Antinuclear

Tony Abbott’s vow to abolish the carbon tax but keep the compensation smacks of populist politics at its finest PAUL SYVRET THE COURIER-MAIL JULY 02, 2013  “…………On the carbon front, emissions from the electricity sector have been reduced by 7 per cent, although other factors, such as demand, contribute to this, while renewable energy use is up 30 per cent. Most of the new-generation energy being planned is renewable or gas fired, indicating the carbon price is doing what it is designed to do in terms of shaping long-term investment.

Not a bad effort, Australia. Take a bow.

Still Abbott perseveres (straight-faced) with his claim the looming election will be a referendum on carbon, despite polls indicating only one in three voters support the removal of the tax and its replacement by the Coalition’s nebulous “Direct Action” scheme.

In short, a price on carbon, which was Abbott’s preferred policy option until he saw a chance to use it as a wedge in his plot to topple former Liberal leader Malcolm Turnbull, is seen by all but a handful of economists as the most efficient way of reducing emissions.

It is a “Pigovian tax”, designed to change behaviour by penalising companies that generate what are called negative externalities, in this case, spewing greenhouse gases into an already warming globe.

As Harvard Professor of Economics Greg Mankiw put it in a 2009 paper: “The economics here is straightforward: emitting carbon into the atmosphere entails a negative externality. In absence of any policy, people will emit too much. The Pigovian policy response is to impose a tax on carbon emission. This will induce households and firms to internalise the carbon externality when deciding, for example, how much to drive, what kind of car to buy, how much electricity to use, what kind of electric power plant to build and so on.”

But no, the Abbott response is to declare again on national television over the weekend that not only would he axe the tax, but Australians would keep the compensation, the sort of addle-headed populism that must have more financially literate members of his team screaming in silent anguish……

This is at the same time the rest of the world is moving to price carbon, with some markets, such as Europe, already well established. Just last week US President Barack Obama took America a big step down the road with a decision to cap emissions for US power plants. California, with a larger economy than Australia, already has a cap-and-trade scheme.

What about here? We may well be left with a “policy” that is based on little more than blood oath obduracy and dog-whistling for the deniers. http://www.couriermail.com.au/news/opinion/tony-abbott8217s-vow-to-abolish-the-carbon-tax-but-keep-the-compensation-smacks-of-populist-politics-at-its-finest/story-fnihsr9v-1226672519966