Invitations and Becomings

This week in Crikey, Bernard Keane suggests a couple of different ways of tackling climate change as an economic problem (of stimulating a certain sort of investment). 

<!-- break -->

Achieving energy efficiencies will require significant investment, which in a period of lower profits will be a more difficult business case for carbon-intensive industries. We could further increase certainty for business by adapting the HECS model and providing interest-free loans to large emitters for investment in carbon reducing technologies, which could be recovered through the ETS starting in 2010. This would bring forward considerable investment into the next two years and enable businesses to reduce their liability under the ETS once it kicks off. Not to mention the minor benefit of actually reducing emissions.

And -- deep breath -- let’s deal with job leakage concerns about an ETS. As an ardent anti-protectionist it galls me to say it, but we should consider carbon tariffs on countries -- especially developed countries -- unwilling to take serious action to reduce emissions growth. Not to do so when they’re competing with Australians businesses that operate under an ETS amounts to a subsidy of their contribution to climate change.

Earlier in the article,  Keane points out that European countries are likely to take a similary protectionist stance ... so why shouldn't we?

The HECS approach to green investment is interesting too. I take it the idea is that the loans get paid back through the ETS, because there is a price on emissions, although I don't quite understand how this works. Can anyone spell it out for me?

Also, on Crikey's environmental blog, Rooted, John Hepburn points out that every crisis is an opportunity, and the opportunity we are presented with is building our way out of climate change. Hepburn points out that there's some attractive low hanging fruit to be picked. For example:

Only about 400,000 Australian homes use solar energy to heat water. This is indescribably stupid - but it means we have a great opportunity. At a cost of about $2000 a pop (assuming you’d get a pretty good bulk discount if you’re spending $10billion at your local plumber – and you’re the Government), you could install around five million solar hot water systems – enough to do nearly every house in Australia.  According to the Federal Gov’t stats, a solar hot water system saves (working) families between $300 and $700 a year. Let’s call it $500. That means an annual saving of around $2.5 billion in electricity bills for Australian families, which would increase disposable income not just this year but each year for the 20-30 year life of the systems.

AGL says a standard off-peak electric hot water system generates up to 4.5 Tonnes of CO2 per year. For the sake of argument, let’s call it 3. That’s 15 million tonnes of CO2 saved per year, or about enough to close down Hazelwood (one of the world’s dirtiest brown coal power stations – which is just about to get another massive handout from the federal gov’t through the emissions trading scheme).

As Dave would say: something to think about...