Thursday, February 08, 2007

Cap-and-shade

The Australian's editorial continues to cloud the debate by propogating the unproven claim that an emissions trading scheme is far superior to a carbon tax:

Such a system [carbon trading] would be far less punitive than a per-tonne tax on coal or emissions which would ultimately be paid by consumers and which would chase industry and jobs overseas to less restrictive regulatory environments.

Who do they think is going to ultimately pay for the costs of buying permits? And again:

Likewise, the market signals sent by emissions trading will help create the research and investment climate necessary to develop carbon-reducing technologies such as gasification and geosequestration.

But so will a tax. People seem to believe that cap-and-trade is better becuase it's a market-based system. But this is just argument by labels not a rationale in itself.

The only reason I can think of for preferring a trading scheme is that perhaps the appartus that goes along with it (auction markets, traders, etc) will make it difficult for governments to change policy in the future and thus reduce soverign risk. I'm not sure that this is the case though since presumably a government would also be addicted to the tax revenue that a carbon tax would bring in.

3 comments:

Mick Stone said...

The best thing about a carbon tradin system is that no extra money is going to the Government

Matt Canavan said...

But you could introduce one in a revenue neutral way by, say, lowering the corporate tax rate. Also I don't think giving valuable permits away to carbon emitters is good policy.

Mick Stone said...

Just like the CGST ey?

We get the GST in return for tax cuts.......Two years later we're all payin more income tax than ever before.

Tax to GDP has only ever really trended upwards. Dont give em any excuses to keep it goin up.

But here's a real alternative: No carbon tax, no carbon credit scheme. When meteorology departments can't get tomorrow's weather right, why should they get it right for 50 years down the track. Besides China and India will be the biggest polluters in a decade and they wont sign up to any carbon scheme...And why should they?