Monday, May 15, 2006

The economics of Kyoto and the business of ideas

The Australia Institute ('TAI') has just released a paper suggesting that the economic costs to Australia of ratifying the Kyoto Protocol and implementing carbon-pricing measures such as a carbon tax or domestic emissions trading scheme have been massively overstated and the economic benefits overlooked:

The current policy of staying outside Kyoto and not pricing carbon carries substantial economic risks. First, it locks us out of the emerging carbon markets, limiting both foreign investment in Australian clean technologies and plantations (through the Joint Implementation mechanism of the Kyoto Protocol) and participation by Australian companies in developing country projects (through the Protocol’s Clean Development Mechanism). Second, by insulating our economy from a carbon price, it retards the development of new clean industries and increases our future dependence on imported technology and expertise. Third, it fails to preserve the competitiveness of Australia’s coal exports (considerably greater in both export earnings and jobs than aluminium production), which will be subject to the emissions
policies and taxes of importing countries. Fourth, it exposes our exports of coal and emissions-intensive products to likely consumer and government preferences against climate ‘free-riders’.
It suggests a carbon tax or emissions scheme be introduced, together with tax rebates for energy-intensive exporters:

How could the competitiveness problem best be deal with? The Australian Government has claimed for some years that seeking legally binding emissions limits for the major developing countries is the best response. This strategy failed in Kyoto and has not borne fruit since. It has seen the Government backed into a corner where Australia now, alone with the United States, refuses to ratify the Kyoto Protocol. This paper proposes a different approach: that Australia ratify the Kyoto Protocol and implement a carbon tax or emissions trading, incorporating offsets that preserve the competitiveness of the industries at risk. Ideally, the offsets would be designed so that they might form the basis of a future multi-lateral solution to carbon leakage. As a full and more respected participant in the international climate negotiations, Australia would be better placed to pursue a multi-lateral approach.
It's an intriguing idea. I can't tell you the assumptions the paper's based on or really examine its conclusions, because the paper costs $21 and I'm debating with myself whether to fork out the cash and read it! It does sound interesting but there's so much material on the economics of climate change which is free and which I haven't found time to read!

Which brings me to the second part of this blog - and I'll admit this is essentially a rant prompted by being asked to pay for something I'm used to getting for free.

There's been some interesting articles and discussions recently on think tanks in Australia and how political groups sell their policy ideas. The gist of these has been that progressive groups and think tanks in Australia need to do better at selling their ideas.

I don't know how many people will read the Australia Institute paper for $21. I suspect not a whole lot. I don't know how many people would read it if it was free - but my guess would be substantially more. Obviously TAI needs to raise money to fund its works, but my question to TAI, the Climate Action Network, the big green groups and other sympathetic business and lobby groups is this: If this report makes a useful contribution to the Australian climate change policy debate, shouldn't you be trying to get it maximum exposure? Surely someone can commission or sponsor TAI to produce reports like this and make them available for free? I could be wrong, but I suspect a few thousand dollars would raise more money for TAI than they'll get from selling copies of the report for $21 each.

The press release has been picked up by some of the media, which perhaps is the main thing, but if you want to influence the debate I would have thought you'd want your primary source as widely read as possible.


Amy Stodghill said...

If the governments of the United States or Australia decide to sign on to the Kyoto Protocol, would it be for anything other than a strategic political move at this point?

As far as paying for reports - I'm against it.

Anonymous said...


Anonymous said...

Interesting website with a lot of resources and detailed explanations.