Satchelnomics: Carbon tax - environmental martyrdom?

Satchelnomics: Carbon tax: environmental martyrdom or doing the right thing?
Up above the world so high... 30,000 feet in the air watching the day break.
Such is the microcosm of the comfortably modern life and the grand paradox at the centre of the global warming (aka climate change) narrative, that one might find oneself sipping tea from a paper cup while looking out upon a fleet of jumbo jets from the food court of Sydney airport composing a story on the Carbon Tax and climate change. 

Western comforts have a lot to answer for.

The ‘necessities’ that clever man has created through his industry, which posits human progress as keeping up with the Jones’ (we must raise our standard of living, whatever that may be... onwards we go!), versus the responsibility of man to steward that which he did not make (i.e. the natural world) for posterity remains a pressing matter for our times.

Just this week, the State of the Climate Report has been released, showing that the extreme weather events of last year (droughts, floods and heat waves) coincided with a peak in greenhouse gas emissions. The Report, published by the Australian Government Bureau of Meteorology and CSIRO states:

Our observations show that sea-surface temperatures around Australia have increased faster than the global average. The concentrations of long-lived greenhouse gases in the atmosphere reached a new high in 2011. Annual growth in global fossil-fuel CO2 emissions between 2009 and 2010 was 5.9 per cent, reversing a small decline of 1.2 per cent recorded between 2008 and 2009 during the global financial crisis.

But the discourse around the science is still on shaky ground, which gives climate-change sceptics a reason to beat their drums: with so many variables to keep us on our toes, including La Nina and volcanoes that spew C02 (notably, not as much as me and you!), the authors of State of the Climate are “consciously conservative” about attributing wild and weird weather fluctuations to climate change.

According to Dr Karl Braganza of the Melbourne Bureau of Meteorology, who spoke to Mark Colvin at the ABC, “When you come to individual weather events it's a lot harder ‘cause really what you're trying to identify there are weather events that would never have occurred previously without the influence of greenhouse gasses and with a 40 per cent increase it's not that easy to determine that.”

But while the jury is still out on climate change – one of the most polarizing issues in public debate – on July 1, 2012, Australia effectively implemented its Carbon Tax, thereby becoming a world leader (world beater, no less) on the international stage. Hooray, right?! Not so much. The Tax has not exactly been embraced wholeheartedly.

Why? The timing has not been great.

‘Tis a season for global fiscal restraint and Australia, buffered by the mining boom, is operating as if it’s on a different planet. As Gina Rinehart explores for meteorite sites in WA in an effort to extract more of her iron ore from the ground to invest back into her diverse areas of interest (including the media), the warning signs are bearing down like a full moon as we go about extracting a tax from the top polluters.

The leader of the International Monetary Fund Christine Lagarde has said that the global economic forecast is far from shiny. “Make no mistake: this is a global crisis,” she has warned before the IMF’s forecast is released on July 16. “In today’s interconnected world, we can no longer afford to look only at what goes on within our national borders. This crisis does not recognise borders. This crisis is knocking at all our doors.”

Arguably, the same could be said for global warming. And the Carbon Tax. Knock, knock!

Whether we liked it or not, we did have to let it in on July 1, though Tony Abbott has made it clear that he will repeal the tax if he is elected to government in 2013. It is said that he will substitute it instead with another scheme (as yet to be disclosed in detail) aimed at reducing carbon emissions by 5 per cent by 2020, likely funded by an emissions reduction fund.

This means that either way, Australia is committed to reducing its output of C02. Even some big businesses, including AGL, GE and Westpac, are in support of seeing it through. Businesses for Clean Energy consortium spokesperson Nathan Fabian said that the initial confusion about who pays and what the price effects will be will wane in time.

"Businesses have accepted there will have to be some sort of price constraint on carbon," he said. Businesses participating in this group are taking steps to communicate with their customers about why a low-carbon economy and policies that support that is good for Australia and good for them."

Though there is currently confusion about what a carbon tax might look like under an Abbott government, many companies have been preparing for a 'clean energy future' just as others have had to adapt technologically to the e-environment (renewable energy sector is in a state of glee).

We are not alone

Though it's unclear exactly how the Carbon Tax will contribute to the overall environmental health of the world at a time when the economic outlook is cataclysmic and other nations are tempering their environmental enthusiasm (in this context, you might call the Carbon Tax environmental martyrdom), it's a significant event in terms of worldwide momentum, particularly as Australia has in the past been seen to drag its feet.

The government has stressed that Australia is not alone in adopting its climate change policy to encourage abatement or discourage emissions of greenhouse gases. The Productivity Commission found that 1,096 climate change policies existed across nine countries with Australia accounting for 237 of them.

Finland implemented a carbon tax back in 1990. It currently charges US$24.39 per tonne of CO2. But Norway introduced a tax on carbon in 1991 and its emissions increased by 43 per cent per capita between 1991 and 2008. (To read what other countries are doing see this SBS guide.) You can tax all you like, but can't necessarily affect sweeping behavioural change.

The international environmental talks in Rio de Janeiro in June, 20 years since the first Earth Summit was called giving rise to the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol, showed that of the 90 goals set out in 1992, the world has failed to meet all but four of them – in fact, things are worse.

"Everybody should look in the mirror and ask what history is going to make of this," said Oxfam spokesperson Stephen Hale at Rio+20. "We face connected crises. Rio+20 should be a turning point, but it is a dead end." Which is a bit bleak. An impassioned ABC environmental journalist Sara Phillips wrote in response:

"Climate not like peace or health: it is not a long-term problem to be addressed incrementally through careful management and negotiated co-ordination. It is a problem that needs an immediate, decisive and bold response... Climate change has the potential to affect every human, every other animal, every insect and every plant on this planet. It has the potential to kill hundreds of millions of us - through famine or natural disaster."

The implementation of the Carbon Tax signified Australia's response to a global problem, though this message was somewhat lost amidst the petty politicking of the day and a fog of confusion about who wins and who loses and what the Coalition's policy will be. For those on the streets wary of extra financial burdens, there has understandably been reticence to celebrate.

As with the atmosphere before Y2K and the GST, there was trepidation as we headed into "Carbon Sunday". Henny Penny and her friends were heard to say, "The sky is falling!" as 4,000 people took to the streets of Sydney to rally against the tax with a vigour enough to fuel a street of lights, while other protestors were spurred on by radio announcer Alan Jones in Melbourne on a rainy winter's day.

The main concerns? Jobs will be lost, whole industries will collapse, prices will rise, low-income earners will suffer and the nation will meet its demise.

Tony Abbott attempted to stymie Julia Gillard's offensive pro-Carbon Tax what's-the-big-deal? media campaign (the "lived experience" will tell) with talk of repealing the legislation that is 'bad for business and bad for the economy' should he come to office, while other pollies made a song and dance (take it away, Craig Emerson) making mock appeals to the common sense of the people.

But as of July 1, 2012, we had fixed a Carbon Tax in place for three years that will see around 300 of the biggest emitters of carbon pollution in the country, primarily in the industries of electricity, energy, mining, business transport, waste and industrial processes, pay $23 for each tonne of greenhouse gas they emit into the atmosphere.

These funds will, in turn, go towards creating a “Green Energy Future” for Australia, encouraging the companies to reduce their emissions, supporting a transference to green-energy infrastructure, and compensating Australians for the inconvenience of the tax. The birds were still chirping, reportedly, after "Carbon Sunday".

Softening the blow

This 'global outlook' environmental long-termism, while conscious about the plight of people in the developing world, could put our own nation's most vulnerable at risk, so it's only practicable and morally responsible to ensure they are looked after. And, in a political sense, votes are at stake (there's an election next year, we must remember).

This is why so much time has been spent by the Gillard government on ameliorating household budget fears, rather than trumpeting the significance for Planet Earth of the tax (the Greens were left to do that).

Assistance measures to households include a rise in the tax-free threshold from $6,000 to $18,000; in 2015-16, the tax free threshold will be increased to $19,400, to provide assistance for the projected carbon price out to 2019-20. There is up to $338 per year extra for single pensioners, and increases to Family Tax Benefits Part A ($110 per child) and B ($69 extra). There is also the Essential Medical Equipment Payment for those who need to run dialysis machines and such to stay alive.

The Gillard government has been quick to point out that some households will be "over-compensated" for any price rises as a result of the Carbon Tax (cite the means-tested SchoolKids Bonus, the pre-election-2013 sweetener which put up to $820 extra into the pockets of low to middle-income families starting June).

Where the Carbon Tax has the most potential to hurt is amongst middle to high income families whose carbon footprints are higher, particularly if they use air conditioners, dishwashers and other energy-sucking electrical goods. They won't be getting tax breaks, either, as singles on over $80k and couples on $110k plus miss out.

Economist Peter Martin notes that $1 billion of lump sum carbon tax compensation payments propelled consumer spending toward a record high as we neared the end of the financial year, making June 2012 the biggest month for motor vehicle sales in Australian history. One in every four vehicles sold in June was an SUV.

More motor car sales? Ironic. We are accustomed to buying big, shiny new things. Not exactly environmentally conscious spending. But there you go – fair go for all!

Finance Minister Penny Wong assured charities that government assistance would be made available as they transitioned into the post-Carbon Tax environment. Concerns around further cost-of-living pressures due to escalating electricity prices was enough to send talk-back radio into a frenzy.

Times are tough. "Struggling to stay afloat" is a common refrain. So what of the fate of polar bears in the Arctic when one cannot pay the electricity bill?

The electricity side-story

There is some confusion around why Australians have seen electricity prices skyrocket – is it the Carbon Tax’s fault? Not entirely.

Electricity has continued to increase in price due to Australia’s archaic power grid and our heavy reliance on fossil fuel generated energy. Coal power is the cheapest to produce, but it is costly to transport from power station to our cities.

The Australian energy industry has slowly been deregulated since the early 1990s with formerly state-run entities replaced by private, non-government companies in an effort to give consumers choice and price competition. Retail electricity prices are regulated by the state and federal governments.

Now these companies tapped into the grid must use their capital for infrastructure (power poles, wires) upgrades, which the Australian Energy Regulator (AER) overseeing expenditures. Hence, exorbitant price rises for everyone of up to 40 per cent!

It’s anticipated the Carbon Tax will further increase electricity price rises by 10 per cent. That is of little joy to families who are barely making ends meet, business owners dependent on energy-intensive industry and consumers who will be affected at the receiving end. 

But the great beauty of the price rises is that they have helped to curb our consumption habits, which is a win for the environment – essentially, we were kicking goals even before the Carbon Tax due to financial necessity and, possibly, all that Earth Hour campaigning.

John Grimes, chief executive of the Australian Solar Energy Society, notes that over the last three years electricity consumption in the National Electricity Market has fallen by 3.2 per cent.

"If you go right back to the 1950s, residential consumption has continued to rise year on year, and in around 2006, we saw that plateau," Ausgrid energy efficiency specialist Paul Myors told the ABC last year, attributing the two per cent annual drop in NSW to consumers switching to energy efficient hot water systems and light bulbs.

While middle-class families have a choice between operating five televisions and an air-conditioner, basic electrical amenities for pensioners and those living near or on the poverty line will still be affected by price rises driven by demand and infrastructure upgrades.

The best thing we can do individually is to cut our needs for electricity: less demand = market over-supply = lower costs.

You, me and everyone we know

Most reasonable people would agree that taking care of the environment is a good thing. They pick up their rubbish, recycle, compost and keep hot showers to a minimum length.

As many as one fifth of Australian families have installed solar panels or solar hot water systems, seeing both the economic (government incentives) and environmental sense in doing so, thereby helping to collectively reduce electricity consumption overall.

Then there are the trendy urbanites and tree-changers who have taken up bike riding, using extra blankets in lieu of heaters, have their own veggie patches and who generally practise greener living who get the benefit of lower electricity and fuel costs by simply "thinking green".

After years of profligate spending and the unnecessary accumulation of things, the GFC was really a gift in disguise, causing us to think carefully about what we use and how much we use and how much it’s costing us.

How we go about using our nation’s precious resources, and the degree to which we are able to accept ‘going green’ will inform Australia’s future. In May, as Carbon Tax compensation payments started to hit bank accounts, Aussies took to the shops and bought electrical goods, shoes, restaurant meals and books with retail sales rising 0.9 per cent for the month... the biggest gain for nearly two years.

We cannot control what behaviours people will make habit, but we can help them to see the (energy efficient incandescent) light and give them affordable and attractive options. God gave man dominion over all things but also free will – how we wield it is a matter of education and incentivisation – encouraging people to get out of the cities and go down to the farm.

Down on the farm...

Down on the farm, where Henny Penny scratches around on the ground, the cows have been let off from paying the tax while the pigs have been happily amused since December when it was declared that the manure and methane they produce could be turned into carbon credits. "Did you ever hear of such a thing?" said Babe, "They are turning our farts into Clean Energy Future funds!".

One farmer named Mr Smith told The Australian at the time that his new gas-driven generator would turn his pigs' methane into electricity (I'll be!), thereby heating and lighting his piggery sheds and driving his feed machines, meaning his "spiralling power bills of $80,000 a year will disappear", and not only that but he'd receive "useful carbon credit payments in the bank".

In the piggy bank, indeed! It's a win-win for the environment and farmer Smith's economy.

But another pig producer, Mark McLean of River Haven Enterprises at Waikerie, South Australia, who runs 700 sows and is looking into the Methane Capture and Storage Scheme as a means of recovering costs, says piggeries like his, who have undergone cost-heavy infrastructure changes and are also feeling pressure from the increased cost of grain, will be affected by rising input costs.

"While we understand agriculture to be exempt from the carbon tax, we're quite concerned about the flow on costs of other inputs such as transport, power and water,” he told the ABC.

"We've been told there will be a 17 percent power increase for general households in South Australia so I'm concerned how that will impact on pig farms because power is a obviously a big power cost centre for us."

So, we might very well expect that in an effort to support our farmers we might see the prices of bacon and pork go up... hence the Sunday Roast test. It will be up to us individually or else the piggy market will run its coarse.

As far as dairy farmers go, there's increased irrigation costs to consider due to the price of electricity, as well as freight, refrigeration and transport pressures. But under the Carbon Farming Initiative, they are encouraged to earn carbon credits by capturing cow manure. The farmers will have to wear the extra costs passed onto them by food procressors paying the carbon tax. The supermarket milk wars do not help, nor does the high Aussie dollar.

For farmers, much is dependent on whether they've made their houses from straw or brick and the extent to which consumers are happy to show their support.

The resources issue

Of course, the pressures on those who make a living off the land are greater than the Carbon Tax. Running parallel to the Carbon Tax discourse are other debates that make "putting a price on carbon" a more sensitive issue.

These side-stories include including the buying up of prime agricultural land by overseas interests; coal seam gas, which has many farmers riled up with others seeing dollar signs; and, of course, the depletion of our finite resources as a result of the mining boom, which is keeping the whole economy afloat and Gina Rinehart atop the world’s richest list.

The Mining Tax also took effect on July 1, with The Economist dubbing it, together with the Carbon Tax, the “Tithes of Discontent”. The big miners, Tony Abbott and the State of Queensland are going into battle over the seeming unfairness of being lumped with supporting the nation because of the mining boom’s success.

Limited to coal and iron ore, this tax on the “rent” of our natural resources by the likes of BHP, Rio Tinto, Fortescue Metals, Cliver Palmer’s Minerology and Gina Rinehart’s Hancock Prospecting, is limited to coal and iron ore, Australia’s two biggest exports. And therein lies one of the problems with the structure of our economy: we are not value-adding, but exporting "raw".

And, scarily, there are signs the mining boom is slowing. BHP Billiton has indicated it could slow approvals of mega-projects to accommodate metal prices stalling. China and India amongst other nations are the recipients of our earthly goodness, while the industry – protective of its own interests, of course – is happily the recipient of foreign workers.

Fair go, Australia?

Some have been quick to argue that the Carbon Tax does not a fair go make for Australia, when put in a global context. Many Aussies are not fans of a pass-the-buck mentality whereby Aussies pay a Carbon Tax while big C02 emitting countries – many powered along by our coal exports – get away with fudging their way through to a cleaner future.

According to CDIAC estimates for 2009 and 2010, China currently creates the largest amount of C02 emissions, with over 8.2 million metric tonnes, but is quite low on the scale of emissions-per-person. When divided by the total population, there are 6.2 tonnes of C02 emitted for each of China's 1.3 billion people.

Saudia Arabians, who number 27 million, emit the most C02 per person (18.2), followed by the US (17.6 tonnes per person in a population of 312 million). Australians, who emit 16 tonnes per capita each year and number 22.7 million, come in fourth with emissions of 365,513 metric tonnes.

It is fair to say that we have a large land mass, and are highly reliant on industry such as agriculture (which creates an estimated 23.7 per cent of national greenhouse gas), and therefore emit more natural emissions, and these are also significantly, but not totally, absorbed naturally by our forests and such ("natural sequestrations").

We also export our C02-laden goods elsewhere, and we also don't have nuclear power or hydro power, like other nations. We are fossil fuel dependent. We are in a precarious position.

Those most likely to be affected by climate change in coming years will be from developing nations. Thus, climate change is a human rights, not just an environmental issue. So says Professor Jane McAdam, an expert in refugee and migration law and author of Climate Change, Forced Migration and International Law (Oxford University Press, 2012).

She says those people with income, education, resources and infrastructure will be less affected by climate change, as they have greater mobility and resources at hand, while those in abject poverty, who live in more fragile environments, are more likely to be displaced as the sea waters rise.

And, still, there is the dilemma: why should developing nations like India and China be hindered in making "progress" by being forced into making deals on the environment, as was made clear at Copenhagen, which followed Kyoto.

We Westerners, after all, have had an indulgent amount of time to spew pollution into the air in order to build up our respective economies, and they would like that same grace afforded them. Not sure how the environment feels about that, but it is reality.

In 2007, Australia was still being a stick-in-the-mud about Kyoto. The vision back then was that in order to stabilise global temperatures by 2050, greenhouse gas emissions would have to fall by 30 per cent. Rich countries, it was said, would have to shoulder most of the burden.

John Howard thought Kyoto and the 2006 Stern Report on the Economics of Climate Change made no room for Australia being in a particular and peculiar economic position, with Kyoto cast off as“prescriptions from Europeans that come from a European perspective”.

“Nations that do not have vast reserves of fossil fuel have a different view about this matter than nations that do," he said at the time. "Australia is in a very unusual position: we have a small population but we have been blessed by providence with large reserves of fossil fuel. We should play to our natural advantages and I am simply not going to agree to prescriptions that are going to damage the future of the Australian economy, and I am not going to agree to prescriptions that are going to cost the jobs of Australian coalminers.”

Sir Nicholas Stern, author of the Stern Report, a significant document for setting the stage on global warming, said that Australia not signing the protocol was “a strong statement” to the rest of the world: “If each producer of 1 per cent [of greenhouse gases] said it would not agree to anything until everybody else did, nothing would happen.”

Kevin Rudd ratified the Kyoto protocol when he swept to power, trumpeting climate change as the "great moral dilemma" of our time. Two years later, at Copenhagen summit, he was left dismayed. China, India, the Arab oil states and Brazil would not cooperate.

For these nations, environmental strategies that have the potential to cripple their growing economies simply aren’t worth the effort – why should they stop lopping trees and industrialising their cities just to appease the Western conscience?

Climate change became a matter of political diplomacy. It was proposed that the West would have to orchestrate a sort of “green welfare compensation plan” by increasing foreign aid. Rudd was encouraged to scrap the unpopular Emissions Trading Scheme.

Then the GFC came, Rudd was toppled and Julia Gillard signed off on a deal to keep the balance of power with the Greens, which brings us to the current scene. The Greens have put the environment front and centre, as would be expected, while Julia Gillard’s Labor Party is in defence mode, as the Carbon Tax is seen to affect its key supporter base: your average Aussie worker.

The lucky country?

One of the amazing things about being an Australian is our proximity to nature: the beaches, the bush, the rainforests, the creeks, the wonderful horizons that stretch out for miles and the clear starry nights… if our Indigenous Australians have taught us anything, it’s that the land itself deserves our respect.

Probably the biggest risk, at this stage, is that an impetus may have been lost to act responsibly and vigilantly on an individual basis to reduce our impact on the environment. The tax could be seen as a scapegoat... we pay so why should I make an effort? The extra pull on our finances offset by a negligence to perform one's basic duties for the safe-keeping of the environment (hence, Norway!).

The Carbon Tax is not very inspiring.

Your average Aussie is probably more inclined to want to compost and recycle and walk to work if they are incentivised, rather than taxed, for daily living and breathing – particularly if they perceive that they are getting no benefit at all from the big companies who shoulder the burden of the tax and pass the buck and get a government handshake to stay happy.

We all, at a basic human level, enjoy the feel-good endorphins associated with making a right choice.

Is the Carbon Tax in part about appeasing the comfortable, middle-class Western hypocrisy that sees us comfortably reclining in air-conditioned homes while bemoaning rising electricity prices? Will it change habits, protect the environment, have the desired effect? It would be interesting to see, via a household environmental audit, if the tax encourages people to keep cutting back or to throw all caution to the wind.

We know too much to keep carrying on as if our actions did not have one iota of influence over the atmosphere and, in turn, the world’s flora and fauna. Fern Tree Gulley gave us 80s kids a lesson in that circa 1992, long before Al Gore gave us An Inconvenient Truth reproof in 2006. Then there was Fox's green-friendly Avatar and Dr. Suess' The Lorax. Now in cinemas, Ice Age 4: Continental Drift!

One of the amazing things about being an Australian is our proximity to nature: the beaches, the bush, the rainforests, the creeks… if our Indigenous Australians have taught us anything, it’s that the land itself deserves our respect.

Lost somewhere along the way, between the cost that this new tax will entail and the occasional shonky merchant on the street who is using it as a nifty scapegoat for raising prices, is the grander ideological conversation about environmental morality and man's propensity to act out of self-interest rather than in the name of preservation, posterity and respect for that which we did not create.

The debate should be about addressing the negligence of “civilisation” where selfishness prevails at the expense of the common good, of acting responsibly and sharing the burden of doing so with adequate help for the poor.

We won't be on this earth for long, so we should really get busy casting off the shackles of consumerism and individualism that are likely to hold future generations back from having a positive environmental impact; restoring the earth to some of its former glory. Nature is wonderful and we ought to be thoughtful.

We need to give them hope, energy and the means for creative thinking and encourage them to get their hands dirty with rakes and shovels and wheel-barrows as they learn about the role of the earth in the grand scheme of things, including the basic science of plants turning C02 into the air we breathe (as yet, no tax on that).

Did we fly to the moon too soon?
Did we squander the chance?
In the rush of the race
The reason we chase is lost in romance
And still we try
To justify the waste
For a taste of man's greatest adventure
- Tasmin Archer, "Sleeping Satellite", 1992

Bibliography (some extra Carbon Tax reading):
State of the Climate 2012, Australian Government Bureau of Meteorology, CSIRO
Productivity Commission: Carbon Emission Policies in Key Economies Overview
Factbox: Carbon taxes around the world, SBS
Australia v Norway: does Garnaut’s comparison add up? by Ronald Ripple at The Conversation
Where carbon is taxed, Carbon Tax Centre

Who knows how the Carbon Tax will affect you? ABC Kimberley

Stupid Often: A political motto by Christopher Pearson at The Australian 
Climate concerns forgotten in carbon anti-climax by Mungo McCallum at The Drum
Abbott a hypocrite in carbon debate by Andrew Bolt at The Herald Sun
The Carbon Tax Explained by Matthew King for BigPond Money
Carbon tax will drive innovation: Australian business group, ABC
Big polluters convinced carbon price is here to stay, SMH
Tithes of discontent: the political dangers of taxing carbon and mining, The Economist
The truth about rising power prices by John Grimes at Renew Economy
Tax minor compared to electricity by Neil Perry at The Gympie Times
The carbon tax explained by Andy's Rant (in pictorial form!)
Doing it tough? Suddenly we're buying cars big-time and starting to shop by Peter Martin
Beat poverty first, then tackle emissions by Alan Oxley at The Australian
Matthew Warren - confused or maybe just wrong? by Tristan Edis at Climate Spectator
Carbon tax will further cripple the pig industry says producer, ABC Rural
Budget figures mean little when jobs are hard to come by, The Courier
Carbon Tax: Behind the News (in simple video form!)
Car culture can change: an interview with Paul Keeling,
Stern Report: the key points by Hilary Osborne at The Guardian

Girl With a Satchel


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