Carbon Commodities Climate Change Political Nightmare

Don’t Do It, Kevin !

Dear Kevin Rudd, current Prime Minister of all Australia,

Of all the meaningless things to stake your premiership on, it has to be that ridiculous notion of Carbon Trading.

You realise that it won’t raise a single dollar for the de-Carbonisation of your appallingly ginormous national Energy and Transport sectors, don’t you ?

Just because Europe is playing at Carbon Markets, doesn’t mean it really works. The Euro cost of a tonne of Carbon today is EUR 13.06, nowhere near the “Stern optimum” of USD 80 per tonne of Carbon Dioxide. (The IPCC reckons on USD 100 per tonne, by the way).

And just because the Americans might join in with a Carbon Market of their own doesn’t mean you have to join in with their game.

With all those plans for Carbon Capture and Storage (expensive) and New Nuclear (costly), the Europeans and the Americans are heading for trouble if they think they can raise the finance for this from Carbon Trading.

Carbon Trading isn’t like a tax : revenues don’t come straight through the coffers of the State. You may Auction Carbon Permits, like the Europeans plan to from 2013, but the only people who will really win are the Bankers.

And don’t expect it to have any measure of success for years and years, if it ever does. Carbon Trading will be usurped and made into a commodity market, not a de-Carbonisation stimulus.

We don’t have years and years to wait for a cumbersome, top-heavy fake commodities market to produce Carbon emissions reduction. We need Peak Global Carbon by 2015, or we’re peach melba on a catastrophic fire risk day in Sydney.

Don’t throw away your leadership position over a failed Classical Economics-driven policy.

Why not announce a rapid and immediate ratchet down of the use of Coal ? Why not encourage green investors to make Australia the leading Wind Power nation of the South ? Why not issue Energy rations for your citizens to get the ball rolling ?

Don’t go to the ballot box over Carbon Trading. It’s not worth it.

Yours sincerely…

“Rudd may call election over carbon trading programme : Australian premier could act if Parliament fails to pass his green plans : Cath Everett, BusinessGreen, 20 Nov 2009 : Australian Prime Minister Kevin Rudd, whose government was elected in 2007 on a pro-green platform, may call an early election if Parliament fails to pass his carbon trading programme next week, according to a senior minister. The government is currently negotiating possible changes to the carbon trading proposals with opposition members, who control the upper house of the Senate, the aim being to broker a deal over the weekend. Such changes are likely to involve excluding agriculture from the scheme, although the conservative Liberal-National coalition in opposition is also pushing for coal mining, food processing and a range of other industries to be exempted too…”

2 replies on “Don’t Do It, Kevin !”

There is a simple, relatively painless way to halt global warming that all nations should find attractive and easy to agree to without protracted negotiation.

Energy saving, nuclear, renewables, electric cars etc. are only ways of filling the energy gap that cutting carbon dioxide emissions will create and mankind has been very effectively filling energy gaps for centuries without the aid of agreed national or global strategies, taxes or caps. Carbon capture is different. It is a way of stopping pollution and will always add cost. You can legislate to stop pollution (which is economically inefficient) or you can use market forces by giving credits in a cap and trade system, credits against a carbon tax or by paying directly in fuel prices as in this proposal. If we drive carbon capture in these ways all the other things will happen too.

We should oblige fossil fuel producers and importers to contract for the capture and sequestration of a quantity of carbon dioxide equal to a proportion of that produced from the fuel they supply. The proportion could start at a few percent and build up. This would increase fuel price encouraging energy saving, nuclear, renewables, electric cars etc. and provide full, immediate funding for carbon capture and storage.

The contract might permit capture to be delayed for a year if the quantity captured were increased by 10%, and for another year for another 10% etc. This would not only help with plant problems, but would also allow contracts to be placed today, providing a huge incentive to get carbon capture and storage up and running as soon as possible. It is not lack of know-how that is holding back carbon capture but the lack of an incentive to apply it.

We must soon stop carbon emissions from power generation, cement manufacture etc. and substitute electricity for fuel use in many domestic, industrial and transport applications. Taxing carbon, capping emissions or contracting for carbon capture when fuel is produced could all provide the economic incentive but unless the rest of the world joins in they will not solve the problem.

Contracting for carbon capture is guaranteed to reduce carbon dioxide emissions to whatever annual target is set and is easy for everyone to agree to because:

 It will appeal to rapidly growing and mature countries alike. There are no national caps to restrict relative growth.
 It will allow all industries in all countries to compete on a level playing field. There are no tax or carbon credit differentials and no allowances for governments to give out or auction.
 Because there is only one number to agree, the global annual target, extensive international negotiations will be unnecessary. There will be no national targets to haggle over and perhaps never meet and no issue about who gets the revenue from a carbon tax or what the rate should be.
 Enforcement is straightforward and does not rely on the co-operation of every country. The contracts would be traded and recorded centrally, mostly placed and paid for by the international energy companies. If countries were uncooperative and used their own fuel internally without contracting for carbon capture, a central monitoring organisation could impose an increased capture proportion on imports or exports of fuel for that country to compensate.

So what will it cost? The simple answer is that carbon capture and storage could cost up to 50 euros per tonne of carbon dioxide emission avoided. This is equivalent to $32/barrel of oil but the contract would only cost a proportion of that.

The complicated answer is that it is only practical to capture carbon dioxide from large point sources like power stations. Forcing 75% capture on the global market through my proposal would drive fuel price up and electricity price down until we switched from fuel to electricity for some industrial, domestic and transport applications.

The simple cost is modest compared to recent price changes so why are we waiting? Perhaps within as little as twenty-five years we could be defining the proportion of carbon to be captured, based on fossil fuel production at the time, such that global emissions were contained at the level that the oceans absorb annually. That is about 2.2 billion tonnes of carbon per year (25% of current emissions). Atmospheric carbon dioxide concentration would then stop rising.

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