Pricing emissions: Questions for the Multi-Party Climate Change Committee and the Coalition

The PC notes that N.Z. has an ETS, but with no emissions ‘cap’. Kiwis are waiting to see what others do: no unilateral emissions reduction target for them. N.Z. has an emissions price ‘cap’ of about $A10 a tonne. The N.Z. Prime Minister indicated an intention to slow N.Z. efforts in this area. Without an emissions ‘cap’, and such a low price, does the N.Z. ETS deliver any emissions reductions? The PC finds almost none. The N.Z. ETS model seems ‘best practice’ symbolism. It costs a lot less than Australia’s current silly ineffectiveness. The PC also suggests that, on average, Australia is already doing more than N.Z.

An emissions-capped ETS and abolition of the costly symbolism still operating in Australia requires voters to recognise that the following is the ACME of ideology and the antithesis of rational analysis:

Christine Milne took another swipe at the Productivity Commission's damning assessment of small scale roof-top solar schemes…The Commission found that some schemes involved an effective subsidy of over $A1,000 per tonne of carbon abatement. Milne said "many of the small-scale renewable schemes have been put in place by governments as photo opportunities rather than as serious emissions reduction schemes. They've been photo-opportunities, they've been public awareness raising, they have not been seriously, ever, designed to be emissions reducing and therefore I think it's wrong to include those schemes and calculate a price in that way".

If we just go through the motions like N.Z, maybe this symbolism will cost less than our current silly posturing and pointless bickering, debate, ‘spin’, and related resource misallocation in Australia. 

This symbolism would require an ETS with no ‘cap’, and no unilateral emissions reduction target. We could have trans-Tasman trade in (near-worthless) permits, learning how to work the scheme when and if the permits have real value. This is inferior to doing nothing at all. It’s really a subterfuge for financing the Government’s wider income redistribution agenda. It adds nothing to our emissions abatement effort.

Would our policy debate then revert to improving Australia’s sagging productivity, and dealing with shortages in key inputs like labour and infrastructure? The N.Z experience suggests it might.