Posts Tagged ‘ETS’

When we talked about climate change, a friend of mine once said: People only change for one of three reasons:

1. they make money,
2. they lose money or
3. it is the law.

(money in this context is a general human reward such as ego and/or emotion). Climate change, and our approach to making changes raises some interesting questions.

A Strong Global Climate Pact

“We are entering territory here that humanity has not been in before” Professor Ross Garnaut said to reporters upon his handover of his 620-page report to the Rudd government 30 September 2008. “Failure to deal with climate change now will haunt humanity until the end of time.”

Professor Garnaut then went on to hinge his recommendations on a ’strong global climate pact’, which, if you could pull it off, would enable Australia to make “a 25 per cent cut in emissions by 2020, keeping atmospheric carbon concentration to 450 parts per million (ppm)”.

But he wasn’t hopeful of the world agreeing to this ’strong mitigation deal’: If that proved impossible, Professor Garnaut said, he wanted Australia “to push for a deal for global atmospheric carbon concentration of 550 ppm, which means Australia cutting emissions by 10 per cent by 2020″. And, if no climate deal is forged out of the United Nations process, Australia should “cut emissions by 5 per cent”, Professor Garnaut said.

Consumers Will Wear the Cost

Professor Garnaut then went on to tell us that “Consumers will wear the majority of the cost of an emissions trading scheme, paying more for a range of goods and services as businesses pass on the emissions price.” ‘We (the taxpayers)’ cannot be expected to pay, but ‘We (the consumers)’ are going to have to pay for everything anyway.

Rather than have the government (representing the taxpayers) regulate directly and force the polluters to clean up their act, we have to rely on the market (without any involvement of the consumers, except through their ability to pay) to bring about the required changes. The Treasury modelling, released a couple of weeks ago, says consumers will pay about anther $5 per week electricity, and $2 for gas.

So do you feel happy about this. We, the consumers, pay extra. Why is the government not prepared to implement a raft of measures to complement or speed up this process?

Climate Change Solutions?

The Mckinsey Global Institute has published a detailed review of some simple measures that provide high returns, use existing technology and do not cost the consumer more. It is estimated that 50% of global energy demand from now to 2020 can be met from better energy efficiency using existing technology and will pay for themselves.

Examples include energy efficient appliances, heating, cooling, lighting, and transportation. These really simple measures combine savings to consumers and savings to the environment, but the government appears loath to legislate. McKinsey wrote a paper on The Case for Investing on Energy Productivity (Feb 2008).

There are 4 areas that Mckinsey say governments should intervene to give immediate returns:

1. Set energy efficiency standards for appliances and equipment
2. Finance energy upgrades in new buildings and renovations
3. Raise corporate standards for energy efficiencies
4. Invest in energy intermediaries

Maybe these will implemented as part of the Emissions Trading Scheme, or maybe the Government will only do a mediocre job and not act on climate change decisive enough.

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The Federal Government is planning to introduce carbon emissions trading scheme in 2010, and Wayne Swan says “acting on climate change now will save Australia significant financial outlay in the future”.

Household are expected to payout about $7 per week more for gas and electricity.

Treasury modeling says the ETS would mean households pay about $5 per week more for power while gas would add $2 per week.

Did you know you can save those rising costs, which are nearly $400 more each year, simply by installing a solar hot water heater?

If you install a system now you won’t pay anything more than you are currently paying for hot water heating. Furthermore you don’t have to be concerned about the $5 per week price increase due to ETS, or the 5% to 8% annual increase which bites you every year from now forever.

Treasurer Wayne Swan conceded the cost would hit lower income families harder and said the Government would work to help all Australians in managing the cost. “The Government is of course committed to helping households adjust to the scheme by compensating them for the impact,” Mr Swan said.

No firm figure of assistance has yet to be given.

The scheme would mean carbon as a unit was given a value in the hope of reducing emissions. Mr Swan says Australia could reasonably expect to cut emissions by at least 60% by 2050 with little impact on the economy. The expected price is around $23 per tonne of C02

The Treasurer also said the modeling, which was completed in response to a report by Australia’s peak climate adviser Professor Ross Garnaut, showed a higher cost if Australia failed to act now.

Mr Swan said the alternative energy sector would grow by more than 3,000% if the scheme was introduced.

“Low emissions technologies and production processes will become more competitive and low emission goods will become more attractive to consumers,” he said.

The good news is that installing a solar hot water system frees you from most of the impact of a emissions trading scheme, and saves you over $10,000 over the life of the system.