Peak Oil News and Message Boards

In the wake of Australia’s move to add a price to carbon dioxide emissions — which is particularly notable considering the country is one of the world’s big exporters of coal (and related CO2 emissions) — I sent a query to some Australian analysts of climate and energy policy to see if this holds lessons for the United States.

Here are the questions I sent (with some e-mail shorthand fixed), followed by the analysis:


1) Some Australians working on climate policy (visiting Baruch College through a fellowship program) told me the tax reforms integrated into the plan made the political difference, as summarized by the government this way:

To assist households with price impacts, there will be two rounds of tax cuts and increases in pensions, allowances and benefits. Significant tax reform will mean that more than 1 million people will no longer need to file a tax return. Increasing the tax-free threshold and cutting taxes also boosts incentives to work. Over 50 per cent of carbon price revenue will be spent on households. Household transport fuel consumption will not be subject to a carbon price. [More here.]

The government’s public outreach has really stressed the economic win for many families under the plan. Does this hold up to scrutiny?

2) Another question that came up in chatting with the visiting fellows was whether Australia’s carbon exports would in any way be affected/curtailed by this plan. It seems the answer is no? If that’s correct how does this square with the stated goal of limiting risks attending unabated greenhouse-gas emissions?

3) Is the plan too skewed toward renewables as opposed to a broader suite of lower- or no-carbon alternatives (e.g., natural gas)?

4) A pattern in efforts to pass U.S. climate legislation was the shift from hard caps to all kinds of add-ons that, in essence, served as escape clauses or safety valves. Has that happened there? what are the biggest “out clauses” in the package?

there will be practically no impact on coal exports from the policy. Contribution to a global outcome is simply that Australia is trying to do domestically what may be its part toward global action, thereby encouraging others. The question of fossil fuel exports is much bigger than this policy.


The plan was also not designed to reduce Australian exports of coal to Asia, only to reduce domestic emissions. Asia has to reduce Asian coal consumption, the supplier nation is never going to do that.

Unlike the Treasury modelling, the study reveals which households are winners and which losers.

It shows that low-income families with children (the bottom 20 per cent) are on average $6.30 a week ahead, middle-income families $1.30 ahead and high-income families (the top 20 per cent) are $6.30 a week worse off.

All single parents with children come out ahead, low-income earners by $5.60 a week, middle-income households by $11.80 and high-income families by 50¢.

In total 69 per cent of households will be better off, 16 per cent worse off by less than $5 a week, almost 10 per cent worse off by between $5 and $10 a week, and almost 5 per cent worse off by more than $10 a week.

According to NATSEM, pensioners will be on average $4.70 a week better off and 80 per cent of self-funded retirees will also come out ahead.

NSW households will be on average $2.60 a week in front, less than the average $3.40 gain for Queenslanders who have lower heating costs, but more than higher-earning residents of the ACT, who will be 60¢ behind on average. Victorians will benefit by $2.30 a week.

AgentR11 wrote:If the impact is so tiny, why does anyone expect it to alter CO2 emission behavior?

ralfy wrote:Ultimately, a tax will not involve governments but peak oil, if not a resource crunch.

papa moose wrote:

AgentR11 wrote:If the impact is so tiny, why does anyone expect it to alter CO2 emission behavior?

IIRC the plan is to ramp up the tax gradually over time, at the moment its more about getting the system in place.

Shaved Monkey wrote:The CO2 narrative is easier to sell than the Peak Oil narrative
The story is the same its just most people haven't heard of PO but have heard of CO2.
I don't think the tax will solve the problem on its own but it is a step in the right direction and is only temporary until the ETS.
The only way to solve it is go totally renewable energy and the way to do that is make it cheaper to invest in green infrastructure.
The legislation is passed even if the Conservatives gets into power they cant repeal for 2 terms because the Greens hold the balance of power in the senate and/or Abbott will get knifed by Turnball eventually and he wants an ETS too.