Wednesday, September 30, 2009



Climate change: Arse-backwards

Something I skipped in yesterday's overview of the Climate Change Response (Moderated Emissions Trading) Amendment Bill: The government's subsidy scheme is actually two-tier, offering 60% or 90% subsidies respectively to moderately or highly emissions-intensive sectors. So what makes a sector moderately or highly emissions-intensive? According to new section 161A(4),

For the purposes of this section, an eligible industrial activity—

(a) is moderately emissions-intensive if the weighted average emissions-intensity from those carrying out the activity in the years for which data has been provided under section 161B were equal to or greater than 800 whole tonnes of emissions per $1 million of revenue from the activity, but less than 1600 whole tonnes of emissions per $1 million of revenue:

(b) is highly emissions-intensive if the weighted average emissions-intensity from those carrying out the activity in the years for which data has been provided under section 161B were equal to or greater than 1600 whole tonnes of emissions per $1 million of revenue from the activity:

Think about that for a minute: more tons of carbon per dollar earned means less value generated per unit of emissions - in other words, the highly emissions-intensive sectors are in fact the worst value for money. And yet these are exactly the sectors the government wishes to reward. Meanwhile, the low emissions-intensive sectors - the ones that generate the most money per ton of carbon - are left to fend for themselves.

If the goal is to transform our economy and set us on a low-carbon path, this is simply arse-backwards. But the goal isn't economic transformation: it is to support marginal industries whose - and by offering a subsidy the government implicitly admits this - environmental costs outweigh their economic benefits. In other words, industries that make us worse off by destroying our natural wealth.

The government should not be doing this. If it thinks those sectors are essential, it should offer them assistance to clean themselves up (ideally, in exchange for equity - we shouldn't be offering free lunches for private profit). Otherwise, it should let them go bankrupt. Either way, we will be better off. But supporting industries which make us worse off is simply utter madness.