Carbon tax not the solution we need on climate

A carbon tax, proposed by The Greens as an alternative to Rudd’s CPRS, would increase power prices for ordinary people, and be just as ineffective in encouraging renewables as carbon trading
With Rudd’s CPRS stalled in the Senate, and support for the scheme falling, the debate about solutions to climate change has opened up.
The Greens have proposed an interim two-year carbon tax, as a transition to carbon trading, starting at $23 per tonne this year. Unlike the CRPS it would not involve tradeable permits, or the use of offsets, but as the Greens state “The scheme would operate using the proposed CPRS administrative framework”. The proposal originally comes from the Garnaut review, the report by free market economist Ross Garnaut that led to the CPRS.
The Greens are attempting to deal themselves back into climate negotiations with the government, rather than fight for solutions that would actually work. Given the scale of the problem, their carbon tax proposal is remarkable for its timidity. However timidity is not the only problem. A carbon tax will make getting solutions that work more difficult.
The Greens are proposing exemptions for “trade exposed emissions intensive industries”, just as with the CPRS.
This would include exemptions for companies like Alcoa, who have just done a deal to source their power from a coal-fired power station in Victoria, Loy Yang power. It will lock in their enormous use of power for the next 26 years.
Exemptions are designed to support Australian companies against international competitors. But being Australian companies does not make their emissions any less harmful to the climate. Climate change doesn’t recognise nations.
Problems
Carbon taxes are market mechanisms that, like Rudd’s CPRS, work by imposing a price on carbon emissions. This is designed to make polluting forms of energy more expensive, which would supposedly encourage the private sector to invest in renewables.
But a carbon tax set at $23 is far too low to do this. Renewables expert Mark Diesendorf estimates it would have to be set at $100 or more to make solar power competitive.
Energy producers would simply pass the cost of a carbon tax on to consumers. This means ordinary people would pay the cost of a transition to renewable energy—not the polluters.
Some argue increased prices for consumers could be offset by giving them back the revenue from a carbon tax or eliminating other regressive taxes.
But even the threat that prices might rise will alienate ordinary people. It is with good reason most working class people are suspicious of government policies that might raise their cost of living. We have experienced over 20 years of neo-liberal “reforms” designed to cut living standards and boost corporate profits. The climate movement needs to make it clear whose side we are on.
We need a mass movement to force our rulers to act to stop climate change. People will not join our movement if it could mean they can’t afford to drive a car, or if they are cut off electricity.
The right will attack a carbon tax in the same way Abbott has attacked Rudd’s CPRS—labelling it a “great big new tax” that will hurt living standards.
Regulation
If government is serious about stopping something dangerous, it bans it. DDT is banned because of its effects on the environment. So is asbestos. We need to regulate absolute limits on carbon pollution. Why allow companies to pay a tax and continue to destroy the planet?
Carbon taxes are always less effective than regulation. For instance taxing old incandescent light globes would reduce their use, but banning them stops it altogether. Taxing the car industry or petrol might force some poor people to stop driving, but requiring car manufactures to produce electric cars run on renewable energy alongside massively expanded public transport would make a real difference.
Funding renewables?
The Greens say that their proposal “Results in a surplus of $2.97 billion… which could be directed towards climate mitigation and adaptation infrastructure”.
We do need a way of raising money to pay for the building of renewable power generation. But this should come from taxing polluting corporations and the rich—those responsible for climate change.
If government was serious about funding a transition it could raise corporate tax and the highest individual tax rate back to where they were in the 1980s—corporate tax would go from 30 per cent back to 40 per cent and the highest tax rate from 45 per cent back to 60 per cent.
The movement must demand what is necessary, rather that try to come up with “solutions” that are acceptable to those who run our world, but that will not work.
Rudd claims carbon trading can be the key mechanism to fight climate change. The climate movement’s answer must be that a massive program of government spending to install renewable energy and public transport is necessary, not to argue for a carbon tax.