Australia headed for economic strife, but still wants an emissions trading scheme?

The Australian economy has held up pretty well against the storm of the global financial crisis, but it appears the financial crisis is starting to bite here too. China’s economy is slowing, which will reduce our exports of resources. It is the resources boom which has insulated Australia from the bulk of the global economic storm so far.

I published this graph in a previous post, How an ETS would create economic chaos to indicate Australia’s recent dependence upon resource mining.

 australian-exports1

Any commercial enterprise with this type of graph of its product mix would have identified this as a commercial risk and acted to mitigate the risk of the main product line going sour for some reason. These actions might include investing in value adding from that product, increasing sales in other existing product lines, not locking in investment in this product line too far in the future, while ensuring that product can be supplied for as long as there is demand for it ……..

Another risk mitigation strategy would be to ensure that the business does not place critical reliance on the cash flow from this one major product. Australia has not made the most of any of these risk mitigating opportunities. Therefore as the demand for our resources slows, we are going to feel a bit of a pinch.

Fortunately this slow down shouldn’t last too long. The world’s financial industry is starting to settle in corrective and remedial action. This will take time to come around, but it will. The upturn will be gradual though, as finance and credit will become available again a bit at a time, not in one wave of a magic wand. In the meantime industry needs to slow activity until the financial markets get back onto firmer ground.

Imagine though if the downturn in industry was imposed for ten years? That is what Australia is facing with the cap, tax and (one day) trade Carbon Pollution Reduction Scheme. It is our boom and bread and butter industries – mining and agriculture – that will feel the main impacts. Industry will take time to implement the cleaner technologies, once they become technically realistic and cost effective.

Industry invests less in R&D and innovation in a downturn because most efforts and money are spent on ensuring survival. No sense investing heavily in next generation technology if the risk you won’t be around next year is getting uncomfortable.

Also, government invests less in innovation when tax revenue falls. Social security, health, education, policing and security are basic services expected of a government in a developed country. It is the other areas in which there is more flexibility in spending, and that is where the cuts will be made.

Hopefully the policy makers are reviewing their strategy regarding CPRS already.

 

What would you do if you were part of the government policy making team? What risk mitigation strategies and policy changes would you be taking now?

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Senator Joyce calls environmentalists Nazis

Senator Barnaby Joyce

 

Australia’s Senator Barnaby Joyce is making his stance on an emissions trading scheme very clear. AAP today quote the Senator calling global warming theory “eco-totalitarianism” and compares the shunning and hushing of  anyone refuting an emissions trading scheme to the totalitarianism of the Nazi era. The following is an extract from the item on heraldsun.com.au:

 

Environmentalism is like Nazism – Joyce

Article from: AAP January 14, 2009 08:23am

NATIONALS firebrand Barnaby Joyce has launched a fresh attack on emissions trading, drawing parallels between environmentalists and Nazis.

Senator Joyce warned of the rise of “eco-totalitarianism” and said he would not be “goosestepping” along with them.

The Federal Government plans to start emissions trading in 2010 to reduce carbon pollution and take up the fight against climate change.

“The idea that this scheme can go forward and no one’s allowed to question because there’s a new form of eco-totalitarianism that demands blind obedience, I think that is wrong,” the Nationals Senate leader said on ABC radio today.

“One has to fall into lockstep, goosestep and parade around the office ranting and raving that we are all as one?”

He has also written to farmers expressing his views. Refer my post Senator Barnaby Joyce on Climate Change and ETS. I am no fan of the concept either as you may have gathered from Emissions Trading Scheme Does not Make Ecocnomic Sense.

I consider myself an environmentalist, but I am against an emissions trading scheme. I am also against anyone trying to tell me what I should think. So I get where he is coming from.

 Most blogs I have read have a very genteel code of behaviour. If you don’t agree, you say so – politely. In the “in your face” world of politics, it is another matter. Behaviour in Parliament in Western societies would be considered obscenely rude in some other countries.

Also, some global warming alarmists are so absorbed by their beliefs that they will attack anyone who dares to differ. You have to sympathise with them a little – they really believe Al Gore et al and that the world will become inhabitable and life as we know it will cease because of CO2 emissions. If you think your life is threatened you do tend to get a bit tense.

In summary – global warming alarmists, please keep your insults and belittlements to yourself. No one likes being told what to think or that they are too stupid to understand. Open, frank but polite debate is needed with people from both sides of the argument respecting the other’s right to an opinion – even if they are wrong!

Emissions Trading Scheme Does Not Make Economic Sense

CPRS and You Booklet
CPRS and You Booklet

The Australian Treasury prepared a paper called Australia’s Low Pollution Future – The Economics of Climate Change Mitigation which was launched by the Treasurer on 30 October 2008.

This paper presents Treasury’s view that a switch to active measures to reduce Australia’s carbon emissions by 5%-15% from 2000 levels will have a net cost to Australians of only about 5% GDP in real terms. This aligns with IPCC’s economic forecasts which show that developed countries like Australia will mitigate the costs of adapting to reduced CO2 emissions by implementing an emissions trading scheme.

However there is one fundamental difference in the two calculations. Australian Treasury states the 5% reduction in GDP will commence almost from day 1 and continue past the date proposed for Australia to enter the international emissions trading market in the year 2020. IPCC’s economic forecasts show much greater reductions in GDP without engagement in the international emissions trading scheme and mitigation to a few percent if developed countries join in the international emissions trading scheme from the UN’s target date for implementation of 2010 – ten years before Australian Treasury proposes Australia join the international market.

One obvious problem with IPCC’s forecasts is that for the effect on GDP for developed counties to be mitigated by an emissions trading scheme, the developed countries must be getting a cash inflow from somewhere as a result of the trading scheme. From where? The developing countries? Do they think China and India are going to pay other countries for the right to continue to burn fossil fuels?

The problem with the Australian Treasury forecast is that although they state there will be a negative effect on the production of some industries, including coal, alumina and cattle, this will be compensated for by Australia developing greenhouse gas friendly industries. And what might these be? Australian Treasury shows only one industry with significant increasing contribution to GDP – forestry. As Treasury states that their forecast is based on “existing land area” this increase must be made up of a big jump in the value of carbon credits as well as the value of harvested timber. Will we be allowed to harvest the trees we grow?

Forestry is not a significant employer. Once the trees are established there is little activity in maintaining them. Therefore there will be very little economic input into the Australian economy from this industry. I suspect the flow on effects of changed employment levels and the resulting change in mix of economic multiplier effects have not been fully factored into the Australian Treasury forecasts.

Australia’s highest export earners are the resources sector. Australia’s economy is very heavily dependent upon primary industry – mining and agriculture. Take away coal, alumina and cattle and we have very little productive sector left!

Australian Exports
To sell an emissions trading scheme as morally correct and thus reduce the level of backlash for this new tax, the Australian Government has spun up a nice fuzzy name – Carbon Pollution Reduction Scheme.

Climate Change Debate Has Moved!

I have set up a new website in WordPress. I found the software I was using wasn’t very comment friendly, and I want to generate discussion.

So – welcome to Read n Say. I have used a new name so that I can use this blog for new subjects that catch my attention after this Global Warming and ETS nonsense (hopefully) goes away.

Please let me know what you think, suggest topics for future discussion, send emails, links and even copy anything you find here. The purpose of this blog is to circulate ideas and generate discussion.

Obama told Australia’s coal is killing the world

Now this is a story no global warming sceptic could leave alone. Professor James Hansen of NASA’s Goddard Institute for Space Studies has dumped on Australia’s coal industry – big time!

Refer Courier Mail’s on line news article “Australia destroying life on earth” earlier today.

James Hansen’s name pops up quite frequently in relation to global warming alarmist news. Professor Hansen has written an open letter to Michelle and Barack Obama, published on the internet because it wouldn’t be able to be hand delivered to him before his inauguration.

Being a sceptic, I looked up the letter myself, and yes, he did say the following …..

Australia exports coal and sets atmospheric carbon dioxide goals so large as to
guarantee destruction of much of the life on the planet

Nobody realistically expects that the large readily available pools of oil and gas will be left in the ground.

What really gets my goat is that he claims that no-one expects oil and gas to stay in the ground, but that coal should.

He includes some other gems which were not reported in the newspaper article …..

Analysis of Earth’s history helps reveal the level of greenhouse gases needed to maintain a climate resembling the Holocene, Creation, the period of reasonably stable climate in which civilization developed. That carbon dioxide level, unsurprisingly in retrospect, is less than the current 385 ppm (parts per million). The safe amount for the long-term is no more than 350 ppm, probably less. Pre-industrial carbon dioxide amount was 280 ppm.

The Holocene Climate Optimum refers to the period of time between about 8,000 to 5,000 years ago. My reading tells me that CO2 levels then were 260 to 270 ppmv and the Earth’s temperature was up to 3 degrees C warmer than modern times. During that period, CO2 levels actually dipped a little, while temperatures rose. Since then, temperatures have lowered a little, with increases and decreases, while CO2 levels have gradually increased.

Going back over 5,000 years is well and truly before any man made CO2 influence. Going back further into prehistory, some scientists report the atmospheric CO2 levels were well over 1000 ppmv during some of the periods of greatest biodiversity. Presumably Professor Hansen doesn’t look back that far as he referred to the Holocene period as “Creation”. I have heard Christian ministers of religion refer to the Earth as 40,000 years old, not 8,000.

Since the Holocene Climate Optimum the Earth has experienced periods of unstable climate with successive moderate changes from warming to cooling and back again. There is some evidence that these climate changes were the undoing of the supremecy of some civilisations within recorded history.

Hmmm – the USA produces a fair bit of oil and gas, but little or no coal. Australia produces a heap of coal and lesser amounts of oil and gas. Why all of a sudden is oil and gas production and consumption OK, but coal is a no-no?

Has Professor Hansen become very patriotic, protective of US oil, gas and automotive industries? Has Professor Hansen discovered that somehow coal originating CO2 is worse for the world than oil and gas CO2? Or is Professor Hansen receiving sponsorship from the rich and powerful US oil and gas lobby?

Regardless of the reason for this twaddle from Professor Hansen, it just adds further “fuel” to the global warming sceptics’ concerns that the CO2 caused global warming alarmists stories are not realistic and that global warming alarmism lacks credibility.

The full letter can be found at http://www.columbia.edu/~jeh1/mailings/20081229_DearMichelleAndBarack.pdf

Lessons From History on Climate Change

Published with the permission of Viv Forbes:

“Lessons from History on Climate Change”.
A statement by Viv Forbes, Chairman of the Carbon Sense Coalition.
3 January 2009
For Immediate Release.

The Carbon Sense Coalition today congratulated Senator Barnaby Joyce, Senator Ron Boswell, Senator Cory Bernardi and Dr Dennis Jensen MP for their principled stand against the Emissions Trading Scheme.

Releasing a new paper entitled “Climate Change in Perspective” the Chairman of the Carbon Sense Coalition, Mr Viv Forbes, said that changing climate was a permanent feature of Earth’s history – man did not cause it and cannot change it.

“All over the world, politicians, scientists, taxpayers and shareholders are waking up to the fact that they have been conned by the global warming story. All we need to do is read a bit of climate history to get things into perspective and realize how lucky we are today.”

He commented: “Within just the last 20,000 years, vast ice sheets melted from the earth’s surface, seas rose about 130 m, temperatures rose well above present levels several times, and as the seas warmed, they expelled their dissolved carbon dioxide.”

“Then just 300 years ago, earth suffered from the bitter cold and famines caused by the Little Ice Age. Since about 1700 AD, warmth created by increasing solar activity has been driving back the deadly frosts, snow and ice. Carbon dioxide is naturally expelled from the warming oceans to the atmosphere – humans have very little to do with it all.”

“All of these events were caused by and controlled by natural processes, and all life on earth was forced to adapt or die.”

“Despite continual increases in man’s emissions of carbon dioxide, the earth has not warmed since 1998. With unseasonal snow, bitter frosts, power failures and lost crops being reported every week, to send 10,000 pampered politicians and bureaucrats on a junket to Poland to discuss “Global warming” is surely a sick joke?

“A growing number of politicians are now bravely stating what a large and increasing number of scientists have been saying: “There is no global warming crisis, carbon dioxide is a benefit not a danger in the atmosphere, and the whole Emissions Trading industry is shaping up to be a bigger financial disaster than the sub-prime mess.”

To read the full report from The Carbon Sense Coalition on “Climate Change in Perspective” see:
http://carbon-sense.com/2009/01/02/climate-change-in-perspective/

For a link to the additional 650 scientists who signed their dissent over Man-Made Global Warming claims and continue to debunk the so-called “Consensus” in 2008 see:
http://epw.senate.gov/public/index.cfm?FuseAction=Files.View&FileStore_id=83947f5d-d84a-4a84-ad5d-6e2d71db52d9&CFID=53242194&CFTOKEN=70206467

To read comments by Senator Joyce see:
http://www.agmates.com/blog/2008/12/17/barnaby-joyce-the-innate-problems-with-labors-emissions-trading-scheme/

Viv Forbes
Chairman
The Carbon Sense Coalition
MS 23 Rosewood Qld 4340
0754 640 533

info@carbon-sense.com www.carbon-sense.com.

Senator Barnaby Joyce on Climate Change and ETS

The following is an address to the readers of Agmates website from the Leader of the Nationals in the Australian Senate, Barnaby Joyce –

Leader of the Nationals in the Senate Barnaby Joyce writes to the Agmates community –
*****
I’m going to be serious and quite frank with you here as the issues I am about to raise will be contentious not only amongst coalition MP’s but also my own party.
Every age comes up with a witch to burn, a sect that apparently if it is not succumbed will bring about the destruction of an empire, an issue that occupies the rigours of the day.
It is almost as if those in the position of power and their surrounding Illuminati with time to spare are terrified of the banality of daily existence and so search for an issue that demands blind obedience to conquer it.
The most dangerous place to be in these times of immense fervour is in the counter position that calls in to question the logic of the euphoria. Those who dare to question are held as heretics. There is a communal life fest in being part of the pack or staying silent.
It is hard for them to separate from the reality that the world is fairly constant and predictable and that things of the greater nature of the universe have remained beyond our control in the past and generally shall remain so into the future.
It was interesting to hear the recent discussion between Freeman Dyson, Emeritus Professor of Physics at the Institute for Advanced Study, Princeton, with Robyn Williams, on The Science Show on ABC Radio National, when he rightly stated that the world has many problems but global warming is not one of the biggest ones. As Dyson said:
“Sea level rise has been going on much longer, long before global warming, and it probably has very little to do with human activities. All we know for sure is that sea level has been rising steadily for about 10,000 years and we’ll have to do something about that.”
I don’t pretend for one moment to be a scientist but in my role in the Senate it is implicit in my job to be a sceptic , to question and to consider all sides and be open to the views of many rather than one view.
My current concern with the emissions trading scheme is that a religious fervour has built up around the altar of global warming. Those who serve at the altar have become ruthless in their denigration of alternate views. This fervour has now received its imprimatur by reason of a new tax, or should it be tithe to be paid to the Rudd Labor Government.
The similarity in this newest forte of socialism can be defined by the ultimate purpose of divesting the individual of their asset or income stream on the premise of an apparent greater moral good.
But who becomes the benefactors of this divestment? The administrators and the traders. Their pockets are lined with the property and income of others.
I don’t remember anybody paying rural Australia for the vegetation that was divested from their asset, rural land, during the tree-clearing legislation so we could meet our Kyoto target and unfortunately I don’t hear any chorus of questioning as to why in the future rural producers, after trying to feed the nation and others, will have to be dragged into an emissions trading scheme that could make many of them unviable.
Where is all this heading?
The National Party has been at the forefront of saying this is all getting beyond ridiculous and becoming dangerous. They are also being supported by unlikely allies such as the Australian Workers Union who see their own members, who have been part of the process of delivering wealth to our nation from their labours have had their industries now termed ‘dirty’ by the new environmental high priests. In this new Orwellian frenzy everyone is looking over their shoulder.
Australia is going down a path of an ETS without the co-operation of the major emitting countries. It says that it is morally right to do so. The Rudd Labor Government and others say that unilateral action is a moral imperative. I look forward to that same fervour of moralistic rectitude as they approach the Mugabe issue in Zimbabwe. He is certainly in the wrong and it is on this new platform of morals that we await our dear leader to launch an attack in a very worthwhile and immediate practice of ridding our planet of this tyrant, Mugabe. That is something that would be of an exceptional benefit.
The government is currently honey-coating the fact that it will be collecting a vast amount of money from the Australian people. The ETS will collect $11.5 billion in its first year, $12 billion in its second, it will force up the price of goods and services, it will encourage industries to move to where an ETS is not present.
Australia generates 1.5 per cent of global greenhouse emissions and this ETS will reduce world levels by the smallest sliver, which self-evidently will have nil effect on global climate whether you believe in climate warming or not.
People will lose their job or their business because of the ETS. They will be the modern-day witches burning on the environmentalist fanatical pyre because their role in this new dynamic was unacceptable.
For regional Australia we look forward to the ridiculous prospect of 34 million possible hectares of forest to take the place of farming land, formerly the backbone of so many regional towns and generations of good, honest working Australians’ lives.
The history of human civilisations has the disturbing trait of devising ways to put themselves out of business, sometimes through no more than their own excesses and belief structures of their governing bureaucracies. The only protection against these excesses is the capacity of the general population to question, to doubt and to disagree.
I have no doubt that as a world we must become efficient with the utilisation of our resources. We must give the greatest number of people the greatest access to the highest standard of living, it is only fair.
Efficiency, more than emissions, must become the trading scheme that brings a cleaner, fairer future. Encourage efficiency and keep the government’s hands out of people’s pockets and off their assets and that will bring a greater propensity to a long-term broad-based better world for all of us.
END

Well said Senator.
Please pass on this news, and your support of the Senator’s comments, particularly to your Member of Parliament.