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Carbon Tax Pros and Cons

By Eco Guy 8:18pm 10th August 2011
We look at the Pros and Cons of the Carbon Tax...

Carbon Tax Pros and Cons

The Carbon Tax in Australia is probably the most contentious bit of environmentally related legislation in many a year. It has probably caused one of the biggest environmental discussions in this country. We look at the various pros and cons of this Tax and give judgment.

The Environmental Impact

The carbon tax has definitely raised the public awareness of environmental issues for sure; the wall to wall coverage of the Tax and associated climate change issues has been pretty much relentless since this tax was drafted.

The trouble is a lot of what is being said does not really show a link between enacting the Carbon Tax and actually improving the general environment in Australia. There seems to be a lot of fluffy statements and hand waving; maybe because its a complex subject to communicate, but there is a sure absence of hard facts on the direct benefits. For instance it is understood that the Carbon Tax is primarily designed to help deal with global warming, yet none of the documentation provided by the government actually say what the temperature reduction would be - it has been estimated that the tax will only result in a reduction of 0.0007 degrees; this is a change so small that cannot be measured in the environment.

So what about other environmental impacts? The Carbon Tax does not actually do anything directly to reduce 'genuine' sources of pollution - such as industrial process pollution, fertilizer run off, etc. Also it won't do anything to effect sea levels, as sea levels have been increasing at largely constant rate for 200 years anyways, well before man made Co2 came along.

The financial Impact

A major component of the Carbon Tax is to transfer most of the money raised through the tax directly to those who will be worst effected by the rise in prices as they come through. Now on the face of it this sounds like a good idea, but if you think about it, if the majority of people do not experience a market signal to change their behavior there is no reason for them to change...  So they will keep consuming the same services and products which in turn produce the same Co2 pollution.. The net effect is that more money ends up flowing through the government whilst for the consumers there is no net change. Now for those who are not compensated, due to their level of income, yes, things will become more expensive and yes they will change their behavior. The trouble is they would probably first cut back on none essential expenditures first, in effect a belt tightening, which if done by many families will have a negative impact on the economy...

Now what about the money which is to go towards R&D? The paperwork says around about 10% of the money raised will be spent on R&D - the trouble is this is money without a 'driver' as such, let me explain. R&D done by businesses using money they raise is often very results orientated, they expect to get a marketable return for the investment. R&D money from government is often given as a grant to a business, in essence there is not such a requirement to deliver as the business didn't have to raise the government money, they got given it.

Now the R&D could well generate benefits; the trouble is even if it does, what market do they have to sell it into? Remember the Carbon Tax will result in a likely tightening of discretionary expenditure by individuals and businesses - in effect the very people who could buy such new leading edge tech will not be in a position to do so. Combine this with the current global economic climate and it will be very difficult indeed to take a new green tech to market and actually get somewhere.

There is also what economists term the 'opportunity cost' to be considered, i.e. in instead of spending X on something what else of benefit could be done instead. So it should be reasonable to ask what could we do instead of spending many billions through the Carbon Tax? Now I know the majority of the money is coming from the polluters, but assuming it could be used in other ways what could you do instead? How about:
  • Modernization of trains and public transport to make commuting a much more enjoyable and reliable experience for more people;
  • Refocus manufacturing standards so give more emphasis to designing for efficiency, reuse and reliability;
  • More research and support around sustainable farming practices.

What about the Carbon Pollution?

The main backbone of the Carbon Tax is to charge the top 400 polluters in our economy. Most of these are associated with electricity generation by the burning of coal, yet the plants they are using to burn this coal are very old. Newer generation coal burners produce more energy with dramatically less Co2 production by up to 30%. This would be a dramatically higher reduction in Co2 then the whole Carbon Tax would deliver, yet you do not hear about this option anywhere in the news...

So what is this Carbon Tax really about?

The Carbon tax is actually about a minority government doing anything necessary to stay in power by adopting policies of the Greens that in a majority government would never see the light of day.

The Greens policies, when put to the acid test, often fails on the grounds of practicality. They often view any industry as an 'evil' to be stamped out, yet it is quite possible by logical reasoning and analysis to end up with a result that benefits both the people and the environment, as the modernization of the power stations above shows.

For us, this Carbon Tax is not really going to do anything productive for the environment or the people; which is a real shame. This site is here to promote positive and logical environmental thinking, to us the Carbon Tax is the absolute anathema of our point of view, it stands for everything wrong in environmental legislation. So much more could be done for man and the planet with some proper logical thinking; what a waste.

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