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The Greenhouse Levy
September 16, 2006 | 7 Comments | Joshua Gans
Earlier this week, I proposed a simple way forward on the issue of Australia complying with its international environmental obligations (should it decide to have any that is). The idea was for Australia to simply embrace carbon neutrality and either plant trees or purchase offsets. This would all be funded by a Greenhouse Levy which, like the Medicare Levy, would be a simple fraction of a person’s income. I estimated that about 0.6% (or $2 billion in total per annum) would do the trick.
The problem is that this was based on how a household might offset its carbon. If you visit a site like www.carbonneutral.com.au, you can calculate your household’s carbon emissions and the cost of offsets. I did this and our household produced 22.31 tonnes of CO2 equivalents per annum which would take 96 trees at a total cost of about $300 to offset. Most of this was due to air travel (mostly mine) and indeed by moving from a car to public transport we would only save a few trees per year. If all households paid this, then this would come to about $2 billion, as I had expected.
But this is just a fraction of total greenhouse emissions. Australia puts in some 600 million tonnes of the stuff into the atmosphere each year. That would take more like $10 billion to offset with a levy of over 3 percent. Getting neutrality from that perspective is not going to be as politically saleable as I had hoped.
Of course, to comply with Kyoto, we only have to reduce emissions to 1990 levels; 3 percent less than what they are now. That requires a reduction of 18 million tonnes per annum at a cost of $300 million. Now that gets us in the territory of a levy more like 0.1 percent. Given these numbers it seems embarassingly low an amount and I would love it if someone could confirm this. Indeed, instead of a levy, we could simply plough the baby bonus money into offsets and we would be done.
All this would put to pay the whole ‘we will destroy Australian industry’ nonsense that even a larger levy could deal with. Certainly worth talking about, I think.
Comments
7 Responses to “The Greenhouse Levy”
Actually it’s even less onerous than you suggest. Australia wasn’t asked to reduce its emissions to 1990 levels; its Lyoto target is 108% of 1990 levels.
[...] This scheme has obviously more appeal than the trading scheme in Kyoto. The problem is that it is not directly Kyoto compliant and so stands out from an agreed upon collective solution. Nonetheless, as I have said before, becoming Kyoto compliant (without adverse effects of macroeconomic flows) is possible if we commit to purchase carbon offsets or plant trees to bring out net emissions to 1990 levels. A greenhouse levy to fund this would also bring in a constituency for actually reducing emissions so that taxes could fall. [...]
[...] Climatic policies: Slate discovers the carbon tax as a viable alternative to emissions trading. In Australia, we are so at the forefront of policy we have just gotten to rejecting the tax having rejected emission trading and back to emission trading. When are we going to move beyond this and also think about schemes to offset carbon too? [...]
[...] (Oh and by the way, if it could build reliability into the mix, that would make me even happier. And if you are worried about my environmental leanings then read some previous posts like this one or this one). [...]
The scepticism about rouge used carbon salesmen is appropriate. However, it is clear that quality carbon offsets can be beneficial to the planet particularly if the offsets are for greenhouse emissions that have no optional greenhouse reduction strategy. A case in point is air travel. If you do travel by air then it is appropriate to offset the emissions. For this reason Uncook carbon offset have been designed as a quality product with highly additional projects administered through the respected Greenhouse Gas Abatement Scheme. See http://www.uncook.com for more information.
In 2008 the arithmetic for getting to carbon neutrality is even better than you think. Do it right and it will increase the economic output of the country. We all become richer by becoming cleaner:) This can be done by diverting a modest amount of resources from consumption to investment in renewables and that is easy to do by rewarding people who save energy but requiring the rewards to be spent on saving more energy. See http://rewards.edentiti.com
[...] for reference, the Carbon Neutral site was found through this post on Joshua Gan’s blog, Core [...]