Climate Policy Submission


Here’s my submission to the Senate Select Committee on Climate Policy. It was a bit of a rush job, given competing pressures like the Global Financial Crisis and the continuing (related) problems of the Murray-Darling. Comments appreciated.

42 thoughts on “Climate Policy Submission

  1. “Carbon taxes and emissions trading schemes have broadly similar effects.
    However, emissions trading schemes are preferred because they achieve
    certainty in reaching targets, deal better with macroeconomic shocks and have
    more potential for global integration”

    John, I have to vehemently disagree with quantitative measures and putting our emission rights in the hands of global derivatives experts over straight, level playing field carbon and resource taxing. In that regard Greg Mankiw points out the already blindingly obvious here-

  2. So, what about coal export as opposed to coal combustion? Does that come under any possible CPRS?

  3. On a quick reading I agree on most points with a few quibbles. For starters are we morally bound to compensate big emitters? The issues have been discussed for over a decade. Clothing makers were not compensated when flared pants went out of style.
    The two weak points of the EU scheme are free permits and generous offsets, yet the latter is hardly mentioned in the submission.

    As the previous poster alluded Australia’s fossil fuel exports (coal~230Mt, LNG~20Mt) are a glaring inconsistency and must come in to harmonization efforts. I’m baffled by the voluntary efforts discussion. On a national scale they will be trivial and won’t affect power companies share of the cap.

  4. Well, I certainly don’t want coal exports to be taxed in any way. That would be terrible.

  5. Just on the difference between a carbon tax and at ETS. You say that an ETS is better because in the end we will move to a global ETS. But what is the problem with the government implementing a carbon tax locally (if this is easier to do) & then doing the trading necessary in the global ETS itself. Locally, its a tax, which is simpler for most people and businesses to understand. The government can then adjust the tax as necessary, and engage in the global ETS to meet any international obligations.

  6. The paper suffers from the same myopia as the general Climate Policy debate in Australia. The focus is too narrow. Carbon pricing cannot be considered in isolation, particularly without also considering existing distortionary energy subsidy programs with their perverse incentives.

    To widen the focus further, the debate should be about Sustainable Energy Policy. “Sustainable” means that the energy sources must be renewable and sustainable in the long term. It also means that negative externalities, pollution of commons etc. must be reduced to a level that is sustainable in the long term in both environmental and economic terms.

    There will be little point in creating a carbon price by taxes or carbon-pricing if the entire existing raft of fossil fuel subsidies is not done away with. This is the elephant in the room.

    Obviously we can’t get the elephant out of the door in one go and we don’t want to demolish our economic house to do it. To extend the metaphor, the method obviously is to “freeze” the elephant of fossil fuel subsidies and pare it down slice by slice so that these relics can be cast out of our economic house piece by piece. This obviously implies a type of “grandfathering” but of the graduated change type.

    Along with the removal of subsidies for fossil fuel use we must then price carbon pollution. My clear preference is for a carbon tax and a carbon tariff on imports from countries which refuse to price carbon by taxes or market instruments.

    Given the the current failure of financial markets in the GFC and the need for colossal government intervention why in the blithering hellcat tarnations would you trust the market to handle carbon pricing? The market (top-heavy with corporate power as it is still) has a clear incentive to subvert and pervert the process.

    Can JQ answer these questions?

    Why have you avoided the issue of all the existing perverse subsidies for fossil fuel use?

    Why, given that the GFC is a prime example of market failure on a huge scale, would you trust the market to get carbon pricing right?

  7. Ikonclast said: Why, given that the GFC is a prime example of market failure on a huge scale, would you trust the market to get carbon pricing right?

    If an ETS puts an absolute cap on the amount of carbon-dioxide emitted, then how can it not get the price right? I mean, what we care about is the amount of CO_2 emitted, right? This is fixed. Fine. The cost of this is not fixed, so a market seems a pretty natural way for people to negotiate prices “I’ll buy the right to emit a ton of carbon off you for $40”.

    You can dislike an ETS and prefer a tax, but I don’t see how you can do this on the grounds of “inefficient markets”.

  8. Ikonoklast, I’ve written extensively, including on this blog, about the need to remove existing subsidies on fossil fuel use (for example

    And I’ve made submissions to Queensland and federal budget processes on these issues

    So, I get a bit annoyed by comments like yours. As I said, there’s quite a bit happening at present and its not possible to cover everything all the time.

    On your final sentence, what Peter R said.

  9. #4 The appendix covers the compensation issue in detail, making exactly the point that previous micro reforms like tariff reform have not included compensation for owners of capital.

  10. Fair enough jquiggin, my apologies for being annoying. I do (almost) despair of this country ever developing anything like an integrated Sustainable Energy Policy.

    The influence of corporate vested interests in distorting energy policy (and thus climate policy) is excessive to say the least. I am not sure how this influence can be reined in. The Rudd government seems to be very susceptible to it.

    I am sure our views meet at some point. I do in fact consider that a straightforward, undistorted and well-regulated market could deliver us genuine sustainable energy outcomes and AGW amelioration; the emphasis being on the adjectives of “straightforward, undistorted and well-regulated”. We might also need considerable dirigist government intervention as with the current broadband plans.

    However, the current carbon pricing (ETS) path seems beset with the pitfalls of special pleading from vested corporate interests. If the emphasis could be shifted to consumer compensation as you advocate this would be a different matter and help un-distort the model.

    The current path of the Labor government seems to be to keep the existing perverse incentives and add even more with the special free permits for heavy polluters. As it stands, this policy is hopeless for all except the big polluters for whom it represents a big win. This last only holds true of course until climate change wrecks the basis of their wealth and livelihood along with everyone elses.

    To recapitulate, a straightforward, undistorted and well-regulated market could deliver the changes we seek. The question then is can democratic politics (as they stand in Australia) deliver a straightforward, undistorted and well-regulated market? The performance of the Rudd government to date does not generate confidence in this regard.

    The GFC demonstrates (once again) that un-regulated markets rapidly become corrupt and perverse. Given that many dubious and downright deceptive financial instruments were created in the build-up to the GFC, we would have to see very strong regulation of financial instruments including financial instruments dealing with carbon trading.

    This regulation would need to either wholly limit the instruments by law or to change the onus of proof; namely that a new financial instrument could not be approved until its integrity, usefullness and benignity to the democratic national interest was proved before a government tribunal set up to determine such matters. Anything less will be twisted and destroyed by corporate vested interests. If we fail to plan against that eventuality we are naive in the extreme.

  11. Just a couple of editorial points, Prof Q

    p. 10, par. 2 needs additional space before ‘Particularly…’ at start of third sentence

    p. 10, too many carriage returns between third and fourth pars

    p. 11 general comment – I like the counter-cyclical argument, and I’m wondering if anyone is doing any modelling on this in terms of the current slump. This would in principle seem to be the best argument to use against the ‘we can’t afford it now’ crowd

    p. 16 there is a redundant full stop before the subtitle at the head of the page

  12. As a more specific answer to the (in my view naive) question “how can it (the market) not get the (carbon) price right?”, I would say this.

    VERY EASILY. After all, how did the current market not get the price of derivatives, CDOs etc. right?

    It did not get the price right because of outright manipulation, deception, breach of trust, fraud and so on. These financial market operators are nothing if not manipulative and deceptive.

    If the world’s markets are not greatly reformed and regulated they will have a field day rorting carbon trading. Honestly, I can’t believe people could be so naive as not to see that.

    The other issue is that our entire (neoliberal) free market model may still be in some considerable overall error. I mean in the sense of its propensity to issue excess debt and create bubbles i.e. boom and bust cycles. Are we to entrust the entirety of carbon pricing to this unreformed boom and bust system? There is some naive thinking going on here and it is not mine.

    I guess I am back to being very annoying on this point. I must say in my turn that naive and boundless faith in free markets (as opposed to moderate faith in well-regulated markets) annoys the heck out of me. I (along with millions of other Australians) have had to put up with a lot of downright exploitation and alienation in my life as a worker due to the greed and bull*** of economic rationalism, corporate managerialism and neoliberal economics over the last 20 years.

    I never forget. I retain some residual bitterness and a total scepticism about the “magic hand” of un-regulated free markets.

  13. JQ, with no disrespect intended, while you may be correct in this case that Observa was snarking, you are not well served by applying your censorship policy in this way on this thread. The thing is, you yourself invited comments and feedback, and doing this has what Americans call a “chilling effect” on that because others cannot see just what constitutes going beyond acceptable bounds.

    For this sort of thing you should probably only delete specific offensive phrasing while marking the omission, and annotate the rest to provide guidance for others while letting them see just what you do not like (the sort of approach I tried to use to hostile feedback on this blog a month or so back, showing where I thought it was wilfully ignoring and misstating). Otherwise – whatever your actual intentions – it just works out as “when people ask for criticism what they really want is praise” and only elicits USSR era Krokodil kinds of dissent that do not touch on fundamentals even if you are actually willing to allow more.

  14. John, on page 13 you have “Garnaut’s estimate of a 25 per cent reduction on 2000 levels appears to be
    the minimum consistent with..” and the sentence just trails off without ending.

  15. I disagree that CDOs are an appropriate analogy in arguing why carbon markets should not be the central plank of Australia’s climate policy response.

    The fact that nobody has made it work yet is far more pertinent. South Korea is the latest country to cave in to polluting interests. This is not an abberation, but the norm – as it stands, this idea that a centrally managed carbon price is the most efficient/best means of reducing emissions has been falsified at every turn from Phase 1 of the EU ETS onwards.

    Just as economists like Willem Buiter are arguing that we should question the base assumption that markets are the default mode of exchange, the onus should really be on Quiggin and other carbon pricing boosters to demonstrate that this IS like other micro-reforms.

    Don’t get me wrong – I understand and support the case you make for not compensating the owners of capital (p.10 of the attachment is a sublime demolition of this in the stationery energy sector), but when the government has proved itself incapable of doing this, why continue to support the concept rather than advocate more direct, measurable efforts?

    ps. your attachment failed to mention the inter-state emissions leakages that will occur as a result of RGGI

  16. Ikonclast says: As a more specific answer to the (in my view naive) question “how can it (the market) not get the (carbon) price right?, I would say this.

    VERY EASILY. After all, how did the current market not get the price of derivatives, CDOs etc. right?

    Oh phooey :-)! The two are completely different. Here is how they are different.

    With an ETS, we know, up front, the outcome we want to achieve. We want to emit X tons of CO_2. We fix that. So we get the outcome we want, and let the emitters work out the price. It is the outcome that is important, no?

    With other financial thingy’s (lets say shares), the pricing is based on the future value of the asset, with discount rates for risk and inflation and interest rates, etc etc. All these things are near-impossible to predict, and so it is little wonder that “the markets” get them wrong.

    There can be problems in the implementation of an ETS, such as:

    * We fix a CO_2 value that is too low (which we have done);
    * We subvert the whole thing by handing out free permits to some and not including others at all (which we have done);
    * We fail to actually monitor/police emissions properly, so traded emissions targets become a fiction (I doubt this will happen on a large scale, but I live in fear).

    But these are implementation issues, not inherent problems with an ETS. If you want to argue against an ETS, fine, but I don’t think “inefficient markets” is the best line of attack.

  17. PML, I don’t think deleting unhelpful comments has a chilling effect on discussion. Very much the opposite. Lots of blogs have no useful discussion because the threads are filled with snarks and flames.

  18. The stuff about derivatives is a red herring. There’s no need for any derivatives market, and to the extent we might see one, it’s only likely to be in futures markets, which have worked reasonably well for 100 years or more. And, while derivatives might create problems for investors, Peter Rickwood’s basic point is the right one. It doesn’t matter all that much what happens in the market, as long as aggregate emissions are constrained appropriately by the total issue of permits. Not the case with the CPRS unfortunately, but that’s not because of the choice of an ETS mechanism., in what sense do you think EU Phase II has failed? It seems to be going reasonably well to me, and a move to fully auctioned permits has been foreshadowed.

  19. “Lots of blogs have no useful discussion because the threads are filled with snarks and flames.”

    Exhibit A: People like me taunting Graeme Bird when Catallaxy used to allow him to run free.

    Read this.

    I think John does a very good job of keeping this blog on track as a thoughtful and civilised policy testbed.

    Which is why I don’t come by much anymore. I’m just a carny at heart.

  20. JQ – a few comments if I may.
    Thanks. My responses in itals
    1. On page 7, you call for mandatory energy efficiency standards; there (IMHO) no argument for these standards once we have the ETS or carbon tax, except in uncovered sectors (eg farming). Otherwise we are putting a higher price on emissions in some sectors than in others – what is the argument for this? Any probs about asymmetric information can easily be fixed by mandatory information standards, which you advocate.
    I don’t see a big role for mandatory standards, but I’m a pragmatist rather than a dogmatist on these matters. If (as with light bulbs) mandatory standards seem likely to work quickly and at low cost, I’m happy to accept a deviation from market purity
    2. There is also no argument for planning policies to promote efficiency, once the ETS is in place.
    See 1
    3. (page 10) There are enormous risks in having price uncertainty – in particular, business investment could be cut significantly. On the other hand, uncertainty over Australia’s emissions will have a negligible effect on the global environment. This provides a very strong argument for increasing the certainty over the price of Australia’s emissions.
    This seems to be another version of the free rider argument
    4. I think you are overstating the ease of reaching a global agreement on quantity rather than price. Witness the difficulties in getting agreement on the Kyoto caps, when this involved only a few countries – imagine how much harder it will be with almost 200 countries involved.
    I agree it will be difficult, though the “200 countries” point is not really relevant. If the or 12 big players agree, the rest will have no choice to go along. Getting agreement on quantities among the big players will be hard, but my point was that there’s no way an agreement on price could be reached.
    5. While capital owners have not always been compensated, they have been in some cases, such as special compensation to retirees for the GST effect on their superannuation and the payouts to dairy farmers after deregulation. There is also an argument that a Constitutional challenge could be mounted by those who don’t receive compensation (the clause about acquisition of property on just terms).
    Given that capital owners have mostly not been compensated in the past, the idea that the takings doctrine could be applied in this way seems most implausible. Both here in and the US, arguments of this kind have invariably, and rightly, been rejected
    6. It appears inconsistent to argue that the costs of emissions permits will fall on customers and (simultaneously) on capital owners. Perhaps the impact will be shared between the two groups?
    I’m not arguing that. Rather, I’m saying that capital owners are likely to be net beneficiaries if they receive compensation for losses that are actually borne by consumers
    7. The Government hasn’t ruled out adjusting permits to take account of voluntary action.
    All the more reason to put pressure on them
    8. There is definitely a need for a derivatives market. Business needs some degree of certainty about return on their investment; derivatives can increase certainty and thus can increase investment, including for low emissions technology.
    AFAIK, derivatives markets for existing emissions permits have been limited. But I’m pretty much neutral on this issue.

  21. One commentator has said;

    ‘Because carbon cap-and-trade systems are inherently super-complex, they are nearly certain to be “gamed” – defeated by gimmicks, litigation, and special-favours lobbying. Lawyers and financiers will always think of pretexts and schemes faster than regulators can repair flaws in the language of complex regulation.’

    A cap and trade system promises a “cap” in the title and then incorporates reams of fine print exceptions which mean in effect at the end of each year and at the end of each decade there is no real cap at all.

    The above just touches on the national get-out clauses. Consider also the ultimate international get-out clause from the green paper. “The scheme cap would not be adjusted in the event that it is incompatible with internationally negotiated national targets and, if necessary, the Government would make up any shortfall in internationally agreed targets by purchasing international emissions units.”

    What price international regulation and compliance? Consider the phrase “if necessary”. Will any sovereign government consider it “necessary” if it is inexepedient to do so? And if a country like Australia could be held to
    such a committment by international pressure then it constitutes an open-ended promise to subsidise emitters with public funds “if necessary”.

    I predict the empirical long term outcome will confirm my basic assertion. There is no real cap at all.

  22. John,

    Very good submission, especially your arguments against free permits. I have one significant point of disagreement, though, related to the discussion above about markets getting the carbon price right.

    I accept that if our goal is simply to meet our emissions targets at the lowest immediate cost, emissions trading is clearly the best option. But there is another, equally important goal that is often overlooked in this debate – enabling a transition to a low carbon economy. The two goals are related but not identical, and the distinction is very important.

    If the carbon price falls too low for too long, we will make no progress towards creating the new jobs and new industries that are needed, and no changes to the way we generate and use energy. The price signal will be too weak and the uncertainty too high to encourage investment in low carbon technologies, or to stimulate the long term research and development needed to enable new technologies and lower the cost of existing ones. In short, a low carbon price discourages innovation.

    If this happens at an international level, the long term costs will be higher; if it happens only at the national level, Australia will miss out on all the opportunities afforded to the early movers.

    From the perspective of the investors and innovators, I can see two clear risks that could lead to excessively low carbon prices. The obvious one is a cyclical downturn. Another one that hasn’t received much attention is the availability of very low cost abatement options on the international market. A good example of this is avoided deforestation in developing countries. Australia currently has a joint agreement with Indonesia to find ways to include the preservation of their forests in international carbon markets. To give you an idea of the difference this would make, Garnaut points to estimates that Indonesia’s annual emissions from deforestation could amount to several times Australia’s total annual CO2 emissions, and that the cost of avoiding these emissions could be as low as US$1-2/tCO2.

    Of course, I’m not saying that we shouldn’t stop deforestation in developing countries – I think it’s absolutely vital – I’m just pointing to the danger that it is the ONLY thing that we do.

    For these reasons, I advocate a price floor (I’m following Peter Wood’s lead on this, see his submission 371). This is a hybrid solution that would combine the economic flexibility and emissions reduction certainty of a cap-and-trade system, with the investor certainty of a flat carbon tax.

    For more details, I invite you to read my (fairly rushed) full submission here.

  23. Robert Shapiro’s criticism of cap and trade sums it up well.

    “The clearest illustration of the problems with cap-and-trade is the European Trading Scheme, based on the Kyoto protocols covering most of Europe. According to a new report by the Government Accountability Office, there’s little if any evidence that the ETS has had any effect at all on emissions in Europe. One reason is that major emitters such as Germany simply exempt many of their facilities generating greenhouse gases. Another factor is the “offset” permits that European “transition” economies, themselves exempt from caps, can sell to other ETS members. According to a recent study in Nature, once we set aside those offsets, emissions under the ETS have actually increased by 10 percent.”

    The correct path is much simpler, relatively speaking;

    (a) remove perverse subsidies for fossil fuels;
    (b) implement a carbon tax; and
    (c) complement the process by direct government intervention with a timetable to move to a sustainable renewables energy system within 30 years.

  24. Footnote: See the article, “Climate Fraud and Carbon Colonialism: The New Trade in Greenhouse Gases” – Heidi Bachram.

    This ought to effectively demolish all but the most foolish and blind faith in “Capn’ Trade” or Captain Trade to give him his formal title.

  25. The prospect of carbon prices getting too low to fund innovations I think is covered by CPRS ‘gateway’ concept of floor and ceiling prices. If the floor price was say $20 per tonne of CO2 that should generate over $10bn absent free permits.

    The notion of paying the Indos not to raze forests is flawed in both theory and likely practice. Instead of blackmailing other countries they should get a carbon debit if they fail to preserve their forests. There are associated issues of timing, natural variation, stakeholding and additionality, all of which underscore how offsets are a minefield. I suggest if any governments or corporations are making such payments they will want them acknowledged under a carbon tax.

    Alas we now have the Clean Coal Institute as a possible delaying mechanism. If Rudd was a footy umpire I suspect he would give away a lot of free kicks to one side.

  26. I agree Brett’s comments above (25).

    With a price floor, there is no limit to the amount of low cost abatement, where low cost abatement is abatement that costs less than the level of the price floor. Also, if the price floor is sufficiently high that it is likely to be in operation, voluntary actions will count. Innovation can also make a difference to greenhouse gas levels.

    In my opinion, an ETS with a price floor is a superior way of taking into account voluntary action than a pure cap-and-trade system where permits are allocated for voluntary action. The latter system would require a regulator to decide on what constitutes voluntary action, which would be complicated.

  27., in what sense do you think EU Phase II has failed? It seems to be going reasonably well to me, and a move to fully auctioned permits has been foreshadowed

    Carbon markets like the EU ETS do not bring willing buyers and sellers together to determine price, as in classical economic theory. Instead, they are controlled by the release of permits from certain institutions like the UN’s CDM Executive Board (thanks to the linking directives in the case of the EU ETS or the proposed CPRS)

    I disagree with you that they should be seen as simply another item on balance sheets. Regulatory carbon markets are created with specific policy goals in mind. The price collapse in the EU ETS risks undermining these goals without significant rejigging of the rules. As Michael Grubb puts it, governments will snatch defeat from the jaws of victory at this rate.

    At a minimum, what Peter Wood said – a price floor is necessary – one that reflects the policy intent of the scheme.

  28. I strongly support John Q’s censorship (Post 16 & 20). I only wish it wasn’t necessary. Why is it people fill their responses with abuse, red herrings, rants, extreme statements etc rather than arguments and discussion? Civility does seem to reduce on blogs, for reasons I don’t understand.

  29. Dissenting views are usually censored on this blog.

    Which no doubt explains why it includes 451 comments from you – JQ

    John, no disrespect to your convictions or related work, even if those convictions are delusional.

    AGW is a fraud.

    Carbon is increasing in the atmosphere, but it is only assume that it is anthropologically source. The increase in atmospheric carbon could be coming from anywhere.

    If Australia cut carbon emissions by 100%, it will not have any effect on carbon increasing in the atmosphere.

  30. I don’t normally comment on such matters, but it is John Quiggin’s blog, he has every right to remove any comment that he wants.

  31. If I go by my own case, I have to say that John Quiggin tolerates dissent very well provided there is some point being made and at least a shred of reasoning to go with it. I’ve certainly been dissenting in this thread.

    I’ve been long-winded, repetitive and a bit snarky. If JQ deleted my last few posts, I’d have to admit I probably deserved it.

  32. Very good submission from our learned Professor. Lets hope TPTB give it the consideration it deserves.

    RE: the carbon tax vs ETS debate: There are really only two reasons for preferring a carbon tax over emissions trading and they are:

    1. A carbon tax is simpler.
    2. A carbon tax is less susceptible to manipulation by the cowboys that gave us the GFC.

    I’d happily support an ETS if someone could convince me these problems could be overcome. As it stands, the CPRS seems inordinately complex with lots of outs and exceptions.

  33. There is a voluntary action that will work under the CPRS. Anyone can buy a permit and not use it. If 5 million people buy 10 permits and tear them up that in itself will reduce emissions by 10%. The cost will be $100 per year per person. State and local governments and NGOs could do the same.

    How do you organize 5 million people to do it? Don’t know. Getup! could give it a try.

  34. Peter Wood, you are missing the point. It isn’t about whether JQ has the right or the ability to censor, but whether he was wise to exercise it on that occasion, in the special circumstances of this thread.

    JQ, your rebuttal at comment 20 relates to the wisdom of your practice and policy in general, without regard to the special circumstances of this thread, which I believe made it unwise in this case for the reasons I gave. I note that you pretty much followed the suggested alternative approach at comment 33, which means that other readers know just how far to take invited criticism that is meant constructively.

    Ikonoklast at comment 34, that last point and your comment rather illustrate what I was getting at. As, when and if your comments were ever deleted like that, you and JQ knew what was going on – but others only saw JQ’s brief note announcing the censorship. That’s no big deal usually, but on a thread like this the only information that gets out – the message that gets sent – is, criticism is requested and gets slammed against the wall. Sure, that may not be how it really was, and some readers may not see it as a big deal even if it really was like that – but others may be like me and see that sequence as inconsistent with the openness implied by the original request for feedback. And that’s the chilling effect.

  35. I thought we were having a discussion on climate policy, rather than comments policy.

    In response to parts 1 and 2 of mp’s comment (23), there is a case to have complementary policies in covered sectors when there is market failure. The fact that energy efficiency is very poor in Australia is a clear example of market failure. There are several reasons for this failure to occur. One is due to informational failures, which occur because there is very poor information about energy usage of buildings and appliances. Another is because of split incentives – where a landlord is not interested in investing in reducing energy usage of a building because the benefits will go to someone else (the tenant).

  36. @carbonsink my two point argument for an ETS is
    1) it gets the physical target every time
    2) the spot CO2 price lowers under weak demand.

    There is no reason to suppose dodgy offsets under an ETS won’t morph into dodgy deductions under a carbon tax. Same goes for industry wide exemptions. Now a problem might be if the ETS floor price is $20 and a free floating price was more like $7.50. As NEMMCO have shown with electricity price limits these can be changed under compelling circumstances. The problem then becomes funding the ‘green shift’. For example only $500 of free insulation to homes not $1600.

  37. Peter Wood:-

    – it’s not the policy so much as the practice; and

    – where there is censorship, there is no material directly related to the thread to discuss but only its absence – and that’s the practice.

  38. I agree with JQs right to remove blog postings. I run a discussion board and I do the same myself. JQ did much better than me – he stated why he removed it publicly. I do that privately and quietly and often get a private apology from the perpetrator. If you run a blog or discussion board – you know what works in the interests of maintaining civility and some people in blogs can get very rude, pedantic or uncivil or overly personal. Im not saying Observa did any of that but JQ noted he didnt make a point presumably accompanied by a negative comment. Well, this time Observa didnt get away with it. Others do get away with it sometimes in here. Luck of the draw because it isnt only Observa but it reminds us all about an acceptable code of behaviour to have a civil (strong even) debate without it degenerating into a slanging match or a vicious whinge session.

    No one should call JQs intervention censorship. That is taking the concept of the freedom of ideas too far (let a thousand flowers bloom etc even the rampant weeds and thistles??).

    Its actually like having a referee at a footy match to be sensible about it.

    The umpire only intervenes when he needs to and everyone else gives the umpire respect.

    Nothing worse that a game of cricket that descends into a rugby scrum. Fair is fair. Thats part of the reason why JQs blog is so well received.

  39. I agree with Carbonsink’s points.

    “1. A carbon tax is simpler.
    2. A carbon tax is less susceptible to manipulation…”

    Hermit argues the other position;

    “… my two point argument for an ETS is
    1) it gets the physical target every time
    2) the spot CO2 price lowers under weak demand.”

    I don’t think the supporters of the ETS are watching the empirical outcomes of the political process to date. The special pleadings of the fossil fuel lobby are resulting in a scheme with free permits for big polluters and NO REAL CAP.

    I argue most strongly that the cap is illusory. Not only is Rudd’s cap high and therefore weak, it is also hedged in so many ways that it is illusory. JQuiggin may well be arguing for a better ETS that has a lower cap and a real cap (I think he is). However, the empirical reality of this political process is showing us that ETS negotiation outcomes tend strongly to favour big polluters and to set in place not a cap but a colandar full of holes.

    It is a complicated “one-remove” process which attempts to handle the problem with clumsy “market-gloves” when direct government action of “Tax and Enact Alternatives” would achieve real results. Let us call that the TEA scheme.

    Is anyone who is pro-ETS ready to argue why they think the cap is real and why they think corporations won’t “game” and defraud an ETS? The latter would also entail an exposition of how international compliance would be enforced and how carbon rating agencies will be any more reliable than financial risk rating agencies.

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