The Effect of the Carbon Price on Electricity Prices

Updated on Friday, September 13, 2013 at 18:11 by MCJ

Updated on Sunday, November 3, 2013 at 22:39 by MCJ

In an otherwise good article, Peter Martin today wrote that

[the TD Securities Melbourne Institute price index] reports a jump in electricity prices of 14.9 per cent and a jump in household gas prices of 10.3 per cent, almost all of which would have been due to the carbon tax. [emphasis mine]

This is incorrect, and, unfortunately, he is not the first journalist to make this mistaken claim. Evidence to the contrary be found in, for example, the reports from the relevant authorities in states that regulate their electricity prices:

New South Wales

IPART’s “Final Report – Changes in regulated electricity retail prices from 1 July 2012”

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Laggard to Leader: a Review

Updated on Tuesday, July 24, 2012 at 16:41 by MCJ

Beyond Zero Emissions, the non-for-profit climate change group, yesterday released the latest in their series of plans to get Australia to a state of zero emissions (or below): Laggard to Leader; How Australia can lead the world to zero carbon prosperity.

The report springs from the observation, also reported by e.g. Crikey on Friday, that the UN Framework Convention on Climate Change is failing to achieve the actions required to prevent dangerous anthropogenic climate change. It then goes beyond this to suggest new means of addressing the problem, in which Australia leads the world to a zero carbon future.

Sound utopian? It’s actually reasonably well argued, by and large, even if it’s difficult to see our current crop of politicians implementing many of the report’s suggestions.

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Pricing Carbon Has Passed the Acid Test

I am quoted in today’s Sydney Morning Herald piece on the carbon pricing scheme.

Tomorrow, the nation steps over the threshold of carbon pricing into a domain where pumping out greenhouse gas has an economic price as well as an environmental one. The federal government’s Clean Energy Bill is a compromise with which no one is entirely happy. But the consensus of economists is that it is likely to work well enough to cut emissions by 5 per cent, the minimum supported by the major parties.

“If you assume the political will to implement the scheme is there, a huge ‘if’, then the question is whether the scheme is designed well enough to achieve its goals - I think it is,” says Martin Jones, a researcher at the Centre for Energy and Environmental Markets and University of NSW. “The mechanism is an effective one: emissions trading schemes have proven records of reducing emissions.”

Does It Make Sense for Australia to Restrict Its Export of Fossil Fuels?

Once we dig up and sell the coal, are we still responsible for the emissions? ‘Stop exporting fossil fuels’ has not just economic, but moral components, given that much of our fuels go to developing countries.

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Surrendering to the Idea of a Price Floor

From July 2015, the Australian federal government will set the price of the permits in its emissions trading scheme free – within limits. The government intends to introduce a price floor and price ceiling until at least 2017/18.

This is good news for emission reduction activities whose viability depends on prices several years hence, such as larger, more complex projects. Further, the goal of abatement at least-cost should be balanced against the goal of abating as rapidly as possible; should reaching current targets be cheaper than expected, a floor price can ensure a minimum level of spending on abatement.

Last December, the government released a discussion paper and called for submission on the price floor, which combines a reserve price for Australian carbon units at auction with an ‘international unit surrender charge’ that ensures international carbon credits cost at least as much as domestic units. Four options are being considered for the international unit surrender charge.

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New South Wales Bins Carbon Trading Scheme

Updated on Thursday, April 5, 2012 at 13:50 by MCJ

Updated on Friday, April 13, 2012 at 18:58 by MCJ

I am quoted in today’s Point Carbon article on NSW’s announcement that GGAS is ending. (Readable with a free trial.)

Australian state New South Wales will abandon its Greenhouse Gas Abatement Scheme (GGAS) on July 1, when the federal government introduces a tax on CO2 emissions, state Energy Minister Chris Hartcher announced Thursday.

The baseline-and-credit scheme has operated since 2003, targeting emission cuts primarily in the state electricity sector, but also in industry and forestry.

 The phase-out was expected, but leaves market participants with 16 million surplus credits that will be ineligible for use in the nationwide scheme.

 This spurred Minister Hartcher to demand in local media Thursday that the federal government compensate the credit holders.

 However, market observers dismissed Hartcher’s claims.

 “It’s been clear from the outset of GGAS to all participants and government that GGAS would finish when a national carbon pricing scheme started,” said Martin Jones, a researcher at the University of New South Wales.

 “The problem of excess supply and an upcoming end date have been on the radar for at least half a decade, and insufficient efforts to address it have little to do with the federal government,” he told Point Carbon News.

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State Climate Schemes Are Still Worthwhile under a Carbon Price

In justifying their recent abandonment of state-based climate schemes, the governments of Queensland and Victoria have both claimed that the schemes will be redundant under the federal emissions trading scheme (ETS) that begins in July. Yet this justification is only a smokescreen, as a carbon price can well exist with other environmental and climate schemes.

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More Personal Carbon Offsetting

A year ago I looked into offsetting my GHG emissions from, and detailed my experiences with First Climate.This month I wanted to repeat the process, but for a smaller volume of offsets. This made First Climate, with whom I was otherwise happy, inconvenient, as, to quote them:

the reality is that our key focus in the Australian market is at the corporate/wholesale level and as such we are unable to provide alternatives for transactions via our Frankfurt trading desk, which can only be achieved via international bank transfers.  As you highlighted this obviously presents a problem for retail buyers seeking to make purchases of less than $500 which fail to trigger the threshold for most banks.

I believe that it would be best if in these circumstances we refer you directly to our retail channel partner The Carbon Reduction Institute (http://www.noco2.com.au), who is more than capable and willing to assist in this regard.  CRI are recognised as one of the best carbon offset retailer in the Australian market.

I called the CRI, registered my intent to purchase six tonnes of offsets, and waited for a call-back. After a week, I chatted with a bloke I play football with who happens to work at the CRI, and a few days later he took over my query.

The easiest way to purchase offsets from The Carbon Reduction Institute is via their online calculator: https://secure.noco2.com.au/?Calculator

Though the CRI essentially just deal with First Climate, they won’t sell Gold Standard Verified Emission Reductions under volumes of ~100t. However, the will sell Verified Carbon Standard offsets. The differences – and more about the CRI’s offsets – are explained in this guide [PDF]; also useful is Carbon Offset Watch’s independent rankings of offset providers.

I wasn’t as impressed with the CRI as I was with First Climate. Next time I’ll probably try Climate Friendly, as they sell Gold Standard VERs.

The Fundamental Question on Asylum Seekers

Australia’s dog of a policy on asylum seekers – at least, those arriving by boat – appears set to be a continued topic of political discussion this year, so I’d like to echo the sentiments of Guy Rundle as expressed just before Christmas:

The Australian asylum seeker discussion is wrongly framed. As signatories to the Refugee Convention, we have a categorical moral imperative to allow any potential refugees that reach our shores to claim asylum; this is their right.

However, the policy debate revolves around whether we can

“wholly negate someone’s rights (that we have explicitly promised them), in a situation where their life and freedom will be wholly annihilated indefinitely, all as a strategy for dissuading unknown future persons from making a possibly perilous journey.

By that definition we are using the ‘deterrent’ — the people locked up for years on Manus, Nauru, in Malaysia, or god knows where — as a means to a utilitarian end. It is a clear use of human beings in their totality, as means to other ends, and cannot in any sense ground a moral policy.

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Australian Carbon Price Legislation Passed

The Senate has just passed the primary piece of legislation for the carbon pricing mechanism.

Well done, Australia :-)