Thursday, March 20, 2008

The Cost Of Hot Air

You may recall my article "Of Atmosphere and Arguments" and my last paragraph:

I'm all for being cautious and responsible but if the net effect of this argument is simply to make my life more expensive, I shall be extremely annoyed.

Well here's the problem:

From The Age 20/02/2008

Commissioned by the Climate Institute, a lobby group, it found Canberra will reap at least $400 million in 2011 and between $7.2 billion and $20.6 billion by 2020 if all businesses that emit greenhouse gases are forced to pay.

Sure, it sounds good, but who's going to foot the bill? Will it be the businesses concerned? Well no. They'll simply pass $400 million in 2011 and between $7.2 billion and $20.6 billion by 2020 on to cash strapped consumers who for the most part, cannot afford it.

But I liked this bit:

The Climate Institute called for the revenue to be spent on helping the poor, who face rising electricity and petrol prices once the new system arrives in 2010.

Are we really as stupid as that? So stupid that we'd invent a methodology then use the money it generates as a subsidy to make the methodology affordable? It really is the most ridiculous idea. There is absolutely no incentive whatsoever for any business to reduce any emissions. They'll simply pay the fees and pass that cost on to Joe Average who will then go to the government, cap in hand, to get his handout so he can afford to pay the increase.

Donna asked if businesses will be forced to upgrade their equipment to "cleaner" technology:

From yet another article at The Age (21/03/2008)

He said the massive Government revenues flowing from carbon permits — tipped to reach $20 billion a year by 2020 — should be spent helping communities such as the brown coal-rich Latrobe Valley, initially by boosting funding for research into storing greenhouse gases underground.

"Boosting funding for research..." So the answer is no. There's no viable alternative and no viable method of emission reduction yet we're perfectly happy to start charging for it. This is where I get seriously upset. We can't stop making CO2 simply because we need the electricity. It's like a tax on breathing.


Donna said...

Um, are there any mention of plans
for these same co's that emit the
gases to be forced/suggested to switch their environmental equipt over to cleaner technology? Or is
that just "understood"- that if they don't, the businesses in question will be "fined" ?

It is somewhat stupid- it's the same thing, over here, but, in alot
of different "venues". They talk about raising the "minimum wage",
but ALOT of single parent families
wont notice any "raise"- everyday
stuff just costs too much.

What does petrol cost there? It's
about $3.06/gal here- it'll go back
down in fall when oil co's "re-tool" again for cold weather.

phoenix said...

There are 3.78 litres in a gallon... we pay by the litre.

That converts to about 80c per litre... US. (which converts to around 88.6c AUD)

We pay about $1.40 per litre here... AUD (1.26 US)

That means we're paying almost twice as much as you guys.

One good thing that the govt has done for your citizens.... but that doesn't really make up for the fact that they're sending your country broke for the sake of a useless war.

Donna said...

We should both be glad we don't live in Europe, where petrol is about 6.-7. euros/litre!

I sent my husb. the posting you had from today- he's in the "industral pollution control"
industry- there are only about 5 co's in the world that REALLY "handle" equipt to handle gas emissions, etc. He's in Vapor Recovery for one of the co's- he's
in UK this wk., but I emailed him
your article to see what his take on the lobby group is.

Plonka said...


that if they don't, the businesses in question will be "fined"

As far as I can tell, no. We'll just tax them based on the amount of CO2. And let's bear in mind that we're only talking about CO2 here. We don't seem to be at all concerned with anything else...

Dikkii said...

There's actually this argument that's been going on since the early part of the twentieth century that suggests that a tax on pollutants is an economic necessity.

This argument has been going on so long that it even has a name - "externalising costs". The argument goes a little like this:

* Producers have a duty of care to ensure that only environmentally friendly waste (and other impacts) enters the environment (at a realistic level, although some have contended at any level)
* It costs money to ensure that waste, etc. remains environmentally friendly
* This cost is said to be passed on to other users of an environment should environmentally unfriendly waste (etc) be released into an environment
* Ergo, this release is said to be "externalising" costs
* It is in an organisation's best financial interests to reduce costs
* Ergo, organisations will attempt to externalise as many costs as realistically possible
* Externalised costs identified with long term pollution (etc) are not immediately quantifiable, however internally incurred costs generally are
* There is often little initial community/environmental resistance to externalised costs for a number of reasons
* Ergo, little resistance to fiscally (if nothing else) responsible corporate behaviour creates the perfect circumstances for what is now known as "market failure" if pollution is considered a "product".

Et cetera.

The example that gets used in textbooks in Australia is the disgrace that is the Ok Tedi mine in PNG.

The one thing that never gets discussed, though, is who foots the bill if costs are internalised. Granted, if the producer does, most of it gets passed on to the consumer, of which the users of the environment in question usually form a subset. But if health is affected – what price a person’s life/quality of?

I suppose this means that we all pay one way or the other - financially or otherwise.

Excellent post, Plonka.

Dikkii said...

I meant to add another dot point:

* Taxation is often used to solve instances of market failure.

I'm sure that you got the drift.

Plonka said...


You are as usual, correct. It is however, an argument that saddens me greatly as it never works. Those that rape the environment for profit can afford to either pay the fees or taxes or simply pass it on to consumers. It does nothing at all to heal the wounds or stop the raping.

It also happens to be one of the reasons I'm of the opinion that this whole CO2 beat up is a scam. Businesses are growing out of it and big businesses, in many forms, will be the only real winners if I and those like me are correct.

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