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Carbon Reality, Again

The Wall Street Journal has an opinion on the Prime Minister Kevin Rudd of Australia and his failure of imposing cap and trade sanctions to their economy. The political realities of imposing a tax on certain portions of the economy to their detriment and the reward of other industries is difficult to justify. For instance:

  • are customers (industrial and consumer) willing to pay 10% more for their energy needs due to be generated from coal when another part of the country is served by nuclear?
  • are customers willing to pay considerably more for the trucking of fruits and vegetables than their fellow constituent that lives a little closer to the source?

There are many more examples, obviously. The key thing here is that we are talking dollars and cents. And many people would be willing to spend those dollars to save the planet if they thought it was really doing that rather than just lining the pocket of someone else or putting their local economy at risk versus another economy farther away. It would also assist if there were more solid evidence of the rewards of carbon reduction and that this was the best way to that end.

It’s turning out that the biggest problem with carbon taxes is political reality. Australian Prime Minister Kevin Rudd has just announced he will delay implementing his trademark cap-and-trade emissions trading proposal until at least 2011. Mr. Rudd’s March proposal would have imposed total carbon permit costs (taxes) of 11.5 billion Australian dollars (US$8.5 billion) in the first two years, starting in 2010. This would have increased consumer prices by about 1.1% and shaved 0.1% off annual GDP growth until at least 2050, according to Australia’s Treasury. Support has fallen among business groups and individuals who earlier professed enthusiasm for Aussie cap and trade. Green gains were negligible; Australia accounts for only 1.5% of global greenhouse gas emissions.


This is yet another example of politicians elsewhere cashing in politically on the current anti-carbon enthusiasm, only to discover that support diminishes as the real-world costs become clear.

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