Who wants a carbon tax?

quill pen

To the Editor
Climate Conversation

14th November 2010

When the Australian PM says “we need a price on carbon”, she is just sprouting another misleading Wongism like “we must reduce carbon pollution”.

Most forms of carbon already have a price – coal, oil, gas, petrol, diesel, beef, bread, butter, diamonds and whisky all have a price (which usually includes a few taxes).

What Ms Gillard wants, but dares not say, is another tax on our usage of many carbon products.

But who wants a tax on carbon?

The Greens do. They hate humans and their farm animals, crops, coal, oil, cars, power generators and heavy industry. They would like to see the end of most mining, farming, fishing and forestry. A carbon tax will hit all of these people so the Greens support it.

Ms Gillard and her Fiscal Czar want a carbon tax. They lead a party of taxaholics who need a new tax to support their extravagant spending. Unions, even those in industries that will be harmed directly by a carbon tax, ignore the interests of their members to maintain party solidarity.

Taxes are the life blood of the tax consuming industries – there will never be enough taxes to satiate the nationalised education, health, media, research and welfare industries. So they all want a carbon tax.

And of course the wind and solar subsidy-suckers want heavy carbon taxes to hide their chronic inability to provide economic and reliable power.

The nuclear power industries love carbon taxes – it gives them a cost advantage against coal, oil and gas in the production of base load power.

Many big businesses are trying to buy green respectability by plugging a carbon tax – they will pass it on to Australian consumers, but exporters will get exemptions.

For lawyers and accountants, new taxes bring new business. They love new taxes with complex rules and many exemptions.

And of course all of Asia hopes that Australia imposes a carbon tax. It will shift our industries to (Asian) countries with no carbon taxes.

So there is a powerful and diverse carbon tax lobby.

Where are the environmental benefits?

There are none. Carbon dioxide is not a pollutant – more of it will help plants grow, thus creating a greener earth. And it is fanciful to believe that a carbon tax in Australia could possibly produce any beneficial effect on our climate. Climate will continue to change as it always has.

Who will be hurt by a carbon tax?

Whenever you tax something, a marginal producer somewhere closes up, and less of it is produced. Its price rises because of the increased costs of production and the reduced supply.

Carbon taxes must increase the cost of electricity, fuel, food, fibres, building materials and transport. They will harm every Australian consumer, especially the poor who have no savings cushion and who spend a greater percentage of their income on these essentials.

So who is our government protecting – taxaholics and vested interests, or consumers?

Viv Forbes

Viv Forbes is Chairman of the Carbon Sense Coalition. He is a geologist, soil scientist, financial analyst and farmer with experience in government service, politics, mining and grazing. He and his wife own a small grazing property and own shares in a small coal exploration company. He is self-employed and lives with his wife on their Queensland farm. He talks a lot of sense and we’re pleased to carry his message.

21 Thoughts on “Who wants a carbon tax?

  1. val majkus on November 15, 2010 at 10:33 pm said:

    Hi Viv it’s nice to see your fame spreading; and I entirely agree you talk a lot of sense; you know from our previous correspondence that I’m a fan

  2. val majkus on November 15, 2010 at 10:50 pm said:

    Viv you forgot one tax consuming industry and that the Govt and its public servants; there are many public servants who work hard but what worthwhile work is the Dept of Climate Change and the NBN and its boss with his I think $450,000 pa salary; I won’t go on but you probably get the message; I’d like to hear how New Zealanders are going with their ETS

  3. I had various communications with government departments in the lead up to the introduction of the ETS.

    I still do not understand which market the price of CO2 will be linked to once the ETS comes out of its transition phase.

    CO2 is currently at a fixed rate of $12.50 per tonne (I think?)

    The implication is that this was half the market rate. Given the demise of CCX, this figure seems a bit overpriced.

    I was told by a government person (since left) that businesses need to watch the carbon price in order to plan their business activities.

    However, no one to date has been able to tell me what determines this price.

  4. Richard C (NZ) on November 16, 2010 at 11:48 am said:

    “However, no one to date has been able to tell me what determines this price.”

    It gets silly:-

    PROPOSED FOSSIL CARBON EMISSIONS TAX:
    The analysis set out herein shows that a fossil carbon emissions tax of about $200 per emitted CO2 tonne is required to cause the cost of coal fuelled electricity generation to exceed the cost of non-fossil fuel electricity generation. A lesser fossil carbon emissions tax simply will not achieve the desired result.

    IMPACT OF FOSSIL CARBON EMISSIONS TAX ON COMBUSTION OF COAL:
    In Canada, as elsewhere in the world, a lot of electricity is produced by combustion of coal. Coal is extremely cheap. Coal is dug out of the ground from an open pit mine using a large backhoe, dumped onto an earth mover, dumped into a railway car, dumped onto a storage pile and then carried by conveyor into a boiler. The labor content is very small. The cost is primarily amortization of the mechanical equipment. The IESO website indicates that, with government guaranteed debt financing, the cost of electricity generated from combustion of coal is about:
    $.048 / kWe-h.

    Consider the additional cost of generating electricity from coal if coal is subject to a fossil carbon emissions tax of $200 / emitted tonne CO2. The thermal energy from coal comes from combustion of carbon. The thermal energy released by combustion of carbon to form carbon dioxide gas at 25 degrees C is 94.26 kcal / mole CO2 (National Bureau of Standards Circ. 500 (1950)). Converting this figure into more convenient units gives:
    (94.26 kcal / mole) X (4180 J / kcal) X (1 mole / .044 kg CO2) = 8.9547 X 10^6 J / kg CO2
    Using conventional equipment this heat can be converted into electricity with a conversion efficiency of about 33%, so the resulting electricity output is:
    8.9547 X 10^6 J / kg CO2 X (.33 We-s / J) X 1 kWe / 1000 We X 1 h / 3600 s
    = .8208 kWe-h / kg CO2
    The effect of a $200 / emitted CO2 tonne carbon tax is to increase the cost of electricity obtained by combustion of coal by about:
    ($200 / 1000 kg CO2) / (.8208 kWe-h / kg CO2) = $.244 / kWe-h.

    http://www.xylenepower.com/Carbon%20Tax.htm

  5. Richard C (NZ) on November 16, 2010 at 12:02 pm said:

    Carbon Dioxide Emission Factors for Coal

    Anthropogenic carbon dioxide emissions

    Let us examine a couple of illustrative examples. When burning one ton of anthracite coal, 3.66 tons of carbon dioxide (CO2) are formed. In the process, 2.66 tons of oxygen from the air are consumed to oxidize the carbon. When burning one ton of natural gas (assuming it is 100% methane), 2.74 tons of CO2 are formed. In the process, 3.99 tons of oxygen are consumed from the air to oxidize the fuel.

    Stem coal prices surge to highest levels in 2010

    15 Nov 2010

    It is reported that prompt FOB Newcastle and DES ARA coal prices rose by USD 2 per tonne to USD 4 per tonne to hit the highest levels seen since January on last Thursday on China physical demand, the U.S. dollar’s weakness and the general surge of money into commodity markets.

    A February loading South African cargo traded at USD 104.5 up by USD 3 from Wednesday.

    A December loading South African cargo traded at USD 105 a tonne up by USD 4 from Wednesday’s bid level.

    A January delivery DES ARA cargo traded at USD 106.5 a tonne up by USD 2.25 from Wednesday.

    A February and two January loading Australian cargoes traded at USD 110.00 FOB Newcastle up by USD 2 from Wednesday.

    A December DES ARA cargo was bid at USD 106.5 a tonne up by USD 2.25 from Wednesday.

    A January cargo was bid at USD 106.25 and offered at USD 106.75 up USD 1.25 on the bid.

    A December loading South African cargo was bid at USD 104 and offered at USD 105 up by USD 4.

    A January South African cargo was bid at USD 105 and offered at USD 105.75 up by nearly USD 4 on the bid.

    Analysts have had to revise coal price forecasts made only a month ago because the price rises projected for mid 2011 have already been achieved.

    Chinese buyers are seeking South African and Indonesian prompt cargoes to build stockpiles sufficient to supply power through an unusually cold winter and this is drawing tonnage away from Europe and cutting spot availability to India. The overall scenario is one of tightening supply because of the flow to Asia of Atlantic coal and supply bottlenecks in key exporting countries such as Indonesia, Australia and Colombia.

    Colombia’s coal output for 2010 will be a couple of million tonnes below the 80 million target due to heavy rains. Indonesian exporters said earlier in the week that their output targets had also been cut due to rains. If Chinese and Indian buyers end up competing for spot cargoes, a sharp price spike cannot be ruled out.

    In Europe, demand remains muted although a few utilities in Germany have bought spot tonnage this week, despite a fall in coal burning margins below that of gas for the first time since May.

  6. val majkus on November 16, 2010 at 11:37 pm said:

    I’ll try this here as I can’t get through on the BOM site
    Wednesday, 26 January 2011
    605/610 (Washington State Convention Center)
    Harvey Stern, Bureau of Meteorology, Melbourne, Vic., Australia; and B. Campbell, M. Efron, J. Cornall-Reilly, and J. McBride
    The Australian Data Archive for Meteorology (ADAM) is used to compare trends in maximum temperature (MAXTEMP) at Sydney and Melbourne with those at other (less urbanised) Australian localities.
    By this means, the relative extent to which MAXTEMP increases in those cities can be attributed to urbanisation, the enhanced greenhouse effect, and other causes, is quantified.

    The influence of cities on overnight temperatures is well documented. However, their influence on daytime temperatures is less well documented.

    Sydney and Melbourne MAXTEMP data are compared with other ADAM data sets and are found to be increasing at a faster rate than elsewhere.

    For example, Sydney’s MAXTEMP is increasing at a linear rate that is +0.065 deg C per decade faster than that of Newcastle, whilst Melbourne’s MAXTEMP is increasing at a linear rate that is +0.050 deg C per decade faster than that of Ballarat.

    More generally, Sydney and Melbourne MAXTEMP data are compared with ADAM data sets for the 73 Australian localities (excluding Sydney and Melbourne) with at least 80 years of MAXTEMP data during the 100-year period 1910 to 2009 inclusive.

    MAXTEMPs at Sydney and Melbourne are found to be increasing, respectively, at rates 0.080 deg C per decade and 0.071 deg C per decade faster than the average temperature at the 73 sites. The probabilities of such large differences occurring by chance is <<0.1% in both cases. That the average MAXTEMPs in the two cities are rising faster than at more rural localities is therefore largely attributed to urbanisation.

    For both localities, annual MAXTEMP data are statistically modelled over various control periods using MAXTEMP data at surrounding non-urban stations as input. Thereby, sequences of non-urbanised MAXTEMP can be constructed for the hypothetical circumstance of the cities not being built.

    Synoptic stratification of daily data shows that a recent "jump" in the Melbourne series is due to buildings constructed immediately to the south of the site.

    In contrast to the current study, Torok's (1996) PhD work identified, and adjusted for, "' jumps in the time series due to non-climatic changes' (and this consequently removed) …urbanisation signals from the time series". Torok's adjustments have been applied to the derivation of the Bureau of Meteorology's high quality data sets (HQDS).

    The current study's approach (using ADAM data sets) has been to identify, and preserve, the urbanisation signals in the time series.

    As would be expected, MAXTEMP rising trends in the Melbourne and Sydney HQDS (with the urbanisation signals removed) are found to be slower than those in the corresponding ADAM data sets (without the urbanisation signal removed).

  7. and now Nick Smith is saying Agriculture may remain excluded from the NZ ETS in 2015.
    http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10688278
    No mention of scrapping it completely though….

  8. val majkus on November 17, 2010 at 2:49 pm said:

    Ron or any NZ readers are all political parties in NZ in favour of an ETS?
    and what has it meant for your general cost of living?

  9. The ACT party have actively lobbied against the ETS and continue to do so.

    Unfortunately, the nature of the beast is that it is very hard to unravel once in place, because there is an ownership issue over the permits. (The forestry owners were “promised” an ETS, and since they are the sole beneficiaries they are the ones that will lose)

    I just don’t know what will happen once the transition phase ends and the price of “carbon” is determined by the market, whatever that market may be.

    If the price of carbon is small, then we have a bureaucracy that is counting up all these emissions for no reason.

    As we witness the self-destruction of the EU, maybe it is time to ponder on these useless government structures.

  10. val majkus on November 17, 2010 at 3:58 pm said:

    I suppose Andy your forest owners could continue to sell carbon credits on the international market if the national market ceased to exist (which I anticipate would be the hope of a lot of climate realists in NZ)

  11. Richard C (NZ) on November 17, 2010 at 4:12 pm said:

    “what has it meant for your general cost of living?”

    Val, see ETS and carbon taxes:

    https://www.climateconversation.org.nz/open-threads/politics/ets-and-carbon-taxes-001/

    There you find the fuel levies, shipping costs and dairy costs that I know of. Only the electricity generators that burn carbon are subject to the ETS as far as I’m aware (my retailer doesn’t – whew!). But much more coal-fired elec gen in OZ.

    The NZ situation is bizarre. Andy thinks the NZ ETS CO2 price per tonne is $12.50 but my search up-thread shows a study in Canada that recommends a tax of $200 on coal priced at just over $100 per tonne, total price $300, to bring fossil fuel into parity with non-fossil fuel thereby cranking up the price of electricity five-fold.

    So $12.50 in NZ is meaningless – they could make it $1.50 and it would have the same effect but a lot less onerous (it’s mainly to placate the European markets and the electorate fringe).

    Pacifica Shipping calculates the ETS Levy added at $6 per TEU (Twenty-foot Equivalent Unit), based on the $25 New Zealand unit price (capped rate) so Andys $12.50 may apply to some other sector.

    We obviously should compile a list of levies for NZ and by “we” I suppose I mean me..

  12. Richard C (NZ) on November 17, 2010 at 4:38 pm said:

    This guide gives an easy overview:-

    Forestry in the Emissions Trading Scheme

    http://www.maf.govt.nz/sustainable-forestry/2010-ets-guide.pdf

    Basically forest owners can sell their credits (NZ$25 per NZU) but they have to pay that unit for deforestation. So a working forest incurs costs but a forester or farmer that plants marginal land and doesn’t fell the trees earns credits.

    Whether they can find a market with willing buyers at $25 over the long term remains to be seen. We know one market has gone belly up after trading around 60c and last trade $3.41.

    Richard T must have insider knowledge because he’s touting $50 /sarc

  13. Just Googled “ETS $12.50”

    e.g

    Foresters accumulating credits have the option of either selling their credits on the ETS or accepting $12.50 per tonne of carbon from the government. “Foresters can take the $12.50 or sell their credits overseas on the spot market. They can still do that under the amended scheme. The spot market is paying $28 and climbing. Therefore they’d be silly to sell in NZ at a set market price of $12.50. But every credit sold overseas by a NZ forest is a credit the government cannot claim in its emissions inventory.

    “If I was a forester I’d be holding off to 2015 because carbon credit prices will go sky high. Our carbon credits will carry a gold-plated premium.”

    http://www.stuff.co.nz/southland-times/business/national-farm/3011135/Farming-ETS-shows-biggest-change-of-all-trading-sectors

    I smell a bubble that has already popped

  14. Richard C (NZ) on November 17, 2010 at 6:04 pm said:

    Distracted by trolling at HT. Managed to ruffle both Bryan’s and Gareth’s feathers. It’s been a good day.

    Bryan first says “The science is not difficult to comprehend”. then when challenged pleads:

    “You know perfectly well I make no claim to be a scientist and I won’t be making the comment you invite. But the Real Climate Wiki indicates that there’s nothing in what you provide to alter my lay understanding of the science.’

    Gareth spat the dummy;

    http://hot-topic.co.nz/clutching-at-straws/#comment-20623

    Back On Topic

    I don’t think the Southland Times article from last year has their facts right. The Oct 2010 ETS Forestry Guide has this:

    The primary unit of trade in the ETS is the New Zealand Unit (NZU). One NZU represents one tonne of carbon dioxide (CO2) either released to the atmosphere (emissions) or removed from the atmosphere (removals). The Government issues NZUs for increases in the carbon stocks in Kyoto-compliant forests and these may be held, or bought and sold, within New Zealand [or converted for overseas sale]

    If a Participant does not have sufficient units, they are required to buy additional units for surrender. During a transition period that applies until 31 December 2012, Participants in the forestry sector can pay cash at a fixed rate of $25 per NZU as an alternative to surrendering units.

    The $25 per NZU is compatible with the shipping rate above. I searched for $12.50 in the pdf and no occurrence.

    The European spot price is EU14.89 (about NZ$26 before brokerage).

    http://www.eex.com/en

    But I don’t think those “Emission Rights” are a 1:1 conversion with NZU’s.

    Even so, NZ$25 is nowhere near the C$200 tax proposal.

  15. Richard C (NZ) on November 17, 2010 at 6:24 pm said:

    To put some perspective on the position of coal in NZ, I vaguely remember doing some calcs to make a comparison between the energy equivalent of the coal mined from a Fonterra mine in the Waikato for use in their local dairy factories and the electrical energy used by the city of Hamilton.

    The Fonterra coal energy was the greater figure but I can’t remember for how many factories.

    I’ve still got the report somewhere if anyone wants to fact check.

  16. Richard C (NZ) on November 17, 2010 at 6:57 pm said:

    “So a working forest incurs costs” – this is incorrect

    Post-1989 forest land is primarily exotic or indigenous forest that is established after 31 December 1989 on land that was non-forest land on 31 December 1989. For these forests:
    • Owners of the forest land (or those with a registered interest in the forest on the land) may voluntarily become Participants in the ETS, and in doing so are entitled to receive NZUs for the increase in carbon stocks in their forests from 1 January 2008

    Pre-1990 forest land is an area that was forest land on 31 December 1989, and that on 31 December 2007 is still forest land and is covered by predominantly exotic forest species.
    For these forests:
    • Landowners have no obligations under the ETS if pre-1990 forest land is not deforested (that is, if it is re-established after harvesting).
    • No NZUs are earned for an increase in the carbon stock of pre-1990 forest land.

  17. $12.50 referenced here:

    Regulatory Impact Statement
    New Zealand Emissions Trading Scheme: Industrial allocation

    The Act provides for a transition phase from 1 July 2010 to 31 December 2012, whereby firms are required to surrender only one emissions unit for every two tonnes of emissions. In addition, firms can purchase emissions units from the Crown at a fixed price of $25 per unit. This means the effective maximum price for each tonne of emissions during the transition phase is $12.50.

    http://www.climatechange.govt.nz/publications/ris/ets-industrial-allocation.html

  18. Richard C (NZ) on November 17, 2010 at 9:16 pm said:

    Makes sense,. I could see that 12.5 was not 1/2 25 by coincidence. So that’ s for 3 sectors.

    From the Act:

    22A Transitional provision for liability to surrender units to cover emissions from activities relating to liquid fossil fuels, stationary energy, and industrial processes

    (1) This section applies to a person who—

    (a) carries out an activity listed in Part 2, Part 3, or subpart 1 of Part 4 of Schedule 3 in the period 1 July 2010 to 31 December 2012; or

    (b) is a participant in relation to an activity listed in Part 3 or 4 of Schedule 4 in the period 1 July 2010 to 31 December 2012.

    (2) Despite anything in this Act, a person to whom this section applies is only liable to surrender, and may only surrender, 1 unit for each 2 whole tonnes of emissions from the activity in respect of the period referred to in subsection (1).

    http://www.legislation.govt.nz/act/public/2002/0040/latest/DLM2645780.html#DLM2645780

  19. val majkus on November 17, 2010 at 10:57 pm said:

    new post at WUWT yesterday
    Constructal GDP
    Posted on November 16, 2010 by Willis Eschenbach
    Guest Post by Willis Eschenbach
    quotes of the last paras

    OK, call me slow. I knew that depriving the developing world of affordable energy would impede development. But I had never realized that energy use is development, that there is a thermodynamic relationship between the two. I hadn’t noticed that if a country wishes to develop, it can only develop to the extent that it has energy, and no further. Lack of energy doesn’t merely hinder or slow or delay development of poor countries as I had thought.

    It puts an absolute ceiling on development.

    Given the number of people in the world living on a dollar a day or so, that’s a discouraging insight in the context of the current AGW war on fossil fuel energy.

  20. Just thought I’d let you know that Canada has just killed it’s Carbon tax

  21. Richard C (NZ) on November 18, 2010 at 10:14 am said:

    What struck me is that all that US energy, 56.2 Quads lost, 35.2 Quads useful, goes into the atmosphere as heat.

    From Wikipedia:

    A quad is a unit of energy equal to 1015 (a short-scale quadrillion) BTU,[1] or 1.055 × 1018 joules (1.055 exajoules or EJ) in SI units.

    The unit is used by the U.S. Department of Energy in discussing world and national energy budgets. The global primary energy production in 2004 was 446 quad, equivalent to 471 EJ. [2]

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