Tuesday, April 27, 2010

Australian Government defers action on ETS

According to stories in the Australian media (here, here, here), the Australian Government has deferred any action on an ETS until the end of 2012. The story will be well covered; I just wanted to record it.

It left me wondering how former opposition leader Malcolm Turnbull must feel. Pretty disheartened, I would guess. However, it also made me wonder whether or not it might lead him to reconsider his decision to quit Parliament.

Wednesday postscript:

I find myself with oddly mixed reactions on this one.

Having worked my way through the issues, I came to the view that action needed to be taken on climate change. My concern then lay in the nature of the action to be taken. Really, I wanted to understand more about the nature of the options, about the combination of things that might deliver the required results, rather than the the almost exclusive focus on one option.

Reports in the Australian media mention a newly released Lowy Institute study on changing Australian attitudes to climate change as an issue. As I write, the study does not yet appear to be on-line. Apparently, the study shows a weakening in support for action to address climate change, together with a strong reluctance to pay any costs for that action.

It was always going to be the case that action to address climate change would impose costs. One of my concerns lay in my inability to properly trace those costs through, to properly understand the dynamic aspects. I also thought that public discussion that suggested that that the real costs would be small, that we could somehow have our cake and eat it too, were dangerously misleading.

The problem has always been the difference between aggregate and distributional effects. Even if aggregate costs were to be small taking benefits and growth factors into account, distributional effects make for a pattern of individual winners and losers. Those losing may find little comfort in a general argument about small net costs. This difficulty has been compounded by the tendency to load so many other things onto climate change. 

The timing of the decision in NSW to raise electricity prices by such a significant amount did not help. The fact that this was due to previous under-investment in the electricity system was neither here nor there. Consumers faced a big price rise with the certainty of a further increase on top if the ETS came in. In combination, it was just too much.

In theory, the delay in the introduction of the ETS could provide time for further discussion and refinement, for testing options, for further public education through debate. I would like to think that this might happen. My concern is that the whole issue may actually be parked in political terms, leaving us no further advanced in two year's time.             

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