Carbon taxes are useless without a technological breakthrough

Raising the cost of using a particular fuel will shift consumption to another fuel, but only if all other things are equal. Unfortunately for climate change hysterics, when it comes to CO2 emissions, all other things aren’t equal.

This is a relevant issue now Australia effectively has a CO2 tax.

Under Australia’s ‘Safeguard Mechanism’, an invention of the previous Coalition government now being ‘refined’ by Labor, Australia’s 215 largest CO2 emitting facilities will face a virtual carbon tax.

They’ve been told they need to reduce their emissions on average by 4.9 per cent a year, and if they can’t manage this, they may buy carbon credits, but only if the credits cost less than an inflation-adjusted $75 a tonne.

This is effectively a tax that cuts in at the average mandated level of emissions per type of facility, and which is determined by the number of facilities that can’t meet those benchmarks and the amount of emissions they emit.

The more emissions, the higher the price, until $75 a tonne. And if the demand exceeds the supply? Well, perhaps some of those polluters will wish their industry organisations hadn’t lobbied for a price cap. They may already even be thinking that, looking at the mess a cap is making of the gas market. Those that can stay in business at those tax levels, that is.

To make this hang together in some way that keeps the Greens happy, the government needed to prove the carbon offsets market was effective. Carbon markets are susceptible to fraud, with double-dipping, poor governance, and imprecise science.

The answer to these problems, raised in an ANU critique about the Australian carbon credit market, was to appoint former Chief Scientist Professor Ian Chubb to do a review. Chubb gave the scheme the all-clear, subject to 16 recommendations.

Inquiries are only as good as their terms of reference and their personnel. At no stage was Chubb asked what the total carbon credit capacity of Australia is, which would determine the depth of the market and the price that should be charged. If he had, he may have discovered that Australia absorbs more than twice as much CO2 as it emits.

But this wouldn’t suit the narrative which is to see emissions management as a result purely of fuel-type, rather than also a function of volume. The size of the continent, which contributes to Australia’s high per capita emissions, is also the solution to them, as long as we don’t grow the population too much.

There is also another side to the use of carbon credits which points to the absurdity of carbon taxes. The fact that they need to be available at all, means the government tacitly acknowledges there are no substitutes for fossil fuels for particular uses.