.
Here is an extract starting from why current plans will not work:
Geraldine Doogue: You mean fail in reducing greenhouse gas emissions?
Geoff Carmody: It will fail in at least three senses. It will fail significantly to reduce greenhouse gas emissions, it will fail in terms of imposing unnecessary adjustment costs on economies; the necessary ones are high enough but the unnecessary ones should not exist. And finally, it will actually generate ultimately, a community backlash against what''s going on, because if an individual country acts on the production model, loses competitiveness, that leads to jobs being shifted offshore, we actually import that law of greenhouse gas emissions by increasing our imports. Our employment goes down and the world''s climate doesn''t get affected. What''s the point?
Geraldine Doogue: So if you did do an emphasis on consumption rather than production, how would that work?
Geoff Carmody: The detail of that is going to be the subject of my next paper but to explain it in terms of consumption and production, let me note that production includes for Australia, Australia''s exports, plus production used locally. Consumption includes Australia''s imports plus production used locally. Now at the moment, because we''re focusing on the production model, we can already see the target for the policy being corrupted. We''re seeing industries on the export side being carved out at least for a time, we''re seeing...
Geraldine Doogue: ...concessions, you mean?
Geoff Carmody: That''s right. There are similar pressures building on the import side. We haven''t yet seen the full pressure that will build on the import side. So we might lose 40% to 50% of the base right there. Then it gets worse, because under the Green Paper, we''re going to provide compensation for various groups in the community which will further cut back the base on which this policy has to work.
Geraldine Doogue: So in other words, everybody, like when I pay my energy bill sort of thing, I''m a consumer of energy, so the pressure comes on me, does it? Is that what you''re saying? And then I would kick back, obviously I''d hopefully reduce my use, but I''d also kick back at the people supplying me. Is that how it''s supposed to work?
Geoff Carmody: Well ultimately, in a competitive world, these policies, whether we''re talking about an emissions trading system or a formal carbon tax, work by sending a price signal through the economy, and ultimately that price signal must pass all the way through to the final consumer. And so that way, everybody in the economy sees the signal, but if they can move their activities or their production technology, or if they can move their consumption away from products that attract a high tax or a high price for carbon, towards products that attract a low tax or a low price for carbon, they will be better off. And that''s the mechanism through which these broad-based policies are supposed to work.
Geraldine Doogue: But if you were exporting coal, for the sake of argument, or iron ore, which is what we''re really—are you saying you wouldn''t ask them to pay any price because it''s going offshore?
Geoff Carmody: Well let me explain. I''m saying that we should not ask them to pay our carbon price because, point one, if we do, at least at the margin, their prices will be increased to a point where the buyers of those products will shift to other sources of supply, thus corrupting the intent of the policy. And secondly, if you can cut a global deal, our exports will indeed attract a carbon price as imports in the country importing them.
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