Factor of five
The Oz reports Opposition spokesman Greg Hunt, saying that “FAMILIES face electricity price rises of up to $1100 a year” under a carbon price of $30/tonne. Oz reporter James Massola doesn’t check the arithmetic behind this scary claim, so I guess it’s a job for the blogosphere.
Using black coal as the fuel source, a tonne of CO2 is emitted for each MWh generated, so the tax comes out at 3c/kWh. Our hypothetical family would have to use nearly 40 000 kWh each year. The average NSW household uses 7300 Kwh/year, putting Hunt’s claim out by a factor of five. That “up to” is doing an awful lot of work, the kind that would get a commercial advertiser into a lot of trouble with Consumer Affairs.
Assuming Hunt isn’t deliberately lying (and to be fair, he’s one of the best on the Opposition side) how did he get such an absurd number? My guess is that he divided an estimate of total revenue ($16 billion, which looks about right for emissions of 500 million tonnes a year), then divided by the number of households. His mistake of course is to assume that 100 per cent of emissions arise from household use of electricity – the correct figure is about 20 per cent.
Coming back to the average household, the implied cost is around $200/year, which would, in a properly designed scheme, be returned one way or another, either in direct compensation or in offsetting tax cuts.