Australian energy policy: getting the balance 'right'

6. The misdirected 'moral' argument: consumers or producers?

Under production-based emissions reduction policy, rich consumers can choose not to pay by importing cheaper substitutes. 'First mover' countryproducers are forced to close. Poor country suppliers choose to sell into higher-priced export markets, and poor consumers areforced to pay higher (incl. import) prices.

The European evidence shows just this result. Emissions production shifted offshore, and then EU consumers imported the emissions (and more) right back, carbon price-free.

How is this 'moral' or 'fair'? If we want lower emissions, and if we want 'morality', rich consumers should pay more, not poor consumers. Producers shouldn't be the 'fall-guys'.

This is fairer. A consumption-based emissions reduction policy delivers this result. It's also more efficient in cutting global emissions. Producers don't suffer trade losses, so I'm pretty sure Trump would agree.

My 'bottom line'

At home, we need to focus much more on energy reliability and affordability. We've failed badly on these.

Globally, advocacy of a national emissions consumption-based policy is our primary responsibility. In a world of creeping protectionism, only a protection-neutral policy will have more than a snowball's chance in hell of global acceptance, while being trade policy-respectable. Emissions production-based policies, with their intrinsic negative protection effects, should not be considered further. They have already failed.

Control what we can control locally. Persuade others to agree to control what we jointly affect globally.