Carbon tax or trading – just so much hot air

Ahead of next week's LIA meeting on the same theme, industry sage, James Cryer, wades into the debate between the two competing climate-change policy instruments – carbon tax v emissions trading.He reckons it's like comparing how many angels can dance on the head of a pin and that both miss the point.

Only a climate-change scheme that taxes usage at the input stage will work, as people or companies only respond to the ‘pain’ charged on what they are using, not what they’re emitting into the atmosphere. If governments were fair dinkum, they could implement such taxes tomorrow, along with subsidies on alternate energy use.

By presenting carbon as the culprit, governments and opportunistic companies are appealing to our simplistic notions to declare war on carbon, to the exclusion of other pollutants.

Mankind seems hot-wired to jump onboard any bandwagon that rolls past, without questioning its underlying premise. Be it the innocence of hula-hoops or UFO's or weight-loss diets or the more sinister beliefs such as Jim Jones or Scientology.

It seems we are being similarly engulfed by pop psychology, wrapped in a mantle of pseudo-science, as we fall for the next fad – man-made global warming. We're again being asked to turn off our brains and leave them at the door, while we uncritically accept what the consensus of scientists tell us what to believe in.

One of the telltale signs of a looming fad, easily fuelled these days by the internet, is the number of buzzwords that describe the phenomenon. We accept these jargon words as some kind of sacred mantra that turn our minds to jelly.

Jargon is designed to intimidate or stymie discussion, as the speaker is meant to possess superior wisdom. Phrases such as global warming, greenhouse emissions, carbon footprint and climate change have a ring of verisimilitude that causes lay people to accept them as gospel.

So, how can we who know nothing, possibly challenge the climate modeling experts who predict with absolute certainty that mankind is causing the world to get warmer?

Do you believe that?

Perhaps it's so seductive because it chimes with our own inbuilt conceit that man has the power to control the environment? If we made it warmer, surely we can make it cooler, by simply reversing the process! Such logic has an irresistible symmetry, which makes it oh, so easy to believe. I wish that life on Earth were so simple – to be controlled just by pulling levers.

The other option, that there may just be some in-built, climatic variability within the system or even external causes such as sunspot activity, seems too elusive, esoteric or simply un-exciting. We need a more vivid, easily understood explanation – so along come the buzzwords. Merely by mouthing them often enough we convince ourselves of the cause – too much carbon dioxide. And the solution to global warming? Ride a bike to work, change a few light bulbs, and plant a few trees – problem solved!

We so love the simple solutions.

But there's one word which one hardly ever hears, in this headlong rush to kill the post-modernist devil, carbon. And that is pollution. When I was in Los Angeles in 1970, there was a serious pollution problem. No, not smoking pot. It was called smog. It comprised photosynthesized, air-borne particulates from industry and cars, and it was ten times worse than pollution now.
In those days they hadn't invented concepts like the ‘Kyoto’ and ‘Copenhagen’ gabfests. They just acted! They legislated that all vehicles had to have catalytic converters and all industrial smokestacks had to install after-burners. In less than a year the air was as clean as a whistle. Compare this with how long we've been talking about so-called ‘climate action’.

Some people want to have a bet both ways, by referring to carbon pollution, but there's no such thing. Current levels of carbon are so far below what they were during previous eras that we're not even close to pollution. The suggestion that too much carbon will lead to ‘ocean acidification’ is just another example of fear mongering by phraseology!

Unfortunately, the concept of being inundated by a blanket of tiny black particles has taken hold in the primitive recesses of our mind.

My point is, that by focusing on carbon dioxide we're chasing the robber down the wrong street. Forget carbon dioxide – it's not the bad guy you've been lead to believe. Forget your carbon footprint – go to a good chiropodist if you're having foot problems.

Forget trying to reduce carbon, you may as well try and reduce oxygen, or nitrogen, or any other element that happens to be on the wanted list. One good volcano or a few good sunspots will bugger up all that effort you went to in re-cycling your toilet paper and using only biodegradable shampoo on your pet poodle.

Stick it to the cows

So who started this obsession with carbon? Governments wanted to be seen to be doing something, but didn't have the guts until some bright spark invented the carbon emission-trading scheme. This got everyone off the hook and produced only winners.

• Governments love it because they can lurk in the background without actually having to do anything.
• Polluters love it as they can buy credits but still keep polluting.
• Merchant bankers love it because they can make a fortune as the middlemen, without actually producing anything.
• The greens love it because it sounds like a great idea!

Whether you actually need a carbon-trading scheme gets completely overlooked (go back to LA, circa 1970, above).

Eventually the penny dropped that a carbon emission-trading scheme would be an expensive folly, but the imperative persisted that we had to do something to eliminate this latter-day demon, carbon. So another bright spark came up with a more direct mechanism – the carbon tax. Although it's got an authoritative ring to it, you may as well impose a tax on ships and shoes and ceiling wax, and cabbages and kings (apologies to Lewis Carroll).

How on earth do you measure emissions? The thought of bureaucrats walking round paddocks holding bags jammed in cows' behinds beggars belief, but it may yet become a new job spec within the Dept of Climate Change. If you can't measure it, you can't manage it!

Killer tax grab

So what's my solution? Go back to first principles: forget carbon. Pollution in various guises is the real bad guy. The answer is not just one simplistic carbon-reduction program, as if carbon was a bunch of rabbits to be eradicated.

Unless there are guarantees of tax reductions in other areas, carbon taxes are just another cynical grab for cash by governments. It's been proven many times that people and companies only respond to direct pain or pleasure, i.e. taxes or subsidies linked directly to things we can see or touch.

This brings me to my killer point: you can apply tax at either the input (consumption) or the output (emission). The current obsession with taxing emissions is completely misguided; by then it's too late and too difficult to measure. So forget about trying to tax carbon.

The simplest response would be to apply surtax on the use of fossil fuels, typically petrol, in vehicles and industry. This would prompt the immediate response of everyone taking their own steps to reduce consumption and thereby pollution. You'd put the additional revenue into subsidizing alternate energy sources and public transport.

The next step would be to add incremental additions to the tax on the use, not emission, of coal-based energy and offer tax incentives on renewable sources. (I hate to admit it, but I'm starting to think that coal, if properly cleansed, is probably not too bad after all - but that's another story, as is nuclear power, the cleanest of all.)

Increase fines for illegal industrial discharges either into rivers or atmosphere and ensure stricter after burner controls.

By simply doing this you'd address 90% of the problem without creating massive bureaucracies, time-wasting committees and the costly delays that have plagued all the other more sophisticated proposals.

Most problems have a simple, elegant solution, or a convoluted political one. Carbon trading schemes or carbon taxes are merely attempts to complicate an otherwise simple issue. We really don't need either. Let's go back to basics with simpler, less complicated solutions.

It's not rocket-science!


James Cryer
Managing Director
JDA